-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LuIbhTIflrsT6OM7oVxx/9P+KB1nFa5ORM14VeTBwG6KFqF4H3VOYM2yI3+r/jZ7 L9AJnUV2lzoBi23s/rem1g== 0000950144-95-002791.txt : 19951010 0000950144-95-002791.hdr.sgml : 19951010 ACCESSION NUMBER: 0000950144-95-002791 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 18 CONFORMED PERIOD OF REPORT: 19951006 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19951006 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANPONCE CORP CENTRAL INDEX KEY: 0000763901 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 660416582 STATE OF INCORPORATION: PR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-13818 FILM NUMBER: 95579239 BUSINESS ADDRESS: STREET 1: 209 MUNOZ RIVERA AVE STREET 2: POPULAR CENTER BUILDING CITY: HATO REY STATE: PR ZIP: 00918 BUSINESS PHONE: 8097659800 MAIL ADDRESS: STREET 1: P.O. BOX 362708 CITY: SAN JUAN STATE: PR ZIP: 00936-2708 8-K 1 BANPONCE CORPORATION FORM 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): October 6, 1995 BANPONCE CORPORATION -------------------- (Exact name of registrant as specified in its charter) COMMONWEALTH OF PUERTO RICO NO. 0-13818 NO. 66-0416582 --------------------------- ----------- -------------- (State or other jurisdiction (Commission File (IRS employer of incorporation) Number) Identification No.) 209 MUNOZ RIVERA AVENUE HATO REY, PUERTO RICO 00918 ------------------------- ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (809)765-9800 - -------------------------------------------------------------------------------- (Former name or former address, if changes since last report) 2 ITEM 5. OTHER EVENTS The exhibits listed in Item 7 below are hereby incorporated herein by reference. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (1)(b) Distribution Agreement, dated October 6, 1995, among BanPonce Corporation, Merrill Lynch & Co., CS First Boston Corporation and First Chicago Capital Markets, Inc. (1)(c) Amendment, dated October 6, 1995, to the Distribution Agreement, dated October 11, 1991, as amended on December 2, 1993, and as supplemented on June 16, 1993 and August 1, 1994, among BanPonce Financial Corporation, BanPonce Corporation, Merrill Lynch & Co., CS First Boston Corporation and First Chicago Capital Markets, Inc. (4)(l) Form of Fixed Rate Medium-Term Note, Series 2, of BanPonce Corporation. (4)(m) Form of Floating Rate Medium-Term Note, Series 2, of BanPonce Corporation. (4)(n) Form of Fixed Rate Medium-Term Note, Series C, of BanPonce Financial Corp., endorsed with the guarantee of BanPonce Corporation. (4)(o) Form of Floating Rate Medium-Term Note, Series C, of BanPonce Financial Corp., endorsed with the guarantee of BanPonce Corporation. (5)(c) Opinion of Brunilda Santos de Alvarez, Esq., regarding BanPonce Corporation Medium-Term Notes, Series 2. (5)(d) Opinion of Brunilda Santos de Alvarez, Esq., regarding BanPonce Financial Corp. Medium-Term Notes, Series C. (5)(e) Opinion of Sullivan & Cromwell BanPonce Corporation Medium-Term Notes, Series 2. (5)(f) Opinion of Sullivan & Cromwell regarding BanPonce Financial Corp. Medium-Term Notes, Series C. (8)(a) Tax opinion of Sullivan & Cromwell in connection with BanPonce Corporation Medium-Term Notes, Series 2. (8)(b) Tax opinion of Sullivan & Cromwell in connection with BanPonce Financial Corp. Medium-Term Notes, Series C. -1- 3 (8)(c) Tax opinion of McConnell Valdes in connection with BanPonce Corporation Medium-Term Notes, Series 2. (10)(a) Administrative Procedures governing Medium-Term Notes, Series 2, of BanPonce Corporation. (10)(b) Administrative Procedures governing Medium-Term Notes, Series C, of BanPonce Financial Corp., fully guaranteed by BanPonce Corporation. (10)(c) Interest Calculation Agency Agreement, dated as of October 6, 1995, between BanPonce Corporation and The First National Bank of Chicago. (10)(d) Interest Calculation Agency Agreement, dated as of October 6, 1995, between BanPonce Financial Corp. and The First National Bank of Chicago. (23)(c) Consents of Counsel (included in Exhibits (5)(c), (5)(d), (5)(e), (5)(f), (8)(a), (8)(b), and (8)(c)). -2- 4 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. BANPONCE CORPORATION (Registrant) Date: October 6, 1995 By: /s/ Jose Luis Lopez Calderon ----------------- -------------------------------- Name: Jose Luis Lopez Calderon Title: (Senior Vice President) -3- EX-1.(B) 2 DISTRIBUTION AGREEMENT DATED 10/6/95 1 EXHIBIT (1)(b) BANPONCE CORPORATION MEDIUM-TERM NOTES DUE FROM 9 MONTHS TO 30 YEARS FROM DATE OF ISSUE DISTRIBUTION AGREEMENT October 6, 1995 MERRILL LYNCH & CO. Merrill Lynch, Pierce, Fenner & Smith Incorporated World Financial Center North Tower New York, New York 10281 CS FIRST BOSTON CORPORATION 55 East 52nd Street New York, New York 10055 FIRST CHICAGO CAPITAL MARKETS, INC. One First National Plaza Mail Suite 0407 Chicago, Illinois 60670-0327 Ladies and Gentlemen: BanPonce Corporation, a Puerto Rico corporation (the "Company"), confirms its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, CS First Boston Corporation and First Chicago Capital Markets, Inc. (each, an "Agent" and collectively, the "Agents") with respect to the issue and sale by the Company of its Medium-Term Notes described herein (the "Notes"). The Notes are to be issued pursuant to an Indenture, dated as of February 15, 1995 (the "Indenture"), between the Company and The First National Bank of Chicago, as trustee (the "Trustee"). As of the date hereof, the Company has authorized the issuance and sale of Notes with an aggregate initial offering price of up to $1,000,000,000 through the Agents pursuant to the terms of this Agreement. It is understood, however, that the Company may from time to time authorize the issuance of additional Notes and that such additional Notes may be sold through or to the Agents pursuant to the terms of this Agreement, all as though the issuance of such Notes were authorized as of the date hereof. This Agreement provides both for the sale of Notes by the Company directly to purchasers, in which case the Agents will act as agents of the Company in soliciting Note purchasers, and, as may from time to time be agreed to by the Company and any Agent, to such Agent as principal for resale to purchasers. 2 The Company has filed with the Securities and Exchange Commission (the "SEC") a registration statement on Form S-3 (No. 33-61601) for the registration of debt securities, including the Notes, under the Securities Act of 1933, as amended (the "1933 Act"), and the offering thereof from time to time in accordance with Rule 415 of the rules and regulations of the SEC under the 1933 Act (the "1933 Act Regulations"). Such registration statement has been declared effective by the SEC and the Indenture has been qualified under the Trust Indenture Act of 1939, as amended (the "1939 Act"). Such registration statement (and any further registration statements which may be filed by the Company for the purpose of registering additional Notes and in connection with which this Agreement is included as an exhibit) and the prospectus constituting a part thereof, and any prospectus supplements relating to the Notes, including all documents incorporated therein by reference, as from time to time amended or supplemented by the filing of documents pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"), or the 1933 Act or otherwise, are referred to herein collectively as the "Registration Statement" and the "Prospectus", respectively, except that if any revised prospectus shall be provided to the Agents by the Company for use in connection with the offering of the Notes which is not required to be filed by the Company pursuant to Rule 424(b) of the 1933 Act Regulations, the term "Prospectus" shall refer to such revised prospectus from and after the time it is first provided to the Agents for such use. SECTION 1. Appointment as Agents. (a) Appointment of Agents. Subject to the terms and conditions stated herein and subject to the reservation by the Company of the right to sell Notes directly on its own behalf, the Company hereby appoints each Agent as its agent for the purpose of soliciting purchases of the Notes from the Company by others and agrees that, except as otherwise contemplated herein, whenever the Company determines to sell Notes directly to an Agent as principal for resale to others, it will enter into a Terms Agreement (hereafter defined) relating to such sale in accordance with the provisions of Section 3(b) hereof. The Agents are not authorized to appoint sub-agents or to engage the services of any other broker or dealer in connection with the offer or sale of the Notes. The Company agrees that, during the period that the Agents are acting as the Company's agents hereunder, the Company will not contact or solicit potential investors introduced to it by the Agents to purchase the Notes. Notwithstanding anything to the contrary contained herein, the Company may, upon one day's prior written notice to the Agents, authorize any other person, partnership or corporation (an "Additional Agent") to act as its agent to solicit offers for the purchase of all or part of the Notes of the Company. Unless the Agents otherwise agree, the appointment of an Additional Agent shall be effected by the Company's addition of the name and address of the Additional Agent to the signature page of a 2 3 counterpart of this Agreement, the execution of such counterpart by the Additional Agent, and the delivery of executed copies of such counterpart to each Agent and its counsel. Thereafter the term "Agents" as used in this Agreement shall mean the Agents and such Additional Agent. At such time, the Additional Agent shall specify its requirement for the delivery of certificates, letters and opinions as are set forth in Section 5 hereof. It is understood that if from time to time the Company is approached by a prospective agent offering to solicit a specific purchase of Notes, the Company may engage such agent with respect to such specific purchase, provided that (i) such agent is engaged on terms substantially similar (including the same commission schedule as set forth hereto as Schedule A) to the applicable terms of this Agreement and (ii) each Agent is given notice of such purchase promptly, including the terms thereof and a copy of the agreement setting forth the terms of engagement of such agent by the Company, in each case after the purchase is agreed to. (b) Reasonable Efforts Solicitations; Right to Reject Offers. Upon receipt of instructions from the Company, each Agent will use its reasonable efforts to solicit purchases of such principal amount of the Notes as the Company and such Agent shall agree upon from time to time during the term of this Agreement, it being understood that the Company shall not approve the solicitation of purchases of Notes in excess of the amount which shall be authorized by the Company from time to time or in excess of the principal amount of Notes registered pursuant to the Registration Statement. The Agents will have no responsibility for maintaining records with respect to the aggregate principal amount of Notes sold, or of otherwise monitoring the availability of Notes for sale under the Registration Statement. Each Agent will communicate to the Company, orally or in writing, each offer to purchase Notes from such Agent, other than those offers rejected by such Agent. Each Agent shall have the right, in its discretion reasonably exercised, to reject any proposed purchase of Notes, as a whole or in part, and any such rejection shall not be deemed a breach of such Agent's agreement contained herein. The Company may accept or reject any proposed purchase of the Notes, in whole or in part. (c) Solicitations as Agent; Purchases as Principal. In soliciting purchases of the Notes on behalf of the Company, each Agent shall act solely as agent for the Company and not as principal. Each Agent shall make reasonable efforts to assist the Company in obtaining performance by each purchaser whose offer to purchase Notes has been solicited by such Agent and accepted by the Company. No Agent shall have any liability to the Company in the event any such purchase is not consummated for any reason, except in the event that such sale is not consummated due to the failure of such Agent to perform its obligations hereunder. No Agent shall have an obligation to purchase Notes from the Company as principal, but any Agent may agree from time to time to purchase Notes as principal. Any such purchase of Notes by an Agent as principal 3 4 shall be made pursuant to a Terms Agreement in accordance with Section 3(b) hereof. (d) Reliance. The Company and each Agent agree that any Notes the placement of which such Agent arranges shall be placed by such Agent, and any Notes purchased by an Agent shall be purchased in reliance on the representations, warranties, covenants and agreements of the Company contained herein and on the terms and conditions and in the manner provided herein. SECTION 2. Representations and Warranties of the Company. (a) The Company represents and warrants to the Agents as of the date hereof, as of the date of each acceptance by the Company of an offer for the purchase of Notes (whether through an Agent as agent or to an Agent as principal), as of the date of each delivery of Notes (whether through an Agent as agent or to an Agent as principal) (the date of each such delivery to an Agent as principal being hereafter referred to as a "Settlement Date"), and as of any time that the Registration Statement or the Prospectus shall be amended or supplemented (other than by an amendment or supplement providing solely for a change in the interest rates of Notes or similar changes and other than an amendment or supplement that relates to an offering of debt securities other than the Notes) or there is filed with the SEC any document incorporated by reference into the Prospectus (other than any Current Report on Form 8-K relating exclusively to the issuance of debt securities other than the Notes under the Registration Statement) (each of the times referenced above being referred to herein as a "Representation Date") as follows: (i) Due Incorporation and Qualification. The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the Commonwealth of Puerto Rico with corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus; the Company is duly registered as a bank holding company under the Bank Holding Company Act of 1956, as amended (the "Bank Holding Company Act"); and the Company is not required to register as a foreign corporation in any jurisdiction in order to conduct the business presently conducted by it. (ii) Subsidiaries. Each subsidiary of the Company which is a significant subsidiary as defined in Rule 405 of Regulation C of the 1933 Act Regulations (each, a "Significant Subsidiary") has been duly incorporated and is validly existing as a corporation or a bank in good standing under the laws of the jurisdiction of its incorporation, has corporate power and authority to own, lease and operate its properties and conduct its business as described in the Prospectus and is duly qualified as a foreign corporation to transact business 4 5 and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify and be in good standing would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise; and all of the issued and outstanding capital stock of each such Significant Subsidiary has been duly authorized and validly issued, is fully paid and non-assessable (subject to the provisions of Section 55 of Title 12 of the United States Code in the case of Significant Subsidiaries which are national banking associations) and, except as otherwise disclosed in the Prospectus and except for directors' qualifying shares, is owned by the Company, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity or, if such is not the case, that any such security interest, mortgage pledge, lien, encumbrance, claim or equity, when exercised, enforced or otherwise asserted, will not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise. (iii) Registration Statement and Prospectus. At the time the Registration Statement became effective, the Registration Statement complied, and as of the applicable Representation Date will comply, in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations and the 1939 Act and the rules and regulations of the SEC promulgated thereunder. The Registration Statement, at the time it became effective, did not, and at each time thereafter at which any amendment to the Registration Statement becomes effective and any Annual Report on Form 10-K is filed by the Company with the SEC and as of each Representation Date will not, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; the Prospectus, as of the date hereof does not, and as of each Representation Date will not, contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the representations and warranties in this subsection shall not apply to statements in or omissions from the Registration Statement or Prospectus made in reliance upon and in conformity with information furnished to the Company in writing by the Agents expressly for use in the Registration Statement or Prospectus. 5 6 (iv) Incorporated Documents. The documents incorporated or deemed to be incorporated by reference in the Prospectus, at the time they were or hereafter are filed with the SEC, complied or when so filed will comply, as the case may be, in all material respects with the requirements of the 1934 Act and the rules and regulations promulgated thereunder (the "1934 Act Regulations"), and, when read together and with the other information in the Prospectus, did not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were or are made, not misleading. (v) Accountants. The accountants who certified the financial statements and supporting schedules included or incorporated by reference in the Prospectus are independent public accountants within the meaning of the 1933 Act and the 1933 Act Regulations. (vi) Financial Statements. The consolidated financial statements and any supporting schedules included or incorporated by reference in the Registration Statement and the Prospectus present fairly the consolidated financial position of the Company and its consolidated subsidiaries as of the dates indicated and the consolidated results of their operations for the periods specified; except as stated therein, said financial statements have been prepared in conformity with generally accepted accounting principles in the United States applied on a consistent basis during the periods involved; and the supporting schedules included in the Registration Statement present fairly the information required to be stated therein. (vii) Authorization and Validity of this Agreement, the Indenture and the Notes. This Agreement has been duly authorized, executed and delivered by the Company; the Indenture has been duly authorized and is a valid and binding obligation of the Company enforceable in accordance with its terms subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws of general applicability relating to or affecting creditors rights and to general equity principles; the Notes have been duly and validly authorized for issuance, offer and sale pursuant to this Agreement and, when issued, authenticated and delivered pursuant to the provisions of this Agreement and the Indenture against payment of the consideration therefor specified in the Prospectus or pursuant to any Terms Agreement, will constitute valid and legally binding obligations of the Company enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other laws relating to or affecting creditors' 6 7 rights generally and to general equity principles; the Notes and the Indenture will be substantially in the form heretofore delivered to the Agents and conform in all material respects to all statements relating thereto contained in the Prospectus; and the Notes will be entitled to the benefits provided by the Indenture. (viii) Material Changes or Material Transactions. Since the respective dates as of which information is given in the Registration Statement and the Prospectus, except as may otherwise be stated therein or contemplated thereby, there has been no material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business. (ix) No Defaults; Regulatory Approvals. Neither the Company nor any of the Significant Subsidiaries is in violation of its charter or in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other instrument to which it is a party or by which it or any of them or their properties may be bound; the execution, delivery and performance of this Agreement and the Indenture and the consummation of the transactions contemplated herein, therein and pursuant to any applicable Terms Agreement have been duly authorized by all necessary corporate action and will not conflict with or constitute a breach of, or default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of the Significant Subsidiaries pursuant to any contract, indenture, mortgage, loan agreement, note, lease or other instrument to which the Company or any of its subsidiaries is a party or by which it or any of them may be bound or to which any of the property or assets of the Company or any such subsidiary is subject, nor will such action result in any violation of the provisions of the charter or by-laws of the Company or any such subsidiary or any law, administrative regulation or administrative or court order or decree which breach, default, imposition or violation would, in each case, have a material adverse effect on the Company and its subsidiaries taken as a whole; and no consent, approval, authorization, order or decree of any court or governmental agency or body is required for the consummation by the Company of the transactions contemplated by this Agreement, except such as have already been obtained or as may be required under the 1933 Act or the 1933 Act Regulations (which have been obtained), the 1939 Act or state securities or Blue Sky laws. 7 8 (x) Legal Proceedings; Contracts. Except as may be set forth in the Registration Statement, there is no action, suit or proceeding before or by any court or governmental agency or body, domestic or foreign, now pending, or, to the knowledge of the Company, threatened against or affecting, the Company or any of its subsidiaries, which might result in any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise, or might materially and adversely affect the consummation of this Agreement or any Terms Agreement; and there are no contracts or documents of the Company or any of its subsidiaries which are required to be filed or incorporated by reference as exhibits to the Registration Statement by the 1933 Act or by the 1933 Act Regulations which have not been so filed or incorporated by reference. (xi) Regulatory Certificates, Authorities and Permits. The Company and the Significant Subsidiaries possess adequate certificates, authorities or permits issued by the appropriate state, federal or foreign regulatory agencies or bodies necessary to conduct the business now operated by them except for such certificates, authorities or permits as are not material to the business, operations, financial condition or income of the Company or the Significant Subsidiaries; and neither the Company nor any of the Significant Subsidiaries has received any notice of proceedings relating to the revocation or modification of any such certificate, authority or permit which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would materially adversely affect the conduct of the business, operations, financial condition or income of the Company and its subsidiaries considered as one enterprise. (b) Additional Certifications. Any certificate signed by any officer of the Company and delivered to the Agents or to counsel for the Agents in connection with an offering of Notes or the sale of Notes to an Agent as principal shall be deemed a representation and warranty by the Company to the Agents (or, in the case of a sale of Notes to an Agent as principal, to such Agent) as to the matters covered thereby on the date of such certificate. SECTION 3. Solicitations as Agent; Purchases as Principal. (a) Solicitations as Agent. On the basis of the representations and warranties herein contained, but subject to the terms and conditions herein set forth, each Agent agrees, as agent of the Company, to use its reasonable efforts to solicit offers to purchase the Notes upon the terms and conditions set forth herein and in the Prospectus. 8 9 The Company reserves the right, in its sole discretion, to suspend solicitation of purchases of the Notes through the Agents, as agents, commencing at any time for any period of time or permanently. Upon receipt of instructions from the Company, the Agents will forthwith suspend solicitation of purchases from the Company until such time as the Company has advised the Agents that such solicitation may be resumed. The Company agrees to pay each Agent a commission, in the form of a discount, equal to the applicable percentage of the principal amount of each Note sold by the Company as a result of a solicitation made by such Agent as set forth in Schedule A hereto. Each such Agent may reallow any portion of the commission payable pursuant hereto to dealers or purchasers in connection with the offer and sale of any Notes. The purchase price, interest rate, maturity date and other terms of the Notes shall be agreed upon by the Company and each Agent and set forth in a pricing supplement to the Prospectus to be prepared following each acceptance by the Company of an offer for the purchase of Notes. Except as may be otherwise provided in such supplement to the Prospectus, the Notes will be issued in denominations of $1,000 and integral multiples thereof. All Notes sold through any Agent as agent will be sold at 100% of their principal amount unless otherwise agreed to by the Company and such Agent. (b) Purchases as Principal. Each sale of Notes to an Agent as principal shall be made in accordance with the terms contained herein and (unless the Corporation and such Agent shall otherwise agree) pursuant to a separate agreement which will provide for the sale of such Notes to, and the purchase and reoffering thereof by, such Agent. Each such separate agreement (which may be an oral agreement confirmed in writing) between such Agent and the Company is herein referred to as a "Terms Agreement". Unless the context otherwise requires, each reference contained herein to "this Agreement" shall be deemed to include any applicable Terms Agreement between the Company and an Agent. Each such Terms Agreement, whether oral or in writing, shall be with respect to such information (as applicable) as is specified in Exhibit A hereto. Each Agent's commitment to purchase Notes as principal pursuant to any Terms Agreement or otherwise shall be deemed to have been made on the basis of the representations and warranties of the Company herein contained and shall be subject to the terms and conditions herein set forth. Each Terms Agreement shall specify the principal amount of Notes to be purchased by the Agent pursuant thereto, the price to be paid to the Company for such Notes (which, if not so specified in a Terms Agreement, shall be at a discount equivalent to the applicable commission set forth in Schedule A hereto), the time and place of delivery of and payment for such Notes and such other provisions (including further terms of the Notes) as may be mutually agreed upon. Each Agent may 9 10 utilize a selling or dealer group in connection with the resale of the Notes purchased. Unless expressly provided for in the Terms Agreement, no opinions, letters or certificates shall be delivered by the Company in connection with the sale of Notes to each Agent as principal. (c) Administrative Procedures. Administrative procedures with respect to the sale of Notes shall be agreed upon from time to time by the Agents and the Company (the "Procedures"). The Agents and the Company agree to perform the respective duties and obligations specifically provided to be performed by them in the Procedures. SECTION 4. Covenants of the Company. The Company covenants with each Agent as follows: (a) Notice of Certain Events. The Company will notify each Agent immediately (i) of the effectiveness of any amendment to the Registration Statement, (ii) of the filing of any supplement to the Prospectus relating to the Notes or any document to be filed pursuant to the 1934 Act which will be incorporated by reference in the Prospectus, (iii) of the receipt of any comments from the SEC with respect to the Registration Statement or the Prospectus, (iv) of any request by the SEC for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information, and (v) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose. The Company will use reasonable efforts to prevent the issuance of any stop order and, if any stop order is issued, to obtain the lifting thereof. (b) Notice of Certain Proposed Filings. Except as otherwise provided in subsection (1) of this Section, the Company will give each Agent notice of its intention to file or prepare any additional registration statement with respect to the registration of additional Notes, any amendment to the Registration Statement or any amendment or supplement to the Prospectus (other than an amendment or supplement providing solely for a change in the interest rates of Notes and other than an amendment or supplement that relates to an offering of debt securities other than the Notes), whether by the filing of documents pursuant to the 1934 Act, the 1933 Act or otherwise, and will furnish each Agent with copies of any such amendment or supplement or other documents proposed to be filed or prepared a reasonable time in advance of such proposed filing or preparation, as the case may be, except for documents filed pursuant to the 1934 Act, which the Company shall furnish to each Agent immediately after the filing thereof, and will not file any such amendment or supplement other than a document filed pursuant to the 1934 Act in a form to which you or your counsel shall reasonably object. 10 11 (c) Copies of the Registration Statement and the Prospectus. The Company will deliver to each Agent as many signed and conformed copies of the Registration Statement (as originally filed) and of each amendment thereto (including exhibits filed therewith or incorporated by reference therein and documents incorporated by reference in the Prospectus) as such Agent may reasonably request. The Company will furnish each Agent with as many copies of the Prospectus (as amended or supplemented) as such Agent shall reasonably request so long as such Agent is required to deliver a Prospectus in connection with sales or solicitations of offers to purchase the Notes. (d) Preparation of Pricing Supplements. The Company will prepare, with respect to any Notes to be sold through the Agents pursuant to this Agreement, a Pricing Supplement with respect to such Notes and will file such Pricing Supplement pursuant to Rule 424(b)(3) under the 1933 Act not later than the close of business of the SEC on the fifth business day after the date on which such Pricing Supplement is first used. (e) Revisions of Prospectus -- Material Changes. Except as otherwise provided in subsection (l) of this Section, if at any time during the term of this Agreement any event shall occur or condition exist as a result of which it is necessary, to amend or supplement the Prospectus in order that the Prospectus will not include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances in which they were made, not misleading or if it shall be necessary to amend or supplement the Registration Statement or the Prospectus in order to comply with the requirements of the 1933 Act or the 1933 Act Regulations, immediate notice shall be given, and confirmed in writing, to the Agents to cease the solicitation of offers to purchase the Notes in the Agents' capacity as agents and to cease sales of any Notes any Agent may then own as principal pursuant to a Terms Agreement, and the Company will promptly prepare and file with the SEC such amendment or supplement, whether by filing documents pursuant to the 1934 Act, the 1933 Act or otherwise, as may be necessary to correct such untrue statement or omission or to make the Registration Statement and Prospectus comply with such requirements. (f) Prospectus Revisions -- Periodic Financial Information. Except as otherwise provided in subsection (l) of this Section, on the date on which there shall be released to the general public interim consolidated financial statement information related to the Company with respect to each of the first three quarters of any fiscal year or preliminary financial statement information with respect to any fiscal year, the Company shall furnish such information to the Agents, confirmed in writing, and promptly thereafter shall cause the Registration Statement and the Prospectus to be amended or supplemented to include or incorporate 11 12 by reference capsule financial information with respect to the results of operations of the Company and its consolidated subsidiaries for such period. (g) Prospectus Revisions -- Audited Financial Information. Except as otherwise provided in subsection (l) of this Section, on the date on which there shall be released to the general public financial information included in the audited consolidated financial statements of the Company for the preceding fiscal year, the Company shall cause the Registration Statement and the Prospectus to be amended, whether by the filing of documents pursuant to the 1934 Act, the 1933 Act or otherwise, to include or incorporate by reference such audited financial statements and the report or reports, and consent or consents to such inclusion or incorporation by reference, of the independent accountants with respect thereto, as well as such other information and explanations as shall be necessary for an understanding of such financial statements or as shall be required by the 1933 Act or the 1933 Act Regulations. (h) Earnings Statements. The Company will make generally available to the security holders of the Company as soon as practicable, but not later than 90 days after the close of the period covered thereby, an earnings statement (in form complying with the provisions of Rule 158 under the 1933 Act) covering each twelve month period beginning, in each case, not later than the first day of the Company's fiscal quarter next following the "effective date" (as defined in such Rule 158) of the Registration Statement with respect to each sale of Notes. (i) Blue Sky Qualifications. The Company will endeavor, in cooperation with the Agents, to qualify the Notes for offering and sale under the applicable securities laws of such states and other jurisdictions of the United States as the Agents and the Company shall agree and, unless the Company otherwise notifies the Agents, will maintain such qualifications in effect for as long as may be required for the distribution of the Notes; provided, however, that the Company shall not be required to submit to general service of process in any jurisdiction. The Company will promptly advise the Agents of their receipt of any notification with respect to the suspension of the qualification of the Notes for sale in any such state or jurisdiction or the initiating or threatening of any proceeding for such purpose. (j) 1934 Act Filings. The Company, during the period when the time that Prospectus is required to be delivered under the 1933 Act, will file promptly all documents required to be filed with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the 1934 Act. (k) Stand-Off Agreement. If required pursuant to the terms of a Terms Agreement between the Company and any Agent, between the date of any Terms Agreement and the Settlement Date with respect to 12 13 such Terms Agreement, the Company will not, without such Agent's prior consent, offer or sell, or enter into any agreement to sell, any debt securities of the Company (other than the Notes that are to be sold pursuant to such Terms Agreement and commercial paper). (l) Suspension of Certain Obligations. The Company shall not be required to comply with the provisions of subsections (b), (e), (f) or (g) of this Section during any period from the time (i) the Agents shall have suspended solicitation of purchases of the Notes in their capacity as agents pursuant to a request from the Company and (ii) no Agent shall then hold any Notes as principal purchased pursuant to a Terms Agreement, to the time the Company shall determine that solicitation of purchases of the Notes should be resumed or shall subsequently enter into a new Terms Agreement with such Agent. (m) Public Reports. The Company will furnish to the Agents, at the earliest time the Company makes the same available to others, copies of their annual reports and other financial reports furnished or made available to the public generally. SECTION 5. Conditions of Obligations. The obligations of each Agent to solicit offers to purchase the Notes as agent of the Company, the obligations of any purchasers of the Notes sold through such Agent as agent, and any obligation of an Agent to purchase Notes pursuant to a Terms Agreement or otherwise will be subject to the accuracy of the representations and warranties on the part of the Company contained herein and to the accuracy of the statements of the officers of the Company made in any certificate furnished pursuant to the provisions hereof, to the performance and observance by the Company of all their respective covenants and agreements herein contained and to the following additional conditions precedent: (a) Legal Opinions. On the date hereof, the Agents shall have received the following legal opinions, dated as of the date hereof and in form and substance satisfactory to the Agents: (1) Opinion of Counsel to the Company. The opinion of Sullivan & Cromwell, Counsel to the Company to the effect that: (i) The Company is duly registered as a bank holding company under the Bank Holding Act. (ii) The Indenture has been duly authorized, executed and delivered by the Company and duly qualified under the Trust Indenture Act of 1939 and constitutes a valid and legally binding obligation to the Company enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, 13 14 reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. (iii) The series of Notes has been duly authorized and established in conformity with the Indenture, and, when the terms of a particular Note and of its issuance and sale have been duly authorized and established by all necessary corporate action in conformity with the Indenture, such Note has been duly prepared, executed, authenticated and issued in accordance with the Indenture and delivered against payment in accordance with this Agreement, such Note will constitute a valid and legally binding obligation of the Company enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. (iv) All regulatory consents, authorizations, approvals and filings required to be obtained or made by the Company on or prior to the date hereof under the federal laws of the United States and the laws of the State of New York for the issuance, sale and delivery of the Notes by the Company to or through one or more Agents have been obtained or made; provided, however, that such counsel need express no opinion with respect to state securities laws. (v) This Agreement has been duly authorized, executed and delivered by the Company. (vi) The execution and delivery by the Company of the Indenture did not, and the execution and delivery by the Company of this Agreement do not, and the preparation, execution and issuance of each particular Note in accordance with the Indenture, the sale by the Company of such Note in accordance with this Agreement, and the performance by the Company of its obligations under the Indenture, this Agreement and the Notes will not (a) violate the articles of incorporation or by-laws of the Company as in effect on the date hereof, or (b) violate any existing federal law of the United States applicable to the Company; provided, however, that, for the purposes of this paragraph (xi), such counsel need express no opinion with respect to federal or state securities laws, other antifraud laws, fraudulent transfer laws, the Employee Retirement Income Security Act of 1974 and related laws, and laws that restrict transactions between United States persons and certain foreign countries; provided, further, that insofar as 14 15 performance by the Company of its obligations under the Indenture, this Agreement and the Notes is concerned, such counsel need express no opinion as to bankruptcy, insolvency, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights. (vii) The Registration Statement is effective under the 1933 Act and, to the best of such counsel's knowledge, (i) no stop order suspending the effectiveness of the Registration Statement has been issued under the 1933 Act and (ii) no proceedings therefor have been initiated or threatened by the SEC. (viii) As counsel to the Company such counsel has reviewed the Registration Statement and the Prospectus, participated in discussions with representatives of the Agents, the Company and their accountants, and advised the Company as to the requirements of the 1933 Act and the applicable rules and regulations thereunder, and on the basis of the information that such counsel gained in the course of the performance of their services considered in the light of their understanding of the applicable law, including the requirements of Form S-3 and the character of the prospectus contemplated thereby, and the experience they have gained through their practice under the 1933 Act, such counsel confirm that, in their opinion, each part of the Registration Statement, when such part became effective, and the Prospectus, as of the date of the prospectus supplement forming part thereof, appeared on their face to be appropriately responsive in all material respects to the requirements of the 1933 Act, the Trust Indenture Act, and the applicable rules and regulations of the SEC thereunder; and that nothing has come to their attention in the course of their review that has caused them to believe that any part of the Registration Statement, when such part became effective or (if such opinion is being delivered in connection with a Terms Agreement pursuant to Section 3(b) hereof) at the date of any Terms Agreement and at the Settlement Date with respect thereto, as the case may be, contains or contained any untrue statement of a material fact or omits or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading; or that the Prospectus, on the date of the Prospectus Supplement forming part thereof, or (if such opinion is being delivered in connection with a Terms Agreement pursuant to Section 3(b) hereof) at the date of any Terms Agreement and at the Settlement Date with respect thereto, as the case may be, contains or contained any untrue statement of a material fact or omits or omitted to state a 15 16 material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. Such counsel may say that the limitations inherent in the independent verification of factual matters and the character of determinations involved in the registration process are such that they do not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement or the Prospectus except (i) for those made under the captions "Description of Debt Securities and Guarantees" and "Plan of Distribution" and the appropriate sections in any Prospectus Supplement describing the securities offered thereby, insofar as they relate to provisions of documents therein described and (ii) the accuracy of the descriptions of the Federal laws of the United States contained in the Registration Statement and Prospectus under the captions "Certain Regulatory Matters" and "United States Taxation" and that they do not express any opinion or belief as to the financial statements or other financial data contained in the Registration Statement and the Prospectus, as to the statement of the eligibility and qualification of the Trustee under the Indenture; and that their letter is furnished as counsel for the Company to the Agents and is solely for the benefit of the Agents. Such counsel may base their opinions, as to certain questions of fact, on certificates of officers of the Company and may rely as to all matters relating to the laws of the Commonwealth of Puerto Rico upon the opinion of Brunilda Santos de Alvarez, delivered pursuant to Section 5(b)(2) hereof. (2) Opinion of Puerto Rico Counsel to the Company. The opinion of Brunilda Santos de Alvarez, Puerto Rico Counsel to the Company, to the effect that: (i) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the Commonwealth of Puerto Rico. (ii) The Company has corporate power and authority to own, lease and operate its properties and conduct its business as described in the Registration Statement. (iii) The Company is not required to register as a foreign corporation in any jurisdiction in order to conduct the business presently conducted by it. (iv) Each Significant Subsidiary has been duly incorporated and is validly existing as a corporation or 16 17 a bank in good standing under the laws of the jurisdiction of its incorporation, has corporate power and authority to own, lease and operate its properties and conduct its business as described in the Registration Statement, and, to the best of such counsel's knowledge and information, is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which it owns or leases substantial properties or in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business; except where the failure to so qualify and be in good standing would not have a material adverse effect on the Company and its subsidiaries taken as a whole; and all of the issued and outstanding capital stock of each such Significant Subsidiary has been duly authorized and validly issued and is fully paid and non-assessable (subject to the provisions of Section 55 of Title 12 of the United States code in the case of Significant Subsidiaries which are national banking associations) and, except for directors' qualifying shares, is owned, directly or through such subsidiaries, by the Company free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity. (v) This Agreement has been duly authorized, executed and delivered by the Company. (vi) The Indenture has been duly and validly authorized, executed and delivered by the Company and constitutes a valid and legally binding obligation of the Company enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. (vii) The series of Notes has been duly authorized and established in conformity with the Indenture, and, when the terms of a particular Note and of its issuance and sale have been duly authorized and established by all necessary corporate action in conformity with the Indenture, such Note has been duly prepared, executed, authenticated and issued in accordance with the Indenture and delivered against payment in accordance with this Agreement, such Note will constitute a valid and legally binding obligation of the Company enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. 17 18 (viii) All regulatory consents, authorizations, approvals and filings required to be obtained or made by the Company on or prior to the date hereof under the federal laws of the United States and the General Corporation Law of the Commonwealth of Puerto Rico for the issuance, sale and delivery of the Notes by the Company to or through one or more Agents have been obtained or made; provided, however, that such counsel need express no opinion with respect to state securities laws. (ix) To the best of such counsel's knowledge, neither the Company nor any of the Significant Subsidiaries is in violation of its charter or in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, note or lease known to such counsel to which it or any of them is a party or by which their properties may be bound; the execution and delivery by the Company of the Indenture and the Distribution Agreement and any Terms Agreement do not, and the preparation, execution and issuance of each particular Note in accordance with the Indenture, the sale by the Company of such Note in accordance with the Distribution Agreement, and the performance by the Company of its respective obligations under the Indenture, the Distribution Agreement, the Notes and any Terms Agreement will not (a) violate the articles of incorporation or by-laws of the Company, (b) violate any Federal law of the United States or any law of the Commonwealth of Puerto Rico existing on the date of such opinion or any administrative regulation or administrative or court decree applicable to the Company or any Significant Subsidiary or (c) conflict with or constitute a breach of, or a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of the Significant Subsidiaries pursuant to any contract, indenture, mortgage, loan agreement, note, lease or other instrument known to such counsel to which the Company or any of the Significant Subsidiaries is a party or by which any of them may be bound, or to which any of the property or assets of the Company or any of the Significant Subsidiaries is subject, which breach, default, imposition or violation would, in each case, have a material adverse effect on the Company and its subsidiaries taken as a whole; provided, however, that such counsel need express no opinion with respect to Federal securities laws, other antifraud laws, fraudulent transfer laws, the Employee Retirement Income Security Act of 1974 and related laws, and laws that restrict 18 19 transactions between United States persons and citizens or residents of certain foreign countries; provided, further, that insofar as performance by the Company of its obligations under the Indenture, the Distribution Agreement, any Terms Agreement and the Notes is concerned, such counsel need express no opinion as to bankruptcy, insolvency, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights. (x) To the best of such counsel's knowledge and information, there are no legal or governmental proceedings pending or threatened which are required to be disclosed in the Prospectus, other than those disclosed therein, and all pending legal or governmental proceedings to which the Company or any of its subsidiaries is a party or to which any of its property or assets is subject which are not described in the Registration Statement, including ordinary routine litigation incidental to the business of the Company or any such subsidiary, are, considered in the aggregate, not material. (xi) To the best of such counsel's knowledge, there are no contracts, indentures, mortgages, loan agreements, notes, leases or other instruments or documents required to be described or referred to in the Registration Statement or to be filed as exhibits thereto other than those described or referred to therein or filed or incorporated by reference as exhibits thereto; and the descriptions thereof or references thereto are correct in all material respects. (xii) The Registration Statement is effective under the 1933 Act and, to the best of such counsel's knowledge, no stop order suspending the effectiveness of the Registration Statement has been issued under the 1933 Act or proceedings therefor initiated or threatened by the SEC. (xiii) At the time the Registration Statement became effective, the Registration Statement (other than the financial statements, schedules and other financial data included or incorporated by reference therein as to which no opinion need be rendered by such counsel) complied as to form in all material respects with the requirements of the 1933 Act, the 1939 Act and the regulations under each of those acts. (xiv) Each document filed pursuant to the 1934 Act and incorporated by reference in the Prospectus compiled 19 20 when filed as to form in all material respects with the 1934 Act and the 1934 Act Regulations thereunder. (xv) As counsel to the Company such counsel has reviewed the Registration Statement and the Prospectus, participated in discussions with representatives of the Agents, the Company and their accountants, and advised the Company as to the requirements of the 1933 Act and the applicable rules and regulations thereunder, and on the basis of the information that such counsel gained in the course of the performance of her services considered in the light of her understanding of the applicable law, including the requirements of Form S-3 and the character of the prospectus contemplated thereby, such counsel confirms that, in her opinion, each part of the Registration Statement, when such part became effective, and the Prospectus, as of the date of the prospectus supplement forming part thereof, appeared on their face to be appropriately responsive in all material respects to the requirements of the 1933 Act, the Trust Indenture Act, and the applicable rules and regulations of the SEC thereunder; and that nothing has come to her attention in the course of her review that has caused her to believe that any part of the Registration Statement, when such part became effective (within the meaning of the 1933 Act) or (if such opinion is being delivered in connection with a Terms Agreement pursuant to Section 3(b) hereof) at the date of any Terms Agreement and at the Settlement Date with respect thereto, as the case may be, contains or contained any untrue statement of a material fact or omits or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading; or that the Prospectus, on the date of the Prospectus Supplement forming part thereof, or (if such opinion is being delivered in connection with a Terms Agreement pursuant to Section 3(b) hereof) at the date of any Terms Agreement and at the Settlement Date with respect thereto, as the case may be, contains or contained any untrue statement of a material fact or omits or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. Such counsel may say that the limitations inherent in the independent verification of factual matters and the character of determinations involved in the registration process are such that she does not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement or the Prospectus except for those made under the captions "Certain Regulatory Matters", "Description of Debt Securities and Guarantees" and "Plan of Distribution" and the appropriate sections in any 20 21 Prospectus Supplement describing the securities offered thereby and under "Regulation and Supervision" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994, insofar as they relate to provisions of documents therein described and that she does not express any opinion or belief as to the financial statements or other financial data contained in the Registration Statement and the Prospectus, as to the statement of the eligibility and qualification of the Trustee under the Indenture; and that her letter is furnished as counsel for the Company to the Agents and is solely for the benefit of the Agents. Such counsel may base her opinion, as to certain questions of fact, on certificates of officers of the Company and may rely as to all matters relating to the laws of the State of New York upon the opinion of Sullivan & Cromwell, delivered pursuant to Section 5(a)(1). (3) Opinion of Counsel to the Agents. The opinion of Brown & Wood, counsel to the Agents, covering the matters referred to in subparagraph (1) above under the subheadings (i), (v), (vi), (viii) and (x) and in subparagraph (2) above under the subheading (xi). (4) In giving its opinion required by subsection (a)(3) of this Section, Brown & Wood shall additionally state that nothing has come to their attention that would lead them to believe that the Registration Statement (other than the financial statements, schedules and other financial data included or incorporated by reference therein as to which no opinion need be rendered by such counsel), at the time it became effective, and if an amendment to the Registration Statement or an Annual Report on Form 10-K has been filed by the Company with the SEC subsequent to the effectiveness of the Registration Statement, then at the time such amendment became effective or at the time of the most recent such filing, and at the date hereof, or (if such opinion is being delivered in connection with a Terms Agreement pursuant to Section 3(b) hereof) at the date of any Terms Agreement and at the Settlement Date with respect thereto, as the case may be, contains or contained an untrue statement of a material fact or omits or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading or that the Prospectus (other than the financial statements, schedules and other financial data included or incorporated by reference therein as to which no opinion need be rendered by such counsel), as amended or supplemented at the date hereof, or (if such opinion is being delivered in connection with a Terms Agreement pursuant to Section 3(b) hereof) at the date of any Terms Agreement and at the Settlement Date with respect thereto, as the case may be, 21 22 contains an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (b) Officer's Certificates. At the date hereof, the Agents shall have received certificates of the President or Vice President of the Company, dated as of the date hereof, to the effect that (i) since the respective dates as of which information is given in the Registration Statement and the Prospectus or since the time that any applicable Terms Agreement was entered into, there has not been any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, (ii) the other representations and warranties of the Company contained in Section 2 hereof are true and correct with the same force and effect as though expressly made at and as of the date of such certificate, (iii) the Company has performed or complied with all agreements and satisfied all conditions on their respective parts to be performed or satisfied at or prior to the date of such certificate, and (iv) that no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been initiated or threatened by the SEC. (c) Comfort Letter. The Agents on the date hereof (and any Agent who is party to a Terms Agreement, on the Settlement Date with respect to such Terms Agreement, if required by such Terms Agreement), shall receive a letter from Price Waterhouse LLP, the Company's independent public accountants, dated as of the date hereof or such Settlement Date, in form and substance reasonably satisfactory to the Agents containing statements and information of the type ordinarily included in accountants' "comfort letters" to underwriters contemplated by Statement of Auditing Standards No. 72 with respect to the financial statements and certain financial information contained in or incorporated by reference in the Registration Statement and the Prospectus, and confirming that they are independent accountants within the meaning of the 1933 Act and the 1933 Act Rules. (d) Other Documents. On the date hereof and on each Settlement Date with respect to any applicable Terms Agreement, counsel to the Agents shall have been furnished with such documents as such counsel may reasonably require for the purpose of enabling such counsel to pass upon the issuance and sale of Notes as herein contemplated and related proceedings and all proceedings taken by the Company in connection with the issuance and sale of Notes as herein contemplated shall be satisfactory in form and substance to the Agents and to counsel to the Agents. 22 23 If any condition specified in this Section 5 shall not have been fulfilled when and as required to be fulfilled, this Agreement may be terminated by the Agents (or any applicable Terms Agreement may, at the option of the Agent who is party to such Terms Agreement, be terminated by such Agent) by notice to the Company at any time and any such termination shall be without liability of any party to any other party, except that the covenant regarding provision of an earnings statement set forth in Section 4(h) hereof, the provisions concerning payment of expenses under Section 10 hereof, the indemnity and contribution agreement set forth in Sections 8 and 9 hereof, the provisions of Section 11 hereof concerning the survival of representations, warranties and agreements following delivery hereof, the provisions set forth under "Parties" of Section 15 hereof and the provisions of Section 16 hereof shall remain in effect. SECTION 6. Delivery of and Payment for Notes Sold through the Agents. Delivery of Notes sold through the Agents as agents shall be made by the Company to the Agents for the account of any purchaser only against payment therefor in immediately available funds. In the event that a purchaser shall fail either to accept delivery of or to make payment for a Note on the date fixed for settlement, the Agents shall promptly notify the Company and deliver the Note to the Company, and, if the Agents have theretofore paid the Company for such Note, the Company will promptly return such funds to the Agents. If such failure occurred for any reason other than default by the Agents in the performance of their obligations hereunder, the Company will reimburse the Agents on an equitable basis for their loss of the use of the funds for the period such funds were credited to the Company's account. SECTION 7. Additional Covenants of the Company. The Company covenants with the Agents as follows: (a) Reaffirmation of Representations and Warranties. Each acceptance by it of an offer for the purchase of Notes, and each delivery of Notes to an Agent pursuant to a Terms Agreement, shall be deemed to be an affirmation that the representations and warranties of the Company contained in this Agreement and in any certificate theretofore delivered to the Agents or an Agent, as the case may be, pursuant hereto are true and correct at the time of such acceptance or sale, as the case may be, and an undertaking that such representations and warranties will be true and correct at the time of delivery to the purchaser or his agent, or to the Agents or an Agent, as the case may be, of the Note or Notes relating to such acceptance or sale, as the case may be, as though made at and as of each such time (and it is understood that such representations and warranties shall relate to the Registration 23 24 Statement and Prospectus as amended and supplemented to each such time). (b) Subsequent Delivery of Certificates. Each time that the Registration Statement or the Prospectus shall be amended or supplemented (other than by an amendment or supplement providing solely for a change in the interest rates of Notes or similar changes and other than by an amendment or supplement which relates exclusively to an offering of debt securities other than the Notes or an offering of preferred stock of the Company or its subsidiaries) or there is filed with the SEC any document incorporated by reference into the Prospectus (other than (i) any Current Report on Form 8-K relating exclusively to the issuance of debt securities or preferred stock under the Registration Statement or (ii) a document filed pursuant to Section 14 of the 1934 Act unless requested by the Agents) or (if required pursuant to the terms of a Terms Agreement) the Company sells Notes to an Agent pursuant to a Terms Agreement, the Company shall furnish or cause to be furnished to the Agents (or, in the case of a sale of Notes to an Agent pursuant to a Terms Agreement, to such Agent) forthwith certificates dated the date of filing with the SEC of such supplement or document, the date of effectiveness of such amendment, or the date of such sale, as the case may be, in form satisfactory to the Agents or such Agent, as the case may be, to the effect that the statements contained in the certificates referred to in Section 5(b) hereof which were last furnished to the Agents are true and correct at the time of such amendment, supplement, filing or sale, as the case may be, as though made at and as of such time (except that such statements shall be deemed to relate to the Registration Statement and the Prospectus as amended and supplemented to such time) or, in lieu of such certificates, certificates of the same tenor as the certificates referred to in said Section 5(b), modified as necessary to relate to the Registration Statement and the Prospectus as amended and supplemented to the time of delivery of such certificates. (c) Subsequent Delivery of Legal Opinions. Each time that the Registration Statement or the Prospectus shall be amended or supplemented (other than by an amendment or supplement providing solely for a change in the interest rates of the Notes or similar changes or solely for the inclusion of additional financial information, and, unless the Agents shall otherwise specify, other than by an amendment or supplement which relates exclusively to an offering of debt securities other than the Notes or an offering of preferred stock of the Company or its subsidiaries) or there is filed with the SEC any document incorporated by reference into the Prospectus (other than (i) any Current Report on Form 8-K or (ii) a document filed pursuant to Section 14 of the 1934 Act, in each case, unless the Agents shall otherwise reasonably request), or (if required pursuant to the terms of a Terms Agreement) the Company sells Notes to an Agent pursuant to a Terms Agreement, the Company shall furnish or cause to be furnished forthwith to the Agents (or, 24 25 in the case of a sale of Notes to an Agent pursuant to a Terms Agreement, to such Agent), with a copy to counsel to the Agents, a written opinion or opinions of Puerto Rico Counsel to the Company satisfactory to the Agents or such Agent, as the case may be, dated the date of filing with the SEC of such supplement or document, the date of effectiveness of such amendment, or the date of such sale, as the case may be, in form and substance satisfactory to the Agents or such Agent, as the case may be, of the same tenor as the opinion referred to in Section 5(a)(2) hereof, but modified, as necessary, to relate to the Registration Statement and the Prospectus as amended and supplemented to the time of delivery of such opinion; or, in lieu of such opinion or opinions, counsel last furnishing such opinion to the Agents or such Agent, as the case may be, shall furnish the Agents or such Agent, as the case may be, with a letter to the effect that the Agents or such Agent, as the case may be, may rely on such last opinion to the same extent as though it was dated the date of such letter authorizing reliance (except that statements in such last opinion shall be deemed to relate to the Registration Statement and the Prospectus as amended and supplemented to the time of delivery of such letter authorizing reliance). (d) Subsequent Delivery of Comfort Letters. Each time that the Registration Statement or the Prospectus shall be amended or supplemented to include additional financial information or there is filed with the SEC any document incorporated by reference into the Prospectus which contains additional financial information (other than a Current Report on Form 8-K filed solely for the purpose of incorporating a press release relating to the Company's interim or annual financial statements or results of operations or filed in connection with the issuance of preferred stock by the Company or its subsidiaries pursuant to the Registration Statement) or (if required pursuant to the terms of a Terms Agreement) the Company sells Notes to an Agent pursuant to a Terms Agreement, the Company shall cause Price Waterhouse LLP forthwith to furnish the Agents (or, in the case of a sale of Notes to an Agent pursuant to a Terms Agreement, to such Agent) with a letter, dated the date of effectiveness of such amendment, supplement or document with the SEC, or the date of such sale, as the case may be, in form satisfactory to the Agents or such Agent, as the case may be, of the same tenor as the portions of the letter referred to in Section 5(c) hereof but modified to relate to the Registration Statement and Prospectus, as amended and supplemented to the date of such letter; provided, however, that if the Registration Statement or the Prospectus is amended or supplemented solely to include financial information as of and for a fiscal quarter, Price Waterhouse LLP may limit the scope of such letter to the unaudited financial statements included in such amendment or supplement unless any other information included therein of an accounting, financial or statistical nature is of such a nature that, in the reasonable judgment of the Agents or such Agent, as the case may be, such letter should cover such other information. 25 26 SECTION 8. Indemnification. (a) Indemnification of the Agents. The Company agrees to indemnify and hold harmless each Agent and each person, if any, who controls such Agent within the meaning of Section 15 of the 1933 Act as follows: (i) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment thereto), or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of any untrue statement or alleged untrue statement of a material fact contained in the Prospectus (or any amendment or supplement thereto) or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, unless such untrue statement or omission or alleged untrue statement or omission was made in reliance upon and in conformity with written information furnished to the Company by the Agents expressly for use in the Registration Statement or the Prospectus; (ii) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, if such settlement is effected with the written consent of the Company; and (iii) against any and all expense whatsoever, as incurred (including the fees and disbursements of counsel chosen by the Agents), reasonably incurred in investigating, preparing or defending against any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under (i) or (ii) above. The indemnity is subject to the condition that, insofar as it relates to any untrue statement or omission, or any alleged untrue statement or omission, made in the Prospectus but eliminated or remedied in an amended or supplemented Prospectus at the time of the sale of the related Note, it shall not inure to the benefit of any Agent (or to the benefit of any person who controls any such Agent) if a copy of the Prospectus as amended or supplemented at the time of the sale of such Note, excluding documents incorporated 26 27 therein by reference, was not sent or given to such person at or prior to the time required by the 1933 Act and the receipt of such Prospectus as amended or supplemented would have constituted a sufficient defense to the claim asserted by such person. (b) Indemnification of the Company. Each Agent agrees to indemnify and hold harmless the Company, its directors, the officers who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act against any and all loss, liability, claim, damage and expense described in the indemnity contained in subsection (a) of this Section, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment thereto) or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company by such Agent expressly for use in the Registration Statement (or any amendment thereto) or the Prospectus (or any amendment or supplement thereto). (c) General. Each indemnified party shall give prompt notice to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability which it may have otherwise than on account of this indemnity agreement. An indemnifying party may participate at its own expense in the defense of such action. In no event shall the indemnifying parties be liable for the fees and expenses of more than one counsel (in addition to any local counsel) for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. SECTION 9. Contribution. In order to provide for just and equitable contribution in circumstances in which the indemnity agreement provided for in Section 8 hereof is for any reason held to be unavailable to or insufficient to hold harmless the indemnified parties although applicable in accordance with its terms, the Company and the Agents shall contribute to the aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by said indemnity agreement incurred by the Company and the Agents, as incurred, in such proportions that each Agent is responsible for that portion represented by the percentage that the total commissions and underwriting discounts received by such Agent to the date of such liability bears to the total sales price received by the Company from the sale of Notes to the date of such liability, and the Company is responsible for the balance; provided, however, that no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution 27 28 from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section, each person, if any, who controls an Agent within the meaning of Section 15 of the 1933 Act shall have the same rights to contribution as the Agent, and each director of the Company, each officer of the Company who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act shall have the same rights to contribution as the Company, as the case may be. SECTION 10. Payment of Expenses. The Company will pay all expenses incident to the performance of its obligations under this Agreement, including: (i) The preparation and filing of the Registration Statement and all amendments thereto and the Prospectus and any amendments or supplements thereto; (ii) The preparation, filing and reproduction of this Agreement; (iii) The preparation, printing, issuance and delivery of the Notes, including any fees and expenses relating to the use of book-entry notes; (iv) The fees and disbursements of the Company's accountants and counsel, of the Trustee and its counsel, and of any calculation agent or exchange rate agent; (v) The reasonable fees and disbursements of counsel to the Agents incurred from time to time in connection with the transactions contemplated hereby; (vi) The qualification of the Notes under state securities laws in accordance with the provisions of Section 4(i) hereof, including filing fees and the reasonable fees and disbursements of legal counsel in connection therewith and in connection with the preparation of any Blue Sky Survey and any Legal Investment Survey; (vii) The printing and delivery to the Agents in quantities as hereinabove stated of copies of the Registration Statement and any amendments thereto, and of the Prospectus and any amendments or supplements thereto, and the delivery by the Agents of the Prospectus and any amendments or supplements thereto in connection with solicitations or confirmations of sales of the Notes; (viii) The preparation, printing, reproducing and delivery to the Agents of copies of each Indenture and all supplements and amendments thereto; 28 29 (ix) Any fees charged by rating agencies for the rating of the Notes; (x) Any advertising and other out-of-pocket expenses of the Agents incurred with the written approval of the Company; (xi) The cost of preparing and providing any CUSIP or other identification numbers for the Notes; and (xii) The fees and expenses of any Depositary (as defined in the Indentures) and any nominees thereof in connection with the Notes. SECTION 11. Representations, Warranties and Agreements to Survive Delivery. All representations, warranties and agreements contained in this Agreement or in certificates of officers of the Company submitted pursuant hereto or thereto shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of the Agents or any controlling person of any Agent, or by or on behalf of the Company, and shall survive each delivery of and payment for any of the Notes. SECTION 12. Termination. (a) Termination of this Agreement. This Agreement (excluding any Terms Agreement) may be terminated for any reason, at any time by either the Company or an Agent upon the giving of one day's written notice of such termination to the other party hereto. (b) Termination of a Terms Agreement. Any Agent may terminate any Terms Agreement to which such Agent is a party, immediately upon notice to the Company, at any time prior to the Settlement Date relating thereto (i) if there has been, since the date of such Terms Agreement or since the respective dates as of which information is given in the Registration Statement, any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company or its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, or (ii) if there shall have occurred any material adverse change in the financial markets in the United States or any outbreak or escalation of hostilities or other national or international calamity or crisis the effect of which is such as to make it, in the judgment of such Agent, impracticable to market the Notes or enforce contracts for the sale of the Notes, or (iii) if trading in any securities of the Company has been suspended by the SEC or a national securities exchange, or if trading generally on either the American Stock Exchange or the New York Stock Exchange shall have been suspended, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices for securities have been required, by 29 30 either of said exchanges or by order of the SEC or any other governmental authority, or if a banking moratorium shall have been declared by either Federal, New York or Puerto Rico authorities, or (iv) if the rating assigned by any nationally recognized securities rating agency to any debt securities of the Company as of the date of any applicable Terms Agreement shall have been lowered since that date or if any such rating agency shall have publicly announced since the time of the applicable Terms Agreement that it has placed any debt securities of the Company on what is commonly termed a "watch list" for possible downgrading. (c) General. In the event of any such termination, no party will have any liability to the other party hereto, except that (i) the Agents shall be entitled to any commission earned in accordance with the third paragraph of Section 3(a) hereof, (ii) if at the time of termination (a) any Agent shall own any Notes purchased pursuant to a Terms Agreement with the intention of reselling them or (b) an offer to purchase any of the Notes has been accepted by the Company but the time of delivery to the purchaser or his agent of the Note or Notes relating thereto has not occurred, the covenants set forth in Sections 4 and 7 hereof shall remain in effect until such Notes are so resold or delivered, as the case may be, and (iii) the covenant set forth in Section 4(h) hereof, the provisions of Section 5 hereof, the indemnity and contribution agreements set forth in Sections 8 and 9 hereof, and the provisions of Sections 11, 14 and 16 hereof shall remain in effect. SECTION 13. Notices. Unless otherwise provided herein, all notices required under the terms and provisions hereof shall be in writing, either delivered by hand, by mail or by telex, telecopier or telegram, and any such notice shall be effective when received at the address specified below. If to the Company: BanPonce Corporation 209 Munoz Rivera Avenue Hato Rey, Puerto Rico 00918 Attention: David H. Chafey, Executive Vice President 30 31 If to Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated: Merrill Lynch & Co. Merrill Lynch, Pierce, Fenner & Smith Incorporated North Tower World Financial Center New York, New York 10281-1310 10th Floor Attention: MTN Product Management Telephone: (212) 449-7476 Fax: (212) 449-2234 If to CS First Boston Corporation: CS First Boston Corporation 55 East 52nd Street New York, New York 10055 Attention: Short and Medium-Term Note Department Telephone: (212) 909-3842 Fax: (212) 318-1498 If to First Chicago Capital Markets, Inc.: First Chicago Capital Markets, Inc. One First National Plaza Mail Suite 0407 Chicago, Illinois 60670-0327 Attention: Chief Credit Officer Telephone: (312) 732-5294 Fax: (312) 732-4172 or at such other address as such party may designate from time to time by notice duly given in accordance with the terms of this Section 13. SECTION 14. Governing Law. This Agreement and all the rights and obligations of the parties shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made and to be performed in such State. Any suit, action or proceeding brought by the Company against one or more Agents in connection with or arising under this Agreement shall be brought solely in the state or federal court of appropriate jurisdiction located in the Borough of Manhattan, The City of New York. SECTION 15. Parties. This Agreement shall inure to the benefit of and be binding upon the Agents and the Company and their respective successors. 31 32 Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, firm or corporation, other than the parties hereto and their respective successors and the controlling persons and officers and directors referred to in Sections 8 and 9 and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. This Agreement and all conditions and provisions hereof are intended to be for the sole and exclusive benefit of the parties hereto and respective successors and said controlling persons and officers and directors and their heirs and legal representatives, and for the benefit of no other person, firm or corporation. No purchaser of Notes shall be deemed to be a successor by reason merely of such purchase. SECTION 16. Consent to Jurisdiction; Appointment of Agent to Accept Service of Process. (a) The Company irrevocably consents and agrees, for the benefit of the holders from time to time of the Notes, the Agents and the other persons referred to in Section 15 that any legal action, suit or proceeding against it with respect to its obligations, liabilities or any other matter arising out of or in connection with the Notes, this Agreement or any Terms Agreement may be brought in the courts of the State of New York or the courts of the United States of America located in The City of New York and, until all amounts due and to become due in respect of all the Notes have been paid, or until any such legal action, suit or proceeding commenced prior to such payment has been concluded, hereby irrevocably consent and submit to the non-exclusive jurisdiction of each such court in personam, generally and unconditionally with respect to any action, suit or proceeding for themselves and in respect of their properties, assets and revenues. (b) The Company hereby irrevocably designates, appoints, and empowers Orlando Berges, with offices currently at 7 West 51st Street, New York, New York, as its designee, appointee and agent to receive, accept and acknowledge for and on its behalf, service of any and all legal process, summons, notices and documents that may be served in any action, suit or proceeding brought against the Company in any such United States or State court with respect to their respective obligations, liabilities or any other matter arising out of or in connection with this Agreement or any Terms Agreement and that may be made on such designee, appointee and agent in accordance with legal procedures prescribed for such courts. If for any reason the Designated Agent shall cease to be available to act as such, the Company agrees to designate a new designee, appointee and agent in The City of New York on the terms and for the purposes of this Section 16 reasonably satisfactory to the Agents. The Company further hereby irrevocably consents and agrees to the service of any and all legal process, summons, notices and documents in any such action, suit or proceeding against it by serving a copy thereof upon the relevant agent for 32 33 service of process referred to in this Section 16 (whether or not the appointment of such agent shall for any reason prove to be ineffective or such agent shall accept or acknowledge such service) or by mailing copies thereof by the Company at its address specified in or designated pursuant to this Agreement. The Company agrees that the failure of any such designee, appointee and agent to give any notice of such service to it shall not impair or affect in any way the validity of such service or any judgment rendered in any action or proceeding based thereon. Nothing herein shall in any way be deemed to limit the ability of the holders of the Notes, the Agents and the other persons referred to in Section 15 to serve such legal process, summons, notices and documents in any other manner permitted by applicable law or to obtain jurisdiction over the Company or bring actions, suits or proceedings against the Company in such other jurisdictions, and in such manner, as may be permitted by applicable law. The Company hereby irrevocably and unconditionally waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of venue of any of the aforesaid actions, suits or proceedings arising out of or in connection with this Agreement brought in the United States federal courts located in The City of New York or the courts of the State of New York located in The City of New York and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum. (c) The provisions of this Section 16 shall survive any termination of this Agreement, in whole or in part. 33 34 If the foregoing is in accordance with the Agents' understanding of our agreement, please sign and return to us a one or more counterparts hereof, whereupon this instrument along with all counterparts will become a binding agreement among the Agents and the Company in accordance with its terms. Very truly yours, BANPONCE CORPORATION By:/s/ David H. Chafey, Jr. ------------------------ Name: David H. Chafey, Jr. Title: Executive Vice President Accepted: MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By:/s/ Scott G. Primrose ---------------------------------------- Name: Scott G. Primrose Title: Authorized Signatory CS FIRST BOSTON CORPORATION By:/s/ Martha D. Bailey ---------------------------------------- Name: Martha D. Bailey Title: Vice President FIRST CHICAGO CAPITAL MARKETS, INC. By:/s/ Linda A. Dawson ---------------------------------------- Name: Linda A. Dawson Title: Managing Director 34 35 EXHIBIT A The following terms, if applicable, shall be agreed to by the Company and any Agent which is a party to a Terms Agreement pursuant to such Terms Agreement: Principal Amount: $_______ (or principal amount of foreign currency or currency unit) Interest Rate: If Fixed Rate Note, Interest Rate: If Floating Rate Note: Interest Rate Basis: Initial Interest Rate: Initial Interest Reset Date: Spread or Spread Multiplier, if any: Index Maturity: Maximum Interest Rate, if any: Minimum Interest Rate, if any: Interest Rate Reset Dates: Interest Payment Dates: Calculation Agent: If Redeemable: Initial Redemption Date: Initial Redemption Percentage: Annual Redemption Percentage Reduction: Optional Repayment Date(s), if any: Date of Maturity: Purchase Price: ___% Settlement Date and Time: Additional Terms: Also, agreement as to whether the following will be required: Officer's Certificate pursuant to Section 7(b) of the Distribution Agreement. Legal Opinion pursuant to Section 7(c)of the Distribution Agreement. Comfort Letter pursuant to Section 7(d) of the Distribution Agreement. Stand-off Agreement pursuant to Section 4(k) of the Distribution Agreement. A-1 36 SCHEDULE A As compensation for the services of the Agents hereunder, the Company shall pay the Agents, on a discount basis, a commission for the sale of each Note equal to the principal amount of such Note multiplied by the appropriate percentage set forth below:
PERCENT OF PRINCIPAL MATURITY RANGES AMOUNT - --------------- ---------- From 9 months but less than 1 year . . . . . . . . . . . . . . . .125% From 1 year but less than 18 months . . . . . . . . . . . . . . . .150 From 18 months but less than 2 years . . . . . . . . . . . . . . .200 From 2 years but less than 3 years . . . . . . . . . . . . . . . .250 From 3 years but less than 4 years . . . . . . . . . . . . . . . .350 From 4 years but less than 5 years . . . . . . . . . . . . . . . .450 From 5 years but less than 6 years . . . . . . . . . . . . . . . .500 From 6 years but less than 7 years . . . . . . . . . . . . . . . .550 From 7 years but less than 8 years . . . . . . . . . . . . . . . .600 From 8 years but less than 9 years . . . . . . . . . . . . . . . .600 From 9 years but less than 10 years . . . . . . . . . . . . . . . .600 From 10 years but less than 15 years . . . . . . . . . . . . . . .625 From 15 years but less than 20 years . . . . . . . . . . . . . . .700 From 20 years to 30 years . . . . . . . . . . . . . . . . . . . . .750
EX-1.(C) 3 AMENDMENT #2 TO THE DISTRIBUTION AGREEMENT 10/6/95 1 EXHIBIT (1)(c) AMENDMENT NO. 2 TO DISTRIBUTION AGREEMENT October 6, 1995 WHEREAS, the parties hereto have previously entered into a Distribution Agreement, dated October 11, 1991, as amended by Amendment No. 1 thereto dated December 2, 1993 and as supplemented on June 16, 1993 and August 1, 1994 (the "Distribution Agreement"), among BanPonce Financial Corp. (the "Company"), BanPonce Corporation (the "Guarantor") and Merrill Lynch, Pierce, Fenner & Smith Incorporated, CS First Boston Corporation and First Chicago Capital Markets, Inc. (each, an "Agent and collectively, the "Agents") relating to the issue and sale by the Company of its Medium-Term Notes; and WHEREAS, the Company, the Guarantor and each of the Agents wish to amend the Distribution Agreement (i) to amend the definition of a "Significant Subsidiary" contained in Section 2(a)(ii) thereof to include subsidiaries that may be incorporated as banks, (ii) to except from the requirements of Sections 7(b), 7(c) and 7(d) thereof sales by the Guarantor or its subsidiaries of preferred stock and (iii) to amend the requirements of Section 7(c) thereof to provide for the delivery of the legal opinions required thereby by Puerto Rico counsel to the Company and the Guarantor; NOW, THEREFORE, the Company, the Guarantor and each of the Agents hereby agree to amend said Distribution Agreement as follows: 1. Section 2(a)(ii) of the Distribution Agreement is hereby amended to read as follows: (ii) Subsidiaries. Each subsidiary of the Guarantor or the Company which is a significant subsidiary as defined in Rule 405 of Regulation C of the 1933 Act Regulations (each, a "Significant Subsidiary") has been duly incorporated and is validly existing as a corporation or a bank in good standing under the laws of the jurisdiction of its incorporation, has corporate power and authority to own, lease and operate its properties and conduct its business as described in the Prospectus and is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify and be in good standing would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business 2 prospects of the Guarantor and its subsidiaries considered as one enterprise; and all of the issued and outstanding capital stock of each such Significant Subsidiary has been duly authorized and validly issued, is fully paid and non-assessable (subject to the provisions of Section 55 of Title 12 of the United States Code in the case of Significant Subsidiaries which are national banking associations) and, except as otherwise disclosed in the Prospectus and except for directors' qualifying shares, is owned by the Company or the Guarantor, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity or, if such is not the case, that any such security interest, mortgage pledge, lien, encumbrance, claim or equity, when exercised, enforced or otherwise asserted, will not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Guarantor and its subsidiaries considered as one enterprise. 2. Sections 7(b), 7(c) and 7(d) of the Distribution Agreement are hereby amended to read as follows: (b) Subsequent Delivery of Certificates. Each time that the Registration Statement or the Prospectus shall be amended or supplemented (other than by an amendment or supplement providing solely for a change in the interest rates of Notes or similar changes and other than by an amendment or supplement which relates exclusively to an offering of debt securities other than the Notes or an offering of preferred stock of the Guarantor or its subsidiaries) or there is filed with the SEC any document incorporated by reference into the Prospectus (other than (i) any Current Report on Form 8-K relating exclusively to the issuance of debt securities or preferred stock under the Registration Statement or (ii) a document filed pursuant to Section 14 of the 1934 Act unless requested by the Agents) or (if required pursuant to the terms of a Terms Agreement) the Company sells Notes to an Agent pursuant to a Terms Agreement, the Company shall furnish or cause to be furnished to the Agents (or, in the case of a sale of Notes to an Agent pursuant to a Terms Agreement, to such Agent) forthwith certificates dated the date of filing with the SEC of such supplement or document, the date of effectiveness of such amendment, or the date of such sale, as the case may be, in form satisfactory to the Agents or such Agent, as the case may be, to the effect that the statements contained in the certificates referred to in Section 5(b) hereof which were last furnished to the Agents are true and correct at the time of such amendment, supplement, filing or sale, as the case may be, as though made at and as of such time (except that such statements shall be deemed to relate to 2 3 the Registration Statement and the Prospectus as amended and supplemented to such time) or, in lieu of such certificates, certificates of the same tenor as the certificates referred to in said Section 5(b), modified as necessary to relate to the Registration Statement and the Prospectus as amended and supplemented to the time of delivery of such certificates. (c) Subsequent Delivery of Legal Opinions. Each time that the Registration Statement or the Prospectus shall be amended or supplemented (other than by an amendment or supplement providing solely for a change in the interest rates of the Notes or similar changes or solely for the inclusion of additional financial information, and, unless the Agents shall otherwise specify, other than by an amendment or supplement which relates exclusively to an offering of debt securities other than the Notes or an offering of preferred stock of the Guarantor or its subsidiaries) or there is filed with the SEC any document incorporated by reference into the Prospectus (other than (i) any Current Report on Form 8-K or (ii) a document filed pursuant to Section 14 of the 1934 Act, in each case, unless the Agents shall otherwise reasonably request), or (if required pursuant to the terms of a Terms Agreement) the Company sells Notes to an Agent pursuant to a Terms Agreement, the Company shall furnish or cause to be furnished forthwith to the Agents (or, in the case of a sale of Notes to an Agent pursuant to a Terms Agreement, to such Agent), with a copy to counsel to the Agents, a written opinion or opinions of Puerto Rico Counsel to the Company and the Guarantor satisfactory to the Agents or such Agent, as the case may be, dated the date of filing with the SEC of such supplement or document, the date of effectiveness of such amendment, or the date of such sale, as the case may be, in form and substance satisfactory to the Agents or such Agent, as the case may be, of the same tenor as the opinion referred to in Section 5(a)(2) hereof, but modified, as necessary, to relate to the Registration Statement and the Prospectus as amended and supplemented to the time of delivery of such opinion; or, in lieu of such opinion or opinions, counsel last furnishing such opinion to the Agents or such Agent, as the case may be, shall furnish the Agents or such Agent, as the case may be, with a letter to the effect that the Agents or such Agent, as the case may be, may rely on such last opinion to the same extent as though it was dated the date of such letter authorizing reliance (except that statements in such last opinion shall be deemed to relate to the Registration Statement and the Prospectus as amended and supplemented to the time of delivery of such letter authorizing reliance). (d) Subsequent Delivery of Comfort Letters. Each time that the Registration Statement or the Prospectus shall be 3 4 amended or supplemented to include additional financial information or there is filed with the SEC any document incorporated by reference into the Prospectus which contains additional financial information (other than a Current Report on Form 8-K filed solely for the purpose of incorporating a press release relating to the Guarantor's interim or annual financial statements or results of operations or filed in connection with the issuance of preferred stock by the Guarantor or its subsidiaries pursuant to the Registration Statement) or (if required pursuant to the terms of a Terms Agreement) the Company sells Notes to an Agent pursuant to a Terms Agreement, the Guarantor shall cause Price Waterhouse LLP forthwith to furnish the Agents (or, in the case of a sale of Notes to an Agent pursuant to a Terms Agreement, to such Agent) with a letter, dated the date of effectiveness of such amendment, supplement or document with the SEC, or the date of such sale, as the case may be, in form satisfactory to the Agents or such Agent, as the case may be, of the same tenor as the portions of the letter referred to in Section 5(c) hereof but modified to relate to the Registration Statement and Prospectus, as amended and supplemented to the date of such letter; provided, however, that if the Registration Statement or the Prospectus is amended or supplemented solely to include financial information as of and for a fiscal quarter, Price Waterhouse LLP may limit the scope of such letter to the unaudited financial statements included in such amendment or supplement unless any other information included therein of an accounting, financial or statistical nature is of such a nature that, in the reasonable judgment of the Agents or such Agent, as the case may be, such letter should cover such other information. Except as otherwise expressly provided herein, the Distribution Agreement is in all respects ratified and confirmed, and all the terms, provisions and conditions thereof shall be and remain in full force and effect. 4 5 IN WITNESS WHEREOF, the parties hereto have cause this Amendment No. 2 to the Distribution Agreement to be executed on their behalf as of the day and year first above written. BANPONCE FINANCIAL CORP. By: /s/ David H. Chafey, Jr. ------------------------------- Name: David H. Chafey, Jr. Title: President BANPONCE CORPORATION By: /s/ David H. Chafey, Jr. ------------------------------- Name: David H. Chafey, Jr. Title: Executive Vice President MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By: /s/ Scott G. Primrose ------------------------------- Name: Scott G. Primrose Title: Authorized Signatory CS FIRST BOSTON CORPORATION By: /s/ Martha D. Bailey ------------------------------- Name: Martha D. Bailey Title: Vice President FIRST CHICAGO CAPITAL MARKETS, INC. By: /s/ Linda A. Dawson ------------------------------- Name: Linda A. Dawson Title: Managing Director 5 EX-4.(L) 4 FORM OF FIXED RATE MEDIUM-TERM NOTE, SERIES 2 1 EXHIBIT (4)(l) [Include if this Note is a Global Note -- THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE THEREOF. THIS NOTE MAY NOT BE TRANSFERRED TO, OR REGISTERED OR EXCHANGED FOR SECURITIES REGISTERED IN THE NAME OF, ANY PERSON OTHER THAN THE DEPOSITORY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE REGISTERED, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. EVERY NOTE AUTHENTICATED AND DELIVERED UPON REGISTRATION OF TRANSFER OF, OR IN EXCHANGE FOR OR IN LIEU OF, THIS NOTE SHALL BE A GLOBAL SECURITY SUBJECT TO THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES. Unless this Note is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the Company or its agent for registration of transfer, exchange, or payment, and any Security issued upon registration of transfer of, or in exchange for, or in lieu of, this Note is registered in the name of Cede & Co. or such other name as requested by an authorized representative of DTC (and any payment hereon is made to Cede & Co. or such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.] REGISTERED NO. FXR- CUSIP NO. BANPONCE CORPORATION MEDIUM-TERM FIXED RATE NOTE, SERIES 2 Due Nine Months or More From Date of Issue Payment of Principal, Premium, if any, and Interest ORIGINAL ISSUE DATE: INITIAL DATE ON WHICH THE PRINCIPAL AMOUNT NOTE IS REPAYABLE AT THE $ OPTION OF THE HOLDER: ISSUE PRICE: REDEEMABLE ON OR AFTER: MATURITY DATE: (AT OPTION OF THE COMPANY) INTEREST RATE PER ANNUM: INITIAL REDEMPTION OID DEFAULT AMOUNT: PERCENTAGE: (Only applicable if Note issued at original issue discount)
2 INTEREST PAYMENT DATES: ANNUAL REDEMPTION DEFAULT RATE: PERCENTAGE REDUCTION: (Only applicable if Note issued at original issue discount) Depository: REGULAR RECORD DATE(S): (Only applicable if Note is a Global Note) OTHER PROVISIONS:
BANPONCE CORPORATION, a corporation duly organized and existing under the laws of the Commonwealth of Puerto Rico (herein called the "Company", which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to _______________________________, or registered assigns, the principal sum of ______________ at the office or agency of the Company maintained for such purpose in the Borough of Manhattan, The City of New York (the "Paying Agent"), on the maturity date specified above (the "Maturity Date"), or if such date is not a Business Day (as defined below), the next succeeding Business Day, in such coin or currency as at the time of payment shall be legal tender for the payment of public and private debts, and to pay interest on said principal sum at the rate per annum (computed on the basis of a 360-day year of twelve 30-day months) specified above, in like coin or currency, from and including the original issue date of this Note specified above (the "Original Issue Date") or from and including the most recent Interest Payment Date to which interest has been duly paid or provided for, on the Interest Payment Date(s) specified above in each year (each an "Interest Payment Date") and at Maturity, until the principal sum hereof has been paid or duly provided for. The first payment of interest on a Note originally issued between a Regular Record Date and an Interest Payment Date will be due and payable on the Interest Payment Date following the next succeeding Regular Record Date to the Holder on such next succeeding Regular Record Date. The interest so payable on any Interest Payment Date will be paid to the Holder at the close of business on the Regular Record Date (specified above) next preceding such Interest Payment Date and interest payable at Maturity will be paid to the Person to whom said principal sum is payable. Any such interest not so punctually paid or duly provided for ("Defaulted Interest") will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the -2- 3 Person in whose name this Note (or one or more predecessor Notes) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee referred to on the reverse hereof, notice whereof shall be given to the Holder of this Note not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner, all as more fully provided in the Indenture (as defined on the reverse hereof). Payment of interest on this Note due on any Interest Payment Date (other than interest on this Note due to the Holder hereof at Maturity) shall be paid by check mailed to the Person entitled thereto at his last address as it appears on the Security Register or, if a Depository with respect to this Note is specified above or if $10,000,000 aggregate principal amount of Notes of this series with the Interest Payment Dates specified above are registered in the name of the Holder hereof, in immediately available funds by wire transfer to such account as may have been designated by the Person entitled thereto as set forth herein in time for the paying agent (the "Paying Agent") under the Indenture to make such payments in accordance with its normal procedures. Payment of the principal of and any premium and interest on this Note due to the Holder hereof at Maturity shall be paid in immediately available funds upon presentation of this Note for surrender at the office or agency of the Paying Agent in the Borough of Manhattan, The City of New York, provided that this Note is presented for surrender in time for the Paying Agent to make such payment in such funds in accordance with its normal procedures. Any such designation for wire transfer purposes shall be made by filing the appropriate information with the Trustee at its Corporate Trust Office in the Borough of Manhattan, The City of New York and, unless revoked by written notice to the Trustee received on or prior to the Regular Record Date immediately preceding the applicable Interest Payment Day or the fifteenth calendar day preceding Maturity shall remain in effect with respect to any further payments with respect to this Note payable to such Holder. Any payment of principal, premium or interest on this Note due on any day which is not a Business Day in The City of New York need not be made on such day, but may be made on the next succeeding Business Day in The City of New York with the same force and effect as if made on the due date and no interest shall accrue for the period from and after such date. "Business Day" shall mean, as used herein with respect to any particular location, any day, other than Saturday and Sunday, which is not a day on which banking -3- 4 institutions in such location are authorized or obligated by law or executive order to close. Additional provisions of this Note are contained on the reverse hereof and such provisions shall for all purposes have the same effect as though fully set forth at this place. -4- 5 This Note shall not be valid or become obligatory for any purpose until the Certificate of Authentication hereon shall have been signed by an authorized signatory of the Trustee or its duly authorized agent under the Indenture referred to on the reverse hereof. IN WITNESS WHEREOF, BANPONCE CORPORATION has caused this instrument to be signed by its duly authorized officer, and has caused a facsimile of its corporate seal to be affixed hereto or imprinted hereon. Dated: BANPONCE CORPORATION By:________________________ By:________________________ Attest:_____________________ TRUSTEE'S CERTIFICATE OF AUTHENTICATION This Note is one of a designated series of Debt Securities described in the Indenture referred to on the reverse hereof The First National Bank of Chicago, as Trustee, By:_____________________ Authorized Signatory -5- 6 BANPONCE CORPORATION MEDIUM-TERM FIXED RATE NOTE, SERIES 2 Due Nine Months or More From Date of Issue This Note is one of a duly authorized issue of debentures, notes and other evidences of indebtedness of the Company (hereinafter called the "Debt Securities"), issued or to be issued under and pursuant to an indenture dated as of February 15, 1995 (hereinafter called the "Indenture"), duly executed and delivered by the Company to The First National Bank of Chicago, as Trustee (hereinafter called the "Trustee"), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, duties and immunities thereunder of the Trustee and the rights thereunder of the Holders of the Debt Securities. As provided in the Indenture, the Debt Securities may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest, if any, at different rates, may be subject to different redemption provisions, if any, may be subject to different sinking, purchase or analogous funds, if any, may be subject to different covenants and events of default, and may otherwise vary as provided or permitted in the Indenture. This Note is one of a series of the Debt Securities, which series is designated as the Medium-Term Notes, Series 2 (the "Notes") of the Company and is limited in aggregate initial offering price of up to $1,000,000,000, less the aggregate initial offering price of "Securities" (as defined in the Prospectus, dated September 27, 1995, relating to debt securities and preferred stock of the Company, Popular International Bank, Inc. and BanPonce Financial Corp.) authenticated and delivered upon original issuance, other than the Notes. The Notes may mature at different times, bear interest, if any, at different rates, be redeemable at different times or not at all, be repayable at the option of the Holder at different times or not at all, be issued at an original issue discount, and be denominated in different currencies. In case an Event of Default, as defined in the Indenture, with respect to the Notes shall have occurred and be continuing, the principal hereof may be declared, and upon such declaration shall become, due and payable in the manner, with the effect and subject to the conditions provided in the Indenture. -6- 7 The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Debt Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than a majority in principal amount of the Debt Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Debt Securities of each series at the time Outstanding, on behalf of the Holders of all Debt Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note. In the event that the Company shall be obligated to pay any Additional Amounts due to a change in law, regulation or interpretation, the Company may, at its option, redeem the Note as a whole at a redemption price of 100% of the principal amount thereof (or, if such Note is an original issue discount note, 100% of the OID Default Amount) together with accrued interest to the date fixed for redemption. If so provided on the face of this Note, this Note may also be redeemed by the Company on and after the date so indicated on the face hereof; provided, however, that the first two paragraphs of Section 1103 of the Indenture shall not apply to this Note, and if less than all of the Notes are to be redeemed, the Company may select, from Notes that are subject to redemption pursuant to the terms thereof, the Note or Notes, or portion or portions thereof, to be redeemed. On and after the date, if any, from which this Note may be redeemed, this Note may be redeemed in whole or in part, at the option of the Company at a redemption price equal to the product of the principal amount of this Note to be redeemed multiplied by the Redemption Percentage, together with accrued interest, if any, to the date fixed for redemption. The Redemption Percentage shall initially equal the Initial Redemption Percentage specified on the face of this Note, and shall decline at each anniversary of the initial date that this Note is redeemable by the amount of the Annual Redemption Percentage Reduction specified on the face of this Note, until the Redemption Percentage is equal to 100%. -7- 8 If so provided on the face of this Note, this Note will be repayable in whole or in part in increments of $1,000, provided that the remaining principal amount of any Note surrendered for partial repayment shall be at least $1,000, on any Business Day on or after the "Initial Date on which the Note is Repayable at the Option of the Holder" (as stated on the face hereof), at the option of the Holder, at 100% of the principal amount to be repaid, plus accrued interest, if any, to the repayment date. In order for the exercise of the option to be effective and the Note to be repaid, the Company must receive at the applicable address of the Paying Agent set forth below or at such other place or places of which the Company shall from time to time notify the Holder of this Note, on or before the thirtieth, but not earlier than the sixtieth calendar day, or, if such day is not a Business Day, the next succeeding Business Day, prior to the repayment date, either (i) this Note, with the form below entitled "Option to Elect Repayment" duly completed, or (ii) a telegram, telex, facsimile transmission, or letter from a member of a national securities exchange or the National Association of Securities Dealers, Inc. or a commercial bank or a trust company in the United States of America setting forth (a) the name, address, and telephone number of the Holder of this Note, (b) the principal amount of this Note and the amount of this Note to be repaid, (c) a statement that the option to elect repayment is being exercised thereby, and (d) a guarantee stating that the Paying Agent on behalf of the Company will receive this Note, with the form below entitled "Option to Elect Repayment" duly completed, not later than five Business Days after the date of such telegram, telex, facsimile transmission, or letter (and this Note and form duly completed are received by the Paying Agent on behalf of the Company by such fifth Business Day). Any such election shall be irrevocable. The address to which such deliveries are to be made is The First National Bank of Chicago, Attention: Securities Processing Division, 14 Wall Street, Eighth Floor, New York, New York 10005 (or, at such other places as the Company shall notify the Holders of the Notes). All questions as to the validity, eligibility (including time of receipt) and acceptance of any Note for repayment will be determined by the Company, whose determination will be final and binding. If this Note is issued with an original issue discount, (i) if an Event of Default with respect to the Notes shall have occurred and be continuing, the amount of principal of this Note which may be declared due and payable in the manner, with the effect and subject to the conditions provided in the Indenture, shall be determined in the manner set forth under "OID Default Amount" on the face hereof, and -8- 9 (ii) in the case of a default of payment in principal upon acceleration, redemption, repayment at the option of the Holder or at the Maturity Date hereof, in lieu of any interest otherwise payable, the overdue principal of this Note shall bear interest at a rate of interest per annum equal to the Default Rate stated on the face hereof (to the extent that the payment of such interest shall be legally enforceable), which shall accrue from the date of such acceleration, redemption, repayment at the option of the Holder or Maturity Date, as the case may be, to the date payment has been made or duly provided for or such default has been waived in accordance with the terms of the Indenture. The Notes are issuable in definitive form without coupons in denominations of $1,000 and integral multiples thereof. Upon due presentment for registration of transfer of this Note at the office or agency of the Company maintained for such purpose in the Borough of Manhattan, The City of New York, a new Note or Notes in authorized denominations for an equal aggregate principal amount and like tenor will be issued to the transferee in exchange therefor, subject to the limitations provided in the Indenture and to the limitations described below if applicable, without charge except for any tax or other governmental charge imposed in connection therewith. If this Note is a Global Note (as specified on the face hereof), this Note is exchangeable only if (x) the Depository notifies the Company that it is unwilling or unable to continue as Depository for this Global Note or if at any time the Depository ceases to be a clearing agency registered under the Securities Exchange Act of 1934, as amended, (y) the Company in its sole discretion determines that this Global Note shall be exchangeable for definitive Notes in registered form or (z) an Event of Default, or an event which with notice or lapse of time or both would become an Event of Default, with respect to the Notes represented hereby has occurred and is continuing. If this Note is exchangeable pursuant to the preceding sentence, it shall be exchangeable for definitive Notes in registered form, bearing interest (if any) at the same rate or pursuant to the same formula, having the same date of issuance, redemption provisions, if any, Maturity Date and other terms and of differing denominations aggregating a like amount. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Note at the places, at the respective times, at the rate and in the currency herein prescribed. -9- 10 The Company, the Trustee and any paying agent may deem and treat the Holder hereof as the absolute owner of this Note at such Holder's address as it appears on the Security Register as kept by the Trustee or duly authorized agent of the Company (whether or not this Note shall be overdue), for the purpose of receiving payment of or on account hereof and for all other purposes, and neither the Company nor the Trustee nor any Paying Agent shall be affected by any notice to the contrary. All payments made to or upon the order of such registered Holder shall, to the extent of the sum or sums paid, satisfy and discharge liability for moneys payable on this Note. Terms used herein which are defined in the Indenture and are not defined herein shall have the respective meanings assigned thereto in the Indenture. This Note shall be governed by and construed in accordance with the laws of the State of New York. -10- 11 OPTION TO ELECT REPAYMENT TO BE COMPLETED ONLY IF THIS NOTE IS REPAYABLE AT THE OPTION OF THE HOLDER AND THE HOLDER ELECTS TO EXERCISE SUCH RIGHTS The undersigned hereby irrevocably requests and instructs the Company to repay the within Note (or portion thereof specified below) pursuant to its terms at a price equal to the principal amount thereof, together with interest to the repayment date, to the undersigned, at _______________________________________________________________________________ _______________________________________________________________________________ (Please print or type name and address of the undersigned) For this Note to be repaid the Company must receive at the Corporate Trust Office of the Trustee in The City of New York or at such other place or places of which the Company shall from time to time notify the Holder of the within Note, on or before the thirtieth, but not earlier than the sixtieth, calendar day, or, if such day is not a Business Day, the next succeeding Business Day, prior to the repayment date, (i) this Note, with this "Option to Elect Repayment" form duly completed, or (ii) a telegram, telex, facsimile transmission, or letter from a member of a national securities exchange or the National Association of Securities Dealers, Inc. or a commercial bank or a trust company in the United States of America setting forth (a) the name, address, and telephone number of the Holder of the Note, (b) the principal amount of the Note and the amount of the Note to be repaid, (c) a statement that the option to elect repayment is being exercised thereby, and (d) a guarantee stating that the Note to be repaid with this form duly completed will be received by the Paying Agent on behalf of the Company not later than five Business Days after the date of such telegram, telex, facsimile transmission, or letter (and such Note and form duly completed are received by the Paying Agent on behalf of the Company by such fifth Business Day). Exercise of the repayment option by the Holder shall be irrevocable. If less than the entire principal amount of the within Note is to be repaid, specify the portion thereof (which shall be an integral multiple of $1,000) which the Holder elects to have repaid: __________________________; and specify the denomination or denominations (which shall be $1,000 or an integral multiple thereof) of the Note or Notes to be issued to the Holder for the portion of the within Note not being repaid (in the absence of any specification, one such Note will be issued for the portion not being repaid): ________________ -11- 12 Date:___________________ ________________________________________________________________________________ Notice: The signature to this Option to Elect Repayment must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement or any other change whatsoever. -12- 13 ___________ ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM -- as tenants in common UNIF GIFT MIN ACT--________ Custodian ____________ TEN ENT -- as tenants by the entireties (Cust) (Minor) JT TEN -- as joint tenants with right Under Uniform Gifts to Minors Act of survivorship and not as tenants in common ___________________________________________ (State)
Additional abbreviations may also be used though not in the above list. FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto Please Insert Social Security or Other Identifying Number of Assignee ________________________________________________________________________________ PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE ________________________________________________________________________________ ________________________________________________________________________________ the within Note of BANPONCE CORPORATION and does hereby irrevocably constitute and appoint ____________________________________________________________________ _______ attorney to transfer the said Note on the books of the Company, with full power of substitution in the premises. Dated: _______________________ ____________________________________ ____________________________________ NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement or any change whatsoever. -13- EX-4.(M) 5 FORM OF FLOATING RATE MED-TERM NOTE, SERIES 2 1 EXHIBIT (4)(m) [Include if this Note is a Global Note -- THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE THEREOF. THIS NOTE MAY NOT BE TRANSFERRED TO, OR REGISTERED OR EXCHANGED FOR SECURITIES REGISTERED IN THE NAME OF, ANY PERSON OTHER THAN THE DEPOSITORY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE REGISTERED, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. EVERY NOTE AUTHENTICATED AND DELIVERED UPON REGISTRATION OF TRANSFER OF, OR IN EXCHANGE FOR OR IN LIEU OF, THIS NOTE SHALL BE A GLOBAL SECURITY SUBJECT TO THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES. Unless this Note is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the Company or its agent for registration of transfer, exchange, or payment, and any Security issued upon registration of transfer of, or in exchange for, or in lieu of, this Note is registered in the name of Cede & Co. or such other name as requested by an authorized representative of DTC (and any payment hereon is made to Cede & Co. or such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.] REGISTERED NO. FLR- CUSIP NO. BANPONCE CORPORATION MEDIUM-TERM FLOATING RATE NOTE, SERIES 2 Due Nine Months or More From Date of Issue Payment of Principal, Premium, if any, and Interest ORIGINAL ISSUE DATE: INITIAL INTEREST RATE: PRINCIPAL AMOUNT $ MATURITY DATE: INTEREST RATE BASIS: INDEX MATURITY: IF LIBOR: [ ] LIBOR REUTERS SPREAD: + REDEEMABLE ON OR AFTER [ ] LIBOR TELERATE - (AT OPTION OF THE COMPANY): INDEX CURRENCY: IF THE CMT RATE: INTEREST PAYMENT PERIOD: INITIAL REDEMPTION [ ] 7055 PERCENTAGE: [ ] 7052 INTEREST RATE RESET MATURITY INDEX: PERIOD: MAXIMUM INTEREST RATE: Depository: INITIAL DATE ON WHICH THE SPREAD MULTIPLIER: NOTE IS REPAYABLE AT THE (Only applicable if this Note OPTION OF THE HOLDER: ANNUAL REDEMPTION is a Global Note) PERCENTAGE REDUCTION:
2 INTEREST PAYMENT DATES: MINIMUM INTEREST RATE: INTEREST CALCULATION DATES: (If other than ten calendar CALCULATION AGENT: days after the Interest Determination Date) OTHER PROVISIONS: BANPONCE CORPORATION, a corporation duly organized and existing under the laws of the Commonwealth of Puerto Rico (herein called the "Company", which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to ____________________________, or registered assigns, the principal sum of _____________________________ at the office or agency of the Company maintained for such purposes in the Borough of Manhattan, The City of New York (the "Paying Agent"), on the maturity date shown above (the "Maturity Date"), or if such date is not a Business Day, the next succeeding Business Day, in such coin or currency as at the time of payment shall be legal tender for the payment of public and private debts, and to pay interest commencing with the first Interest Payment Date specified above following the Original Issue Date specified above or from and including the most recent Interest Payment Date to which interest has been duly paid or provided for monthly, quarterly, semi-annually or annually as specified above under "Interest Payment Period", on the Interest Payment Dates specified above and at Maturity, on said principal sum at said offices or agencies, in like coin or currency, at a rate per annum equal to the Initial Interest Rate specified above until the first Interest Reset Date following the Original Issue Date specified above and thereafter at a rate per annum determined in accordance with the provisions on the reverse hereof under the heading "Determination of Interest Rate Per Annum for Certificate of Deposit Rate Notes", "Determination of Interest Rate Per Annum for Commercial Paper Rate Notes", "Determination of Interest Rate Per Annum for CMT Rate", "Determination of Interest Rate Per Annum for Eleventh District Cost of Funds Rate Notes", "Determination of Interest Rate Per Annum for Federal Funds Rate Notes", "Determination of Interest Rate Per Annum for LIBOR Notes", "Determination of Interest Rate Per Annum for Prime Rate Notes" or "Determination of Interest Rate Per Annum for Treasury Rate Notes", depending upon whether the Interest Rate Basis specified above is Certificate of Deposit Rate, Commercial Paper Rate, CMT Rate, Eleventh District Cost of Funds Rate, Federal Funds Rate, LIBOR, Prime Rate or Treasury Rate; provided, however, -2- 3 that if any Interest Payment Date specified above would otherwise fall on a day that is not a Business Day (as defined herein), such Interest Payment Date will be the next succeeding Business Day, except that in the event that the Interest Rate Basis for this Note is LIBOR, if such day falls in the next calendar month, such Interest Payment Date will be the next preceding day that is a Business Day. Interest on this Note shall accrue (a) if the rate at which interest on this Note is payable shall be adjusted monthly, quarterly, semi-annually or annually, as specified above under "Interest Rate Reset Period" and as determined in accordance with the provisions on the reverse hereof, from the Interest Payment Date next preceding the date of this Note to which interest has been paid, unless the date hereof is an Interest Payment Date to which interest has been paid, in which case from the date of this Note, or unless no interest has been paid on this Note, in which case from the Original Issue Date specified above, until the principal sum hereof has been paid or duly provided for or (b) if the rate at which interest on this Note is payable shall be adjusted daily or weekly, as specified above under "Interest Rate Reset Period" and as determined in accordance with the provisions on the reverse hereof, from the Regular Record Date (as defined herein) next preceding the date of this Note through which interest has been paid, unless the date hereof is a Regular Record Date through which interest has been paid, in which case from the day after the date of this Note, or unless no interest has been paid on this Note, in which case from the Original Issue Date specified above, until the principal sum hereof has been paid or duly provided for; provided, however, that if the Original Issue Date is after any Regular Record Date preceding any Interest Payment Date and before such Interest Payment Date, interest on this Note shall accrue from such Interest Payment Date unless the rate at which interest on this Note is payable shall be adjusted daily or weekly, as provided above under "Interest Rate Reset Period" and as determined in accordance with the provisions on the reverse hereof, in which case interest on this Note shall accrue from such Regular Record Date, or, in either case, if no interest has been paid on this Note, from the Original Issue Date specified above. The interest so payable on any Interest Payment Date will be paid to the Holder at the close of business on the Regular Record Date next preceding such Interest Payment Date, and interest payable at Maturity will be paid to the Person to whom said principal sum is payable; provided, however, that the first payment of interest on a Note originally issued between a Regular Record Date and an Interest Payment Date will be made on the Interest Payment Date following the next succeeding Regular Record Date to the Holder on such next succeeding Regular Record Date. Any such interest not so punctually paid or duly provided for ("Defaulted Interest") will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in -3- 4 whose name this Note (or one or more predecessor Notes) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee referred to on the reverse hereof, notice whereof shall be given to the Holder of this Note not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner, all as more fully provided in the Indenture (as defined on the reverse hereof). "Regular Record Date" shall mean the fifteenth day, whether or not such date shall be a Business Day, prior to any Interest Payment Date. "Business Day" shall mean, as used herein with respect to any particular location, any day, other than a Saturday or Sunday, which is (a) not a day on which banking institutions in such location are authorized or obligated by law or executive order to close and (b), in the event that the Interest Rate Basis for this Note is LIBOR, a London Banking Day. "London Banking Day" shall mean any day on which dealings in deposits in U.S. dollars are transacted in the London interbank market. Payment of interest on this Note due on any Interest Payment Date (other than interest on this Note due to the Holder hereof at Maturity) shall be made by check mailed to the Person entitled thereto at his last address as it appears on the Security Register or, if a Depository with respect to this Note is specified above or if $10,000,000 aggregate principal amount of Notes of this series with the Interest Payment Dates specified above are registered in the name of the Holder hereof, in immediately available funds by wire transfer to such account as may have been appropriately designated by the Person entitled thereto as set forth herein in time for the Paying Agent to make such payment in such funds in accordance with its normal procedures. Payment of the principal of, and any premium and interest on this Note due to the Holder hereof at Maturity shall be made in immediately available funds upon presentation of this Note at the office or agency of the Paying Agent in the Borough of Manhattan, The City of New York, provided that this Note is presented for surrender in time for the Paying Agent to make such payment in such funds in accordance with its normal procedures. Any such designation for wire transfer purposes shall be made by filing the appropriate information with the Paying Agent at its Corporate Trust Office or agency in the Borough of Manhattan, The City of New York and, unless revoked by written notice to the Paying Agent received on or prior to the Regular Record Date immediately preceding the applicable Interest Payment Date or the fifteenth day preceding Maturity, shall remain in effect with respect to any further payments with respect to this Note payable to such Holder. -4- 5 If any Interest Payment Date with respect to this Note would otherwise fall on a day that is not a Business Day such Interest Payment Date shall be postponed to the next day that is a Business Day provided, however, that in the event that the Interest Rate Basis for this Note is LIBOR, if such Business Day falls in the next succeeding calendar month, such payment shall be made on the immediately preceding Business Day. If the date of Maturity of this Note would fall on a day that is not a Business Day, the payment of principal, premium, if any, and interest shall be made on the next succeeding Business Day, and no interest on such payment shall accrue for the period from and after Maturity. Additional provisions of this Note are contained on the reverse hereof and such provisions shall for all purposes have the same effect as though fully set forth at this place. This Note shall not be valid or become obligatory for any purpose until the Certificate of Authentication hereon shall have been signed by an authorized signatory of the Trustee or its duly authorized agent under the Indenture referred to on the reverse hereof. -5- 6 IN WITNESS WHEREOF, BANPONCE CORPORATION has caused this instrument to be signed by its duly authorized officer, and has caused a facsimile of its corporate seal to be affixed hereto or imprinted hereon. Dated: BANPONCE CORPORATION By:________________________ By:________________________ Attest:_____________________ TRUSTEE'S CERTIFICATE OF AUTHENTICATION This Note is one of a designated series of Debt Securities described in the Indenture referred to on the reverse hereof The First National Bank of Chicago, as Trustee By:_______________________ Authorized Signatory -6- 7 BANPONCE CORPORATION MEDIUM-TERM FLOATING RATE NOTE, SERIES 2 Due Nine Months or More From Date of Issue This Note is one of a duly authorized issue of debentures, notes or other evidences of indebtedness of the Company (hereinafter called the "Debt Securities"), issued or to be issued under and pursuant to an indenture dated as of February 15, 1995 (hereinafter called the "Indenture"), duly executed and delivered by the Company to The First National Bank of Chicago as Trustee (hereinafter called the "Trustee"), to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, duties and immunities thereunder of the Trustee and the rights thereunder of the Holders of the Debt Securities. As provided in the Indenture, the Debt Securities may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest, if any, at different rates, may be subject to different redemption provisions, if any, may be subject to different sinking, purchase or analogous funds, if any, may be subject to different covenants and events of default, and may otherwise vary as provided or permitted in the Indenture. This Note is one of a series of the Debt Securities, which series is designated as the Medium-Term Notes, Series 2 (the "Notes") of the Company and is limited in aggregate initial offering price of up to $1,000,000,000, less the aggregate initial offering price of "Securities" (as defined in the Prospectus, dated September 27, 1995, relating to debt securities and preferred stock of the Company, Popular International Bank, Inc. and BanPonce Financial Corp.) authenticated and delivered upon original issuance, other than the Notes. The Notes may mature at different times, bear interest, if any, at different rates, be redeemable at different times or not at all, be repayable at the option of the Holder at different times or not at all, and be denominated in different currencies. The interest rate in effect from the date of issue to the first Interest Reset Date shall be the Initial Interest Rate specified on the face hereof. Commencing with the first Interest Reset Date following the Original Issue Date specified on the face hereof, the rate at which interest on this Note is payable shall be adjusted daily, weekly, monthly, quarterly, semi-annually or annually as specified on the face hereof under "Interest Rate Reset Period". Each such adjusted rate shall be applicable from and including the Interest Reset Date to which it relates but not including the next succeeding Interest Reset Date or until Maturity, as the case may be. Subject to applicable -7- 8 provisions of law and except as specified herein, on each Interest Reset Date, the rate of interest on this Note shall be the rate determined with respect to the Interest Determination Date next preceding such Interest Reset Date in accordance with the provisions of the applicable heading below. If the Interest Rate Basis specified on the face of this Note is the Certificate of Deposit Rate, Commercial Paper Rate, CMT Rate, Federal Funds Rate or Prime Rate, the Interest Determination Date with respect to any Interest Reset Date shall be the second Business Day immediately preceding such Interest Reset Date. If the Interest Rate Basis specified on the face hereof is the Treasury Rate, the Interest Determination Date with respect to any Interest Reset Date shall be the day of the week in which such Interest Reset Date falls on which Treasury bills are auctioned; provided, however, that if, as a result of a legal holiday, an auction with respect to any week is held on the preceding Friday, such Friday shall be the Interest Determination Date with respect to the Interest Reset Date occurring in the next succeeding week. If the Interest Rate Basis specified on the face of this Note is the Eleventh District Cost of Funds Rate, the Interest Determination Date with respect to any Interest Reset Date shall be the last Business Day of the month immediately preceding such Interest Reset Date on which the Federal Home Loan Bank of San Francisco publishes the Eleventh District Cost of Funds Index (as defined below). If the Interest Rate Basis specified on the face of this Note is LIBOR, the Interest Determination Date with respect to any Interest Reset Date shall be the second London Banking Day preceding such Interest Reset Date. If the Interest Rate Reset Period specified on the face hereof is daily, the Interest Reset Dates with respect to this Note shall be each Business Day. If the Interest Rate Reset Period specified on the face of this Note is weekly, the Interest Reset Dates with respect to this Note shall be Wednesday of each week; provided, however, that if the Interest Rate Basis specified on the face of this Note is the Treasury Rate, the Interest Reset Dates with respect to this Note shall be Tuesday of each week. If the Interest Rate Reset Period specified on the face of this Note is monthly, the Interest Reset Dates with respect to this Note shall be the third Wednesday of each month; provided, however, if the Interest Rate Basis specified on the face of this Note is the Eleventh District Cost of Funds Rate, the Interest Reset Date with respect to this Note shall be the first Business Day of each month. If the Interest Rate Reset Period specified on the face of this Note is quarterly, the Interest Reset Dates with respect to this Note shall be the third Wednesday of March, June, September and December of each year. If the Interest Rate Reset -8- 9 Period specified on the face of this Note is semi-annual, the Interest Reset Dates with respect to this Note shall be the third Wednesday of the two months in each year specified on the face hereof under Interest Rate Reset Period. If the Interest Rate Reset Period specified on the face of this Note is annual, the Interest Rate Reset Dates with respect to this Note shall be the third Wednesday of the month in each year specified on the face hereof under Interest Rate Reset Period. Notwithstanding the foregoing, if the Interest Rate Basis specified on the face hereof is Treasury Rate and any Interest Reset Date with respect to this Note falls on a day on which Treasury bills are to be auctioned, then such Interest Reset Date shall be postponed to the next succeeding Business Day. If any Interest Reset Date with respect to this Note would otherwise be a day that is not a Business Day, such Interest Reset Date shall be postponed to the next succeeding Business Day; provided, however, if the Interest Rate Basis specified on the face hereof is LIBOR, if such next succeeding Business Day is in the next succeeding calendar month, such Interest Reset Date shall be the immediately preceding Business Day. Unless otherwise specified on the face hereof, the Calculation Date with respect to any Interest Determination Date shall be the earlier of (i) the tenth calendar day after such Interest Determination Date, or if any such day is not a Business Day (as defined in the Indenture) the next succeeding Business Day or (ii) the Business Day preceding the applicable Interest Payment Date or Maturity, as the case may be. Determination of Interest Rate Per Annum for Certificate of Deposit Rate Notes. If the Interest Rate Basis specified on the face hereof is Certificate of Deposit Rate, the Interest Rate per annum determined with respect to any Interest Determination Date shall equal the rate on such date, adjusted by the addition or subtraction of the Spread, if any, specified on the face hereof, and/or by multiplication by the Spread Multiplier, if any, specified on the face hereof and calculated to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upwards, for negotiable certificates of deposit having the Index Maturity specified on the face hereof as published by the Board of Governors of the Federal Reserve System in "Statistical Release H.15(519), Selected Interest Rates" or any successor publication of the Board of Governors of the Federal Reserve System ("H.15(519)") under the heading "CDs (Secondary Market)." In the event that such rate is not published prior to 3:00 P.M., New York City time, on the Calculation Date with respect to such Interest Determination Date, then the Certificate of Deposit Rate with respect to such Interest Reset Date shall be the rate (adjusted and/or multiplied and calculated as described above) on such Interest Determination Date for negotiable certificates of deposit having the Index Maturity specified on the face hereof as -9- 10 published by the Federal Reserve Bank of New York in its daily statistical release, "Composite 3:30 P.M. Quotations for U.S. Government Securities," or any successor publication of the Federal Reserve Bank of New York ("Composite Quotations"), under the heading "Certificates of Deposit." If by 3:00 P.M., New York City time, on the Calculation Date with respect to such Interest Determination Date such rate is not published in either H.15(519) or Composite Quotations, the Certificate of Deposit Rate with respect to such Interest Determination Date shall be calculated by the Calculation Agent and shall be the arithmetic mean (adjusted and/or multiplied and calculated as described above) of the secondary market offered rates, as of 10:00 A.M., New York City time, on such Interest Determination Date, of three leading nonbank dealers of negotiable U.S. dollar certificates of deposit in The City of New York selected by the Calculation Agent for negotiable certificates of deposit of major United States money center banks (in the market for negotiable certificates of deposit) with a remaining maturity closest to the Index Maturity, specified on the face hereof in denominations of U.S. $5,000,000; provided, however, that, if fewer than three dealers selected as aforesaid by the Calculation Agent are quoting as mentioned in this sentence, the Certificate of Deposit Rate with respect to such Interest Determination Date will be the Certificate of Deposit Rate in effect on such Interest Determination Date. Determination of Interest Rate Per Annum for Commercial Paper Rate Notes. If the Interest Rate Basis specified on the face hereof is Commercial Paper Rate, the interest rate per annum determined with respect to any Interest Determination Date shall equal (a) the Money Market Yield (as defined herein) of the rate on such Interest Determination Date for commercial paper having the Index Maturity specified on the face hereof, (i) as such rate is published in H.15(519), under the heading "Commercial Paper," or (ii) if such rate is not so published on or prior to 3:00 P.M., New York City time, on the Calculation Date pertaining to such Interest Determination Date, as published in Composite Quotations, under the heading "Commercial Paper," or (b) if by 3:00 P.M., New York City time, on the Calculation Date with respect to such Interest Determination Date, such rate is not published in either of such publications, the Money Market Yield of the arithmetic mean of the offered rates, as of 11:00 A.M., New York City time, on such Interest Determination Date, of three leading dealers in commercial paper in The City of New York selected by the Calculation Agent for commercial paper having the Index Maturity specified on the face hereof placed for industrial issuers whose bond rating is "AA," or the equivalent, from a nationally recognized rating agency, in each of the above cases, adjusted by the addition or subtraction of the Spread, if any, specified on the face -10- 11 hereof, and/or by multiplication by the Spread Multiplier, if any, specified on the face hereof and calculated to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upwards; provided, however, that if fewer than three dealers selected as aforesaid by the Calculation Agent are quoting rates as described above, the interest rate per annum hereon with respect to such Interest Determination Date shall be the Commercial Paper Rate in effect hereon on such Interest Determination Date. "Money Market Yield" shall be a yield (expressed as a percentage) calculated in accordance with the following formula: Money Market Yield = 100 x 360 x D ----------------------- 360 - (D x M) where "D" refers to the per annum rate for commercial paper, quoted on a bank discount basis and expressed as a decimal calculated to seven decimal places, without rounding; and "M" refers to the actual number of days in the interest period for which interest is being calculated. Determination of Interest Rate Per Annum for CMT Rate Notes. If the Interest Rate Basis specified on the face hereof is CMT Rate, the Interest Rate per annum determined with respect to any Interest Determination Date shall equal the rate displayed on the Designated CMT Telerate Page (as defined herein) under the caption "...Treasury Constant Maturities...Federal Reserve Board Release H.15...Mondays Approximately 3:45 P.M.," under the column for the Designated CMT Maturity Index (as defined herein) for (i) if the Designated CMT Telerate Page is 7055, the rate on such Interest Determination Date and (ii) if the Designated CMT Telerate Page is 7052, the week, or the month, as applicable, ended immediately preceding the week in which the related Interest Determination Date occurs. If such rate is no longer displayed on the relevant page, or if not displayed by 3:00 P.M., New York City time, on the related Calculation Date, then the CMT Rate for such Interest Determination Date will be such treasury constant maturity rate for the Designated CMT Maturity Index as published in the relevant H.15(519). If such rate is no longer published, or if not published by 3:00 P.M., New York City time, on the related Calculation Date, then the CMT Rate for the Interest Determination Date will be such treasury constant maturity rate for the Designated CMT Maturity Index (or other United States Treasury rate for the Designated CMT Maturity Index) for the Interest Determination Date with respect to such Interest Reset Date -11- 12 as may then be published by either the Board of Governors of the Federal Reserve System or the United States Department of the Treasury that the Calculation Agent determines to be comparable to the rate formerly displayed on the Designated CMT Telerate Page and published in the relevant H.15(519). If such information is not provided by 3:00 P.M., New York City time, on the related Calculation Date, then the CMT Rate for such Interest Determination Date will be calculated by the Calculation Agent and will be a yield to maturity, based on the arithmetic mean of the secondary market closing offer side prices as of approximately 3:30 P.M., New York City time, on the Interest Determination Date reported, according to their written records, by three leading primary United States government securities dealers (each, a "Reference Dealer") in The City of New York selected by the Calculation Agent (from five such Reference Dealers selected by the Calculation Agent and eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest)), for the most recently issued direct noncallable fixed rate obligations of the United States ("Treasury Notes") with an original maturity of approximately the Designated CMT Maturity Index and a remaining term to maturity of not less than such Designated CMT Maturity Index minus one year. If the Calculation Agent cannot obtain three such Treasury Note quotations, the CMT Rate for such Interest Determination Date will be calculated by the Calculation Agent and will be a yield to maturity based on the arithmetic mean of the secondary market offer side prices as of approximately 3:30 P.M., New York City time, on the Interest Determination Date of three Reference Dealers in The City of New York (from five such Reference Dealers selected by the Calculation Agent and eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest)), for Treasury Notes with an original maturity of the number of years that is the next highest to the Designated CMT Maturity Index and a remaining term to maturity closest to the Designated CMT Maturity Index and in an amount of at least $100 million. If three or four (and not five) of such Reference Dealers are quoting as described above, then the CMT Rate will be based on the arithmetic mean of the offer prices obtained and neither the highest nor the lowest of such quotes will be eliminated; provided, however, that if fewer than three Reference Dealers selected by the Calculation Agent are quoting as described herein, the CMT Rate will be the CMT Rate in effect on such Interest Determination Date. If two Treasury Notes with an original maturity as described in the second preceding sentence have remaining terms to maturity equally close to the Designated CMT Maturity Index, the quotes for -12- 13 the Treasury Note with the shorter remaining term to maturity will be used. "Designated CMT Telerate Page" means the display on the Dow Jones Telerate Service on the page designated above (or any other page as may replace such page on that service for the purpose of displaying Treasury Constant Maturities as reported in H.15(519)), for the purpose of displaying Treasury Constant Maturities as reported in H.15(519). If no such page is specified, the Designated CMT Telerate Page shall be 7052, for the most recent week. "Designated CMT Maturity Index" means the original period to maturity of the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years) specified on the face hereof with respect to which the CMT Rate will be calculated. If no such maturity is specified, the Designated CMT Maturity Index shall be 2 years. Determination of Interest Rate Per Annum for Eleventh District Cost of Funds Notes. If the Interest Rate Basis specified on the face hereof is Eleventh District Cost of Funds, the interest rate per annum determined with respect to any Interest Determination Date shall be the rate equal to the monthly weighted average cost of funds for the calendar month immediately preceding the month in which such Interest Determination Date falls, as set forth under the caption "11th District" on Telerate Page 7058 as of 11:00 A.M., San Francisco time, on such Interest Determination Date. If such rate does not appear on Telerate Page 7058 on any related Interest Determination Date, the Eleventh District Cost of Funds Rate for such Interest Determination Date shall be the monthly weighted average cost of funds paid by member institutions of the Eleventh Federal Home Loan Bank District that was most recently announced (the "Index") by the FHLB of San Francisco as such cost of funds for the calendar month immediately preceding the date of such announcement. If the FHLB of San Francisco fails to announce such rate for the calendar month immediately preceding such Interest Determination Date, then the Eleventh District Cost of Funds Rate determined as of the Interest Determination Date will be the Eleventh District Cost of Funds Rate in effect on such Interest Determination Date. In determining that the Federal Home Loan Bank of San Francisco has failed in any month to publish the Eleventh District Cost of Funds Index, the Calculation Agent may conclusively rely on any written advice of the Federal Home Loan Bank of San Francisco to such effect. Determination of Interest Rate Per Annum for Federal Funds Rate Notes. If the Interest Rate Basis -13- 14 specified on the face hereof is Federal Funds Rate, the interest rate per annum determined with respect to any Interest Determination Date shall equal the rate, adjusted by the addition or subtraction of the Spread, if any, specified on the face hereof, and/or by multiplication by the Spread Multiplier, if any, specified on the face hereof and calculated to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upwards, on such Interest Determination Date for Federal Funds as published in H.15(519) under the heading "Federal Funds (Effective)." In the event that such rate is not so published prior to 3:00 P.M., New York City time, on the Calculation Date with respect to such Interest Determination Date, then the Federal Funds Rate with respect to such Interest Determination Date will be the rate (adjusted or multiplied and calculated as described above) on such Interest Determination Date as published in Composite Quotations under the heading "Federal Funds/Effective Rate." If by 3:00 P.M., New York City time, on the Calculation Date with respect to such Interest Determination Date such rate is not published in either H.15(519) or Composite Quotations, the Federal Funds Rate with respect to such Interest Reset Date shall be calculated by the Calculation Agent and shall be the arithmetic mean (adjusted and/or multiplied and calculated as described above) of the rates for the last transaction in overnight Federal Funds arranged by three leading brokers of Federal Funds transactions in The City of New York selected by the Calculation Agent as of 9:00 A.M., New York City time, on such Interest Determination Date; provided, however, that if fewer than three brokers selected as aforesaid by the Calculation Agent are quoting rates as mentioned in this sentence, the Federal Funds Rate with respect to such Interest Determination Date shall be the Federal Funds Rate in effect on such Interest Determination Date. Determination of Interest Rate Per Annum for LIBOR Notes. If the Interest Rate Basis specified on the face hereof is LIBOR, the interest rate per annum determined with respect to any Interest Determination Date relating to a LIBOR Note (a "LIBOR Interest Determination Date") shall equal LIBOR, adjusted by the addition or subtraction of the Spread, if any, specified on the face hereof, and/or by multiplication by the Spread Multiplier, if any, specified on the face hereof and calculated to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upwards, determined by the Calculation Agent in accordance with the following provisions: (i) LIBOR will be determined as set forth on the face hereof, as either (a) the arithmetic mean of the offered rates for deposits in U.S. dollars having the Index -14- 15 Maturity specified on the face hereof, commencing on the second London Banking Day immediately following such LIBOR Interest Determination Date, that appear on the Reuters Screen LIBO Page as of 11:00 A.M., London time, on such LIBOR Interest Determination Date, if at least two such offered rates appear on the Reuters Screen LIBO Page ("LIBOR Reuters"), or (b) the rate for deposits in U.S. dollars having the Index Maturity specified on the face hereof, commencing on the second London Banking Day immediately following such LIBOR Interest Determination Date, that appears on Telerate Page 3750 as of 11:00 A.M., London time, on such LIBOR Interest Determination Date ("LIBOR Telerate"). "Reuters Screen LIBO Page" means the display designated as page "LIBO" on the Reuters Monitor Money Rates Service (or such other page as may replace page LIBO on that service for the purpose of displaying London interbank offered rates of major banks). "Telerate Page 3750" means the display designated as page "3750" on the Telerate Service (or such other page as may replace the 3750 page on that service or such other service or services as may be nominated by the British Bankers' Association for the purpose of displaying London interbank offered rates for U.S. dollar deposits). If neither LIBOR Reuters nor LIBOR Telerate is specified above, LIBOR will be determined if LIBOR Telerate had been specified. If LIBOR Reuters is specified above and at least two such offered rates appear on the Reuters Screen LIBO Page, the rate in respect of such LIBOR Interest Determination Date will be the arithmetic mean of such offered rates as determined by the Calculation Agent. If fewer than two offered rates appear on the Reuters Screen LIBO Page, or if no rate appears on Telerate Page 3750, as applicable, LIBOR in respect of such LIBOR Interest Determination Date will be determined as if the parties had specified the rate described in (ii) below. (ii) With respect to a LIBOR Interest Determination Date on which fewer than two offered rates for the applicable Index Maturity appear on the Reuters Screen LIBO Page, as specified in (i)(a) above, or on which no rate appears on Telerate Page 3750, as specified in (i)(b) above, as applicable, LIBOR will be determined on the basis of the rates at which deposits in U.S. dollars having the Index Maturity specified above are offered at approximately 11:00 A.M., London time, on such LIBOR Interest Determination Date by four major banks in the London interbank market selected by the Calculation Agent (the "Reference Banks") to prime banks in the London interbank market, commencing on the second London Banking Day immediately following such LIBOR Interest Determination Date and in a principal amount equal to an amount of not less than U.S. $1 million that is representative for a single transaction in such market at -15- 16 such time. The Calculation Agent will request the principal London office of each of the Reference Banks to provide a quotation of its rates. If at least two such quotations are provided, LIBOR for such LIBOR Interest Determination Date will be the arithmetic mean of such quotations. If fewer than two quotations are provided, LIBOR for such LIBOR Interest Determination Date will be the arithmetic mean of the rates quoted by 11:00 A.M., New York City time, on such LIBOR Interest Determination Date by three major banks in The City of New York selected by the Calculation Agent for loans in U.S. dollars to leading European banks, having the Index Maturity specified in the applicable Pricing Supplement, commencing on the second London Banking Day immediately following such LIBOR Interest Determination Date and in a principal amount equal to an amount of not less than U.S. $1 million that is representative for a single transaction in such market at such time; provided, however, that if the banks selected as aforesaid by the Calculation Agent are not quoting as mentioned in this sentence, LIBOR will be LIBOR in effect on such LIBOR Interest Determination Date. Determination of Interest Rate Per Annum for Prime Rate Notes. If the Interest Rate Basis specified on the face hereof is Prime Rate, Prime Rate determined with respect to any Interest Determination Date shall equal the rate adjusted by the addition or subtraction of the spread, if any, specified on the face hereof, and/or by multiplication by the Spread Multiplier, if any, specified on the face hereof and calculated to the nearest one hundred- thousandth of a percentage point, with five one-millionths of a percentage point rounded upwards, set forth in H.15(519) for such date opposite the caption "Bank Prime Loan." If such rate is not yet published by 9:00 A.M., New York City time, on the Calculation Date, the Prime Rate for such Prime Rate Interest Determination Date will be the arithmetic mean of the rates of interest publicly announced by each bank named on the Reuters screen NYMF Page as such bank's prime rate or base lending rate as in effect for such Prime Rate Interest Determination Date as quoted on the Reuters Screen NYMF Page on such Prime Rate Interest Determination Date, or, if fewer than four such rates appear on the Reuters Screen NYMF Page for such Prime Rate Interest Determination Date, the rate shall be the arithmetic mean of the prime rates quoted on the basis of the actual number of days in the year divided by 360 as of the close of business on such Prime Rate Interest Determination Date by at least two of the three major money center banks in The City of New York selected by the Calculation Agent from which quotations are requested. If fewer than two quotations are provided, the Prime Rate shall be calculated by the Calculation Agent and shall be -16- 17 determined as the arithmetic mean of the prime rates quoted in The City of New York on such date by the approximate number of banks or trust companies organized and doing business under the laws of the United States, or any State thereof, each having total equity capital of at least $500 million and being subject to supervision or examination by a Federal or State authority, selected by the Calculation Agent to quote such rate or rates; provided, however, that if the Prime Rate is not published in H.15(519) and the banks or trust companies selected as aforesaid are not quoting as mentioned in this sentence, the Prime Rate with respect to such Prime Rate Interest Determination Date will be the interest rate otherwise in effect on such Prime Rate Interest Determination Date. "Reuters Screen NYMF Page" means the display designated as page "NYMF" on the Reuters Monitor Money Rates Service (or such other page as may replace page NYMF on that service for the purpose of displaying prime rates or base lending rates of major United States banks). Determination of Interest Rate Per Annum for Treasury Rate Notes. If the Interest Rate Basis specified on the face hereof is Treasury Rate, the interest rate per annum determined with respect to any Interest Determination Date shall equal the rate adjusted by the addition or subtraction of the spread, if any, specified on the face hereof, and/or by multiplication by the Spread Multiplier, if any, specified on the face hereof and calculated to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upwards, for the most recent auction of direct obligations of the United States ("Treasury bills") having the Index Maturity specified on the face hereof as published in H.15(519), under the heading "Treasury bills -- Auction Average (Investment)" or, if not so published by 3:00 P.M., New York City time, on or prior to the Calculation Date pertaining to such Interest Determination Date, the auction average rate for the aforementioned auction for such Interest Determination Date (expressed as a bond equivalent, calculated to the nearest one hundred-thousandth of a percentage point, rounded upwards, on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) for such auction as otherwise announced by the United States Department of the Treasury, in either case, adjusted by the addition or subtraction of the Spread, if any, specified on the face hereof, and/or by multiplication by the Spread Multiplier, if any, specified on the face hereof and calculated to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upwards. In the event that the results of the auctions of Treasury bills having the Index Maturity -17- 18 specified on the face hereof are not published or reported as provided above by 3:00 P.M., New York City time, on the Calculation Date pertaining to such Interest Determination Date or if no such auction is held for a particular week, then the Treasury Rate with respect to such Interest Determination Date shall be a yield to maturity (expressed as a bond equivalent, calculated to one hundred-thousandth of a percentage point, without rounding, on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) of the arithmetic mean (adjusted and/or multiplied and calculated as described above) of the secondary market bid rates, as of approximately 3:30 P.M., New York City time, on such Interest Determination Date, of three leading primary United States government securities dealers selected by the Calculation Agent, for the issue of Treasury bills with a remaining maturity closest to the Index Maturity specified on the face hereof; provided, however, that if fewer than three dealers selected as aforesaid by the Calculation Agent are quoting as mentioned in this sentence, the Treasury Rate with respect to such Interest Determination Date shall be the Treasury Rate in effect on such Interest Determination Date. Notwithstanding the foregoing, the interest rate per annum hereon shall not be greater than the Maximum Interest Rate, if any, or less than the Minimum Interest Rate, if any, specified on the face hereof. The Calculation Agent shall calculate the interest rate hereon in accordance with the foregoing on or before each Interest Determination Date. The interest rate on this Note shall in no event be higher than the maximum rate permitted by New York law as the same may be modified by United States law of general application. At the request of the Holder hereof, the Calculation Agent will provide to the Holder hereof the interest rate hereon then in effect and, if different, the interest rate which will become effective as a result of a determination made on the most recent Interest Determination Date with respect to this Note. Interest payments hereon will include interest accrued to but excluding the applicable Interest Payment Date. Accrued Interest hereon from the Original Issue Date or from the last date to which interest hereon has been paid, as the case may be, shall be an amount calculated by multiplying the face amount hereof by an accrued interest factor. Such accrued interest factor shall be computed by adding the interest factors calculated for each day from the -18- 19 Original Issue Date or from the last date to which interest shall have been paid or duly provided for, as the case may be, up to but not including the date for which accrued interest is being calculated. The interest factor for each such day shall be computed by dividing the interest rate per annum applicable to such day by 360 if the Interest Rate Basis specified on the face hereof is Certificate of Deposit Rate, Commercial Paper Rate, Eleventh District Cost of Funds Rate, Federal Funds Rate, LIBOR or Prime Rate or by the actual number of days in the year if the Interest Rate Basis specified on the face hereof is Treasury Rate or CMT Rate. In case an Event of Default, as defined in the Indenture, with respect to the Notes shall have occurred and be continuing, the principal hereof may be declared, and upon such declaration shall become, due and payable in the manner, with the effect and subject to the conditions provided in the Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Debt Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than a majority in principal amount of the Debt Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Debt Securities of each series at the time Outstanding, on behalf of the Holders of all Debt Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note. In the event that the Company shall be obligated to pay any Additional Amounts due to a change in law, regulation or interpretation, the Company may, at its option, redeem the Note as a whole at a redemption price of 100% of the principal amount thereof together with accrued interest to the date fixed for redemption. If so provided on the face of this Note, this Note may be redeemed by the Company on and after the date so indicated on the face hereof; provided, however, that the first two paragraphs of Section 1103 of the Indenture shall -19- 20 not apply to this Note, and if less than all of the Notes are to be redeemed, the Company may select, from Notes that are subject to redemption pursuant to the terms thereof, the Note or Notes, or portion or portions thereof, to be redeemed. On and after the date, if any, from which this Note may be redeemed, this Note may be redeemed in whole or in part, at the option of the Company at a redemption price equal to the product of the principal amount of this Note to be redeemed multiplied by the Redemption Percentage together with accrued interest to the date fixed for redemption. The Redemption Percentage shall initially equal the Initial Redemption Percentage specified on the face of this Note, and shall decline at each anniversary of the initial date that this Note is redeemable by the amount of the Annual Redemption Percentage Reduction specified on the face of this Note, until the Redemption Percentage is equal to 100%. If so provided on the face of this Note, this Note will be repayable in whole or in part in increments of $1,000, provided that the remaining principal amount of any Note surrendered for partial repayment shall be at least $1,000, on any Business Day on or after the "Initial Date on which the Note is Repayable at the Option of the Holder" (as stated on the face hereof), at the option of the Holder, at 100% of the face amount hereof, plus accrued interest, if any, to the repayment date. In order for the exercise of the option to be effective and the Notes to be repaid, the Company must receive at the applicable address of the Paying Agent set forth below or at such other place or places of which the Company shall from time to time notify the Holder of this Note, on or before the thirtieth, but not earlier than the sixtieth day, or, if such day is not a Business Day, the next succeeding Business Day, prior to the repayment date, either (i) this Note, with the form below entitled "Option to Elect Repayment" duly completed, or (ii) a telegram, telex, facsimile transmission, or letter from a member of a national securities exchange or the National Association of Securities Dealers, Inc., or a commercial bank or a trust company in the United States of America setting forth (a) the name, address and telephone number of the Holder of this Note, (b) the principal amount of this Note and the amount of this Note to be repaid, (c) a statement that the option to elect repayment is being exercised thereby, and (d) a guarantee stating that the Paying Agent on behalf of the Company will receive this Note, with the form below entitled "Option to Elect Repayment" duly completed, not later than five Business Days after the date of such telegram, telex, facsimile transmission or letter (and this Note and form duly completed are received by the Paying Agent on behalf of the Company by such fifth Business Day). Any such election shall be irrevocable. The address -20- 21 to which such deliveries are to be made is The First National Bank of Chicago, Attention: Securities Processing Division, 14 Wall Street, Eighth Floor, New York, New York 10005 (or at such other places as the Company shall notify the Holders of the Notes). All questions as to the validity, eligibility (including time of receipt) and acceptance of any Note for repayment will be determined by the Company, whose determination will be final and binding. The Notes are issuable in definitive form without coupons in denominations of $1,000 and integral multiples thereof. Upon due presentment for registration of transfer of this Note at the office or agency of the Company maintained for such purposes in the Borough of Manhattan, The City of New York, a new Note or Notes in authorized denominations for an equal aggregate principal amount and like tenor will be issued to the transferee in exchange therefor, subject to the limitations provided in the Indenture and to the limitations described below, if applicable, without charge except for any tax or other governmental charge imposed in connection therewith. If this Note is a Global Note (as specified on the face hereof), this Note is exchangeable only if (x) the Depository notifies the Company that it is unwilling or unable to continue as Depository for this Global Note or if at any time the Depository ceases to be a clearing agency registered under the Securities Exchange Act of 1934, as amended, (y) the Company in its sole discretion determines that this Global Note shall be exchangeable for definitive Notes in registered form or (z) an Event of Default, or an event which with notice or lapse of time or both would be an Event of Default, with respect to the Notes represented hereby has occurred and is continuing. If this Note is exchangeable pursuant to the preceding sentence, it shall be exchangeable for definitive Notes in registered form, bearing interest (if any) at the same rate or pursuant to the same formula, having the same date of issuance, redemption provisions, if any, Maturity Date and other terms and of differing denominations aggregating a like amount. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Note at the places, at the respective times, at the rate and in the currency herein prescribed. The Company, the Trustee and any paying agent may deem and treat the registered Holder hereof as the absolute owner of this Note at such Holder's address as it appears on -21- 22 the Security Register of the Company as kept by the Trustee or duly authorized agent of the Company (whether or not this Note shall be overdue), for the purpose of receiving payment of or on account hereof and for all other purposes, and neither the Company nor the Trustee nor any paying agent shall be affected by any notice to the contrary. All payments made to or upon the order of such registered Holder shall, to the extent of the sum or sums paid, effectually satisfy and discharge liability for moneys payable on this Note. Terms used herein which are defined in the Indenture and not defined herein shall have the respective meanings assigned thereto in the Indenture. This Note shall be governed by and construed in accordance with the laws of the State of New York. -22- 23 OPTION TO ELECT REPAYMENT TO BE COMPLETED ONLY IF THIS NOTE IS REPAYABLE AT THE OPTION OF THE HOLDER AND THE HOLDER ELECTS TO EXERCISE SUCH RIGHTS The undersigned hereby irrevocably requests and instructs the Company to repay the within Note (or portion thereof specified below) pursuant to its terms at a price equal to the principal amount thereof, together with interest to the repayment date, to the undersigned, at ________________________ ___________________________________________________________ (please print or type name and address of the undersigned). For this Note to be repaid the Company must receive at the Corporate Trust Office of the Trustee in The City of New York or at such other place or places of which the Company shall from time to time notify the Holder of the within Note, on or before the thirtieth, but not earlier than the sixtieth day, or, if such day is not a Business Day, the next succeeding Business Day, prior to the repayment date, (i) this Note, with this "Option to Elect Repayment" form duly completed, or (ii) a telegram, telex, facsimile transmission, or letter from a member of a national securities exchange or the National Association of Securities Dealers, Inc. or a commercial bank or a trust company in the United States of America setting forth (a) the name, address, and telephone number of the Holder of the Note, (b) the principal amount of the Note and the amount of the Note to be repaid, (c) a statement that the option to elect repayment is being exercised thereby, and (d) a guarantee stating that the Note to be repaid with this form duly completed will be received by the Paying Agent on behalf of the Company not later than five Business Days after the date of such telegram, telex, facsimile transmission or letter (and such Note and form duly completed are received by the Paying Agent on behalf of the Company by such fifth Business Day). Exercise of the repayment option by the Holder is irrevocable. If less than the entire principal amount of the within Note is to be repaid, specify the portion thereof (which shall be an integral multiple of $1,000) which the Holder elects to have repaid: ________________________; and specify the denomination or denominations (which shall be $1,000 or an integral multiple thereof) of the Note or Notes to be issued to the Holder for the portion of the within Note not being repaid (in the absence of any such specification, one such Note will be issued for the portion not being repaid): _______________ -23- 24 Date: _____________________ _____________________________________________________________________________ Notice: The signature to this Option to Elect Repayment must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement or any other change whatsoever. -24- 25 ____________________ ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM -- as tenants in common UNIF GIFT MIN ACT -- _____ Custodian ____________ TEN ENT -- as tenants by the entireties (Cust) (Minor) JT TEN -- as joint tenants with right Under Uniform Gifts to Minors Act of survivorship and not as tenants in common _________________________________________ (State)
Additional abbreviations may also be used though not in the above list. FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto Please Insert Social Security or Other Identifying Number of Assignee ________________________________________________________________________________ PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE ________________________________________________________________________________ ________________________________________________________________________________ the within Note of BANPONCE CORPORATION and does hereby irrevocably constitute and appoint ____________________________________________________________________ attorney to transfer the said Note on the books of the Company, with full power of substitution in the premises. Dated: ____________________ _______________________________________ _______________________________________ NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement or any change whatsoever. -25- EX-4.(N) 6 FORM OF FIXED RATE MED-TERM NOTE, SERIES C 1 EXHIBIT (4)(n) [Include if this Note is a Global Note -- THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE THEREOF. THIS NOTE MAY NOT BE TRANSFERRED TO, OR REGISTERED OR EXCHANGED FOR SECURITIES REGISTERED IN THE NAME OF, ANY PERSON OTHER THAN THE Depository OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE REGISTERED, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. EVERY NOTE AUTHENTICATED AND DELIVERED UPON REGISTRATION OF TRANSFER OF, OR IN EXCHANGE FOR OR IN LIEU OF, THIS NOTE SHALL BE A GLOBAL SECURITY SUBJECT TO THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES. Unless this Note is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the Company or its agent for registration of transfer, exchange, or payment, and any Note issued upon registration of transfer of, or in exchange for, or in lieu of, this Note is registered in the name of Cede & Co. or such other name as requested by an authorized representative of DTC (and any payment hereon is made to Cede & Co. or such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.] REGISTERED NO. FXR- CUSIP NO. BANPONCE FINANCIAL CORP. MEDIUM-TERM FIXED RATE NOTE, SERIES C Due Nine Months or More From Date of Issue Payment of Principal, Premium, if any, and Interest Guaranteed by BANPONCE CORPORATION ORIGINAL ISSUE DATE: INITIAL DATE ON WHICH THE PRINCIPAL AMOUNT NOTE IS REPAYABLE AT THE $ OPTION OF THE HOLDER: ISSUE PRICE: REDEEMABLE ON OR AFTER: MATURITY DATE: (AT OPTION OF THE COMPANY) INTEREST RATE PER ANNUM: INITIAL REDEMPTION PERCENTAGE: OID DEFAULT AMOUNT: (Only applicable if Note issued at original issue discount)
2 ANNUAL REDEMPTION DEFAULT RATE: INTEREST PAYMENT DATES: PERCENTAGE REDUCTION: (Only applicable if Note issued at original issue discount) Depository: REGULAR RECORD DATE(S): (Only applicable if Note is a Global Note) OTHER PROVISIONS:
BANPONCE FINANCIAL CORP., a corporation duly organized and existing under the laws of the State of Delaware (herein called the "Company", which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to __________________ _____________, or registered assigns, the principal sum of______________ at the office or agency of the Company maintained for such purpose in the Borough of Manhattan, The City of New York (the "Paying Agent"), on the maturity date specified above (the "Maturity Date"), or if such date is not a Business Day (as defined below), the next succeeding Business Day, in such coin or currency as at the time of payment shall be legal tender for the payment of public and private debts, and to pay interest on said principal sum at the rate per annum (computed on the basis of a 360-day year of twelve 30-day months) specified above, in like coin or currency, from and including the original issue date of this Note specified above (the "Original Issue Date") or from and including the most recent Interest Payment Date to which interest has been duly paid or provided for, on the Interest Payment Date(s) specified above in each year (each an "Interest Payment Date") and at Maturity, until the principal sum hereof has been paid or duly provided for. The first payment of interest on a Note originally issued between a Regular Record Date and an Interest Payment Date will be due and payable on the Interest Payment Date following the next succeeding Regular Record Date to the Holder on such next succeeding Regular Record Date. The interest so payable on any Interest Payment Date will be paid to the Holder at the close of business on the Regular Record Date (specified above) next preceding such Interest Payment Date and interest payable at Maturity will be paid to the Person to whom said principal sum is payable. Any such interest not so punctually paid or duly provided for ("Defaulted Interest") will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Note (or one or more predecessor Notes) is registered at the close of businesson a Special Record Date for the payment -2- 3 of such Defaulted Interest to be fixed by the Trustee referred to on the reverse hereof, notice whereof shall be given to the Holder of this Note not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner, all as more fully provided in the Indenture (as defined on the reverse hereof). Payment of interest on this Note due on any Interest Payment Date (other than interest on this Note due to the Holder hereof at Maturity) shall be paid by check mailed to the Person entitled thereto at his last address as it appears on the Security Register or, if a Depository with respect to this Note is specified above or if $10,000,000 aggregate principal amount of Notes of this series with the Interest Payment Dates specified above are registered in the name of the Holder hereof, in immediately available funds by wire transfer to such account as may have been designated by the Person entitled thereto as set forth herein in time for the paying agent (the "Paying Agent") under the Indenture to make such payments in accordance with its normal procedures. Payment of the principal of and any premium and interest on this Note due to the Holder hereof at Maturity shall be paid in immediately available funds upon presentation of this Note for surrender at the office or agency of the Paying Agent in the Borough of Manhattan, The City of New York, provided that this Note is presented for surrender in time for the Paying Agent to make such payment in such funds in accordance with its normal procedures. Any such designation for wire transfer purposes shall be made by filing the appropriate information with the Trustee at its Corporate Trust Office in the Borough of Manhattan, The City of New York and, unless revoked by written notice to the Trustee received on or prior to the Regular Record Date immediately preceding the applicable Interest Payment Day or the fifteenth calendar day preceding Maturity shall remain in effect with respect to any further payments with respect to this Note payable to such Holder. Any payment of principal, premium or interest on this Note due on any day which is not a Business Day in The City of New York need not be made on such day, but may be made on the next succeeding Business Day in The City of New York with the same force and effect as if made on the due date and no interest shall accrue for the period from and after such date. "Business Day" shall mean, as used herein with respect to any particular location, any day, other than Saturday and Sunday, which is not a day on which banking institutions in such location are authorized or obligated by law or executive order to close. -3- 4 Additional provisions of this Note are contained on the reverse hereof and such provisions shall for all purposes have the same effect as though fully set forth at this place. This Note shall not be valid or become obligatory for any purpose until the Certificate of Authentication hereon shall have been signed by an authorized signatory of the Trustee or its duly authorized agent under the Indenture referred to on the reverse hereof. IN WITNESS WHEREOF, BANPONCE FINANCIAL CORP. has caused this instrument to be signed by its duly authorized officer, and has caused a facsimile of its corporate seal to be affixed hereto or imprinted hereon. Dated: BANPONCE FINANCIAL CORP. By:________________________ Attest:___________________ TRUSTEE'S CERTIFICATE OF AUTHENTICATION This Note is one of a designated series of Debt Securities described in the Indenture referred to on the reverse hereof. THE FIRST NATIONAL BANK OF CHICAGO, as Trustee By:_________________________ Authorized Signatory -4- 5 BANPONCE FINANCIAL CORP. MEDIUM-TERM FIXED RATE NOTE, SERIES C Due Nine Months or More From Date of Issue This Note is one of a duly authorized issue of debentures, notes and other evidences of indebtedness of the Company (hereinafter called the "Debt Securities"), all unconditionally guaranteed by BanPonce Corporation (hereinafter called the "Guarantor") and issued or to be issued under and pursuant to an indenture dated as of October 1, 1991, as supplemented by the First Supplemental Indenture, dated as of February 28, 1995 (together, hereinafter called the "Indenture"), duly executed and delivered by the Company and the Guarantor to The First National Bank of Chicago, as Trustee (hereinafter called the "Trustee") and as Successor Trustee to Citibank, N.A., to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, duties and immunities thereunder of the Trustee and the rights thereunder of the Holders of the Debt Securities. As provided in the Indenture, the Debt Securities may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest, if any, at different rates, may be subject to different redemption provisions, if any, may be subject to different sinking, purchase or analogous funds, if any, may be subject to different covenants and events of default, and may otherwise vary as provided or permitted in the Indenture. This Note is one of a series of the Debt Securities, which series is designated as the Medium-Term Notes, Series C (the "Notes") of the Company and is limited in aggregate initial offering price of up to $1,000,000,000, less the aggregate initial offering price of "Securities" (as defined in the Prospectus, dated September 27, 1995, relating to debt securities and preferred stock of the Company, Popular International Bank, Inc. and BanPonce Financial Corp.) authenticated and delivered upon original issuance, other than the Notes. The Notes may mature at different times, bear interest, if any, at different rates, be redeemable at different times or not at all, be repayable at the option of the Holder at different times or not at all, be issued at an original issue discount, and be denominated in different currencies. In case an Event of Default, as defined in the Indenture, with respect to the Notes shall have occurred and be continuing, the principal hereof may be declared, and upon such declaration shall become, due and payable in the -5- 6 manner, with the effect and subject to the conditions provided in the Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Debt Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with the consent of the Holders of not less than a majority in principal amount of the Debt Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Debt Securities of each series at the time Outstanding, on behalf of the Holders of all Debt Securities of such series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note. In the event that the Guarantor shall be obligated to pay any Additional Amounts due to a change in law, regulation or interpretation, the Company may, at its option, redeem the Note as a whole at a redemption price of 100% of the principal amount thereof (or, if such Note is an original issue discount note, 100% of the OID Default Amount) together with accrued interest to the date fixed for redemption. If so provided on the face of this Note, this Note may also be redeemed by the Company on and after the date so indicated on the face hereof; provided, however, that the first two paragraphs of Section 1103 of the Indenture shall not apply to this Note, and if less than all of the Notes are to be redeemed, the Company may select, from Notes that are subject to redemption pursuant to the terms thereof, the Note or Notes, or portion or portions thereof, to be redeemed. On and after the date, if any, from which this Note may be redeemed, this Note may be redeemed in whole or in part, at the option of the Company at a redemption price equal to the product of the principal amount of this Note to be redeemed multiplied by the Redemption Percentage, together with accrued interest, if any, to the date fixed for redemption. The Redemption Percentage shall initially equal the Initial Redemption Percentage specified on the face of this Note, and shall decline at each anniversary of the initial date that this Note is redeemable by the amount of the Annual Redemption Percentage Reduction specified on -6- 7 the face of this Note, until the Redemption Percentage is equal to 100%. If so provided on the face of this Note, this Note will be repayable in whole or in part in increments of $1,000, provided that the remaining principal amount of any Note surrendered for partial repayment shall be at least $1,000, on any Business Day on or after the "Initial Date on which the Note is Repayable at the Option of the Holder" (as stated on the face hereof), at the option of the Holder, at 100% of the principal amount to be repaid, plus accrued interest, if any, to the repayment date. In order for the exercise of the option to be effective and the Note to be repaid, the Company must receive at the applicable address of the Paying Agent set forth below or at such other place or places of which the Company shall from time to time notify the Holder of this Note, on or before the thirtieth, but not earlier than the sixtieth calendar day, or, if such day is not a Business Day, the next succeeding Business Day, prior to the repayment date, either (i) this Note, with the form below entitled "Option to Elect Repayment" duly completed, or (ii) a telegram, telex, facsimile transmission, or letter from a member of a national securities exchange or the National Association of Securities Dealers, Inc. or a commercial bank or a trust company in the United States of America setting forth (a) the name, address, and telephone number of the Holder of this Note, (b) the principal amount of this Note and the amount of this Note to be repaid, (c) a statement that the option to elect repayment is being exercised thereby, and (d) a guarantee stating that the Paying Agent on behalf of the Company will receive this Note, with the form below entitled "Option to Elect Repayment" duly completed, not later than five Business Days after the date of such telegram, telex, facsimile transmission, or letter (and this Note and form duly completed are received by the Paying Agent on behalf of the Company by such fifth Business Day). Any such election shall be irrevocable. The address to which such deliveries are to be made is The First National Bank of Chicago, Attention: Securities Processing Division, 14 Wall Street, Eighth Floor, New York, New York 10005 (or, at such other places as the Company shall notify the Holders of the Notes). All questions as to the validity, eligibility (including time of receipt) and acceptance of any Note for repayment will be determined by the Company, whose determination will be final and binding. If this Note is issued with an original issue discount, (i) if an Event of Default with respect to the Notes shall have occurred and be continuing, the amount of principal of this Note which may be declared due and payable in the manner, with the effect and subject to the conditions -7- 8 provided in the Indenture, shall be determined in the manner set forth under "OID Default Amount" on the face hereof, and (ii) in the case of a default of payment in principal upon acceleration, redemption, repayment at the option of the Holder or at the Maturity Date hereof, in lieu of any interest otherwise payable, the overdue principal of this Note shall bear interest at a rate of interest per annum equal to the Default Rate stated on the face hereof (to the extent that the payment of such interest shall be legally enforceable), which shall accrue from the date of such acceleration, redemption, repayment at the option of the Holder or Maturity Date, as the case may be, to the date payment has been made or duly provided for or such default has been waived in accordance with the terms of the Indenture. The Notes are issuable in definitive form without coupons in denominations of $1,000 and integral multiples thereof. Upon due presentment for registration of transfer of this Note at the office or agency of the Company maintained for such purpose in the Borough of Manhattan, The City of New York, a new Note or Notes in authorized denominations for an equal aggregate principal amount and like tenor will be issued to the transferee in exchange therefor, subject to the limitations provided in the Indenture and to the limitations described below if applicable, without charge except for any tax or other governmental charge imposed in connection therewith. If this Note is a Global Note (as specified on the face hereof), this Note is exchangeable only if (x) the Depository notifies the Company that it is unwilling or unable to continue as Depository for this Global Note or if at any time the Depository ceases to be a clearing agency registered under the Securities Exchange Act of 1934, as amended, (y) the Company in its sole discretion determines that this Global Note shall be exchangeable for definitive Notes in registered form or (z) an Event of Default, or an event which with notice or lapse of time or both would become an Event of Default, with respect to the Notes represented hereby has occurred and is continuing. If this Note is exchangeable pursuant to the preceding sentence, it shall be exchangeable for definitive Notes in registered form, bearing interest (if any) at the same rate or pursuant to the same formula, having the same date of issuance, redemption provisions, if any, Maturity Date and other terms and of differing denominations aggregating a like amount. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Note -8- 9 at the places, at the respective times, at the rate and in the currency herein prescribed. The Company, the Guarantor, the Trustee and any paying agent may deem and treat the Holder hereof as the absolute owner of this Note at such Holder's address as it appears on the Security Register as kept by the Trustee or duly authorized agent of the Company (whether or not this Note shall be overdue), for the purpose of receiving payment of or on account hereof and for all other purposes, and neither the Company nor the Guarantor nor the Trustee nor any Paying Agent shall be affected by any notice to the contrary. All payments made to or upon the order of such registered Holder shall, to the extent of the sum or sums paid, satisfy and discharge liability for moneys payable on this Note. Terms used herein which are defined in the Indenture and are not defined herein shall have the respective meanings assigned thereto in the Indenture. This Note shall be governed by and construed in accordance with the laws of the State of New York. -9- 10 GUARANTEE OF BANPONCE CORPORATION BanPonce Corporation (the "Guarantor") hereby unconditionally guarantees to the Holder of this Security duly authenticated and delivered by the Trustee, the due and punctual payment of the principal, and premium, if any, of (including any amount in respect of original issue discount), and interest, if any (together with any Additional Amounts payable pursuant to the terms of this Security), on this Security and the due and punctual payment of the sinking fund payments, if any, and analogous obligations, if any, provided for pursuant to the terms of this Security, when and as the same shall become due and payable, whether at Stated Maturity or upon redemption, repayment or upon declaration of acceleration or otherwise according to the terms of this Security and of the Indenture. In case of default by the Company in the payment of any such principal (including any amount in respect of original issue discount), any premium or interest (together with any Additional Amounts payable pursuant to the terms of this Security), sinking fund payment, or analogous obligation, the Guarantor agrees duly and punctually to pay the same. The Guarantor hereby agrees that its obligations hereunder shall be as principal and not merely as surety, and shall be absolute and unconditional irrespective of any extension of the time for payment of this Security, any modification of this Security, any invalidity, irregularity or unenforceability of this Security or the Indenture, any failure to enforce the same or any waiver, modification, consent or indulgence granted to the Company with respect thereto by the Holder of this Security or the Trustee, or any other circumstances which may otherwise constitute a legal or equitable discharge of a surety or guarantor. The Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of merger or bankruptcy of the Company, any right to require a demand or proceeding first against the Company, protest or notice with respect to this Security or the indebtedness evidenced thereby and all demands whatsoever, and covenants that this guarantee will not be discharged as to this Security except by payment in full of the principal of (including any amount payable in respect of original issue discount), and any premium or interest (together with any Additional Amounts payable pursuant to the terms of this Security), thereon. The Guarantor irrevocably waives any and all rights to which it may be entitled, by operation of law or otherwise, upon making any payment hereunder (i) to be -10- 11 subrogated to the rights of a Holder against the Company with respect to such payment or otherwise to be reimbursed, indemnified or exonerated by the Company in respect thereof or (ii) to receive any payment, in the nature of contribution or for any other reason, from any other obligor with respect to such payment. This guarantee shall not be valid or become obligatory for any purpose with respect to this Security until the certificate of authentication on this Security shall have been signed by the Trustee. This guarantee is governed by and construed in accordance with the laws of the State of New York. IN WITNESS WHEREOF, BanPonce Corporation has caused this guarantee to be signed by facsimile by its duly authorized officers and has caused a facsimile of its corporate seal to be affixed hereunto or imprinted hereon. BANPONCE CORPORATION By: ________________________ By: ________________________ Attested: ________________________ -11- 12 OPTION TO ELECT REPAYMENT TO BE COMPLETED ONLY IF THIS NOTE IS REPAYABLE AT THE OPTION OF THE HOLDER AND THE HOLDER ELECTS TO EXERCISE SUCH RIGHTS The undersigned hereby irrevocably requests and instructs the Company to repay the within Note (or portion thereof specified below) pursuant to its terms at a price equal to the principal amount thereof, together with interest to the repayment date, to the undersigned, at ________________________ _______________________________________________________________________________ ________________________________________________________________________________ (Please print or type name and address of the undersigned) For this Note to be repaid the Company must receive at the Corporate Trust Office of the Trustee in The City of New York or at such other place or places of which the Company shall from time to time notify the Holder of the within Note, on or before the thirtieth, but not earlier than the sixtieth, calendar day, or, if such day is not a Business Day, the next succeeding Business Day, prior to the repayment date, (i) this Note, with this "Option to Elect Repayment" form duly completed, or (ii) a telegram, telex, facsimile transmission, or letter from a member of a national securities exchange or the National Association of Securities Dealers, Inc. or a commercial bank or a trust company in the United States of America setting forth (a) the name, address, and telephone number of the Holder of the Note, (b) the principal amount of the Note and the amount of the Note to be repaid, (c) a statement that the option to elect repayment is being exercised thereby, and (d) a guarantee stating that the Note to be repaid with this form duly completed will be received by the Paying Agent on behalf of the Company not later than five Business Days after the date of such telegram, telex, facsimile transmission, or letter (and such Note and form duly completed are received by the Paying Agent on behalf of the Company by such fifth Business Day). Exercise of the repayment option by the Holder shall be irrevocable. If less than the entire principal amount of the within Note is to be repaid, specify the portion thereof (which shall be an integral multiple of $1,000) which the Holder elects to have repaid: __________________________; and specify the denomination or denominations (which shall be $1,000 or an integral multiple thereof) of the Note or Notes to be issued to the Holder for the portion of the within Note not being repaid (in the absence of any -12- 13 specification, one such Note will be issued for the portion not being repaid): ________________ Date:___________________ ________________________________________________________________________________ Notice: The signature to this Option to Elect Repayment must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement or any other change whatsoever. -13- 14 ___________ ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM -- as tenants in common UNIF GIFT MIN ACT--________ Custodian ____________ TEN ENT -- as tenants by the entireties (Cust) (Minor) JT TEN -- as joint tenants with right Under Uniform Gifts to Minors Act of survivorship and not as tenants in common ___________________________________________ (State)
Additional abbreviations may also be used though not in the above list. FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto Please Insert Social Security or Other Identifying Number of Assignee ________________________________________________________________________________ PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE ________________________________________________________________________ ________________________________________________________________________ the within Note of BANPONCE FINANCIAL CORP. and does hereby irrevocably constitute and appoint _____________________________________________________ attorney to transfer the said Note on the books of the Company, with full power of substitution in the premises. Dated: _______________________ ________________________________ ________________________________ NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement or any change whatsoever. -14- EX-4.(O) 7 FORM OF FLOATING RATE MED-TERM NOTE, SERIES C 1 EXHIBIT (4)(o) [Include if this Note is a Global Note -- THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE THEREOF. THIS NOTE MAY NOT BE TRANSFERRED TO, OR REGISTERED OR EXCHANGED FOR SECURITIES REGISTERED IN THE NAME OF, ANY PERSON OTHER THAN THE Depository OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE REGISTERED, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. EVERY NOTE AUTHENTICATED AND DELIVERED UPON REGISTRATION OF TRANSFER OF, OR IN EXCHANGE FOR OR IN LIEU OF, THIS NOTE SHALL BE A GLOBAL SECURITY SUBJECT TO THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES. Unless this Note is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the Company or its agent for registration of transfer, exchange, or payment, and any Note issued upon registration of transfer of, or in exchange for, or in lieu of, this Note is registered in the name of Cede & Co. or such other name as requested by an authorized representative of DTC (and any payment hereon is made to Cede & Co. or such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.] REGISTERED NO. FLR- CUSIP NO. BANPONCE FINANCIAL CORP. MEDIUM-TERM FLOATING RATE NOTE, SERIES C Due Nine Months or More From Date of Issue Payment of Principal, Premium, if any, and Interest Guaranteed by BANPONCE CORPORATION ORIGINAL ISSUE DATE: INITIAL INTEREST RATE: PRINCIPAL AMOUNT $ MATURITY DATE: INTEREST RATE BASIS: INDEX MATURITY: IF LIBOR: [ ] LIBOR REUTERS SPREAD: + REDEEMABLE ON OR AFTER [ ] LIBOR TELERATE - (AT OPTION OF THE COMPANY): INDEX CURRENCY: IF THE CMT RATE: INTEREST PAYMENT PERIOD: INITIAL REDEMPTION [ ] 7055 PERCENTAGE: [ ] 7052 INTEREST RATE RESET MATURITY INDEX: PERIOD: MAXIMUM INTEREST RATE: Depository: INITIAL DATE ON WHICH THE SPREAD MULTIPLIER: NOTE IS REPAYABLE AT THE (Only applicable if this Note OPTION OF THE HOLDER: ANNUAL REDEMPTION is a Global Note) PERCENTAGE REDUCTION:
2 INTEREST PAYMENT DATES: MINIMUM INTEREST RATE: INTEREST CALCULATION DATES: (If other than ten calendar CALCULATION AGENT: days after the Interest Determination Date) OTHER PROVISIONS: BANPONCE FINANCIAL CORP., a corporation duly organized and existing under the laws of the State of Delaware (herein called the "Company", which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to___________________, or registered assigns, the principal sum of _____________________________ at the office or agency of the Company maintained for such purposes in the Borough of Manhattan, The City of New York (the "Paying Agent"), on the maturity date shown above (the "Maturity Date"), or if such date is not a Business Day, the next succeeding Business Day, in such coin or currency as at the time of payment shall be legal tender for the payment of public and private debts, and to pay interest commencing with the first Interest Payment Date specified above following the Original Issue Date specified above or from and including the most recent Interest Payment Date to which interest has been duly paid or provided for monthly, quarterly, semi-annually or annually as specified above under "Interest Payment Period", on the Interest Payment Dates specified above and at Maturity, on said principal sum at said offices or agencies, in like coin or currency, at a rate per annum equal to the Initial Interest Rate specified above until the first Interest Reset Date following the Original Issue Date specified above and thereafter at a rate per annum determined in accordance with the provisions on the reverse hereof under the heading "Determination of Interest Rate Per Annum for Certificate of Deposit Rate Notes", "Determination of Interest Rate Per Annum for Commercial Paper Rate Notes", "Determination of Interest Rate Per Annum for CMT Rate", "Determination of Interest Rate Per Annum for Eleventh District Cost of Funds Rate Notes", "Determination of Interest Rate Per Annum for Federal Funds Rate Notes", "Determination of Interest Rate Per Annum for LIBOR Notes", "Determination of Interest Rate Per Annum for Prime Rate Notes" or "Determination of Interest Rate Per Annum for Treasury Rate Notes", depending upon whether the Interest Rate Basis specified above is Certificate of Deposit Rate, Commercial Paper Rate, CMT Rate, Eleventh District Cost of Funds Rate, Federal Funds Rate, LIBOR, Prime Rate or Treasury Rate; provided, however, -2- 3 that if any Interest Payment Date specified above would otherwise fall on a day that is not a Business Day (as defined herein), such Interest Payment Date will be the next succeeding Business Day, except that in the event that the Interest Rate Basis for this Note is LIBOR, if such day falls in the next calendar month, such Interest Payment Date will be the next preceding day that is a Business Day. Interest on this Note shall accrue (a) if the rate at which interest on this Note is payable shall be adjusted monthly, quarterly, semi-annually or annually, as specified above under "Interest Rate Reset Period" and as determined in accordance with the provisions on the reverse hereof, from the Interest Payment Date next preceding the date of this Note to which interest has been paid, unless the date hereof is an Interest Payment Date to which interest has been paid, in which case from the date of this Note, or unless no interest has been paid on this Note, in which case from the Original Issue Date specified above, until the principal sum hereof has been paid or duly provided for or (b) if the rate at which interest on this Note is payable shall be adjusted daily or weekly, as specified above under "Interest Rate Reset Period" and as determined in accordance with the provisions on the reverse hereof, from the Regular Record Date (as defined herein) next preceding the date of this Note through which interest has been paid, unless the date hereof is a Regular Record Date through which interest has been paid, in which case from the day after the date of this Note, or unless no interest has been paid on this Note, in which case from the Original Issue Date specified above, until the principal sum hereof has been paid or duly provided for; provided, however, that if the Original Issue Date is after any Regular Record Date preceding any Interest Payment Date and before such Interest Payment Date, interest on this Note shall accrue from such Interest Payment Date unless the rate at which interest on this Note is payable shall be adjusted daily or weekly, as provided above under "Interest Rate Reset Period" and as determined in accordance with the provisions on the reverse hereof, in which case interest on this Note shall accrue from such Regular Record Date, or, in either case, if no interest has been paid on this Note, from the Original Issue Date specified above. The interest so payable on any Interest Payment Date will be paid to the Holder at the close of business on the Regular Record Date next preceding such Interest Payment Date, and interest payable at Maturity will be paid to the Person to whom said principal sum is payable; provided, however, that the first payment of interest on a Note originally issued between a Regular Record Date and an Interest Payment Date will be made on the Interest Payment Date following the next succeeding Regular Record Date to the Holder on such next succeeding Regular Record Date. Any such interest not so punctually paid or duly provided for ("Defaulted Interest") will forthwith cease to be payable to the Holder on such -3- 4 Regular Record Date and may either be paid to the Person in whose name this Note (or one or more predecessor Notes) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee referred to on the reverse hereof, notice whereof shall be given to the Holder of this Note not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner, all as more fully provided in the Indenture (as defined on the reverse hereof). "Regular Record Date" shall mean the fifteenth day, whether or not such date shall be a Business Day, prior to any Interest Payment Date. "Business Day" shall mean, as used herein with respect to any particular location, any day, other than a Saturday or Sunday, which is (a) not a day on which banking institutions in such location are authorized or obligated by law or executive order to close and (b), in the event that the Interest Rate Basis for this Note is LIBOR, a London Banking Day. "London Banking Day" shall mean any day on which dealings in deposits in U.S. dollars are transacted in the London interbank market. Payment of interest on this Note due on any Interest Payment Date (other than interest on this Note due to the Holder hereof at Maturity) shall be made by check mailed to the Person entitled thereto at his last address as it appears on the Security Register or, if a Depository with respect to this Note is specified above or if $10,000,000 aggregate principal amount of Notes of this series with the Interest Payment Dates specified above are registered in the name of the Holder hereof, in immediately available funds by wire transfer to such account as may have been appropriately designated by the Person entitled thereto as set forth herein in time for the Paying Agent to make such payment in such funds in accordance with its normal procedures. Payment of the principal of, and any premium and interest on this Note due to the Holder hereof at Maturity shall be made in immediately available funds upon presentation of this Note at the office or agency of the Paying Agent in the Borough of Manhattan, The City of New York, provided that this Note is presented for surrender in time for the Paying Agent to make such payment in such funds in accordance with its normal procedures. Any such designation for wire transfer purposes shall be made by filing the appropriate information with the Paying Agent at its Corporate Trust Office or agency in the Borough of Manhattan, The City of New York and, unless revoked by written notice to the Paying Agent received on or prior to the Regular Record Date immediately preceding the applicable Interest Payment Date or the fifteenth day preceding Maturity, shall remain in effect with respect to any further payments with respect to this Note payable to such Holder. -4- 5 If any Interest Payment Date with respect to this Note would otherwise fall on a day that is not a Business Day such Interest Payment Date shall be postponed to the next day that is a Business Day provided, however, that in the event that the Interest Rate Basis for this Note is LIBOR, if such Business Day falls in the next succeeding calendar month, such payment shall be made on the immediately preceding Business Day. If the date of Maturity of this Note would fall on a day that is not a Business Day, the payment of principal, premium, if any, and interest shall be made on the next succeeding Business Day, and no interest on such payment shall accrue for the period from and after Maturity. Additional provisions of this Note are contained on the reverse hereof and such provisions shall for all purposes have the same effect as though fully set forth at this place. This Note shall not be valid or become obligatory for any purpose until the Certificate of Authentication hereon shall have been signed by an authorized signatory of the Trustee or its duly authorized agent under the Indenture referred to on the reverse hereof. -5- 6 IN WITNESS WHEREOF, BANPONCE FINANCIAL CORP. has caused this instrument to be signed by its duly authorized officer, and has caused a facsimile of its corporate seal to be affixed hereto or imprinted hereon. Dated: BANPONCE FINANCIAL CORP. By:________________________ Attest:___________________ TRUSTEE'S CERTIFICATE OF AUTHENTICATION This Note is one of a designated series of Debt Securities described in the Indenture referred to on the reverse hereof. THE FIRST NATIONAL BANK OF CHICAGO, as Trustee By:____________________ Authorized Signatory -6- 7 BANPONCE FINANCIAL CORP. MEDIUM-TERM FLOATING RATE NOTE, SERIES C Due Nine Months or More From Date of Issue This Note is one of a duly authorized issue of debentures, notes or other evidences of indebtedness of the Company (hereinafter called the "Debt Securities"), all unconditionally guaranteed by BanPonce Corporation (hereinafter called the "Guarantor") and issued or to be issued under and pursuant to an indenture dated as of October 1, 1991, as supplemented by the First Supplemental Indenture, dated as of February 28, 1995 (together, hereinafter called the "Indenture"), duly executed and delivered by the Company and the Guarantor to The First National Bank of Chicago, as Trustee (hereinafter called the "Trustee") and as Successor Trustee to Citibank, N.A., to which Indenture and all indentures supplemental thereto reference is hereby made for a description of the rights, duties and immunities thereunder of the Trustee and the rights thereunder of the Holders of the Debt Securities. As provided in the Indenture, the Debt Securities may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest, if any, at different rates, may be subject to different redemption provisions, if any, may be subject to different sinking, purchase or analogous funds, if any, may be subject to different covenants and events of default, and may otherwise vary as provided or permitted in the Indenture. This Note is one of a series of the Debt Securities, which series is designated as the Medium-Term Notes, Series C (the "Notes") of the Company and is limited in aggregate initial offering price of up to $1,000,000,000, less the aggregate initial offering price of "Securities" (as defined in the Prospectus, dated September 27, 1995, relating to debt securities and preferred stock of the Company, Popular International Bank, Inc. and BanPonce Financial Corp.) authenticated and delivered upon original issuance, other than the Notes. The Notes may mature at different times, bear interest, if any, at different rates, be redeemable at different times or not at all, be repayable at the option of the Holder at different times or not at all, and be denominated in different currencies. The interest rate in effect from the date of issue to the first Interest Reset Date shall be the Initial Interest Rate specified on the face hereof. Commencing with the first Interest Reset Date following the Original Issue -7- 8 Date specified on the face hereof, the rate at which interest on this Note is payable shall be adjusted daily, weekly, monthly, quarterly, semi-annually or annually as specified on the face hereof under "Interest Rate Reset Period". Each such adjusted rate shall be applicable from and including the Interest Reset Date to which it relates but not including the next succeeding Interest Reset Date or until Maturity, as the case may be. Subject to applicable provisions of law and except as specified herein, on each Interest Reset Date, the rate of interest on this Note shall be the rate determined with respect to the Interest Determination Date next preceding such Interest Reset Date in accordance with the provisions of the applicable heading below. If the Interest Rate Basis specified on the face of this Note is the Certificate of Deposit Rate, Commercial Paper Rate, CMT Rate, Federal Funds Rate or Prime Rate, the Interest Determination Date with respect to any Interest Reset Date shall be the second Business Day immediately preceding such Interest Reset Date. If the Interest Rate Basis specified on the face hereof is the Treasury Rate, the Interest Determination Date with respect to any Interest Reset Date shall be the day of the week in which such Interest Reset Date falls on which Treasury bills are auctioned; provided, however, that if, as a result of a legal holiday, an auction with respect to any week is held on the preceding Friday, such Friday shall be the Interest Determination Date with respect to the Interest Reset Date occurring in the next succeeding week. If the Interest Rate Basis specified on the face of this Note is the Eleventh District Cost of Funds Rate, the Interest Determination Date with respect to any Interest Reset Date shall be the last Business Day of the month immediately preceding such Interest Reset Date on which the Federal Home Loan Bank of San Francisco publishes the Eleventh District Cost of Funds Index (as defined below). If the Interest Rate Basis specified on the face of this Note is LIBOR, the Interest Determination Date with respect to any Interest Reset Date shall be the second London Banking Day preceding such Interest Reset Date. If the Interest Rate Reset Period specified on the face hereof is daily, the Interest Reset Dates with respect to this Note shall be each Business Day. If the Interest Rate Reset Period specified on this face of this Note is weekly, the Interest Reset Dates with respect to this Note shall be Wednesday of each week; provided, however, that if the Interest Rate Basis specified on the face of this Note is the Treasury Rate, the Interest Reset Dates with respect to this Note shall be Tuesday of each week. If the Interest -8- 9 Rate Reset Period specified on the face of this Note is monthly, the Interest Reset Dates with respect to this Note shall be the third Wednesday of each month; provided, however, if the Interest Rate Basis specified on the face of this Note is the Eleventh District Cost of Funds Rate, the Interest Reset Date with respect to this Note shall be the first Business Day of each month. If the Interest Rate Reset Period specified on the face of this Note is quarterly, the Interest Reset Dates with respect to this Note shall be the third Wednesday of March, June, September and December of each year. If the Interest Rate Reset Period specified on the face of this Note is semi-annual, the Interest Reset Dates with respect to this Note shall be the third Wednesday of the two months in each year specified on the face hereof under Interest Rate Reset Period. If the Interest Rate Reset Period specified on the face of this Note is annual, the Interest Rate Reset Dates with respect to this Note shall be the third Wednesday of the month in each year specified on the face hereof under Interest Rate Reset Period. Notwithstanding the foregoing, if the Interest Rate Basis specified on the face hereof is Treasury Rate and any Interest Reset Date with respect to this Note falls on a day on which Treasury bills are to be auctioned, then such Interest Reset Date shall be postponed to the next succeeding Business Day. If any Interest Reset Date with respect to this Note would otherwise be a day that is not a Business Day, such Interest Reset Date shall be postponed to the next succeeding Business Day; provided, however, if the Interest Rate Basis specified on the face hereof is LIBOR, if such next succeeding Business Day is in the next succeeding calendar month, such Interest Reset Date shall be the immediately preceding Business Day. Unless otherwise specified on the face hereof, the Calculation Date with respect to any Interest Determination Date shall be the earlier of (i) the tenth calendar day after such Interest Determination Date, or if any such day is not a Business Day (as defined in the Indenture) the next succeeding Business Day or (ii) the Business Day preceding the applicable Interest Payment Date or Maturity, as the case may be. Determination of Interest Rate Per Annum for Certificate of Deposit Rate Notes. If the Interest Rate Basis specified on the face hereof is Certificate of Deposit Rate, the Interest Rate per annum determined with respect to any Interest Determination Date shall equal the rate on such date, adjusted by the addition or subtraction of the Spread, if any, specified on the face hereof, and/or by multiplication by the Spread Multiplier, if any, specified on the face hereof and calculated to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upwards, for negotiable certifi- -9- 10 cates of deposit having the Index Maturity specified on the face hereof as published by the Board of Governors of the Federal Reserve System in "Statistical Release H.15(519), Selected Interest Rates" or any successor publication of the Board of Governors of the Federal Reserve System ("H.15(519)") under the heading "CDs (Secondary Market)." In the event that such rate is not published prior to 3:00 P.M., New York City time, on the Calculation Date with respect to such Interest Determination Date, then the Certificate of Deposit Rate with respect to such Interest Reset Date shall be the rate (adjusted and/or multiplied and calculated as described above) on such Interest Determination Date for negotiable certificates of deposit having the Index Maturity specified on the face hereof as published by the Federal Reserve Bank of New York in its daily statistical release, "Composite 3:30 P.M. Quotations for U.S. Government Securities," or any successor publication of the Federal Reserve Bank of New York ("Composite Quotations"), under the heading "Certificates of Deposit." If by 3:00 P.M., New York City time, on the Calculation Date with respect to such Interest Determination Date such rate is not published in either H.15(519) or Composite Quotations, the Certificate of Deposit Rate with respect to such Interest Determination Date shall be calculated by the Calculation Agent and shall be the arithmetic mean (adjusted and/or multiplied and calculated as described above) of the secondary market offered rates, as of 10:00 A.M., New York City time, on such Interest Determination Date, of three leading nonbank dealers of negotiable U.S. dollar certificates of deposit in The City of New York selected by the Calculation Agent for negotiable certificates of deposit of major United States money center banks (in the market for negotiable certificates of deposit) with a remaining maturity closest to the Index Maturity, specified on the face hereof in denominations of U.S. $5,000,000; provided, however, that, if fewer than three dealers selected as aforesaid by the Calculation Agent are quoting as mentioned in this sentence, the Certificate of Deposit Rate with respect to such Interest Determination Date will be the Certificate of Deposit Rate in effect on such Interest Determination Date. Determination of Interest Rate Per Annum for Commercial Paper Rate Notes. If the Interest Rate Basis specified on the face hereof is Commercial Paper Rate, the interest rate per annum determined with respect to any Interest Determination Date shall equal (a) the Money Market Yield (as defined herein) of the rate on such Interest Determination Date for commercial paper having the Index Maturity specified on the face hereof, (i) as such rate is published in H.15(519), under the heading "Commercial -10- 11 Paper," or (ii) if such rate is not so published on or prior to 3:00 P.M., New York City time, on the Calculation Date pertaining to such Interest Determination Date, as published in Composite Quotations, under the heading "Commercial Paper," or (b) if by 3:00 P.M., New York City time, on the Calculation Date with respect to such Interest Determination Date, such rate is not published in either of such publications, the Money Market Yield of the arithmetic mean of the offered rates, as of 11:00 A.M., New York City time, on such Interest Determination Date, of three leading dealers in commercial paper in The City of New York selected by the Calculation Agent for commercial paper having the Index Maturity specified on the face hereof placed for industrial issuers whose bond rating is "AA," or the equivalent, from a nationally recognized rating agency, in each of the above cases, adjusted by the addition or subtraction of the Spread, if any, specified on the face hereof, and/or by multiplication by the Spread Multiplier, if any, specified on the face hereof and calculated to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upwards; provided, however, that if fewer than three dealers selected as aforesaid by the Calculation Agent are quoting rates as described above, the interest rate per annum hereon with respect to such Interest Determination Date shall be the Commercial Paper Rate in effect hereon on such Interest Determination Date. "Money Market Yield" shall be a yield (expressed as a percentage) calculated in accordance with the following formula: Money Market Yield = 100 x 360 x D ----------------------- 360 - (D x M) where "D" refers to the per annum rate for commercial paper, quoted on a bank discount basis and expressed as a decimal calculated to seven decimal places, without rounding; and "M" refers to the actual number of days in the interest period for which interest is being calculated. Determination of Interest Rate Per Annum for CMT Rate Notes. If the Interest Rate Basis specified on the face hereof is CMT Rate, the Interest Rate per annum determined with respect to any Interest Determination Date shall equal the rate displayed on the Designated CMT Telerate Page (as defined herein) under the caption "...Treasury Constant Maturities...Federal Reserve Board Release H.15...Mondays Approximately 3:45 P.M.," under the column for the Designated CMT Maturity Index (as defined herein) for (i) if the Designated CMT Telerate Page is 7055, -11- 12 the rate on such Interest Determination Date and (ii) if the Designated CMT Telerate Page is 7052, the week, or the month, as applicable, ended immediately preceding the week in which the related Interest Determination Date occurs. If such rate is no longer displayed on the relevant page, or if not displayed by 3:00 P.M., New York City time, on the related Calculation Date, then the CMT Rate for such Interest Determination Date will be such treasury constant maturity rate for the Designated CMT Maturity Index as published in the relevant H.15(519). If such rate is no longer published, or if not published by 3:00 P.M., New York City time, on the related Calculation Date, then the CMT Rate for the Interest Determination Date will be such treasury constant maturity rate for the Designated CMT Maturity Index (or other United States Treasury rate for the Designated CMT Maturity Index) for the Interest Determination Date with respect to such Interest Reset Date as may then be published by either the Board of Governors of the Federal Reserve System or the United States Department of the Treasury that the Calculation Agent determines to be comparable to the rate formerly displayed on the Designated CMT Telerate Page and published in the relevant H.15(519). If such information is not provided by 3:00 P.M., New York City time, on the related Calculation Date, then the CMT Rate for such Interest Determination Date will be calculated by the Calculation Agent and will be a yield to maturity, based on the arithmetic mean of the secondary market closing offer side prices as of approximately 3:30 P.M., New York City time, on the Interest Determination Date reported, according to their written records, by three leading primary United States government securities dealers (each, a "Reference Dealer") in The City of New York selected by the Calculation Agent (from five such Reference Dealers selected by the Calculation Agent and eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest)), for the most recently issued direct noncallable fixed rate obligations of the United States ("Treasury Notes") with an original maturity of approximately the Designated CMT Maturity Index and a remaining term to maturity of not less than such Designated CMT Maturity Index minus one year. If the Calculation Agent cannot obtain three such Treasury Note quotations, the CMT Rate for such Interest Determination Date will be calculated by the Calculation Agent and will be a yield to maturity based on the arithmetic mean of the secondary market offer side prices as of approximately 3:30 P.M., New York City time, on the Interest Determination Date of three Reference Dealers in The City of New York (from five such Reference Dealers selected by the Calculation Agent and eliminating the highest quotation (or, in the event of equality, one of -12- 13 the highest) and the lowest quotation (or, in the event of equality, one of the lowest)), for Treasury Notes with an original maturity of the number of years that is the next highest to the Designated CMT Maturity Index and a remaining term to maturity closest to the Designated CMT Maturity Index and in an amount of at least $100 million. If three or four (and not five) of such Reference Dealers are quoting as described above, then the CMT Rate will be based on the arithmetic mean of the offer prices obtained and neither the highest nor the lowest of such quotes will be eliminated; provided however, that if fewer than three Reference Dealers selected by the Calculation Agent are quoting as described herein, the CMT Rate will be the CMT Rate in effect on such Interest Determination Date. If two Treasury Notes with an original maturity as described in the second preceding sentence have remaining terms to maturity equally close to the Designated CMT Maturity Index, the quotes for the Treasury Note with the shorter remaining term to maturity will be used. "Designated CMT Telerate Page" means the display on the Dow Jones Telerate Service on the page designated above (or any other page as may replace such page on that service for the purpose of displaying Treasury Constant Maturities as reported in H.15(519)), for the purpose of displaying Treasury Constant Maturities as reported in H.15(519). If no such page is specified, the Designated CMT Telerate Page shall be 7052, for the most recent week. "Designated CMT Maturity Index" means the original period to maturity of the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years) specified on the face hereof with respect to which the CMT Rate will be calculated. If no such maturity is specified, the Designated CMT Maturity Index shall be 2 years. Determination of Interest Rate Per Annum for Eleventh District Cost of Funds Notes. If the Interest Rate Basis specified on the face hereof is Eleventh District Cost of Funds, the interest rate per annum determined with respect to any Interest Determination Date shall be the rate equal to the monthly weighted average cost of funds for the calendar month immediately preceding the month in which such Interest Determination Date falls, as set forth under the caption "11th District" on Telerate page 7058 as of 11:00 A.M., San Francisco time, on such Interest Determination Date. If such rate does not appear on Telerate Page 7058 on any related Interest Determination Date, the Eleventh District Cost of Funds Rate for such Interest Determination Date shall be the monthly weighted average cost of funds paid by member institutions of the Eleventh Federal Home -13- 14 Loan Bank District that was most recently announced (the "Index") by the FHLB of San Francisco as such cost of funds for the calendar month immediately preceding the date of such announcement. If the FHLB of San Francisco fails to announce such rate for the calendar month immediately preceding such Interest Determination Date, then the Eleventh District Cost of Funds Rate determined as of the Interest Determination Date will be the Eleventh District Cost of Funds Rate in effect on such Interest Determination Date. In determining that the Federal Home Loan Bank of San Francisco has failed in any month to publish the Eleventh District Cost of Funds Index, the Calculation Agent may conclusively rely on any written advice of the Federal Home Loan Bank of San Francisco to such effect. Determination of Interest Rate Per Annum for Federal Funds Rate Notes. If the Interest Rate Basis specified on the face hereof is Federal Funds Rate, the interest rate per annum determined with respect to any Interest Determination Date shall equal the rate, adjusted by the addition or subtraction of the Spread, if any, specified on the face hereof, and/or by multiplication by the Spread Multiplier, if any, specified on the face hereof and calculated to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upwards, on such Interest Determination Date for Federal Funds as published in H.15(519) under the heading "Federal Funds (Effective)." In the event that such rate is not so published prior to 3:00 P.M., New York City time, on the Calculation Date with respect to such Interest Determination Date, then the Federal Funds Rate with respect to such Interest Determination Date will be the rate (adjusted or multiplied and calculated as described above) on such Interest Determination Date as published in Composite Quotations under the heading "Federal Funds/Effective Rate." If by 3:00 P.M., New York City time, on the Calculation Date with respect to such Interest Determination Date such rate is not published in either H.15(519) or Composite Quotations, the Federal Funds Rate with respect to such Interest Reset Date shall be calculated by the Calculation Agent and shall be the arithmetic mean (adjusted and/or multiplied and calculated as described above) of the rates for the last transaction in overnight Federal Funds arranged by three leading brokers of Federal Funds transactions in The City of New York selected by the Calculation Agent as of 9:00 A.M., New York City time, on such Interest Determination Date; provided, however, that if fewer than three brokers selected as aforesaid by the Calculation Agent are quoting rates as mentioned in this sentence, the Federal Funds Rate with respect to such -14- 15 Interest Determination Date shall be the Federal Funds Rate in effect on such Interest Determination Date. Determination of Interest Rate Per Annum for LIBOR Notes. If the Interest Rate Basis specified on the face hereof is LIBOR, the interest rate per annum determined with respect to any Interest Determination Date relating to a LIBOR Note (a "LIBOR Interest Determination Date") shall equal LIBOR, adjusted by the addition or subtraction of the Spread, if any, specified on the face hereof, and/or by multiplication by the Spread Multiplier, if any, specified on the face hereof and calculated to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upwards, determined by the Calculation Agent in accordance with the following provisions: (i) LIBOR will be determined as set forth on the face hereof, as either (a) the arithmetic mean of the offered rates for deposits in U.S. dollars having the Index Maturity specified on the face hereof, commencing on the second London Banking Day immediately following such LIBOR Interest Determination Date, that appear on the Reuters Screen LIBO Page as of 11:00 A.M., London time, on such LIBOR Interest Determination Date, if at least two such offered rates appear on the Reuters Screen LIBO Page ("LIBOR Reuters"), or (b) the rate for deposits in U.S. dollars having the Index Maturity specified on the face hereof, commencing on the second London Banking Day immediately following such LIBOR Interest Determination Date, that appears on Telerate Page 3750 as of 11:00 A.M., London time, on such LIBOR Interest Determination Date ("LIBOR Telerate"). "Reuters Screen LIBO Page" means the display designated as page "LIBO" on the Reuters Monitor Money Rates Service (or such other page as may replace page LIBO on that service for the purpose of displaying London interbank offered rates of major banks). "Telerate Page 3750" means the display designated as page "3750" on the Telerate Service (or such other page as may replace the 3750 page on that service or such other service or services as may be nominated by the British Bankers' Association for the purpose of displaying London interbank offered rates for U.S. dollar deposits). If neither LIBOR Reuters nor LIBOR Telerate is specified above, LIBOR will be determined if LIBOR Telerate had been specified. If LIBOR Reuters is specified above and at least two such offered rates appear on the Reuters Screen LIBO Page, the rate in respect of such LIBOR Interest Determination Date will be the arithmetic mean of such offered rates as determined by the Calculation Agent. If fewer than two offered rates appear on the Reuters Screen LIBO Page, or if no rate appears on Telerate Page 3750, as applicable, LIBOR in respect of such LIBOR -15- 16 Interest Determination Date will be determined as if the parties had specified the rate described in (ii) below. (ii) With respect to a LIBOR Interest Determination Date on which fewer than two offered rates for the applicable Index Maturity appear on the Reuters Screen LIBO Page, as specified in (i)(a) above, or on which no rate appears on Telerate Page 3750, as specified in (i)(b) above, as applicable, LIBOR will be determined on the basis of the rates at which deposits in U.S. dollars having the Index Maturity specified above are offered at approximately 11:00 A.M., London time, on such LIBOR Interest Determination Date by four major banks in the London interbank market selected by the Calculation Agent (the "Reference Banks") to prime banks in the London interbank market, commencing on the second London Banking Day immediately following such LIBOR Interest Determination Date and in a principal amount equal to an amount of not less than U.S. $1 million that is representative for a single transaction in such market at such time. The Calculation Agent will request the principal London office of each of the Reference Banks to provide a quotation of its rates. If at least two such quotations are provided, LIBOR for such LIBOR Interest Determination Date will be the arithmetic mean of such quotations. If fewer than two quotations are provided, LIBOR for such LIBOR Interest Determination Date will be the arithmetic mean of the rates quoted by 11:00 A.M., New York City time, on such LIBOR Interest Determination Date by three major banks in The City of New York selected by the Calculation Agent for loans in U.S. dollars to leading European banks, having the Index Maturity specified in the applicable Pricing Supplement, commencing on the second London Banking Day immediately following such LIBOR Interest Determination Date and in a principal amount equal to an amount of not less than U.S. $1 million that is representative for a single transaction in such market at such time; provided, however, that if the banks selected as aforesaid by the Calculation Agent are not quoting as mentioned in this sentence, LIBOR will be LIBOR in effect on such LIBOR Interest Determination Date. Determination of Interest Rate Per Annum for Prime Rate Notes. If the Interest Rate Basis specified on the face hereof is Prime Rate, Prime Rate determined with respect to any Interest Determination Date shall equal the rate adjusted by the addition or subtraction of the spread, if any, specified on the face hereof, and/or by multiplication by the Spread Multiplier, if any, specified on the face hereof and calculated to the nearest one hundred- thousandth of a percentage point, with five one-millionths of a percentage point rounded upwards, set forth in H.15(519) for -16- 17 such date opposite the caption "Bank Prime Loan." If such rate is not yet published by 9:00 A.M., New York City time, on the Calculation Date, the Prime Rate for such Prime Rate Interest Determination Date will be the arithmetic mean of the rates of interest publicly announced by each bank named on the Reuters screen NYMF Page as such bank's prime rate or base lending rate as in effect for such Prime Rate Interest Determination Date as quoted on the Reuters Screen NYMF Page on such Prime Rate Interest Determination Date, or, if fewer than four such rates appear on the Reuters Screen NYMF Page for such Prime Rate Interest Determination Date, the rate shall be the arithmetic mean of the prime rates quoted on the basis of the actual number of days in the year divided by 360 as of the close of business on such Prime Rate Interest Determination Date by at least two of the three major money center banks in The City of New York selected by the Calculation Agent from which quotations are requested. If fewer than two quotations are provided, the Prime Rate shall be calculated by the Calculation Agent and shall be determined as the arithmetic mean of the prime rates quoted in The City of New York on such date by the approximate number of banks or trust companies organized and doing business under the laws of the United States, or any State thereof, each having total equity capital of at least $500 million and being subject to supervision or examination by a Federal or State authority, selected by the Calculation Agent to quote such rate or rates; provided, however, that if the Prime Rate is not published in H.15(519) and the banks or trust companies selected as aforesaid are not quoting as mentioned in this sentence, the Prime Rate with respect to such Prime Rate Interest Determination Date will be the interest rate otherwise in effect on such Prime Rate Interest Determination Date. "Reuters Screen NYMF Page" means the display designated as page "NYMF" on the Reuters Monitor Money Rates Service (or such other page as may replace page NYMF on that service for the purpose of displaying prime rates or base lending rates of major United States banks). Determination of Interest Rate Per Annum for Treasury Rate Notes. If the Interest Rate Basis specified on the face hereof is Treasury Rate, the interest rate per annum determined with respect to any Interest Determination Date shall equal the rate adjusted by the addition or subtraction of the spread, if any, specified on the face hereof, and/or by multiplication by the Spread Multiplier, if any, specified on the face hereof and calculated to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upwards, for the most recent auction of direct obligations of the United States ("Treasury bills") having the Index Maturity -17- 18 specified on the face hereof as published in H.15(519), under the heading "Treasury bills -- Auction Average (Investment)" or, if not so published by 3:00 P.M., New York City time, on or prior to the Calculation Date pertaining to such Interest Determination Date, the auction average rate for the aforementioned auction for such Interest Determination Date (expressed as a bond equivalent, calculated to the nearest one hundred-thousandth of a percentage point, rounded upwards, on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) for such auction as otherwise announced by the United States Department of the Treasury, in either case, adjusted by the addition or subtraction of the Spread, if any, specified on the face hereof, and/or by multiplication by the Spread Multiplier, if any, specified on the face hereof and calculated to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upwards. In the event that the results of the auctions of Treasury bills having the Index Maturity specified on the face hereof are not published or reported as provided above by 3:00 P.M., New York City time, on the Calculation Date pertaining to such Interest Determination Date or if no such auction is held for a particular week, then the Treasury Rate with respect to such Interest Determination Date shall be a yield to maturity (expressed as a bond equivalent, calculated to one hundred-thousandth of a percentage point, without rounding, on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis) of the arithmetic mean (adjusted and/or multiplied and calculated as described above) of the secondary market bid rates, as of approximately 3:30 P.M., New York City time, on such Interest Determination Date, of three leading primary United States government securities dealers selected by the Calculation Agent, for the issue of Treasury bills with a remaining maturity closest to the Index Maturity specified on the face hereof; provided, however, that if fewer than three dealers selected as aforesaid by the Calculation Agent are quoting as mentioned in this sentence, the Treasury Rate with respect to such Interest Determination Date shall be the Treasury Rate in effect on such Interest Determination Date. Notwithstanding the foregoing, the interest rate per annum hereon shall not be greater than the Maximum Interest Rate, if any, or less than the Minimum Interest Rate, if any, specified on the face hereof. The Calculation Agent shall calculate the interest rate hereon in accordance with the foregoing on or before each Interest Determination Date. -18- 19 The interest rate on this Note shall in no event be higher than the maximum rate permitted by New York law as the same may be modified by United States law of general application. At the request of the Holder hereof, the Calculation Agent will provide to the Holder hereof the interest rate hereon then in effect and, if different, the interest rate which will become effective as a result of a determination made on the most recent Interest Determination Date with respect to this Note. Interest payments hereon will include interest accrued to but excluding the applicable Interest Payment Date. Accrued Interest hereon from the Original Issue Date or from the last date to which interest hereon has been paid, as the case may be, shall be an amount calculated by multiplying the face amount hereof by an accrued interest factor. Such accrued interest factor shall be computed by adding the interest factors calculated for each day from the Original Issue Date or from the last date to which interest shall have been paid or duly provided for, as the case may be, up to but not including the date for which accrued interest is being calculated. The interest factor for each such day shall be computed by dividing the interest rate per annum applicable to such day by 360 if the Interest Rate Basis specified on the face hereof is Certificate of Deposit Rate, Commercial Paper Rate, Eleventh District Cost of Funds Rate, Federal Funds Rate, LIBOR or Prime Rate or by the actual number of days in the year if the Interest Rate Basis specified on the face hereof is Treasury Rate or CMT Rate. In case an Event of Default, as defined in the Indenture, with respect to the Notes shall have occurred and be continuing, the principal hereof may be declared, and upon such declaration shall become, due and payable in the manner, with the effect and subject to the conditions provided in the Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the Guarantor and the rights of the Holders of the Debt Securities of each series to be affected under the Indenture at any time by the Company, the Guarantor and the Trustee with the consent of the Holders of not less than a majority in principal amount of the Debt Securities at the time Outstanding of each series to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Debt Securities of each series at the time Outstanding, on behalf of the -19- 20 Holders of all Debt Securities of such series, to waive compliance by the Company and the Guarantor with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note. In the event that the Guarantor shall be obligated to pay any Additional Amounts due to a change in law, regulation or interpretation, the Company may, at its option, redeem the Note as a whole at a redemption price of 100% of the principal amount thereof together with accrued interest to the date fixed for redemption. If so provided on the face of this Note, this Note may be redeemed by the Company on and after the date so indicated on the face hereof; provided, however, that the first two paragraphs of Section 1103 of the Indenture shall not apply to this Note, and if less than all of the Notes are to be redeemed, the Company may select, from Notes that are subject to redemption pursuant to the terms thereof, the Note or Notes, or portion or portions thereof, to be redeemed. On and after the date, if any, from which this Note may be redeemed, this Note may be redeemed in whole or in part, at the option of the Company at a redemption price equal to the product of the principal amount of this Note to be redeemed multiplied by the Redemption Percentage together with accrued interest to the date fixed for redemption. The Redemption Percentage shall initially equal the Initial Redemption Percentage specified on the face of this Note, and shall decline at each anniversary of the initial date that this Note is redeemable by the amount of the Annual Redemption Percentage Reduction specified on the face of this Note, until the Redemption Percentage is equal to 100%. If so provided on the face of this Note, this Note will be repayable in whole or in part in increments of $1,000, provided that the remaining principal amount of any Note surrendered for partial repayment shall be at least $1,000, on any Business Day on or after the "Initial Date on which the Note is Repayable at the Option of the Holder" (as stated on the face hereof), at the option of the Holder, at 100% of the face amount hereof, plus accrued interest, if any, to the repayment date. In order for the exercise of the option to be effective and the Notes to be repaid, the Company must receive at the applicable address of the Paying Agent set forth below or at such other place or places of -20- 21 which the Company shall from time to time notify the Holder of this Note, on or before the thirtieth, but not earlier than the sixtieth day, or, if such day is not a Business Day, the next succeeding Business Day, prior to the repayment date, either (i) this Note, with the form below entitled "Option to Elect Repayment" duly completed, or (ii) a telegram, telex, facsimile transmission, or letter from a member of a national securities exchange or the National Association of Securities Dealers, Inc., or a commercial bank or a trust company in the United States of America setting forth (a) the name, address and telephone number of the Holder of this Note, (b) the principal amount of this Note and the amount of this Note to be repaid, (c) a statement that the option to elect repayment is being exercised thereby, and (d) a guarantee stating that the Paying Agent on behalf of the Company will receive this Note, with the form below entitled "Option to Elect Repayment" duly completed, not later than five Business Days after the date of such telegram, telex, facsimile transmission or letter (and this Note and form duly completed are received by the Paying Agent on behalf of the Company by such fifth Business Day). Any such election shall be irrevocable. The address to which such deliveries are to be made is The First National Bank of Chicago, Attention: Securities Processing Division, 14 Wall Street, Eighth Floor, New York, New York 10005 (or at such other places as the Company shall notify the Holders of the Notes). All questions as to the validity, eligibility (including time of receipt) and acceptance of any Note for repayment will be determined by the Company, whose determination will be final and binding. The Notes are issuable in definitive form without coupons in denominations of $1,000 and integral multiples thereof. Upon due presentment for registration of transfer of this Note at the office or agency of the Company maintained for such purposes in the Borough of Manhattan, The City of New York, a new Note or Notes in authorized denominations for an equal aggregate principal amount and like tenor will be issued to the transferee in exchange therefor, subject to the limitations provided in the Indenture and to the limitations described below, if applicable, without charge except for any tax or other governmental charge imposed in connection therewith. If this Note is a Global Note (as specified on the face hereof), this Note is exchangeable only if (x) the Depository notifies the Company that it is unwilling or unable to continue as Depository for this Global Note or if at any time the Depository ceases to be a clearing agency registered under the Securities Exchange Act of 1934, as amended, (y) the Company in its sole discretion determines -21- 22 that this Global Note shall be exchangeable for definitive Notes in registered form or (z) an Event of Default, or an event which with notice or lapse of time or both would be an Event of Default, with respect to the Notes represented hereby has occurred and is continuing. If this Note is exchangeable pursuant to the preceding sentence, it shall be exchangeable for definitive Notes in registered form, bearing interest (if any) at the same rate or pursuant to the same formula, having the same date of issuance, redemption provisions, if any, Maturity Date and other terms and of differing denominations aggregating a like amount. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Note at the places, at the respective times, at the rate and in the currency herein prescribed. The Company, the Guarantor, the Trustee and any paying agent may deem and treat the registered Holder hereof as the absolute owner of this Note at such Holder's address as it appears on the Security Register of the Company as kept by the Trustee or duly authorized agent of the Company (whether or not this Note shall be overdue), for the purpose of receiving payment of or on account hereof and for all other purposes, and neither the Company nor the Guarantor nor the Trustee nor any paying agent shall be affected by any notice to the contrary. All payments made to or upon the order of such registered Holder shall, to the extent of the sum or sums paid, effectually satisfy and discharge liability for moneys payable on this Note. Terms used herein which are defined in the Indenture and not defined herein shall have the respective meanings assigned thereto in the Indenture. This Note shall be governed by and construed in accordance with the laws of the State of New York. -22- 23 GUARANTEE OF BANPONCE CORPORATION BanPonce Corporation (the "Guarantor") hereby unconditionally guarantees to the Holder of this Security duly authenticated and delivered by the Trustee, the due and punctual payment of the principal, and premium, if any, of (including any amount in respect of original issue discount) and interest, if any (together with any Additional Amounts payable pursuant to the terms of this Security), on this Security and the due and punctual payment of the sinking fund payments, if any, and analogous obligations, if any, provided for pursuant to the terms of this Security, when and as the same shall become due and payable, whether at Stated Maturity or upon redemption, repayment or upon declaration of acceleration or otherwise according to the terms of this Security and of the Indenture. In case of default by the Company in the payment of any such principal, any premium or interest (together with any Additional Amounts payable pursuant to the terms of this Security), sinking fund payment, or analogous obligation, the Guarantor agrees duly and punctually to pay the same. The Guarantor hereby agrees that its obligations hereunder shall be as principal and not merely as surety, and shall be absolute and unconditional irrespective of any extension of the time for payment of this Security, any modification of this Security, any invalidity, irregularity or unenforceability of this Security or the Indenture, any failure to enforce the same or any waiver, modification, consent or indulgence granted to the Company with respect thereto by the Holder of this Security or the Trustee, or any other circumstances which may otherwise constitute a legal or equitable discharge of a surety or guarantor. The Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of merger or bankruptcy of the Company, any right to require a demand or proceeding first against the Company, protest or notice with respect to this Security or the indebtedness evidenced thereby and all demands whatsoever, and covenants that this guarantee will not be discharged as to this Security except by payment in full of the principal of, and any premium or interest (together with any Additional Amounts payable pursuant to the terms of this Security), thereon. The Guarantor irrevocably waives any and all rights to which it may be entitled, by operation of law or otherwise, upon making any payment hereunder (i) to be subrogated to the rights of a Holder against the Company with respect to such payment or otherwise to be reimbursed, -23- 24 indemnified or exonerated by the Company in respect thereof or (ii) to receive any payment, in the nature of contribution or for any other reason, from any other obligor with respect to such payment. This guarantee shall not be valid or become obligatory for any purpose with respect to this Security until the certificate of authentication on this Security shall have been signed by the Trustee. This guarantee is governed by and construed in accordance with the laws of the State of New York. IN WITNESS WHEREOF, BanPonce Corporation has caused this guarantee to be signed by facsimile by its duly authorized officers and has caused a facsimile of its corporate seal to be affixed hereunto or imprinted hereon. BANPONCE CORPORATION By: ________________________ By: ________________________ Attested: ________________________ -24- 25 OPTION TO ELECT REPAYMENT TO BE COMPLETED ONLY IF THIS NOTE IS REPAYABLE AT THE OPTION OF THE HOLDER AND THE HOLDER ELECTS TO EXERCISE SUCH RIGHTS The undersigned hereby irrevocably requests and instructs the Company to repay the within Note (or portion thereof specified below) pursuant to its terms at a price equal to the principal amount thereof, together with interest to the repayment date, to the undersigned, at ________________________ _______________________________________________________________________________ (please print or type name and address of the undersigned). For this Note to be repaid the Company must receive at the Corporate Trust Office of the Trustee in The City of New York or at such other place or places of which the Company shall from time to time notify the Holder of the within Note, on or before the thirtieth, but not earlier than the sixtieth day, or, if such day is not a Business Day, the next succeeding Business Day, prior to the repayment date, (i) this Note, with this "Option to Elect Repayment" form duly completed, or (ii) a telegram, telex, facsimile transmission, or letter from a member of a national securities exchange or the National Association of Securities Dealers, Inc. or a commercial bank or a trust company in the United States of America setting forth (a) the name, address, and telephone number of the Holder of the Note, (b) the principal amount of the Note and the amount of the Note to be repaid, (c) a statement that the option to elect repayment is being exercised thereby, and (d) a guarantee stating that the Note to be repaid with this form duly completed will be received by the Paying Agent on behalf of the Company not later than five Business Days after the date of such telegram, telex, facsimile transmission or letter (and such Note and form duly completed are received by the Paying Agent on behalf of the Company by such fifth Business Day). Exercise of the repayment option by the Holder is irrevocable. If less than the entire principal amount of the within Note is to be repaid, specify the portion thereof (which shall be an integral multiple of $1,000) which the Holder elects to have repaid: ___________________________; and specify the denomination or denominations (which shall be $1,000 or an integral multiple thereof) of the Note or Notes to be issued to the Holder for the portion of the within Note not being repaid (in the absence of any such -25- 26 specification, one such Note will be issued for the portion not being repaid): _______________ Date: _____________________ ______________________________________________________________________________ Notice: The signature to this Option to Elect Repayment must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement or any other change whatsoever. -26- 27 ____________________ ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM -- as tenants in common UNIF GIFT MIN ACT -- _____ Custodian ____________ TEN ENT -- as tenants by the entireties (Cust) (Minor) JT TEN -- as joint tenants with right Under Uniform Gifts to Minors Act of survivorship and not as tenants in common _________________________________________ (State)
Additional abbreviations may also be used though not in the above list. FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto Please Insert Social Security or Other Identifying Number of Assignee ________________________________________________________________________________ PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE ________________________________________________________________________________ ________________________________________________________________________________ the within Note of BANPONCE FINANCIAL CORP. and does hereby irrevocably constitute and appoint ________________________________________________________ attorney to transfer the said Note on the books of the Company, with full power of substitution in the premises. Dated: ____________________ _____________________________ _____________________________ NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement or any change whatsoever. -27- EX-5.(C) 8 OPINION OF BRUNILDA SANTOS DE ALVAREZ 1 EXHIBIT (5)(c) BANPONCE CORPORATION PO BOX 362708 SAN JUAN, PUERTO RICO 00936-2708 October 6, 1995 BanPonce Corporation, 209 Munoz Rivera Avenue, Hato Rey, Puerto Rico 00918. Ladies and Gentlemen: In connection with the registration under the Securities Act of 1933, as amended (the "Act"), of up to $1,000,000,000 aggregate amount, or the equivalent thereof in other currencies or currency units, less an amount equal to the aggregate proceeds from the sale of securities other than the Securities (as defined below) registered under the Act under the Registration Statement on Form S-3 (No. 33-61601), of Medium-Term Notes, Series 2 (such series of securities being hereinafter referred to as the "Series" and any securities to be issued from time to time as part of such Series being hereinafter referred to individually as a "Security" and collectively as the "Securities") of BanPonce Corporation, a Puerto Rico corporation (the "Company"), to be issued pursuant to the Indenture, dated as of February 2 BanPonce Corporation -2- 15, 1995 (the "Indenture"), between the Company and The First National Bank of Chicago, as Trustee (the "Trustee"), I, as Counsel to the Company, have examined such corporate records, certificates and other documents, and such questions of law, as I have considered necessary or appropriate for the purposes of this opinion. Upon the basis of such examination, I advise you that, in my opinion: (1) The Company has been duly incorporated and is an existing corporation in good standing under the laws of the Commonwealth of Puerto Rico. (2) The Series has been duly authorized and established in conformity with the Indenture, and, when the terms of a particular Security and of its issuance and sale have been duly authorized and established by all necessary corporate action in conformity with the Indenture, and such Security has been duly prepared, executed, authenticated and issued in accordance with the Indenture and issued and sold as contemplated in the Registration Statement and the Prospectus, dated September 27, 1995 (the "Prospectus"), as supplemented by the Prospectus Supplement, dated October 6, 1995 (the "Prospectus Supplement"), such Security will constitute a valid and legally binding obligation of 3 BanPonce Corporation -3- the Company enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. In connection with my opinion, I have assumed that at the time of the issuance, sale and delivery of each particular Security the authorization of the Series will not have been modified or rescinded and, with respect to each Security, that such Security will conform to the draft forms of the Securities examined by us. I have also assumed that at the time of the issuance, sale and delivery of each particular Security there will not have occurred any change in law affecting the validity, legally binding character or enforceability of such Security and that the issuance, sale and delivery of such Security, all of the terms of such Security and the performance by the Company of its obligations under such Security will comply with applicable law and with each requirement or restriction imposed by any court or governmental body having jurisdiction over the Company and will not result in a default under or a breach of any agreement or instrument then binding upon the Company. 4 BanPonce Corporation -4- I note that, as of the date of this opinion, a judgment for money in an action based on a Security denominated in a foreign currency or currency unit in a Federal or state court in the United States ordinarily would be enforced in the United States only in United States dollars. The date used to determine the rate of conversion of the foreign currency or currency unit in which a particular Security is denominated into United States dollars will depend upon various factors, including which court renders the judgment. In the case of a Security denominated in a foreign currency, a state court in the State of New York rendering a judgment on such Security would be required under Section 27 of the New York Judiciary Law to render such judgment in the foreign currency in which the Security is denominated, and such judgment would be converted into United States dollars at the exchange rate prevailing on the date of entry of the judgment. The foregoing opinion is limited to the Federal laws of the United States, the laws of the Commonwealth of Puerto Rico and the laws of the State of New York, and I am expressing no opinion as to the effect of the laws of any other jurisdiction. With respect to all matters of New York law, I have relied upon the opinion, dated October 6, 1995, of Sullivan & Cromwell, and my opinion is subject to the 5 BanPonce Corporation -5- same assumptions, qualifications and limitations with respect to such matters as are contained in such opinion of Sullivan & Cromwell. Also, I have relied as to certain matters on information obtained from public officials, officers of the Company and other sources believed by us to be responsible, and I have assumed that the Indenture has been duly authorized, executed and delivered by the Trustee thereunder, an assumption which I have not independently verified. I hereby consent to the filing of this opinion as an exhibit to the Registration Statement (No. 33-61601) and to the references to me under the heading "Validity of Offered Securities" in the Prospectus and the heading "Validity of the Notes" in the Prospectus Supplement. In giving such consent, I do not thereby admit that I am in the category of persons whose consent is required under Section 7 of the Act. Very truly yours, /s/ Brunilda Santos de Alvarez ----------------------------- Brunilda Santos de Alvarez EX-5.(D) 9 OPINION OF BRUNILDA SANTOS DE ALVAREZ 1 EXHIBIT (5)(d) BANPONCE FINANCIAL CORP. c/o CT Corporation 1209 Orange Street Wilmington, Delaware 19801 October 6, 1995 BanPonce Corporation, 209 Munoz Rivera Avenue, Hato Rey, Puerto Rico 00918. BanPonce Financial Corp., 521 Fellowship Road, Mt. Laurel, New Jersey 08054. Ladies and Gentlemen: In connection with the registration under the Securities Act of 1933, as amended (the "Act"), of up to $1,000,000,000 aggregate amount, or the equivalent thereof in other currencies or currency units, less an amount equal to the aggregate proceeds from the sale of securities other than the Securities (as defined below) registered under the Act under the Registration Statement on Form S-3 (No. 33-61601), of Medium-Term Notes, Series 2 (such series of securities being hereinafter referred to as the "Series" and any securities to be issued from time to time as part of such Series being hereinafter referred to individually as a "Security" and collectively as the "Securities") of BanPonce 2 BanPonce Corporation -2- BanPonce Financial Corp. Financial Corp., a Delaware corporation (the "Company"), endorsed with guarantees (the "Guarantees") of BanPonce Corporation, a Puerto Rico corporation (the "Guarantor"), to be issued pursuant to the Indenture, dated as of October 1, 1991, as supplemented by the First Supplemental Indenture, dated as of February 28, 1995 (together, the "Indenture"), among the Company, the Guarantor and The First National Bank of Chicago (the "Trustee"), as successor trustee to Citibank, N.A., I, as Counsel to the Guarantor, have examined such corporate records, certificates and other documents, and such questions of law, as I have considered necessary or appropriate for the purposes of this opinion. Upon the basis of such examination, I advise you that, in my opinion: (1) The Guarantor has been duly incorporated and is an existing corporation in good standing under the laws of the Commonwealth of Puerto Rico. (2) The Series has been duly authorized and established in conformity with the Indenture and, when the terms of a particular Security and of its issuance and sale have been duly authorized and established by all necessary corporate action in conformity with the Indenture, and such Security has been duly prepared, 3 BanPonce Corporation -3- BanPonce Financial Corp. executed, authenticated and issued in accordance with the Indenture and issued and sold as contemplated in the Registration Statement and the Prospectus, dated September 27, 1995 (the "Prospectus"), as supplemented by the Prospectus Supplement thereto, dated October 6, 1995 (the "Prospectus Supplement"), such Security will constitute a valid and legally binding obligation of the Company enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. (3) The issuance of the Guarantees has been duly authorized, the Guarantees have been established in conformity with the Indenture and, when the terms of a particular Security and of its issuance and sale have been duly authorized and established by all necessary corporate action in conformity with the Indenture, and such Security has been duly prepared, executed, authenticated and issued in accordance with the Indenture and issued and sold as contemplated in the Registration Statement, the Prospectus and the Prospectus Supplement, and the Guarantee endorsed on 4 BanPonce Corporation -4- BanPonce Financial Corp. such Security has been duly executed in accordance with the Indenture, such Guarantee will constitute a valid and legally binding obligation of the Guarantor enforceable in accordance with its terms, subject to bankruptcy, insolvency,fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. In connection with my opinion, I have assumed that at the time of the issuance, sale and delivery of each particular Security the authorization of the Series and the Guarantees endorsed on the Securities will not have been modified or rescinded and, with respect to each Security and the Guarantee endorsed thereon, that such Security and such Guarantee will conform to the draft forms of the Securities and Guarantees examined by me. I have also assumed that at the time of the issuance, sale and delivery of each particular Security there will not have occurred any change in law affecting the validity, legally binding character or enforceability of such Security and the Guarantee endorsed thereon and that the issuance, sale and delivery of such Security, all of the terms of such Security and the performance by the Company of its obligations under such 5 BanPonce Corporation -5- BanPonce Financial Corp. Security and by the Guarantor of its obligations under such Guarantee will comply with applicable law and with each requirement or restriction imposed by any court or governmental body having jurisdiction over the Company or the Guarantor and will not result in a default under or a breach of any agreement or instrument then binding upon the Company or the Guarantor. I note that, as of the date of this opinion, a judgment for money in an action based on a Security denominated in a foreign currency or currency unit, or on related Guarantees, in a Federal or state court in the United States ordinarily would be enforced in the United States only in United States dollars. The date used to determine the rate of conversion of the foreign currency or currency unit in which a particular Security is denominated into United States dollars will depend upon various factors, including which court renders the judgment. In the case of a Security denominated in a foreign currency, a state court in the State of New York rendering a judgment on such Security, or on a related Guarantee, would be required under Section 27 of the New York Judiciary Law to render such judgment in the foreign currency in which the Security is denominated, and such judgment would be converted into 6 BanPonce Corporation -6- BanPonce Financial Corp. United States dollars at the exchange rate prevailing on the date of entry of the judgment. The foregoing opinion is limited to the Federal laws of the United States, the laws of the Commonwealth of Puerto Rico, the laws of the State of New York and the General Corporation Law of the State of Delaware, and I am expressing no opinion as to the effect of the laws of any other jurisdiction. With respect to all matters of New York law and the General Corporation Law of the State of Delaware, I have relied upon the opinion, dated October 6, 1995, of Sullivan & Cromwell, and my opinion is subject to the same assumptions, qualifications and limitations with respect to such matters as are contained in such opinion of Sullivan & Cromwell. Also, I have relied as to certain matters on information obtained from public officials, officers of the Company and other sources believed by me to be responsible, and I have assumed that the Indenture has been duly authorized, executed and delivered by the Trustee thereunder, an assumption which I have not independently verified. I hereby consent to the filing of this opinion as an exhibit to the Registration Statement (No. 33-61601) and 7 BanPonce Corporation -7- BanPonce Financial Corp. to the references to me under the heading "Validity of Offered Securities" in the Prospectus and the heading "Validity of the Notes and Guarantees" in the Prospectus Supplement. In giving such consent, I do not thereby admit that I am in the category of persons whose consent is required under Section 7 of the Act. Very truly yours, /s/ Brunilda Santos de Alvarez ------------------------------ Brunilda Santos de Alvarez EX-5.(E) 10 OPINION OF SULLIVAN & CROMWELL 1 EXHIBIT (5)(e) SULLIVAN CROMWELL 125 BROAD STREET NEW YORK, NEW YORK 10004 October 6, 1995 BanPonce Corporation, 209 Munoz Rivera Avenue, Hato Rey, Puerto Rico 00918. Ladies and Gentlemen: In connection with the registration under the Securities Act of 1933, as amended (the "Act"), of up to $1,000,000,000 aggregate amount, or the equivalent thereof in other currencies or currency units, less an amount equal to the aggregate proceeds from the sale of securities other than the Securities (as defined below) registered under the Act under the Registration Statement on Form S-3 (No. 33-61601), of Medium-Term Notes, Series 2 (such series of securities being hereinafter referred to as the "Series" and any securities to be issued from time to time as part of such Series being hereinafter referred to individually as a "Security" and collectively as the "Securities") of BanPonce Corporation, a Puerto Rico corporation (the "Company"), to be issued pursuant to the Indenture, dated as of February 2 BanPonce Corporation -2- 15, 1995 (the "Indenture"), between the Company and The First National Bank of Chicago, as Trustee (the "Trustee"), we, as your counsel, have examined such corporate records, certificates and other documents, and such questions of law, as we have considered necessary or appropriate for the purposes of this opinion. Upon the basis of such examination, we advise you that, in our opinion, the Series has been duly authorized and established in conformity with the Indenture, and, when the terms of a particular Security and of its issuance and sale have been duly authorized and established by all necessary corporate action in conformity with the Indenture, and such Security has been duly prepared, executed, authenticated and issued in accordance with the Indenture and issued and sold as contemplated in the Registration Statement and the Prospectus, dated September 27, 1995 (the "Prospectus"), as supplemented by the Prospectus Supplement thereto, dated October 6, 1995 (the "Prospectus Supplement"), such Security will constitute a valid and legally binding obligation of the Company enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or 3 BanPonce Corporation -3- affecting creditors' rights and to general equity principles. In connection with our opinion, we have assumed that at the time of the issuance, sale and delivery of each particular Security the authorization of the Series will not have been modified or rescinded and, with respect to each Security, that such Security will conform to the draft forms of the Securities examined by us. We have also assumed that at the time of the issuance, sale and delivery of each particular Security there will not have occurred any change in law affecting the validity, legally binding character or enforceability of such Security and that the issuance, sale and delivery of such Security, all of the terms of such Security and the performance by the Company of its obligations under such Security will comply with applicable law and with each requirement or restriction imposed by any court or governmental body having jurisdiction over the Company and will not result in a default under or a breach of any agreement or instrument then binding upon the Company. We note that, as of the date of this opinion, a judgment for money in an action based on a Security denominated in a foreign currency or currency unit in a Federal or state court in the United States ordinarily would 4 BanPonce Corporation -4- be enforced in the United States only in United States dollars. The date used to determine the rate of conversion of the foreign currency or currency unit in which a particular Security is denominated into United States dollars will depend upon various factors, including which court renders the judgment. In the case of a Security denominated in a foreign currency, a state court in the State of New York rendering a judgment on such Security would be required under Section 27 of the New York Judiciary Law to render such judgment in the foreign currency in which the Security is denominated, and such judgment would be converted into United States dollars at the exchange rate prevailing on the date of entry of the judgment. The foregoing opinion is limited to the Federal laws of the United States, the laws of the Commonwealth of Puerto Rico and the laws of the State of New York, and we are expressing no opinion as to the effect of the laws of any other jurisdiction. With respect to all matters of Puerto Rico law, we have relied upon the opinion, dated October 6, 1995, of Brunilda Santos de Alvarez, Esq., Puerto Rico counsel to the Company, and our opinion is subject to the same assumptions, qualifications and limitations with respect to such matters as are contained in such opinion of Brunilda Santos de Alvarez, Esq. 5 BanPonce Corporation -5- Also, we have relied as to certain matters on information obtained from public officials, officers of the Company and other sources believed by us to be responsible, and we have assumed that the Indenture has been duly authorized, executed and delivered by the Trustee thereunder, an assumption which we have not independently verified. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement (No. 33-61601) and to the references to us under the heading "Validity of Offered Securities" in the Prospectus and the heading "Validity of the Notes" in the Prospectus Supplement. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Act. Very truly yours, /s/ SULLIVAN & CROMWELL EX-5.(F) 11 OPINION OF SULLIVAN & CROMWELL 1 EXHIBIT (5)(f) SULLIVAN CROMWELL 125 BROAD STREET NEW YORK, NEW YORK 10004 October 6, 1995 BanPonce Corporation, 209 Munoz Rivera Avenue, Hato Rey, Puerto Rico 00918. BanPonce Financial Corp., 521 Fellowship Road, Mt. Laurel, New Jersey 08054. Ladies and Gentlemen: In connection with the registration under the Securities Act of 1933, as amended (the "Act"), of up to $1,000,000,000 aggregate amount, or the equivalent thereof in other currencies or currency units, less an amount equal to the aggregate proceeds from the sale of securities other than the Securities (as defined below) registered under the Act under the Registration Statement on Form S-3 (No. 33-61601), of Medium-Term Notes, Series 2 (such series of securities being hereinafter referred to as the "Series" and any securities to be issued from time to time as part of such Series being hereinafter referred to individually as a "Security" and collectively as the "Securities") of BanPonce 2 BanPonce Corporation -2- BanPonce Financial Corp. Financial Corp., a Delaware corporation (the "Company"), endorsed with guarantees (the "Guarantees") of BanPonce Corporation, a Puerto Rico corporation (the "Guarantor"), to be issued pursuant to the Indenture, dated as of October 1, 1991, as supplemented by the First Supplemental Indenture, dated as of February 28, 1995 (together, the "Indenture"), among the Company, the Guarantor and The First National Bank of Chicago (the "Trustee"), as successor trustee to Citibank, N.A., we, as your counsel, have examined such corporate records, certificates and other documents, and such questions of law, as we have considered necessary or appropriate for the purposes of this opinion. Upon the basis of such examination, we advise you that, in our opinion: (1) The Series has been duly authorized and established in conformity with the Indenture and, when the terms of a particular Security and of its issuance and sale have been duly authorized and established by all necessary corporate action in conformity with the Indenture, and such Security has been duly prepared, executed, authenticated and issued in accordance with the Indenture and issued and sold as contemplated in the Registration Statement and the Prospectus, dated 3 BanPonce Corporation -3- BanPonce Financial Corp. September 27, 1995 (the "Prospectus"), as supplemented by the Prospectus Supplement thereto, dated October 6, 1995 (the "Prospectus Supplement"), such Security will constitute a valid and legally binding obligation of the Company enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. (2) The issuance of the Guarantees has been duly authorized, the Guarantees have been established in conformity with the Indenture and, when the terms of a particular Security and of its issuance and sale have been duly authorized and established by all necessary corporate action in conformity with the Indenture, and such Security has been duly prepared, executed, authenticated and issued in accordance with the Indenture and issued and sold as contemplated in the Registration Statement, the Prospectus and the Prospectus Supplement, and the Guarantee endorsed on such Security has been duly executed in accordance with the Indenture, such Guarantee will constitute a valid and legally binding obligation of the Guarantor 4 BanPonce Corporation -4- BanPonce Financial Corp. enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. In connection with our opinion, we have assumed that at the time of the issuance, sale and delivery of each particular Security the authorization of the Series and the Guarantees endorsed on the Securities will not have been modified or rescinded and, with respect to each Security and the Guarantee endorsed thereon, that such Security and such Guarantee will conform to the draft forms of the Securities and Guarantees examined by us. We have also assumed that at the time of the issuance, sale and delivery of each particular Security there will not have occurred any change in law affecting the validity, legally binding character or enforceability of such Security and the Guarantee endorsed thereon and that the issuance, sale and delivery of such Security, all of the terms of such Security and the performance by the Company of its obligations under such Security and by the Guarantor of its obligations under such Guarantee will comply with applicable law and with each requirement or restriction imposed by any court or 5 BanPonce Corporation -5- BanPonce Financial Corp. governmental body having jurisdiction over the Company or the Guarantor and will not result in a default under or a breach of any agreement or instrument then binding upon the Company or the Guarantor. We note that, as of the date of this opinion, a judgment for money in an action based on a Security denominated in a foreign currency or currency unit, or on related Guarantees, in a Federal or state court in the United States ordinarily would be enforced in the United States only in United States dollars. The date used to determine the rate of conversion of the foreign currency or currency unit in which a particular Security is denominated into United States dollars will depend upon various factors, including which court renders the judgment. In the case of a Security denominated in a foreign currency, a state court in the State of New York rendering a judgment on such Security, or on a related Guarantee, would be required under Section 27 of the New York Judiciary Law to render such judgment in the foreign currency in which the Security is denominated, and such judgment would be converted into United States dollars at the exchange rate prevailing on the date of entry of the judgment. 6 BanPonce Corporation -6- BanPonce Financial Corp. The foregoing opinion is limited to the Federal laws of the United States, the laws of the Commonwealth of Puerto Rico, the laws of the State of New York and the General Corporation Law of the State of Delaware, and we are expressing no opinion as to the effect of the laws of any other jurisdiction. With respect to all matters of Puerto Rico law, we have relied upon the opinion, dated October 6, 1995, of Brunilda Santos de Alvarez, Esq., Puerto Rico counsel to the Guarantor and the Company, and our opinion is subject to the same assumptions, qualifications and limitations with respect to such matters as are contained in such opinion of Brunilda Santos de Alvarez, Esq. Also, we have relied as to certain matters on information obtained from public officials, officers of the Company and other sources believed by us to be responsible, and we have assumed that the Indenture has been duly authorized, executed and delivered by the Trustee thereunder, an assumption which we have not independently verified. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement (No. 33-61601) and to the references to us under the heading 7 BanPonce Corporation -7- BanPonce Financial Corp. "Validity of Offered Securities" in the Prospectus and the heading "Validity of the Notes and Guarantees" in the Prospectus Supplement. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Act. Very truly yours, /s/ SULLIVAN & CROMWELL EX-8.(A) 12 TAX OPINION OF SULLIVAN & CROMWELL 1 EXHIBIT (8)(A) SULLIVAN & CROMWELL 125 BROAD ST. NEW YORK, NEW YORK 10004 October 6, 1995 BanPonce Corporation, 209 Munoz Rivera Avenue Hato Rey, Puerto Rico 00918. Dear Sirs: We have acted as your counsel in connection with the registration under the Securities Act of 1933 (the "Act") of up to $1,000,000,000 aggregate initial offering price, or the equivalent thereof in other currencies or currency units, of Medium Term Notes, Series 2 (the "Notes") of BanPonce Corporation, and hereby confirm to you our opinion as set forth under the heading "United States Taxation" in the Prospectus Supplement relating to the Notes filed under the Act on October 6, 1995. We hereby consent to the filing with the Securities and Exchange Commission of this letter as an exhibit to Registration Statement No. 33-61601 and the reference to us in the above-mentioned Prospectus Supplement under the heading "United States Taxation". In giving such consent, we do not thereby admit that we are in the category 2 BanPonce Corporation -2- of persons whose consent is required under Section 7 of the Act. Very truly yours, /s/ SULLIVAN & CROMWELL EX-8.(B) 13 TAX OPINION OF SULLIVAN & CROMWELL 1 EXHIBIT (8)(B) SULLIVAN & CROMWELL 125 BROAD ST. NEW YORK, NEW YORK 10004 October 6, 1995 BanPonce Corporation, 209 Munoz Rivera Avenue, Hato Rey, Puerto Rico 00918, BanPonce Financial Corp., 521 Fellowship Road, Mt. Laurel, New Jersey 08054. Dear Sirs: We have acted as your counsel in connection with the registration under the Securities Act of 1933 (the "Act") of up to $1,000,000,000 aggregate initial offering price, or the equivalent thereof in other currencies or currency units, of Medium Term Notes, Series C (the "Notes") of BanPonce Financial Corp. and the related guarantees thereof (the "Guarantees") by BanPonce Corporation, and hereby confirm to you our opinion as set forth under the heading "United States Taxation" in the Prospectus Supplement relating to the Notes and Guarantees filed under the Act on October 6, 1995. We hereby consent to the filing with the Securities and Exchange Commission of this letter as an 2 BanPonce Corporation BanPonce Financial Corp. -2- exhibit to Registration Statement No. 33-61601 and the reference to us in the above-mentioned Prospectus Supplement under the heading "United States Taxation". In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Act. Very truly yours, /s/ SULLIVAN & CROMWELL EX-8.(C) 14 TAX OPINION OF MCCONNELL VALDES 1 EXHIBIT (8)(C) MCCONNELL VALDES PO BOX 364225, SAN JUAN, PUERTO RICO 00936-4225 TELEPHONE (809) 759-9292 - FAX (809) 759-9225 October 6, 1995 BanPonce Corporation 209 Munoz Rivera Avenue Hato Rey, Puerto Rico 00918 Dear Sirs: We have acted as your counsel in connection with the registration under the Securities Act of 1933 (the "Act") of up to $1,000,000,000 aggregate initial offering price, or the equivalent thereof in other currencies or currency units, of Medium-Term Notes, Series 2 (the "Notes") of BanPonce Corporation, and hereby confirm to you our opinion as set forth under the heading "Certain Puerto Rico Tax Considerations" in the Prospectus Supplement relating to the Notes filed under the Act on October 6, 1995. We hereby consent to the filing with the Securities and Exchange Commission of this letter as an exhibit to the Registration Statement and the reference to us in the above-mentioned Prospectus Supplement under the heading "Certain Puerto Rico Tax Considerations". In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Act. Very truly yours, McConnell Valdes EX-10.(A) 15 ADMINISTRATIVE PROCEDURES 1 EXHIBIT (10)(a) BANPONCE CORPORATION MEDIUM-TERM NOTE ADMINISTRATIVE PROCEDURES (DATED AS OF OCTOBER 6, 1995) Medium-Term Notes (collectively, the "Notes") in the aggregate principal amount of up to $1,000,000,000 are to be offered on a continuous basis by BanPonce Corporation (the "Company") through Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), CS First Boston Corporation ("CS First Boston") and First Chicago Capital Markets, Inc. ("First Chicago") who, as agents (each an "Agent"), have agreed to use their reasonable efforts to solicit offers to purchase the Notes from the Company. The Agents also may purchase Notes as principal for resale. The Notes are being sold pursuant to a Distribution Agreement between the Company and the Agents, dated October 6, 1995 (the "Distribution Agreement"). The Notes will be issued pursuant to the Indenture (the "Indenture"), dated as of February 15, 1995, between the Company and The First National Bank of Chicago, as trustee (the "Trustee"). A Registration Statement (the "Registration Statement", which term shall include any additional registration statements filed in connection with the Notes as provided in the Distribution Agreement) with respect to the Notes has been filed with the Securities and Exchange Commission (the "Commission"). The most recent base Prospectus included in the Registration Statement, as supplemented with respect to the Notes, is herein referred to as the "Prospectus." The most recent supplement to the Prospectus with respect to the specific terms of the Notes is herein referred to as the "Pricing Supplement." The Notes will either be issued (a) in book-entry form and represented by one or more fully registered Notes (each, a "Book-Entry Note") delivered to the appropriate Trustee, as agent for The Depository Trust Company ("DTC"), and recorded in the book-entry system maintained by DTC, or (b) in certificated form (each, a "Certificated Note") delivered to the purchaser thereof or a person designated by such purchaser. Owners of beneficial interests in Book-Entry Notes will be entitled to physical delivery of Certificated Notes equal in principal amount to their respective beneficial interests only upon certain limited circumstances described in the Prospectus. General procedures relating to the issuance of all Notes are set forth in Part I hereof. Additionally, Book-Entry Notes will be issued in accordance with the procedures set forth in Part II hereof and Certificated Notes will be issued in accordance with the procedures set forth in Part III hereof. Capitalized terms 2 used but not otherwise defined herein shall have the meanings ascribed thereto in the Indenture or the Notes, as the case may be. PART I: PROCEDURES OF GENERAL APPLICABILITY Date of Issuance/ Authentication: Each Note will be dated as of the date of its authentication by the Trustee or its duly appointed authenticating agent. Each Note shall also bear an original issue date (the "Original Issue Date"). 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 Note will mature on a date selected by the purchaser and agreed to by the Company which is not less than nine months nor more than thirty years from its Original Issue Date; provided, however, that Notes bearing interest at rates determined by reference to selected indices ("Floating Rate Notes") will mature on an Interest Payment Date. Currencies: Each Note shall be denominated in one of the currencies or currency units, as specified in the relevant Pricing Supplement, or in such other currency or currency unit as may be agreed from time to time between the Company and each Agent and as specified in the relevant Pricing Supplement, or, if no currency or currency unit is specified therein, in U.S. dollars. Notes denominated in one or more currencies or currency units other than in U.S. dollars are herein referred to as "Multi-Currency Notes." Notes that have the amount of principal payments determined by reference to an index currency are
-2- 3 herein referred to as "Indexed Notes." Denominations: The Notes will be issued in denominations of $1,000 and integral multiples thereof. Any Notes denominated other than in U.S. dollars will be issuable in denominations as set forth in the relevant Multi-Currency and Indexed Note Prospectus Supplement. For special provisions relating to Multi-Currency Notes and Indexed Notes, see the related Multi-Currency and Indexed Note Supplement. Registration: Notes will be issued only in fully registered form. Redemption/Repayment: 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 Optional Repayment Dates, if any. 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 Optional Repayment Dates are indicated with respect to a Note, such Note will not be repayable at the option of the Holder prior to Maturity. The Notes will be subject to redemption by the Company 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 Maturity. Calculation of Interest: In the case of Fixed Rate Notes, interest (including payments for
-3- 4 partial periods) will be calculated and paid on the basis of a 360-day year of twelve 30-day months. In the case of Floating Rate Notes, interest will be calculated and paid on the basis of the actual number of days in the interest period divided by 360 with the exception of Treasury Rate Notes for which interest will be calculated on the basis of the actual number of days in the interest period divided by the actual number of days in the year. If an Interest Payment Date with respect to any Fixed Rate Note falls on a day that is not a Business Day (as hereinafter defined), the payment of interest required to be made on such Interest Payment Date need not be made on such day, but may be made on the next succeeding Business Day with the same force and effect as if made on such Interest Payment Date and no interest shall accrue on such payment for the period from and after such Interest Payment Date. If an Interest Payment Date with respect to any Floating Rate Note would otherwise fall on a day that is not a Business Day, such Interest Payment Date will be the following day that is a Business Day, except that in the case of a LIBOR Note, if such day falls in the next calendar month, such Interest Payment Date will be the preceding day that is a Business Day. If the Stated Maturity, or date of earlier redemption or repayment, as the case may be, of a Note is not a Business Day, the payment of principal and interest due on such day shall be made on the next succeeding Business Day and no interest shall accrue on such payment for the period from and after such Stated Maturity, or date of earlier redemption or repayment. For special provisions relating to
-4- 5 Multi-Currency Notes and Indexed Notes, see the related Multi-Currency and Indexed Note Prospectus Supplement. Acceptance and Rejection of Offers: The Company shall have the sole right to accept offers to purchase Notes from the Company and may reject any such offer in whole or in part. Each Agent shall communicate to the Company, orally or in writing, each reasonable offer to purchase Notes from the Company received by it. Each Agent shall have the right, in its discretion reasonably exercised, without notice to the Company, to reject any offer to purchase Notes through it in whole or in part. Preparation of Pricing Supplement: If any offer to purchase a Note is accepted by the Company, the Company, with the approval of the Agent which presented the order (the "Presenting Agent"), will prepare a Pricing Supplement reflecting the terms of such Note and file the Pricing Supplement relating to the Notes with the Commission in accordance with Rule 424 under the Act. Information to be included in the Pricing Supplement shall include: 1. the name of the Company; 2. the title of the securities, including series designation, if any; 3. the date of the Pricing Supplement and the date of the Prospectus Supplement to which the Pricing Supplement relates; 4. the Price to Public (but only if (a) the trade is being made on an agency basis and (b) such
-5- 6 Price to Public is other than 100%); 5. Net Proceeds to the Company (but only if (a) the trade is being made on a principal basis and (b) the Net Proceeds to the Company is other than 100%), less what would have been the applicable agency commission; 6. the information with respect to the terms of the Notes set forth below (whether or not the applicable Note is a Book-Entry Note) under "Procedures for Notes Issued in Book-Entry Form -- Settlement Procedures", items 2, 3, 7, 8 and 9; and 7. any other terms of the Notes not otherwise specified in the Prospectus or Prospectus Supplement. One copy of such filed document will be sent by telecopy or overnight express (for delivery not later than 11:00 A.M. on the Business Day next following the trade date) to the applicable Presenting Agent at the following addresses: To Merrill Lynch: If by overnight, express or special delivery: Merrill Lynch & Co., Tritech Services, 40 Colonial Drive, Piscataway, New Jersey 08854, Attention: Prospectus Operations/Susan Putnam, If by all other types of deliveries: Tritech Services, #4 Corporate Place, Corporate Park 287, Piscataway, New Jersey 08854, Attention: Prospectus Operations/Nachman Kimerling Telephone: (908) 885-2769 Telecopy: (908) 885-2774/2775/2776
-6- 7 To CS First Boston: CS First Boston Corporation, Five World Trade Center, New York, New York 10048, Attention: Joan Bryan, Transaction Advisory Group Telephone: (212) 322-5105 Telecopy: (212) 803-4096 To First Chicago: First Chicago Capital Markets, Inc. One First National Plaza Mail Suite 0237 Chicago, Illinois 60670 Attention: MTN Operations Manager Telephone: (317) 732-9631 The Presenting Agent will cause a stickered supplemented Prospectus with the trade confirmation to be delivered to the purchaser of the Note.
-7- 8 For record keeping purposes, one copy of each Pricing Supplement shall also be mailed or telecopied to each Agent and the Trustee at the following respective addresses: To Merrill Lynch: Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, World Financial Center, North Tower, 10th Floor, New York, New York 10281-1310, Attention: MTN Product Management Telephone: (212) 449-7476 Telecopy: (212) 449-2234 To CS First Boston: CS First Boston Corporation, 55 East 52nd Street, New York, New York 10055, Attention: Short and Medium-Term Finance Department Telephone: (212) 909-3842 Telecopy: (212) 318-1498 To First Chicago: First Chicago Capital Markets, Inc. One First National Plaza Mail Suite 0407 Chicago, Illinois 60670-0327 Attention: Chief Credit Officer Telephone: (312) 732-5294 Fax: (312) 732-4172 To the Trustee: The First National Bank of Chicago One First National Plaza Suite 0126 Chicago, Illinois 60670-0126 Attention: Corporate Trust Administration In each instance that a Pricing Supplement is prepared, the Presenting Agent will affix the Pricing Supplement to supplemented Prospectuses prior to its use. Outdated Pricing Supplements and the Prospectuses to which they are attached (other than those retained for files) will be destroyed.
-8- 9 Settlement: The receipt of immediately available funds by the Company in payment for a Note and the authentication and delivery of such Note shall, with respect to such Note, constitute "settlement." Offers accepted by the Company will be settled at a time as the purchaser and the Company shall agree and pursuant to the timetable for settlement set forth in Parts II and III hereof under "Settlement Procedures" with respect to Book-Entry Notes and Certificated Notes, respectively (each such date fixed for settlement, a "Settlement Date"). If procedures A and B of the applicable Settlement Procedures with respect to a particular offer are not completed on or before the time set forth under the applicable "Settlement Procedures Timetable", such offer shall not be settled until the Business Day following the completion of Settlement Procedures A and B or such later date as the purchaser and the Company shall agree. In the event of a purchase of Notes by the Presenting Agent as principal, appropriate settlement details will be set forth in the applicable Terms Agreement to be entered into between the Presenting Agent and the Company pursuant to the Distribution Agreement. Procedure for Changing Rates or Other Variable Terms: When a decision has been reached to change the interest rate or any other variable term on any Notes being offered by the Company, the Company will promptly advise the Agents and the Agents will forthwith suspend solicitation of offers to purchase such Notes. Each Agent will telephone the Company with recommendations as to the changed interest rates or other
-9- 10 variable terms. At such time as the Company 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 Company of an offer to purchase at a new interest rate or new variable term, the Company, the Agents and the Trustee shall follow the procedures set forth under the applicable "Settlement Procedures." Suspension of Solicitation; Amendment or Supplement: The Company may instruct the Agents to suspend solicitation of purchases at any time. Upon receipt of such instructions, the Agents will forthwith suspend solicitation of offers to purchase from the Company until such time as the Company has advised them that solicitation of offers to purchase may be resumed. If the Company decides to amend the Registration Statement (including incorporating any documents by reference therein) or supplement any of such documents (other than to change rates or other variable terms), it will promptly advise the Agents and, except in the case of an amendment by the filing of a document incorporated by reference in the Registration Statement, will furnish each Agent and its counsel with copies of the proposed amendment or supplement. One copy of such filed document, along with a copy of the cover letter sent to the Commission, will be delivered or mailed to the Agents at the following addresses:
-10- 11 To Merrill Lynch: Product Management MTNs, Merrill Lynch Money Markets, North Tower, World Financial Center, 10th Floor, New York, New York 10281-1310 Telephone: (212) 449-7476 Telecopy: (212) 449-2234 To CS First Boston: CS First Boston Corporation, 55 East 52nd Street, New York, New York 10055, Attention: Short and Medium-Term Finance Department Telephone: (212) 909-3842 Telecopy: (212) 318-1498 To First Chicago: First Chicago Capital Markets, Inc. One First National Plaza Mail Suite 0407 Chicago, Illinois 60670-0327 Attention: Chief Credit Officer Telephone: (312) 732-5294 Telecopy: (312) 732-4172 In the event that at the time the solicitation of offers to purchase from the Company is suspended (other than to change interest rates or other variable terms) there shall be any offers to purchase Notes that have been accepted by the Company which have not been settled, the Company will promptly advise the Agents and the Trustee whether such offers may be settled and whether copies of the Prospectus as theretofore amended and/or supplemented as in effect at the time of the suspension may be delivered in connection with the settlement of such orders. The Company will have the sole responsibility for such decision and for any arrangements which may be made in the event that the Company determines that such orders may not be settled or that copies of such Prospectus may not be so delivered. Delivery of Prospectus: A copy of the most recent Prospec-
-11- 12 tus 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 obligation or liability to the Signatures: Company or the Trustee in respect of the authenticity of the signature of any officer, employee or agent of the Company or the Trustee on any Note or related Guarantee. Documents Incorporated by Reference: The Company shall supply each Agent with an adequate supply of all documents incorporated by reference in the Registration Statement. Business Day: "Business Day" means any day other than a Saturday, Sunday, or other day on which banks in The City of New York (and, with respect to LIBOR Notes, the City of London) are authorized or obligated by law or executive order to close. For the definition of "Business Day" with respect to Multi- Currency Notes or Indexed Notes, see the Prospectus Supplement.
-12- 13 PART II: PROCEDURES FOR NOTES ISSUED IN BOOK-ENTRY FORM In connection with the qualification of Book-Entry Notes for eligibility in the book-entry system maintained by DTC, the Trustee will perform the custodial, document control and administrative functions described below, in accordance with its obligations under a Letter of Representations from the Company, the Guarantor and the Trustee to DTC, dated October __, 1995, and a Medium-Term Note Certificate Agreement between the Trustee and DTC, dated May 26, 1989 (the "Certificate Agreement"), and its obligations as a participant in DTC, including DTC's Same-Day Funds Settlement System ("SDFS"). Issuance: All Fixed Rate Book-Entry Notes having the same Original Issue Date, interest rate, terms of redemption or repayment, if any, and Stated Maturity (collectively, the "Fixed Rate Terms") will be represented initially by a single global security in fully registered form without coupons; and all Floating Rate Book-Entry Notes having the same Original Issue Date, interest rate basis or bases upon which interest may be determined (each, an "Interest Rate Basis"), which may be one or more of the Commercial Paper Rate, the Treasury Rate, LIBOR, the CD Rate, the CMT Rate, the Federal Funds Rate, the Prime Rate, the Eleventh District Cost of Funds Rate, any other rate set forth by the Company, Initial Interest Rate, Index Maturity, Spread and/or Spread Multiplier, if any, Minimum Interest Rate, if any, Maximum Interest Rate, if any, terms of redemption or repayment, if any, and Stated Maturity (collectively, "Floating Rate Terms") will be represented initially by a single Book-Entry Note. Each Book-Entry Note will be dated and issued as of the date of its authentication by the Trustee or its duly appointed authenticating
-13- 14 agent. Each Book-Entry Note will bear interest from a date (the "Interest Accrual Date") which will be (a) with respect to an original Book-Entry Note (or any portion thereof), its Original Issue Date and (b) with respect to any Book-Entry Note (or portion thereof) issued subsequently upon exchange or transfer of a Book-Entry Note or in lieu of a destroyed, lost or stolen Book-Entry Note, the most recent Interest Payment Date (or, in the case of Floating Rate Notes with interest rates which reset daily or weekly, the day following the most recent Record Date to which interest has been paid or duly provided for on the predecessor Book-Entry Note or Notes (or if no such payment or provision has been made, the Original Issue Date of the predecessor Book-Entry Note or Notes), regardless of the date of authentication of such subsequently issued Book-Entry Note. No Book-Entry Note shall represent any Certificated Note. Identification: The Agents have arranged with the CUSIP Service Bureau (the "CUSIP Service Bureau") of Standard & Poor's Corporation ("Standard & Poor's") for the reservation of approximately 900 CUSIP numbers for each rank of Notes which have been reserved for future assignment to Book-Entry Notes representing Notes issued in book-entry form and have delivered to the Company, the Trustee and DTC an initial written list of such CUSIP numbers. The Trustee will assign CUSIP numbers to Book-Entry Notes as described below under Settlement Procedure B. DTC will notify the CUSIP Service Bureau periodically of the CUSIP numbers that the Trustee has assigned to Book-Entry Notes. The Trustee will notify the Company at
-14- 15 any time when fewer than 100 of the respective reserved CUSIP numbers remain unassigned to Book-Entry Notes, and, if it deems necessary, the Company will reserve additional CUSIP numbers for assignment to Book-Entry Notes representing Notes issued in book-entry form. Upon obtaining such additional CUSIP numbers, the Company will deliver a list of such additional numbers to the Trustee 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 Certificate will instead be represented by two or more Global Certificates which shall be assigned the same CUSIP number. Registration: Each Book-Entry Note will be registered in the name of CEDE & CO., as nominee for DTC, on the register maintained by the Trustee under the Indenture. The beneficial owner of a Book-Entry Note (i.e., an owner of a beneficial interest in a Book-Entry Note), or one or more indirect participants 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 Note in the account of such Participants. The ownership interest of such beneficial owner in such Book-Entry 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.
-15- 16 Transfers: Transfers of beneficial interests in a Book-Entry 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 Book-Entry Note. Exchanges: The Trustee may deliver to DTC and the CUSIP Service Bureau at any time a written notice specifying (a) the CUSIP numbers of two or more Book-Entry Notes Outstanding on such date that represent Book-Entry 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 Book-Entry Notes shall be exchanged for a single replacement Book-Entry Note; and (c) a new CUSIP number to be assigned to such replacement Book-Entry Note. Upon receipt of such a notice, DTC will send to its Participants (including the Trustee) a written reorganization notice to the effect that such exchange will occur on such date. Prior to the specified exchange date, the Trustee 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 Book-Entry Notes to be exchanged will no longer be valid. On the specified exchange date, the Trustee will exchange such Book-Entry Notes for a single Book-Entry Note bearing the new CUSIP number and the CUSIP numbers of the
-16- 17 exchanged Book-Entry Notes will, in accordance with CUSIP Service Bureau procedures, be cancelled and not immediately reassigned. Notwithstanding the foregoing, if the Book- Entry Notes to be exchanged exceed $200,000,000 in aggregate principal amount, one replacement Book-Entry Note will be authenticated and issued to represent each $200,000,000 of principal amount of the exchanged Book- Entry Notes and an additional Book-Entry Note will be authenticated and issued to represent any remaining principal amount of such Book-Entry Notes (see "Denominations" below). Denominations: All Book-Entry Notes will be denominated in U.S. dollars and will be issued in denominations of $1,000 and integral multiples thereof. 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 Book-Entry Note, then one Book-Entry Note will be issued to represent each $200,000,000 principal amount of such Note or Notes issued in book-entry form and an additional Book-Entry Note will be issued to represent any remaining principal amount of such Note or Notes issued in book-entry form. In such a case, each of the Book-Entry Notes shall be assigned the same CUSIP number. Interest: General. Interest on each Note issued in book-entry form will accrue from the Interest Accrual Date of the Book- Entry Note representing such Note. Each payment of interest on a Book-Entry Note will include interest accrued through the day preceding, as the case may
-17- 18 be, the Interest Payment Date (provided that in the case of Floating Rate Notes with interest rates which reset daily or weekly interest payments will include interest accrued to and including the Regular Record Date immediately preceding the Interest Payment Date), the Stated Maturity Date, Redemption Date or Repayment Date. Interest payable at Maturity of a Book-Entry Note will be payable to the Person to whom the principal of such Note is payable. DTC will arrange for each pending deposit message described under Settlement Procedure C below to be transmitted to Standard & Poor's Corporation ("S&P"), 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 S&P. 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, the first payment of interest on any Book-Entry Note originally issued between a Regular Record Date and an Interest Payment Date will occur on the Interest Payment Date following the next Regular Record Date. Fixed Rate Notes. Interest payments on Fixed Rate Book- Entry Notes will be made semiannually on June 15 and December 15 on each year and at Maturity. Floating Rate Notes. Except as provided in Part I under "Calculation of Interest", the Interest Payment Date for a Floating Rate Note will be, in the case of Floating Rate Notes which reset
-18- 19 daily, weekly or monthly, on the third Wednesday of each month or on the third Wednesday of March, June, September and December of each year as specified in the applicable Pricing Supplement; in the case of Floating Rate Notes which reset quarterly, on the third Wednesday of March, June, September and December of each year; in the case of Floating Rate Notes which reset semiannually, on the third Wednesday of the two months of each year specified in the applicable Pricing Supplement; or, in the case of Eleventh District Cost of Funds Rate Notes, on the first Business Day of each month or the first Business Day of each March, June, September or December as specified in the applicable Pricing Supplement and in the case of Floating Rate Notes which reset annually, on the third Wednesday of the month specified in the applicable Pricing Supplement; and, in each case, at Maturity. For additional special provisions relating to Floating Rate Notes, see the Prospectus Supplement. Regular Record Dates. The Regular Record Date with respect to any Interest Payment Date for a Fixed Rate Note shall be the May 31 or November 30 preceding such Interest Payment Date. The Regular Record Date with respect to any Interest Payment Date for any Floating Rate Note shall be the date 15 calendar days (whether or not a Business Day) preceding such Interest Payment Date. Notice of Interest Payments and Regular Record Dates. On the first Business Day of January, April, July and October of each year, the Trustee will deliver to the Company and DTC a written list of Regular Record Dates and Interest Payment
-19- 20 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 Company will notify S&P of the interest rates determined on such Interest Determination Date. Payments of Principal and Interest: Payments of Interest Only. Promptly after each Regular Record Date, the Trustee will deliver to the Company and DTC a written notice specifying by CUSIP number the amount of interest to be paid on each Book-Entry Note issued under the Indenture on the following Interest Payment Date (other than an Interest Payment Date coinciding with Maturity) 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. On such Interest Payment Date, the Company will pay to the Trustee, and the Trustee in turn will pay to DTC, such total amount of interest due (other than at Maturity), at the times and in the manner set forth below under "Manner of Payment." Payments at Maturity. On or about the first Business Day of each month, the Trustee will deliver to the Company and DTC a written list of principal, interest and premium, if any, to be paid on each Book-Entry Note issued under the Indenture having a Maturity in the following month. The Trustee and DTC will confirm the amounts of such principal, premium and interest payments with respect to a Book-Entry Note on or about the fifth Business Day preceding the
-20- 21 Maturity of such Book-Entry Note. At such maturity, the Company will pay to the Trustee, and the Trustee in turn will pay to DTC, the principal amount of such Note, together with interest and premium, if any, due at such Maturity, at the times and in the manner set forth below under "Manner of Payment." Promptly after payment to DTC of the principal, interest and premium, if any, due at the Maturity of such Book-Entry Note, the Trustee will cancel and destroy such Book-Entry Note and deliver to the Company a certificate of destruction therefor. Manner of Payment. The total amount of any principal, premium, if any, and interest due on Book-Entry Notes on any Interest Payment Date or at Maturity shall be paid by the Company to the Trustee in funds available for use as of 9:30 a.m., New York City time, on such date. The Company will make such payment on such Book-Entry Notes by instructing the Trustee to withdraw funds from an account maintained by the Company with the Trustee. The Company will confirm such instructions in writing to the Trustee. Prior to 10:00 a.m., New York City time, on such date or as soon as possible thereafter, the Trustee will pay by separate wire transfer (using Fedwire message entry instructions in a form previously specified by DTC) to an account at the Federal Reserve Bank of New York previously specified by DTC, in funds available for immediate use by DTC, each payment of principal (together with interest and premium, if any) due on a Book-Entry Note on such date. Thereafter on such payment date, DTC will pay, in accordance with its SDFS operating procedures then in effect, such amounts in funds
-21- 22 available for immediate use to the respective Participants in whose names such Notes are recorded in the book-entry system maintained by DTC. Neither the Company nor the Trustee shall have any responsibility or liability for the payment by DTC of the principal of, 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 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 Note. Settlement Procedures: Settlement Procedures with regard to each Book-Entry Note sold by the Agents, as agents of the Company, will be as follows: A. The Presenting Agent will advise the Company by telephone of the following Settlement information: 1. Taxpayer identification number of the purchaser. 2. Principal amount of the Note. 3. Fixed Rate Notes: (a) interest rate Floating Rate Notes: (a) interest rate basis; (b) initial interest rate; (c) spread and/or spread multiplier, if any; (d) initial interest reset dates;
-22- 23 (e) interest reset dates; (f) interest payment dates; (g) index maturity; (h) calculation agent; (i) maximum interest rate, if any; (j) minimum interest rate, if any; (k) alternate rate event spread; and (l) interest rate reset dates. 5. Price to public of the Note. 6. Trade date. 7. Settlement Date (Original Issue Date). 8. Stated Maturity. 9. Redemption provisions, if any: (a) Initial Redemption Date (b) Initial Redemption Percentage (c) Annual Redemption Percentage Reduction 10. Optional Repayment Date(s), if any. 11. Net proceeds to the Company. 12. Presenting Agent's commission. B. The Company will advise the Trustee by telecopy or other method acceptable to the Trustee of the above settlement information received with respect to each Note from the
-23- 24 Presenting Agent and shall confirm to the Trustee that the principal amount of Notes, including such Note, issued as of the relevant Settlement Date shall not exceed the limit with respect to the principal amount of Notes specified in the most recent Company Order delivered to the Trustee pursuant to Section 303 of the Indenture. C. The Trustee will assign a CUSIP Number to the Book-Entry Note and will telephone and advise the Company and the Presenting Agent of such CUSIP Number. The Trustee 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. Identification numbers of the participant accounts maintained by DTC on behalf of the Trustee and the Presenting Agent. 3. Identification as a Fixed Rate Book-Entry Note or Floating Rate Book-Entry Note. 4. Initial Interest Payment Date for such Note, number of days by which such date succeeds the related record date for DTC purposes (or, in the case of Floating Rate Notes which reset daily or weekly, the date five calendar days preceding the Interest Payment
-24- 25 Date) and, if then calculable, the amount of interest payment on such Interest Payment Date (which amount shall have been confirmed by the Trustee). 5. CUSIP number of the Book-Entry Note representing such Note. 6. Whether such Book-Entry Note represents any other Notes issued or to be issued in book-entry form. D. The Company will deliver to the Trustee a Book- Entry Note representing such Note in a form that has been approved by the Company, the Agents and the Trustee. E. The Trustee will complete and authenticate the Book-Entry Note. F. DTC will credit such Note to the participant account of the Trustee maintained by DTC. G. The Trustee will enter an SDFS deliver order through DTC's Participant Terminal System instructing DTC (i) to debit such Note to the Trustee's participant account and credit such Note 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 Trustee maintained by DTC, in an amount equal to the price of such Note less the Presenting Agent's commission. Any entry of such a deliver order shall
-25- 26 be deemed to constitute a representation and warranty by the Trustee to DTC that (i) the Book-Entry Note has been issued and authenticated and (ii) the Trustee is holding such Book-Entry Note pursuant to the Certificate Agreement between the Trustee and DTC. H. The Presenting Agent will enter an SDFS deliver order through DTC's Participant Terminal System instructing DTC (i) to debit such Note to the Presenting Agent's participant account and credit such Note 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 Note. I. Transfers of funds in accordance with SDFS delivery 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 Trustee will credit to an account of the Company maintained by the Trustee funds available for immediate use in the amount transferred to the Trustee in accordance with Settlement Procedure G. K. The Trustee will send a copy of the Book-Entry Note to the Company together with a statement setting forth the principal amount of Notes Outstanding as of the related
-26- 27 Settlement Date after giving effect to such transaction and all other offers to purchase Notes of which the Company has advised the Trustee but which have not been settled. L. The Presenting Agent will confirm the purchase of such Note to the purchaser either by transmitting to the Participant with respect to such Note a confirmation order through DTC's Participant Terminal System or by mailing a written confirmation to such purchaser. Settlement Procedures Timetable: For offers to purchase Notes accepted by the Company, Settlement Procedures "A" through "L" set forth above shall be completed as soon as possible but not later than the respective times (New York City time) set forth below: Settlement Procedure Time ---------- ---- A 11:00 a.m. on the trade date B 12:00 noon on the trade date C 2:00 p.m. on the trade date D 3:00 p.m. on the Business Day before Settlement Date E 9:00 a.m. on Settlement Date F 10:00 a.m. on Settlement Date G-H No later than 2:00 p.m. on Settlement Date I 4:45 p.m. on Settlement Date J-L 5:00 p.m. on Settlement Date]
-27- 28 If a sale is to be settled more than one Business Day after the trade date, Settlement Procedures A, B, and C may, if necessary, be completed at any time prior to the specified times on the first Business Day after such trade date. In connection with a sale which is to be settled more than one Business Day after the trade date, if the initial interest rate for a Floating Rate Note is not known at the time that Settlement Procedure A is completed, Settlement Procedures B and C shall be completed as soon as such rates have been determined, but no later than 11:00 a.m. and 2:00 p.m., New York City time, respectively, on the second Business Day before the Settlement 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 Company shall notify the Trustee and the Trustee will deliver to DTC, through DTC's Participant Terminal System, a cancellation message to such effect by no later than 2:00 p.m., New York City time, on the Business Day immediately preceding the scheduled Settlement Date. Failure to Settle: If the Trustee has not entered an SDFS deliver order with respect to a Book-Entry Note pursuant to Settlement Procedure G, then upon written request (which may be evidenced by facsimile transmission) of the Company the Trustee shall deliver to DTC, through DTC's Participant Terminal System, as soon as practicable a withdrawal message instructing DTC to debit
-28- 29 such Note to the participant account of the Trustee maintained at DTC. DTC will process the withdrawal message, provided that such participant account contains a principal amount of the Book-Entry Note representing such Note that is at least equal to the principal amount to be debited. If withdrawal messages are processed with respect to all the Notes represented by a Book-Entry Note, the Trustee will mark such Book-Entry Note "cancelled", make appropriate entries in its records and send such cancelled Book-Entry Note to the Company. The CUSIP number assigned to such Book-Entry Note shall, in accordance with CUSIP Service Bureau procedures, be cancelled and not immediately reassigned. If withdrawal messages are processed with respect to a portion of the Notes represented by a Book-Entry Note, the Trustee will exchange such Book-Entry Note for two Book- Entry Notes, one of which shall represent the Book-Entry Notes for which withdrawal messages are processed and shall be cancelled immediately after issuance, and the other of which shall represent the other Notes previously represented by the surrendered Book-Entry Note and shall bear the CUSIP number of the surrendered Book-Entry Note. If the purchase price for any Book-Entry Note is not timely paid to the Participants with respect to such 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 Presenting Agent may enter SDFS deliver orders through DTC's Participant Terminal System reversing Settlement Procedures G and H, respectively. Thereafter,
-29- 30 the Trustee 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 Presenting Agent to perform its obligations hereunder or under the Distribution Agreement, the Company will reimburse the Presenting 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 Company. 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 Note that was to have been represented by a Book-Entry Note also representing other Notes, the Trustee will provide, in accordance with Settlement Procedures D and E, for the authentication and issuance of a Book-Entry Note representing such remaining Notes and will make appropriate entries in its records.
PART III: PROCEDURES FOR NOTES ISSUED IN CERTIFICATED FORM Denominations: The Certificated Notes, other than Index Notes and Multi- Currency Notes, will be issued in denominations of $1,000 and integral multiples thereof. Index Notes and Multi- Currency Notes will be issued in the denominations specified in a related Multi-Currency and Indexed Note Prospectus Supplement and Pricing Supplement. Interest: Each Certificated Note will bear interest in accordance with its
-30- 31 terms. Interest will begin to accrue on the Original Issue Date of a Certificated Note for the first Interest Payment Period and on the most recent Interest Payment Date to which interest has been paid for all subsequent Interest Payment Periods. Each payment of interest shall include interest accrued to, but excluding, the date of such payment. Interest payments in respect of Fixed Rate Certificated Notes will be made semiannually on June 15 and December 15 of each year and at Maturity. However, the first payment of interest on any Certificated Note issued between a Regular Record Date and an Interest Payment Date will be made on the Interest Payment Date following the next succeeding Regular Record Date. The Regular Record Date with respect to any Interest Payment Date for a Fixed Rate Certificated Note shall be the May 31 or November 30 preceding such Interest Payment Date. Interest at Maturity will be payable to the person to whom the principal is payable. Except as provided in Part I under "Calculation of Interest", the Interest Payment Date for a Floating Rate Certificated Note will be, in the case of Floating Rate Notes which reset daily, weekly or monthly, on the third Wednesday of each month or on the third Wednesday of March, June, September and December of each year as specified in the applicable Pricing Supplement; in the case of Floating Rate Notes which reset quarterly, on the third Wednesday of March, June, September and December of each year; in the case of Floating Rate Notes which reset semiannually, on the third Wednesday of the two months of each year specified in the applicable Pricing Supplement;
-31- 32 or, in the case of Eleventh District Cost of Funds Rate Notes, on the first Business Day of each month or the first Business Day of each March, June, September or December as specified in the applicable Pricing Supplement and in the case of Floating Rate Notes which reset annually, on the third Wednesday of the month specified in the applicable Pricing Supplement; and, in each case, at Maturity. The Regular Record Date with respect to a Floating Rate Note shall be the date 15 calendar days (whether or not a Business Day) preceding an Interest Payment Date. Notwithstanding the above, in the case of Floating Rate Certificated Notes having interest rates which reset daily or weekly, interest payments shall include accrued interest from, and including, the date of issue or from, but excluding, the last date in respect of which interest has been accrued and paid, as the case may be, through, and including, the Regular Record Date, except that at Maturity the interest payable will include interest accrued to, but excluding, the date of Maturity. For additional special provisions relating to Floating Rate Certificated Notes, see the Prospectus Supplement. Payments of Principal and Interest: Upon presentment and delivery of the Certificated Note, the Trustee or the Company's duly authorized agent will pay the principal amount of each Certificated Note at Maturity and the final installment of interest in immediately available funds. All interest payments in U.S. dollars on a Certificated Note, other than interest due at Maturity, will be made by check drawn on the Trustee or the
-32- 33 Company's duly authorized agent and mailed by such Trustee or agent to the person entitled thereto as provided in the Certificated Note. However, the Registered Owners (as hereinafter defined) of ten million dollars or more in aggregate principal amount of the same series of Certificated Notes (whether having identical or different terms and provisions) shall be entitled to receive payments of interest, other than at Maturity, by wire transfer of immediately available funds if appropriate wire transfer instructions have been received in writing by the appropriate Trustee or such agent not less than 16 days prior to the applicable Interest Payment Date. For special provisions relating to Multi-Currency Notes and Indexed Notes, see the related Multi-Currency and Indexed Note Prospectus Supplement. The Trustee will provide monthly to the Company a list of the principal and interest in each currency to be paid on Certificated Notes maturing in the next succeeding month. Such Trustee or agent will be responsible for withholding taxes on interest paid as required by applicable law, but shall be relieved from any such responsibility if it acts in good faith and in reliance upon an opinion of counsel. Certificated Notes presented to the Trustee or the Company's duly authorized agent at Maturity for payment will be cancelled by such Trustee or agent. All cancelled Certificated Notes held by such Trustee shall be destroyed, and the Trustee shall furnish to the Company a certificate with respect to such destruction.
-33- 34 Settlement Procedures: Settlement Procedures with regard to each Certificated Note purchased through the Agents, as agents, shall be as follows: A. Each Agent will advise the Company by telephone of the following Settlement information with regard to each Certificated Note: 1. Exact name in which the Certificated Note is to be registered (the "Registered Owner"). 2. Exact address or addresses of the Registered Owner for delivery, notices and payments of principal, premium, if any, and interest. 3. Taxpayer identification number of the Registered Owner. 4. Principal amount of the Certificated Note. 5. Denomination of the Certificated Note. 6. Fixed Rate Notes: (a) interest rate Floating Rate Notes: (a) interest rate basis or bases; (b) initial interest rate; (c) spread or spread multiplier, if any; (d) initial interest reset date; (e) interest reset dates; (f) interest payment dates;
-34- 35 (g) index maturity; (h) calculation agent; (i) maximum interest rates, if any; (j) minimum interest rate, if any; (k) alternate rate event spread; and (l) interest determination dates Indexed Notes: (a) specified currency; (b) indexed currency; and (c) base rate of exchange. 8. Currency or currency unit in which the Certificated Note is to be denominated. 9. Price to public of the Certificated Note. 10. Settlement Date (Original Issue Date). 11. Stated Maturity. 12. Redemption provisions, if any: (a) Initial Redemption Date (b) Initial Redemption Percentage (c) Annual Redemption Percentage Reduction 13. Optional Repayment Date(s), if any. 14. Net proceeds to the Company. 15. Presenting Agent's commission.
-35- 36 B. The Company shall provide to the Trustee by telecopy or other method acceptable to the Trustee the above Settlement information with respect to each Certificated Note received from the Agents, the name of the Presenting Agent and shall confirm to the Trustee that the principal amount of Notes, including such Certificated Note, issued as of the relevant Settlement Date shall not exceed the limit with respect to the principal amount of Notes specified in the most recent Company Order delivered to the Trustee pursuant to Section 303 of the Indenture. The Company also shall cause the Trustee or its duly appointed agent to issue, authenticate and deliver Certificated Notes in accordance with the Settlement Procedures Timetable set forth below. The Company also shall provide to the Trustee and the Presenting Agent a copy of the applicable Pricing Supplement. The Company also shall provide to the Trustee and the Presenting Agent a copy of a Multi-Currency and Indexed Note Supplement, if applicable. C. The Trustee or its duly appointed agent will complete and authenticate the Certificated Notes, including the Guarantee, in forms approved by the Company and the Guarantor, as the case may be. D. With respect to each trade, the Trustee will deliver the Certificated Notes and one photocopy thereof to the
-36- 37 applicable Presenting Agent at the following addresses: Merrill Lynch & Co., Money Market Clearance, 55 Water Street, 3rd Floor, N.S.C.C. Window, New York, New York 10041, Attention: Al Mitchell Telephone: (212) 558-2405 Telecopy: (212) 558-2457 CS First Boston Corporation, Five World Trade Center, New York, New York 10048, Attention: Paul Riley. First Chicago Capital Markets, Inc. c/o Bankers Trust, 16 Wall Street, 5th Floor, Window 51, New York, New York, 10015, Attention: Jim Murray, Telephone: (212) 618-2370. The Trustee will keep Stub 1. The Presenting Agent will acknowledge receipt of the Certificated Note through a broker's receipt and will keep the photocopy. Delivery of the Certificated Note will be made only against such acknowledgment of receipt. Upon determination that the Certificated Note, including the related Guarantee, has been authorized, delivered and completed as aforementioned, the Presenting Agent will wire the net proceeds of the Certificated Note after deduction of its applicable commission to the Company pursuant to standard wire instructions given by the Company. E. The Presenting Agent will deliver the Certificated Note, the related Guarantee endorsed
-37- 38 thereon, as well as a copy of the Prospectus and any applicable Pricing Supplement or Supplements received from the Trustee, to the purchaser against payment in immediately available funds. F. The Trustee will send a photocopy of the Certified Note to the Company. Settlement Procedures Timetable: For offers to purchase Certificated Notes accepted by the Company, Settlement Procedures "A" through "F" set forth above shall be completed on or before the respective times set forth below: Settlement Procedure Time ---------- ---- A-B 3:00 PM on Business Day prior to Settlement C-D 2:15 PM on Settlement Date E 3:00 PM on Settlement Date F 5:00 PM on Settlement Date Failure to Settle: In the event that a purchaser of a Certificated Note from the Company shall either fail to accept delivery of or make payment for a Certificated Note on the date fixed for settlement, the Presenting Agent will forthwith notify the Trustee and the Company by telephone, confirmed in writing, and return the Certificated Note to such Trustee. The Trustee or the Company's duly authorized agent, upon receipt of the Certificated Note from the Presenting Agent, will immediately advise the Company, and the Company will promptly arrange to credit the
-38- 39 account of the Presenting Agent in an amount of immediately available funds equal to the amount previously paid by the Presenting Agent in settlement for the Certificated Note. Such credits will be made on the Settlement Date if possible, and in any event not later than the Business Day following the Settlement Date; provided that the Company has received notice on the same day. If such failure shall have occurred for any reason other than failure by the Presenting Agent to perform its obligations hereunder or under the Distribution Agreement, the Company will reimburse the Presenting 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 Company. Immediately upon receipt of the Certificated Note in respect of which the failure occurred, the Trustee or the Company's duly authorized agent will cancel and destroy the Certificated Note, make appropriate entries in its records to reflect the fact that the Certificated Note was never issued, and accordingly notify in writing the Company.
-39- EX-10.(B) 16 ADMINISTRATIVE PROCEDURES 1 EXHIBIT (10)(b) BANPONCE FINANCIAL CORP. MEDIUM-TERM NOTE ADMINISTRATIVE PROCEDURES (Dated as of October 6, 1995) Medium-Term Notes (collectively, the "Notes") in the aggregate principal amount of up to $1,000,000,000 are to be offered on a continuous basis by BanPonce Financial Corp. (the "Company") through Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), CS First Boston Corporation ("CS First Boston") and First Chicago Capital Markets, Inc. ("First Chicago") who, as agents (each an "Agent"), have agreed to use their reasonable efforts to solicit offers to purchase the Notes from the Company. The Agents also may purchase Notes as principal for resale. The Notes are being sold pursuant to a Distribution Agreement among the Company, BanPonce Corporation (the "Guarantor") and the Agents, dated October 11, 1991, as amended and supplemented (the "Distribution Agreement"). The Notes will be unconditionally guaranteed as to payment of principal, premium, if any, and interest by the Guarantor (the "Guarantees"). The Notes and related Guarantees will be issued pursuant to the Indenture (the "Indenture"), dated as of October 1, 1991, as supplemented by the First Supplemental Indenture dated as of February 28, 1995 among the Company, the Guarantor and The First National Bank of Chicago, as trustee (the "Trustee"), and as Successor Trustee to Citibank, N.A. A Registration Statement (the "Registration Statement", which term shall include any additional registration statements filed in connection with the Notes and related Guarantees as provided in the Distribution Agreement) with respect to the Notes and related Guarantees has been filed with the Securities and Exchange Commission (the "Commission"). The most recent base Prospectus included in the Registration Statement, as supplemented with respect to the Notes and related Guarantees, is herein referred to as the "Prospectus." The most recent supplement to the Prospectus with respect to the specific terms of the Notes is herein referred to as the "Pricing Supplement." The Notes will either be issued (a) in book-entry form and represented by one or more fully registered Notes (each, a "Book-Entry Note") delivered to the appropriate Trustee, as agent for The Depository Trust Company ("DTC"), and recorded in the book-entry system maintained by DTC, or (b) in certificated form (each, a "Certificated Note") delivered to the purchaser thereof or a person designated by such purchaser. Owners of beneficial interests in Book-Entry Notes will be entitled to physical delivery of Certificated Notes equal in principal amount to their 2 respective beneficial interests only upon certain limited circumstances described in the Prospectus. General procedures relating to the issuance of all Notes are set forth in Part I hereof. Additionally, Book-Entry Notes will be issued in accordance with the procedures set forth in Part II hereof and Certificated Notes will be issued in accordance with the procedures set forth in Part III hereof. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed thereto in the Indenture or the Notes, as the case may be. PART I: PROCEDURES OF GENERAL APPLICABILITY Date of Issuance/ Authentication: Each Note will be dated as of the date of its authentication by the Trustee or its duly appointed authenticating agent. Each Note shall also bear an original issue date (the "Original Issue Date"). 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 Note will mature on a date selected by the purchaser and agreed to by the Company which is not less than nine months nor more than thirty years from its Original Issue Date; provided, however, that Notes bearing interest at rates determined by reference to selected indices ("Floating Rate Notes") will mature on an Interest Payment Date. Currencies: Each Note shall be denominated in one of the currencies or currency units, as specified in the relevant Pricing Supplement, or in such other currency or currency unit as may be agreed from time to time between the Company and each Agent and as specified in the relevant Pricing Supplement, or, if no currency or currency unit is specified therein, in U.S. dollars. Notes
-2- 3 denominated in one or more currencies or currency units other than in U.S. dollars are herein referred to as "Multi-Currency Notes." Notes that have the amount of principal payments determined by reference to an index currency are herein referred to as "Indexed Notes." Denominations: The Notes will be issued in denominations of $1,000 and integral multiples thereof. Any Notes denominated other than in U.S. dollars will be issuable in denominations as set forth in the relevant Multi-Currency and Indexed Note Prospectus Supplement. For special provisions relating to Multi-Currency Notes and Indexed Notes, see the related Multi-Currency and Indexed Note Supplement. Registration: Notes will be issued only in fully registered form. Redemption/Repayment: 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 Optional Repayment Dates, if any. 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 Optional Repayment Dates are indicated with respect to a Note, such Note will not be repayable at the option of the Holder prior to Maturity. The Notes will be subject to redemption by the Company 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
-3- 4 Dates are indicated with respect to a Note, such Note will not be redeemable prior to Maturity. Calculation of Interest: In the case of Fixed Rate Notes, interest (including payments for partial periods) will be calculated and paid on the basis of a 360-day year of twelve 30-day months. In the case of Floating Rate Notes, interest will be calcu- lated and paid on the basis of the actual number of days in the interest period divided by 360 with the exception of Treasury Rate Notes for which interest will be calculated on the basis of the actual number of days in the interest period divided by the actual number of days in the year. If an Interest Payment Date with respect to any Fixed Rate Note falls on a day that is not a Business Day (as hereinafter defined), the payment of interest required to be made on such Interest Payment Date need not be made on such day, but may be made on the next succeeding Business Day with the same force and effect as if made on such Interest Payment Date and no interest shall accrue on such payment for the period from and after such Interest Payment Date. If an Interest Payment Date with respect to any Floating Rate Note would otherwise fall on a day that is not a Business Day, such Interest Payment Date will be the following day that is a Business Day, except that in the case of a LIBOR Note, if such day falls in the next calendar month, such Interest Payment Date will be the preceding day that is a Business Day. If the Stated Maturity, or date of earlier redemption or repayment, as the case may be, of a Note is not a Business Day, the payment of principal and interest due on such day
-4- 5 shall be made on the next succeeding Business Day and no interest shall accrue on such payment for the period from and after such Stated Maturity, or date of earlier redemption or repayment. For special provisions relating to Multi- Currency Notes and Indexed Notes, see the related Multi- Currency and Indexed Note Prospectus Supplement. Acceptance and Rejection of Offers: The Company shall have the sole right to accept offers to purchase Notes from the Company and may reject any such offer in whole or in part. Each Agent shall communicate to the Company, orally or in writing, each reasonable offer to purchase Notes from the Company received by it. Each Agent shall have the right, in its discretion reasonably exercised, without notice to the Company, to reject any offer to purchase Notes through it in whole or in part. Preparation of Pricing Supplement: If any offer to purchase a Note is accepted by the Company, the Company, with the approval of the Agent which presented the order (the "Presenting Agent"), will prepare a Pricing Supplement reflecting the terms of such Note and file the Pricing Supplement relating to the Notes with the Commission in accordance with Rule 424 under the Act. Information to be included in the Pricing Supplement shall include: 1. the name of the Company and the Guarantor; 2. the title of the securities, including series designation, if any;
-5- 6 3. the date of the Pricing Supplement and the date of the Prospectus Supplement to which the Pricing Supplement relates; 4. the Price to Public (but only if (a) the trade is being made on an agency basis and (b) such Price to Public is other than 100%); 5. Net Proceeds to the Company (but only if (a) the trade is being made on a principal basis and (b) the Net Proceeds to the Company is other than 100%), less what would have been the applicable agency commission; 6. the information with respect to the terms of the Notes set forth below (whether or not the applicable Note is a Book-Entry Note) under "Procedures for Notes Issued in Book-Entry Form -- Settlement Procedures", items 2, 3, 7, 8 and 9; and 7. any other terms of the Notes not otherwise specified in the Prospectus or Prospectus Supplement. One copy of such filed document will be sent by telecopy or overnight express (for delivery not later than 11:00 A.M. on the Business Day next following the trade date) to the applicable Presenting Agent at the following addresses: To Merrill Lynch: If by overnight, express or special delivery: Merrill Lynch & Co., Tritech Services, 40 Colonial Drive, Piscataway, New Jersey 08854, Attention: Prospectus Operations/Susan Putnam
-6- 7 If by all other types of deliveries: Tritech Services, #4 Corporate Place, Corporate Park 287, Piscataway, New Jersey 08854, Attention: Prospectus Operations/Nachman Kimerling, Final Prospectus Unit Telephone: (908) 885-2769 Telecopy: (908) 885-2774/2775/2776 To CS First Boston: CS First Boston Corporation, Five World Trade Center, New York, New York 10055, Attention: Joan Bryan Telephone: (212) 322-5105 Telecopy: (212) 803-4096 To First Chicago: First Chicago Capital Markets, Inc. One First National Plaza Mail Suite 0237 Chicago, Illinois 60670 Attention: MTN Operations Manager Telephone: (317) 732-9631 The Presenting Agent will cause a stickered supplemented Prospectus with the trade confirmation to be delivered to the purchaser of the Note. For record keeping purposes, one copy of each Pricing Supplement shall also be mailed or telecopied to each Agent and the Trustee at the following respective addresses: To Merrill Lynch: Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, World Financial Center, North Tower, 10th Floor, New York, New York 10281-1310, Attention: MTN Product Management Telephone: (212) 449-7476 Telecopy: (212) 449-2234; To CS First Boston:
-7- 8 CS First Boston Corporation, 55 East 52nd Street, New York, New York 10055, Attention: Short and Medium-Term Finance Department Telephone: (212) 909-3842 Telecopy: (212) 318-1498 To First Chicago: First Chicago Capital Markets, Inc. One First National Plaza Mail Suite 0407 Chicago, Illinois 60670-0327 Attention: Chief Credit Officer Telephone: (312) 732-5294 Fax: (312) 732-4172 To the Trustee: The First National Bank of Chicago One First National Plaza Suite 0126 Chicago, Illinois 60670-0126 Attention: Corporate Trust Administration In each instance that a Pricing Supplement is prepared, the Presenting Agent will affix the Pricing Supplement to supplemented Prospectuses prior to its use. Outdated Pricing Supplements and the Prospectuses to which they are attached (other than those retained for files) will be destroyed. Settlement: The receipt of immediately available funds by the Company in payment for a Note and the authentication and delivery of such Note, including the related Guarantee, shall, with respect to such Note, constitute "settlement." Offers accepted by the Company will be settled at a time as the purchaser and the Company shall agree and pursuant to the timetable for settlement set forth in Parts II and III hereof under "Settlement Procedures" with respect to Book- Entry Notes and Certificated Notes, respectively (each such date fixed
-8- 9 for settlement, a "Settlement Date"). If procedures A and B of the applicable Settlement Procedures with respect to a particular offer are not completed on or before the time set forth under the applicable "Settlement Procedures Timetable", such offer shall not be settled until the Business Day following the completion of Settle- ment Procedures A and B or such later date as the purchaser and the Company shall agree. In the event of a purchase of Notes by the Presenting Agent as principal, appropriate settlement details will be set forth in the applicable Terms Agreement to be entered into between the Presenting Agent and the Company pursuant to the Distribution Agreement. Procedure for Changing Rates or Other Variable Terms: When a decision has been reached to change the interest rate or any other variable term on any Notes being offered by the Company, the Company will promptly advise the Agents and the Agents will forthwith suspend solicitation of offers to purchase such Notes. Each Agent will telephone the Company with recommendations as to the changed interest rates or other variable terms. At such time as the Company 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 Company of an offer to purchase at a new interest rate or new variable term, the Company, the Agents and the Trustee shall follow the procedures set forth under the applicable "Settlement Procedures."
-9- 10 Suspension of Solicitation; Amendment or Supplement: The Company may instruct the Agents to suspend solicitation of purchases at any time. Upon receipt of such instructions, the Agents will forthwith suspend solicitation of offers to purchase from the Company until such time as the Company has advised them that solicitation of offers to purchase may be resumed. If the Company and the Guarantor decide to amend the Registration Statement (including incorporating any documents by reference therein) or supplement any of such documents (other than to change rates or other variable terms), they will promptly advise the Agents and, except in the case of an amendment by the filing of a document incorporated by reference in the Registration Statement, will furnish each Agent and its counsel with copies of the proposed amendment or supplement. One copy of such filed document, along with a copy of the cover letter sent to the Commission, will be delivered or mailed to the Agents at the following addresses: To Merrill Lynch: Product Management MTNs, Merrill Lynch Money Markets, North Tower, World Financial Center, 10th Floor, New York, New York 10281-1310 Telephone: (212) 449-7476 Telecopy: (212) 449-2234 To CS First Boston: CS First Boston Corporation, 55 East 52nd Street, New York, New York 10055, Attention: Short and Medium-Term Finance Department Telephone: (212) 909-3842 Telecopy: (212) 318-1498
-10- 11 To First Chicago: First Chicago Capital Markets, Inc. One First National Plaza Mail Suite 0407 Chicago, Illinois 60670-0327 Attention: Chief Credit Officer Telephone: (312) 732-5294 Fax: (312) 732-4172 In the event that at the time the solicitation of offers to purchase from the Company is suspended (other than to change interest rates or other variable terms) there shall be any offers to purchase Notes that have been accepted by the Company which have not been settled, the Company will promptly advise the Agents and the Trustee whether such offers may be settled and whether copies of the Prospectus as theretofore amended and/or supplemented as in effect at the time of the suspension may be delivered in connection with the settlement of such orders. The Company will have the sole responsibility for such decision and for any arrangements which may be made in the event that the Company determines that such orders may not be settled or that copies of such Prospectus may not be so delivered. Delivery of Prospectus: A copy of the most recent Prospectus 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 obligation or liability to the Signatures: Company or the Trustee in respect of the authenticity of the signature of any officer, employee or agent of the Company, the Guarantor or the Trustee on any Note or related Guarantee.
-11- 12 Documents Incorporated by Reference: The Company and the Guarantor shall supply each Agent with an adequate supply of all documents incorporated by reference in the Registration Statement. Business Day: "Business Day" means any day other than a Saturday, Sunday, or other day on which banks in The City of New York (and, with respect to LIBOR Notes, the City of London) are authorized or obligated by law or executive order to close. For the definition of "Business Day" with respect to Multi- Currency Notes or Indexed Notes, see the Prospectus Supplement.
-12- 13 PART II: PROCEDURES FOR NOTES ISSUED IN BOOK-ENTRY FORM In connection with the qualification of Book-Entry Notes for eligibility in the book-entry system maintained by DTC, the Trustee will perform the custodial, document control and administrative functions described below, in accordance with its obligations under a Letter of Representations from the Company, the Guarantor and the Trustee to DTC, dated October __, 1995, and a Medium-Term Note Certificate Agreement between the Trustee and DTC, dated May 26, 1989 (the "Certificate Agreement"), and its obligations as a participant in DTC, including DTC's Same-Day Funds Settlement System ("SDFS"). Issuance: All Fixed Rate Book-Entry Notes having the same Original Issue Date, interest rate, terms of redemption or repayment, if any, and Stated Maturity (collectively, the "Fixed Rate Terms") will be represented initially by a single global security in fully registered form without coupons; and all Floating Rate Book-Entry Notes having the same Original Issue Date, interest rate basis or bases upon which interest may be determined (each, an "Interest Rate Basis"), which may be one or more of the Commercial Paper Rate, the Treasury Rate, LIBOR, the CD Rate, the CMT Rate, the Federal Funds Rate, the Prime Rate, the Eleventh District Cost of Funds Rate, any other rate set forth by the Company, Initial Interest Rate, Index Maturity, Spread and/or Spread Multiplier, if any, Minimum Interest Rate, if any, Maximum Interest Rate, if any, terms of redemption or repayment, if any, and Stated Maturity (collectively, "Floating Rate Terms") will be represented initially by a single Book-Entry Note. Each Book-Entry Note will be dated and issued as of the date of its authentication by the Trustee or its duly appointed authenticating
-13- 14 agent. Each Book-Entry Note will bear interest from a date (the "Interest Accrual Date") which will be (a) with respect to an original Book-Entry Note (or any portion thereof), its Original Issue Date and (b) with respect to any Book-Entry Note (or portion thereof) issued subsequently upon exchange or transfer of a Book-Entry Note or in lieu of a destroyed, lost or stolen Book-Entry Note, the most recent Interest Payment Date (or, in the case of Floating Rate Notes with interest rates which reset daily or weekly, the day following the most recent Record Date to which interest has been paid or duly provided for on the predecessor Book-Entry Note or Notes (or if no such payment or provision has been made, the Original Issue Date of the predecessor Book-Entry Note or Notes), regardless of the date of authentication of such subsequently issued Book-Entry Note. No Book-Entry Note shall represent any Certificated Note. Identification: The Agents have arranged with the CUSIP Service Bureau (the "CUSIP Service Bureau") of Standard & Poor's Corporation ("Standard & Poor's") for the reservation of approximately 900 CUSIP numbers for each rank of Notes which have been reserved for future assignment to Book-Entry Notes representing Notes issued in book-entry form and have delivered to the Company, the Trustee and DTC an initial written list of such CUSIP numbers. The Trustee will assign CUSIP numbers to Book-Entry Notes as described below under Settlement Procedure B. DTC will notify the CUSIP Service Bureau periodically of the CUSIP numbers that the Trustee has assigned to Book-Entry Notes. The Trustee will notify the Company at
-14- 15 any time when fewer than 100 of the respective reserved CUSIP numbers remain unassigned to Book-Entry Notes, and, if it deems necessary, the Company will reserve additional CUSIP numbers for assignment to Book-Entry Notes representing Notes issued in book-entry form. Upon obtaining such additional CUSIP numbers, the Company will deliver a list of such additional numbers to the Trustee 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 Certificate will instead be represented by two or more Global Certificates which shall be assigned the same CUSIP number. Registration: Each Book-Entry Note will be registered in the name of CEDE & CO., as nominee for DTC, on the register maintained by the Trustee under the Indenture. The beneficial owner of a Book-Entry Note (i.e., an owner of a beneficial interest in a Book-Entry Note), or one or more indirect participants 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 Note in the account of such Participants. The ownership interest of such beneficial owner in such Book-Entry 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.
-15- 16 Transfers: Transfers of beneficial interests in a Book-Entry 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 trans- ferors and transferees of such Book-Entry Note. Exchanges: The Trustee may deliver to DTC and the CUSIP Service Bureau at any time a written notice specifying (a) the CUSIP numbers of two or more Book-Entry Notes Outstanding on such date that represent Book-Entry 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 Book-Entry Notes shall be exchanged for a single replacement Book-Entry Note; and (c) a new CUSIP number to be assigned to such replacement Book-Entry Note. Upon receipt of such a notice, DTC will send to its Participants (including the Trustee) a written reorganization notice to the effect that such exchange will occur on such date. Prior to the specified exchange date, the Trustee 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 Book-Entry Notes to be exchanged will no longer be valid. On the specified exchange date, the Trustee will exchange such Book-Entry Notes for a single Book-Entry Note bearing the new CUSIP number and the CUSIP numbers of the
-16- 17 exchanged Book-Entry Notes will, in accordance with CUSIP Service Bureau procedures, be cancelled and not immediately reassigned. Notwithstanding the foregoing, if the Book-Entry Notes to be exchanged exceed $200,000,000 in aggregate principal amount, one replacement Book-Entry Note will be authenticated and issued to represent each $200,000,000 of principal amount of the exchanged Book- Entry Notes and an additional Book-Entry Note will be authenticated and issued to represent any remaining principal amount of such Book-Entry Notes (see "Denominations" below). Denominations: All Book-Entry Notes will be denominated in U.S. dollars and will be issued in denominations of $1,000 and integral multiples thereof. 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 Book-Entry Note, then one Book-Entry Note will be issued to represent each $200,000,000 principal amount of such Note or Notes issued in book-entry form and an additional Book-Entry Note will be issued to represent any remaining principal amount of such Note or Notes issued in book-entry form. In such a case, each of the Book-Entry Notes shall be assigned the same CUSIP number. Interest: General. Interest on each Note issued in book-entry form will accrue from the Interest Accrual Date of the Book- Entry Note representing such Note. Each payment of interest on a Book-Entry Note will include interest accrued through the day preceding, as the case may
-17- 18 be, the Interest Payment Date (provided that in the case of Floating Rate Notes with interest rates which reset daily or weekly interest payments will include interest accrued to and including the Regular Record Date immediately preceding the Interest Payment Date), the Stated Maturity Date, Redemption Date or Repayment Date. Interest payable at Maturity of a Book-Entry Note will be payable to the Person to whom the principal of such Note is payable. DTC will arrange for each pending deposit message described under Settlement Procedure C below to be transmitted to Standard & Poor's Corporation ("S&P"), 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 S&P. 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, the first payment of interest on any Book-Entry Note originally issued between a Regular Record Date and an Interest Payment Date will occur on the Interest Payment Date following the next Regular Record Date. Fixed Rate Notes. Interest payments on Fixed Rate Book- Entry Notes will be made semiannually on June 15 and December 15 of each year and at Maturity. Floating Rate Notes. Except as provided in Part I under "Calculation of Interest", the Interest Payment Date for a Floating Rate Note will be, in the case of Floating Rate Notes which reset
-18- 19 daily, weekly or monthly, on the third Wednesday of each month or on the third Wednesday of March, June, September and December of each year as specified in the applicable Pricing Supplement; in the case of Floating Rate Notes which reset quarterly, on the third Wednesday of March, June, September and December of each year; in the case of Floating Rate Notes which reset semiannually, on the third Wednesday of the two months of each year specified in the applicable Pricing Supplement; or, in the case of Eleventh District Cost of Funds Rate Notes, on the first Business Day of each month or the first Business Day of each March, June, September or December as specified in the applicable Pricing Supplement and in the case of Floating Rate Notes which reset annually, on the third Wednesday of the month specified in the applicable Pricing Supplement; and, in each case, at Maturity. For additional special provisions relating to Floating Rate Notes, see the Prospectus Supplement. Regular Record Dates. The Regular Record Date with respect to any Interest Payment Date for a Fixed Rate Note shall be the May 31 or November 30 preceding such Interest Payment Date. The Regular Record Date with respect to any Interest Payment Date for any Floating Rate Note shall be the date 15 calendar days (whether or not a Business Day) preceding such Interest Payment Date. Notice of Interest Payments and Regular Record Dates. On the first Business Day of January, April, July and October of each year, the Trustee will deliver to the Company and DTC a written list of Regular Record Dates and Interest Payment
-19- 20 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 Company will notify S&P of the interest rates determined on such Interest Determination Date. Payments of Principal and Interest: Payments of Interest Only. Promptly after each Regular Record Date, the Trustee will deliver to the Company and DTC a written notice specifying by CUSIP number the amount of interest to be paid on each Book-Entry Note issued under the Indenture on the following Interest Payment Date (other than an Interest Payment Date coinciding with Maturity) 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. On such Interest Payment Date, the Company will pay to the Trustee, and the Trustee in turn will pay to DTC, such total amount of interest due (other than at Maturity), at the times and in the manner set forth below under "Manner of Payment." Payments at Maturity. On or about the first Business Day of each month, the Trustee will deliver to the Company and DTC a written list of principal, interest and premium, if any, to be paid on each Book-Entry Note issued under the Indenture having a Maturity in the following month. The Trustee and DTC will confirm the amounts of such principal, premium and interest payments with respect to a Book-Entry Note on or about the fifth Business Day preceding the
-20- 21 Maturity of such Book-Entry Note. At such maturity, the Company will pay to the Trustee, and the Trustee in turn will pay to DTC, the principal amount of such Note, together with interest and premium, if any, due at such Maturity, at the times and in the manner set forth below under "Manner of Payment." Promptly after payment to DTC of the principal, interest and premium, if any, due at the Maturity of such Book-Entry Note, the Trustee will cancel and destroy such Book-Entry Note and deliver to the Company a certificate of destruction therefor. Manner of Payment. The total amount of any principal, premium, if any, and interest due on Book-Entry Notes on any Interest Payment Date or at Maturity shall be paid by the Company to the Trustee in funds available for use as of 9:30 a.m., New York City time, on such date. The Company will make such payment on such Book-Entry Notes by instructing the Trustee to withdraw funds from an account maintained by the Company with the Trustee. The Company will confirm such instructions in writing to the Trustee. Prior to 10:00 a.m., New York City time, on such date or as soon as possible thereafter, the Trustee will pay by separate wire transfer (using Fedwire message entry instructions in a form previously specified by DTC) to an account at the Federal Reserve Bank of New York previously specified by DTC, in funds available for immediate use by DTC, each payment of principal (together with interest and premium, if any) due on a Book-Entry Note on such date. Thereafter on such payment date, DTC will pay, in accordance with its SDFS operating procedures then in effect, such amounts in funds
-21- 22 available for immediate use to the respective Participants in whose names such Notes are recorded in the book-entry system maintained by DTC. Neither the Company nor the Trustee shall have any responsibility or liability for the payment by DTC of the principal of, 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 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 benefi- cial owner of such Note. Settlement Procedures: Settlement Procedures with regard to each Book-Entry Note sold by the Agents, as agents of the Company, will be as follows: A. The Presenting Agent will advise the Company by telephone of the following Settlement information: 1. Taxpayer identification number of the purchaser. 2. Principal amount of the Note. 3. Fixed Rate Notes: (a) interest rate Floating Rate Notes: (a) interest rate basis; (b) initial interest rate; (c) spread and/or spread multiplier, if any; (d) initial interest reset dates;
-22- 23 (e) interest reset dates; (f) interest payment dates; (g) index maturity; (h) calculation agent (i) maximum interest rate, if any; (j) minimum interest rate, if any; (k) alternate rate event spread; and (l) interest rate reset dates. 5. Price to public of the Note. 6. Trade date. 7. Settlement Date (Original Issue Date). 8. Stated Maturity. 9. Redemption provisions, if any: (a) Initial Redemption Date (b) Initial Redemption Percentage (c) Annual Redemption Percentage Reduction 10. Optional Repayment Date(s), if any. 11. Net proceeds to the Company. 12. Presenting Agent's commission. B. The Company will advise the Trustee by telecopy or other method acceptable to the Trustee of the above settlement information received with respect to each Note from the
-23- 24 Presenting Agent and shall confirm to the Trustee that the principal amount of Notes, including such Note, issued as of the relevant Settlement Date shall not exceed the limit with respect to the principal amount of Notes specified in the most recent Company Order delivered to the Trustee pursuant to Section 303 of the Indenture. C. The Trustee will assign a CUSIP Number to the Book-Entry Note and will telephone and advise the Company and the Presenting Agent of such CUSIP Number. The Trustee 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. Identification numbers of the participant accounts maintained by DTC on behalf of the Trustee and the Presenting Agent. 3. Identification as a Fixed Rate Book-Entry Note or Floating Rate Book-Entry Note. 4. Initial Interest Payment Date for such Note, number of days by which such date succeeds the related record date for DTC purposes (or, in the case of Floating Rate Notes which reset daily or weekly, the date five calendar days preceding the Interest Payment
-24- 25 Date) and, if then calculable, the amount of interest payment on such Interest Payment Date (which amount shall have been confirmed by the Trustee). 5. CUSIP number of the Book-Entry Note representing such Note. 6. Whether such Book-Entry Note represents any other Notes issued or to be issued in book-entry form. D. The Company will deliver to the Trustee a Book- Entry Note representing such Note in a form that has been approved by the Company, the Agents and the Trustee. E. The Trustee will complete and authenticate the Book-Entry Note. F. DTC will credit such Note to the participant account of the Trustee maintained by DTC. G. The Trustee will enter an SDFS deliver order through DTC's Participant Terminal System instructing DTC (i) to debit such Note to the Trustee's participant account and credit such Note 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 Trustee maintained by DTC, in an amount equal to the price of such Note less the Presenting Agent's commission. Any entry of such a deliver order shall
-25- 26 be deemed to constitute a representation and warranty by the Trustee to DTC that (i) the Book-Entry Note has been issued and authenticated and (ii) the Trustee is holding such Book-Entry Note pursuant to the Certificate Agreement between the Trustee and DTC. H. The Presenting Agent will enter an SDFS deliver order through DTC's Participant Terminal System instructing DTC (i) to debit such Note to the Presenting Agent's participant account and credit such Note 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 Note. I. Transfers of funds in accordance with SDFS delivery 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 Trustee will credit to an account of the Company maintained by the Trustee funds available for immediate use in the amount transferred to the Trustee in accordance with Settlement Procedure G. K. The Trustee will send a copy of the Book-Entry Note to the Company together with a statement setting forth the principal amount of Notes Outstanding as of the related
-26- 27 Settlement Date after giving effect to such transaction and all other offers to purchase Notes of which the Company has advised the Trustee but which have not been settled. L. The Presenting Agent will confirm the purchase of such Note to the purchaser either by transmitting to the Participant with respect to such Note a confirmation order through DTC's Participant Terminal System or by mailing a written confirma- tion to such purchaser. Settlement Procedures Timetable: For offers to purchase Notes accepted by the Company, Settlement Procedures "A" through "L" set forth above shall be completed as soon as possible but not later than the respective times (New York City time) set forth below: Settlement Procedure Time ---------- ---- A 11:00 a.m. on the trade date B 12:00 noon on the trade date C 2:00 p.m. on the trade date D 3:00 p.m. on the Business Day before Settlement Date E 9:00 a.m. on Settlement Date F 10:00 a.m. on Settlement Date G-H No later than 2:00 p.m. on Settlement Date I 4:45 p.m. on Settlement Date J-L 5:00 p.m. on Settlement Date
-27- 28 If a sale is to be settled more than one Business Day after the trade date, Settlement Procedures A, B, and C may, if necessary, be completed at any time prior to the specified times on the first Business Day after such trade date. In connection with a sale which is to be settled more than one Business Day after the trade date, if the initial interest rate for a Floating Rate Note is not known at the time that Settlement Procedure A is completed, Settlement Procedures B and C shall be completed as soon as such rates have been determined, but no later than 11:00 a.m. and 2:00 p.m., New York City time, respectively, on the second Business Day before the Settlement 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 Company shall notify the Trustee and the Trustee will deliver to DTC, through DTC's Participant Terminal System, a cancellation message to such effect by no later than 2:00 p.m., New York City time, on the Business Day immediately preceding the scheduled Settlement Date. Failure to Settle: If the Trustee has not entered an SDFS deliver order with respect to a Book-Entry Note pursuant to Settlement Procedure G, then upon written request (which may be evidenced by facsimile transmission) of the Company the Trustee shall deliver to DTC, through DTC's Participant Terminal System, as soon as practicable a withdrawal message instructing DTC to debit
-28- 29 such Note to the participant account of the Trustee maintained at DTC. DTC will process the withdrawal message, provided that such participant account contains a principal amount of the Book-Entry Note representing such Note that is at least equal to the principal amount to be debited. If withdrawal messages are processed with respect to all the Notes represented by a Book-Entry Note, the Trustee will mark such Book-Entry Note "cancelled", make appropriate entries in its records and send such cancelled Book-Entry Note to the Company. The CUSIP number assigned to such Book-Entry Note shall, in accordance with CUSIP Service Bureau procedures, be cancelled and not immediately reassigned. If withdrawal messages are processed with respect to a portion of the Notes represented by a Book-Entry Note, the Trustee will exchange such Book-Entry Note for two Book-Entry Notes, one of which shall represent the Book-Entry Notes for which withdrawal messages are processed and shall be cancelled immediately after issuance, and the other of which shall represent the other Notes previously represented by the surrendered Book-Entry Note and shall bear the CUSIP number of the surrendered Book-Entry Note. If the purchase price for any Book-Entry Note is not timely paid to the Participants with respect to such 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 Presenting Agent may enter SDFS deliver orders through DTC's Participant Terminal System reversing Settlement Procedures G and H, respectively. Thereafter,
-29- 30 the Trustee 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 Presenting Agent to perform its obligations hereunder or under the Distribution Agreement, the Company will reimburse the Presenting 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 Company. 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 Note that was to have been represented by a Book-Entry Note also representing other Notes, the Trustee will provide, in accordance with Settlement Procedures D and E, for the authentication and issuance of a Book-Entry Note representing such remaining Notes and will make appropriate entries in its records.
PART III: PROCEDURES FOR NOTES ISSUED IN CERTIFICATED FORM Denominations: The Certificated Notes, other than Index Notes and Multi- Currency Notes, will be issued in denominations of $1,000 and integral multiples thereof. Index Notes and Multi- Currency Notes will be issued in the denominations specified in a related Multi-Currency and Indexed Note Prospectus Supplement and Pricing Supplement. Interest: Each Certificated Note will bear interest in accordance with its
-30- 31 terms. Interest will begin to accrue on the Original Issue Date of a Certificated Note for the first Interest Payment Period and on the most recent Interest Payment Date to which interest has been paid for all subsequent Interest Payment Periods. Each payment of interest shall include interest accrued to, but excluding, the date of such payment. Interest payments in respect of Fixed Rate Certificated Notes will be made semiannually on June 15 and December 15 of each year and at Maturity. How- ever, the first payment of interest on any Certificated Note issued between a Regular Record Date and an Interest Payment Date will be made on the Interest Payment Date following the next succeeding Regular Record Date. The Regular Record Date with respect to any Interest Payment Date for a Fixed Rate Certificated Note shall be the May 31 or November 30 preceding such Interest Payment Date. Interest at Maturity will be payable to the person to whom the principal is payable. Except as provided in Part I under "Calculation of Interest", the Interest Payment Date for a Floating Rate Certificated Note will be, in the case of Floating Rate Notes which reset daily, weekly or monthly, on the third Wednesday of each month or on the third Wednesday of March, June, September and December of each year as specified in the applicable Pricing Supplement; in the case of Floating Rate Notes which reset quarterly, on the third Wednesday of March, June, September and December of each year; in the case of Floating Rate Notes which reset semiannually, on the third Wednesday of the two months of each year specified in the applicable Pricing Supplement;
-31- 32 or, in the case of Eleventh District Cost of Funds Rate Notes, on the first Business Day of each month or the first Business Day of each March, June, September or December as specified in the applicable Pricing Supplement and in the case of Floating Rate Notes which reset annually, on the third Wednesday of the month specified in the applicable Pricing Supplement; and, in each case, at Maturity. The Regular Record Date with respect to a Floating Rate Note shall be the date 15 calendar days (whether or not a Business Day) preceding an Interest Payment Date. Notwithstanding the above, in the case of Floating Rate Certificated Notes having interest rates which reset daily or weekly, interest payments shall include accrued interest from, and including, the date of issue or from, but exclud- ing, the last date in respect of which interest has been accrued and paid, as the case may be, through, and including, the Regular Record Date, except that at Maturity the interest payable will include interest accrued to, but excluding, the date of Maturity. For additional special provisions relating to Floating Rate Certificated Notes, see the Prospectus Supplement. Payments of Principal and Interest: Upon presentment and delivery of the Certificated Note, the Trustee or the Company's duly authorized agent will pay the principal amount of each Certificated Note at Maturity and the final installment of interest in immediately available funds. All interest payments in U.S. dollars on a Certificated Note, other than interest due at Maturity, will be made by check drawn on the Trustee or the
-32- 33 Company's duly authorized agent and mailed by such Trustee or agent to the person entitled thereto as provided in the Certificated Note. However, the Registered Owners (as hereinafter defined) of ten million dollars or more in aggregate principal amount of the same series of Certificated Notes (whether having identical or different terms and provisions) shall be entitled to receive payments of interest, other than at Maturity, by wire transfer of immediately available funds if appropriate wire transfer instructions have been received in writing by the appropriate Trustee or such agent not less than 16 days prior to the applicable Interest Payment Date. For special provisions relating to Multi-Currency Notes and Indexed Notes, see the related Multi-Currency and Indexed Note Prospectus Supplement. The Trustee will provide monthly to the Company a list of the principal and interest in each currency to be paid on Certificated Notes maturing in the next succeeding month. Such Trustee or agent will be responsible for withholding taxes on interest paid as required by applicable law, but shall be relieved from any such responsibility if it acts in good faith and in reliance upon an opinion of counsel. Certificated Notes presented to the Trustee or the Company's duly authorized agent at Maturity for payment will be cancelled by such Trustee or agent. All cancelled Certificated Notes held by such Trustee shall be destroyed, and the Trustee shall furnish to the Company a certificate with respect to such destruction.
-33- 34 Settlement Procedures: Settlement Procedures with regard to each Certificated Note purchased through the Agents, as agents, shall be as follows: A. Each Agent will advise the Company by telephone of the following Settlement information with regard to each Certificated Note: 1. Exact name in which the Certificated Note is to be registered (the "Registered Owner"). 2. Exact address or addresses of the Regis- tered Owner for delivery, notices and payments of principal, premium, if any, and interest. 3. Taxpayer identification number of the Registered Owner. 4. Principal amount of the Certificated Note. 5. Denomination of the Certificated Note. 6. Fixed Rate Notes: (a) interest rate Floating Rate Notes: (a) interest rate basis or bases; (b) initial interest rate; (c) spread or spread multiplier, if any; (d) initial interest reset date; (e) interest reset dates; (f) interest payment dates;
-34- 35 (g) index maturity; (h) calculation agent; (i) maximum interest rates, if any; (j) minimum interest rate, if any; (k) alternate rate event spread; and (l) interest determination dates Indexed Notes: (a) specified currency; (b) indexed currency; and (c) base rate of exchange. 8. Currency or currency unit in which the Certificated Note is to be denominated. 9. Price to public of the Certificated Note. 10. Settlement Date (Original Issue Date). 11. Stated Maturity. 12. Redemption provisions, if any: (a) Initial Redemption Date (b) Initial Redemption Percentage (c) Annual Redemption Percentage Reduction 13. Optional Repayment Date(s), if any. 14. Net proceeds to the Company. 15. Presenting Agent's commission.
-35- 36 B. The Company shall provide to the Trustee by telecopy or other method acceptable to the Trustee the above Settlement information with respect to each Certificated Note received from the Agents, the name of the Presenting Agent and shall confirm to the Trustee that the principal amount of Notes, including such Certificated Note, issued as of the relevant Settlement Date shall not exceed the limit with respect to the principal amount of Notes specified in the most recent Company Order delivered to the Trustee pursuant to Section 303 of the Indenture. The Company also shall cause the Trustee or its duly appointed agent to issue, authenticate and deliver Certificated Notes in accordance with the Settlement Procedures Timetable set forth below. The Company also shall provide to the Trustee and the Presenting Agent a copy of the applicable Pricing Supplement. The Company also shall provide to the Trustee and the Presenting Agent a copy of a Multi-Currency and Indexed Note Supplement, if applicable. C. The Trustee or its duly appointed agent will complete and authenticate the Certificated Notes, including the Guarantee, in forms approved by the Company and the Guarantor, as the case may be. D. With respect to each trade, the Trustee will deliver the Certificated Notes and one
-36- 37 photocopy thereof to the applicable Presenting Agent at the following addresses: Merrill Lynch & Co., Money Market Clearance, 55 Water Street, 3rd Floor, N.S.C.C. Window, New York, New York 10041, Attention: Al Mitchell Telephone: (212) 558-2405 Telecopy: (212) 558-2457 CS First Boston Corporation, Five World Trade Center, New York, New York 10048, Attention: Paul Riley. First Chicago Capital Markets, Inc. c/o Bankers Trust, 16 Wall Street, 5th Floor, Window 51, New York, New York, 10015, Attention: Jim Murray, Telephone: (212) 618-2370. The Trustee will keep Stub 1. The Presenting Agent will acknowledge receipt of the Certificated Note through a broker's receipt and will keep the photocopy. Delivery of the Certificated Note will be made only against such acknowledgment of receipt. Upon determination that the Certificated Note, including the related Guarantee, has been authorized, delivered and completed as aforementioned, the Presenting Agent will wire the net proceeds of the Certificated Note after deduction of its applicable commission to the Company pursuant to standard wire instructions given by the Company. E. The Presenting Agent will deliver the Certificated Note,
-37- 38 the related Guarantee endorsed thereon, as well as a copy of the Prospectus and any applicable Pricing Supplement or Supplements received from the Trustee, to the purchaser against payment in immediately available funds. F. The Trustee will send a photocopy of the Certified Note to the Company. Settlement Procedures Timetable: For offers to purchase Certificated Notes accepted by the Company, Settlement Procedures "A" through "F" set forth above shall be completed on or before the respective times set forth below: Settlement Procedure Time ---------- ---- A-B 3:00 PM on Business Day prior to Settle- ment C-D 2:15 PM on Settlement Date E 3:00 PM on Settlement Date F 5:00 PM on Settlement Date Failure to Settle: In the event that a purchaser of a Certificated Note from the Company shall either fail to accept delivery of or make payment for a Certificated Note on the date fixed for settlement, the Presenting Agent will forthwith notify the Trustee and the Company by telephone, confirmed in writing, and return the Certificated Note to such Trustee. The Trustee or the Company's duly authorized agent, upon receipt of the Certificated Note from the Presenting Agent, will immediately advise the Company, and the Company
-38- 39 will promptly arrange to credit the account of the Presenting Agent in an amount of immediately available funds equal to the amount previously paid by the Presenting Agent in settlement for the Certificated Note. Such credits will be made on the Settlement Date if possible, and in any event not later than the Business Day following the Settlement Date; provided that the Company has received notice on the same day. If such failure shall have occurred for any reason other than failure by the Presenting Agent to perform its obligations hereunder or under the Distribution Agreement, the Company will reimburse the Presenting 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 Company. Immediately upon receipt of the Certificated Note in respect of which the failure occurred, the Trustee or the Company's duly authorized agent will cancel and destroy the Certificated Note, make appropriate entries in its records to reflect the fact that the Certificated Note was never issued, and accordingly notify in writing the Company.
-39- EX-10.(C) 17 INTEREST CALCULATION AGENCY AGREEMENT 1 EXHIBIT (10)(c) BANPONCE CORPORATION INTEREST CALCULATION AGENCY AGREEMENT INTEREST CALCULATION AGENCY AGREEMENT between BanPonce Corporation, a Puerto Rico corporation (the "Issuer"), and The First National Bank of Chicago, dated as of October 6, 1995. PRELIMINARY STATEMENT 1. The Issuer proposes to issue and sell its Medium-Term Notes, Series 2 (the "Notes") from time to time under, and pursuant to, the terms of an Indenture, dated as of February 15, 1995 (the "Indenture," the terms defined being used herein as defined therein or in the Notes), between the Issuer and The First National Bank of Chicago, trustee thereunder (acting in such capacity, the "Trustee"). 2. The Issuer desires to appoint an agent of the Issuer to calculate the base rates applicable to those Notes on which interest is to accrue at a variable or floating rate ("Floating Rate Notes"), determined by references to LIBOR, the Eleventh District Cost of Funds Rate, the Commercial Paper Rate, the Treasury Rate, the Certificate of Deposit Rate, the CMT Rate, the Prime Rate or the Federal Funds Rate (collectively, the "Base Rates") as are specified and described in the Floating Rate Notes, a copy of which is attached hereto as Exhibit A. NOW, THEREFORE, the Issuer and The First National Bank of Chicago hereby agree as follows: 2 Section 1. Appointment of Calculation Agent. The Issuer hereby appoints The First National Bank of Chicago as Calculation Agent (in such capacity, the "Calculation Agent") of the Issuer with respect to any Floating Rate Notes to be issued by the Issuer under and pursuant to the terms of the Indenture, and the Calculation Agent hereby accepts its obligations as set forth in this Agreement upon the terms and conditions set forth herein. Section 2. Calculation of Base Rates. Unless otherwise specified to the Calculation Agent with respect to any particular note, the calculation date for each applicable Interest Determination Date for any Note shall be the earlier of (i) the tenth calendar day after such Interest Determination Date, or if any such day is not a Business Day (as defined in the Indenture) the next succeeding Business Day or (ii) the Business Day preceding the applicable Interest Payment Date or Maturity, as the case may be. The Calculation Agent shall notify the Issuer and the Trustee of such Base Rate on such calculation date. If at any time the Calculation Agent is not also acting as Trustee under the Indenture, the Issuer shall, upon the issuance of each Floating Rate Note having a different Base Rate or different Interest Determination Dates than the Base Rate or Interest Determination Dates for any prior Floating Rate Note, notify such Calculation Agent of such Interest Determination Dates and Base Rate for such Floating Rate Note. -2- 3 Section 3. New Base Rates. If the Issuer proposes to issue Floating Rate Notes whose interest rate will be determined on a basis or formula not referred to above (a "New Base Rate"), the Issuer shall give a description of such New Base Rate to the Calculation Agent. The Calculation Agent shall determine if it is able and willing to calculate the New Base Rate and upon its agreement in writing to do so the term "Base Rate" shall be deemed to include the New Base Rate. If the Calculation Agent notifies the Issuer that it is not able or willing to calculate the New Base Rate, or that it is only willing to do so on the basis of an increase of its fees not acceptable to the Issuer, the Calculation Agent shall have no responsibility with respect to such New Base Rate and the Issuer shall appoint a different calculation agent to determine the New Base Rate. Section 4. Fees and Expenses. The Calculation Agent shall be entitled to such compensation for its services under this Agreement as may be agreed upon with the Issuer, and the Issuer shall pay such compensation and shall reimburse the Calculation Agent for all reasonable expenses, disbursements and advances incurred or made by the Calculation Agent in connection with the services rendered by it under this Agreement, including reasonable legal fees and expenses, upon receiving an accounting therefor from the Calculation Agent. Section 5. Right and Liabilities of Calculation Agent. The Calculation Agent shall incur no liability for, -3- 4 or in respect of, any action taken, omitted to be taken or suffered by it in reliance upon any Floating Rate Note, certificate, affidavit, instruction, notice, request, direction, order, statement or other paper, document or communication reasonably believed by it to be genuine. Any order, certificate, affidavit, instruction, notice, request, direction, statement or other communication from the Issuer made or given by it and sent, delivered or directed to the Calculation Agent under, pursuant to or as permitted by any provision of this Agreement shall be sufficient for purposes of this Agreement if such communication is in writing and signed by any officer of the Issuer. The Calculation Agent may consult with counsel satisfactory to it and the opinion of such counsel shall constitute full and complete authorization and protection of the Calculation Agent with respect to any action taken, omitted to be taken or suffered by it hereunder in good faith and in accordance with and in reliance upon the opinion of such counsel. In acting under this Agreement, the Calculation Agent (in its capacity as such) does not assume any obligation towards, or any relationship of agency or trust for or with the holders of the Notes. Section 6. Right of Calculation Agent to Own Floating Rate Notes. The Calculation Agent may act as Trustee under the Indenture and it, its officers, employees and shareholders may become owners of, or acquire any interests in, Floating Rate Notes, with the same rights as if the Calculation Agent were not the Calculation Agent, and -4- 5 may engage in, or have an interest in, any financial or other transaction with the Issuer as if the Calculation Agent were not the Calculation Agent. Section 7. Duties of Calculation Agent. The Calculation Agent shall be obliged only to perform such duties as are specifically set forth herein and no other duties or obligations on the part of the Calculation Agent, in its capacity as such, shall be implied by this Agreement. Section 8. Termination, Resignation or Removal of Calculation Agent. The Calculation Agent may at any time terminate this Agreement by giving no less than 90 days' written notice to the Issuer unless the Issuer consents in writing to a shorter time. Upon receipt of notice of termination by the Calculation Agent, the Issuer agrees promptly to appoint a successor Calculation Agent. The Issuer may terminate this Agreement at any time by giving written notice to the Calculation Agent and specifying the date when the termination shall become effective; provided, however, that termination by the Calculation Agent or by the Issuer shall not become effective prior to the date of the appointment by the Issuer, as provided in Section 9 hereof, of a successor Calculation Agent and the acceptance of such appointment by such successor Calculation Agent. If an instrument of acceptance by a successor Calculation Agent shall not have been delivered to the Calculation Agent within 30 days after the giving of such notice of resignation, the resigning Calculation Agent may petition any court of competent jurisdiction for the appointment of a -5- 6 successor Calculation Agent. Upon termination by either party pursuant to the provisions of this Section, the Calculation Agent shall be entitled to the payment of any compensation owed to it by the Issuer hereunder and to the reimbursement of all reasonable expenses, disbursements and advances incurred or made by the Calculation Agent in connection with the services rendered by it hereunder, as provided by Section 4 hereof. Section 9. Appointment of Successor Calculation Agent. Any successor Calculation Agent appointed by the Issuer or by a court following termination of this Agreement pursuant to the provisions of Section 8 hereof shall execute and deliver to the Calculation Agent and to the Issuer an instrument accepting such appointment, and thereupon such successor Calculation Agent shall, without any further act or instrument, become vested with all the rights, immunities, duties and obligations of the Calculation Agent, with like effect as if originally named as Calculation Agent hereunder, and the Calculation Agent shall thereupon be obligated to transfer and deliver, and such successor Calculation Agent shall be entitled to receive and accept, copies of any available records maintained by the Calculation Agent in connection with performance of its obligations hereunder. Section 10. Indemnification. The Issuer shall indemnify and hold harmless the Calculation Agent, its officers and employees from and against all actions, claims, damages, liabilities, losses and expenses (including -6- 7 reasonable legal fees and expenses) relating to or arising out of actions or omissions in any capacity hereunder, except actions, claims, damages, liabilities, losses and expenses caused by the gross negligence or wilful misconduct of the Calculation Agent, its officers or employees. This Section 10 shall survive the payment in full of all obligations under the Notes, whether by redemption, repayment or otherwise. Section 11. Merger, Consolidation or Sale of Business by Calculation Agent. Any corporation into which the Calculation Agent may be merged, converted or consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Calculation Agent may be a party, or any corporation to which the Calculation Agent may sell or otherwise transfer all or substantially all of its corporate trust business, shall, to the extent permitted by applicable law, become the Calculation Agent under this Agreement without the execution of any paper or any further act by the parties hereto. Section 12. Notices. Any notice or other communication given hereunder shall be delivered in person, sent by letter, telecopy or telex or communicated by telephone (subject, in the case of communication by telephone, to written confirmation dispatched within 24 hours) to the addresses given below or such other address as the party to receive such notice may have previously specified: -7- 8 To the Issuer: BanPonce Corporation 209 Munoz Rivera Avenue Hato Rey, Puerto Rico 00918 Attention: Chief Financial Officer Facsimile: (809) 767-8948 To the Calculation Agent: The First National Bank of Chicago 153 W. 51st Street Suite 4011 New York, New York 10019 Attention: Corporate Trust Administration Facsimile: (212) 373-1383 To the Trustee: The First National Bank of Chicago One First National Plaza Suite 0126 Chicago, Illinois 60670-0126 Attention: Corporate Trust Administration Facsimile: (312) 407-1708 Any notice hereunder given by letter, telecopy or telex shall be deemed to have been received when it would have been received in the ordinary course of post or transmission, as the case may be. Section 13. Benefit of Agreement. Except as provided herein, this Agreement is solely for the benefit of the parties hereto and their successors and assigns and no other persons shall acquire or have any rights under or by virtue hereof. Section 14. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. Section 15. Counterparts. This Agreement may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such -8- 9 counterparts shall together constitute one and the same instrument. -9- 10 IN WITNESS WHEREOF, this Agreement has been entered into the day and year first above written. BANPONCE CORPORATION By: -------------------------------- Name: David H. Chafey, Jr. Title: Executive Vice-President THE FIRST NATIONAL BANK OF CHICAGO By: ------------------------------- Name: Title: -10- EX-10.(D) 18 INTEREST CALCULATION AGENCY AGREEMENT 1 EXHIBIT (10)(d) BANPONCE FINANCIAL CORP. INTEREST CALCULATION AGENCY AGREEMENT INTEREST CALCULATION AGENCY AGREEMENT between BanPonce Financial Corp., a Delaware corporation (the "Issuer"), and The First National Bank of Chicago, dated as of October 6, 1995. PRELIMINARY STATEMENT 1. The Issuer proposes to issue and sell its Medium-Term Notes, Series C (the "Notes") from time to time under, and pursuant to, the terms of an Indenture, dated as of October 1, 1991, as amended by the First Supplemental Indenture, dated as of February 28, 1995 (together, the "Indenture," the terms defined being used herein as defined therein or in the Notes), among the Issuer, BanPonce Corporation, a Puerto Rico corporation, and The First National Bank of Chicago, trustee thereunder (acting in such capacity, the "Trustee"), as Successor Trustee to Citibank, N.A. 2. The Issuer desires to appoint an agent of the Issuer to calculate the base rates applicable to those Notes on which interest is to accrue at a variable or floating rate ("Floating Rate Notes"), determined by references to LIBOR, the Eleventh District Cost of Funds Rate, the Commercial Paper Rate, the Treasury Rate, the Certificate of Deposit Rate, the CMT Rate, the Prime Rate or the Federal Funds Rate (collectively, the "Base Rates") as are specified 2 and described in the Floating Rate Notes, a copy of which is attached hereto as Exhibit A. NOW, THEREFORE, the Issuer and The First National Bank of Chicago hereby agree as follows: Section 1. Appointment of Calculation Agent. The Issuer hereby appoints The First National Bank of Chicago as Calculation Agent (in such capacity, the "Calculation Agent") of the Issuer with respect to any Floating Rate Notes to be issued by the Issuer under and pursuant to the terms of the Indenture, and the Calculation Agent hereby accepts its obligations as set forth in this Agreement upon the terms and conditions set forth herein. Section 2. Calculation of Base Rates. Unless otherwise specified to the Calculation Agent with respect to any particular note, the calculation date for each applicable Interest Determination Date for any Note shall be the earlier of (i) the tenth calendar day after such Interest Determination Date, or if any such day is not a Business Day (as defined in the Indenture) the next succeeding Business Day or (ii) the Business Day preceding the applicable Interest Payment Date or Maturity, as the case may be. The Calculation Agent shall notify the Issuer and the Trustee of such Base Rate on such calculation date. If at any time the Calculation Agent is not also acting as Trustee under the Indenture, the Issuer shall, upon the issuance of each Floating Rate Note having a different Base -2- 3 Rate or different Interest Determination Dates than the Base Rate or Interest Determination Dates for any prior Floating Rate Note, notify such Calculation Agent of such Interest Determination Dates and Base Rate for such Floating Rate Note. Section 3. New Base Rates. If the Issuer proposes to issue Floating Rate Notes whose interest rate will be determined on a basis or formula not referred to above (a "New Base Rate"), the Issuer shall give a description of such New Base Rate to the Calculation Agent. The Calculation Agent shall determine if it is able and willing to calculate the New Base Rate and upon its agreement in writing to do so the term "Base Rate" shall be deemed to include the New Base Rate. If the Calculation Agent notifies the Issuer that it is not able or willing to calculate the New Base Rate, or that it is only willing to do so on the basis of an increase of its fees not acceptable to the Issuer, the Calculation Agent shall have no responsibility with respect to such New Base Rate and the Issuer shall appoint a different calculation agent to determine the New Base Rate. Section 4. Fees and Expenses. The Calculation Agent shall be entitled to such compensation for its services under this Agreement as may be agreed upon with the Issuer, and the Issuer shall pay such compensation and shall reimburse the Calculation Agent for all reasonable expenses, -3- 4 disbursements and advances incurred or made by the Calculation Agent in connection with the services rendered by it under this Agreement, including reasonable legal fees and expenses, upon receiving an accounting therefor from the Calculation Agent. Section 5. Right and Liabilities of Calculation Agent. The Calculation Agent shall incur no liability for, or in respect of, any action taken, omitted to be taken or suffered by it in reliance upon any Floating Rate Note, certificate, affidavit, instruction, notice, request, direction, order, statement or other paper, document or communication reasonably believed by it to be genuine. Any order, certificate, affidavit, instruction, notice, request, direction, statement or other communication from the Issuer made or given by it and sent, delivered or directed to the Calculation Agent under, pursuant to or as permitted by any provision of this Agreement shall be sufficient for purposes of this Agreement if such communication is in writing and signed by any officer of the Issuer. The Calculation Agent may consult with counsel satisfactory to it and the opinion of such counsel shall constitute full and complete authorization and protection of the Calculation Agent with respect to any action taken, omitted to be taken or suffered by it hereunder in good faith and in accordance with and in reliance upon the opinion of such counsel. In acting under this Agreement, the Calculation Agent (in its capacity as -4- 5 such) does not assume any obligation towards, or any relationship of agency or trust for or with the holders of the Notes. Section 6. Right of Calculation Agent to Own Floating Rate Notes. The Calculation Agent may act as Trustee under the Indenture and it, its officers, employees and shareholders may become owners of, or acquire any interests in, Floating Rate Notes, with the same rights as if the Calculation Agent were not the Calculation Agent, and may engage in, or have an interest in, any financial or other transaction with the Issuer as if the Calculation Agent were not the Calculation Agent. Section 7. Duties of Calculation Agent. The Calculation Agent shall be obliged only to perform such duties as are specifically set forth herein and no other duties or obligations on the part of the Calculation Agent, in its capacity as such, shall be implied by this Agreement. Section 8. Termination, Resignation or Removal of Calculation Agent. The Calculation Agent may at any time terminate this Agreement by giving no less than 90 days' written notice to the Issuer unless the Issuer consents in writing to a shorter time. Upon receipt of notice of termination by the Calculation Agent, the Issuer agrees promptly to appoint a successor Calculation Agent. The Issuer may terminate this Agreement at any time by giving written notice to the Calculation Agent and specifying the -5- 6 date when the termination shall become effective; provided, however, that not termination by the Calculation Agent or by the Issuer shall become effective prior to the date of the appointment by the Issuer, as provided in Section 9 hereof, of a successor Calculation Agent and the acceptance of such appointment by such successor Calculation Agent. If an instrument of acceptance by a successor Calculation Agent shall not have been delivered to the Calculation Agent within 30 days after the giving of such notice of resignation, the resigning Calculation Agent may petition any court of competent jurisdiction for the appointment of a successor Calculation Agent. Upon termination by either party pursuant to the provisions of this Section, the Calculation Agent shall be entitled to the payment of any compensation owed to it by the Issuer hereunder and to the reimbursement of all reasonable expenses, disbursements and advances incurred or made by the Calculation Agent in connection with the services rendered by it hereunder, as provided by Section 4 hereof. Section 9. Appointment of Successor Calculation Agent. Any successor Calculation Agent appointed by the Issuer or by a court following termination of this Agreement pursuant to the provisions of Section 8 hereof shall execute and deliver to the Calculation Agent and to the Issuer an instrument accepting such appointment, and thereupon such successor Calculation Agent shall, without any further act -6- 7 or instrument, become vested with all the rights, immunities, duties and obligations of the Calculation Agent, with like effect as if originally named as Calculation Agent hereunder, and the Calculation Agent shall thereupon be obligated to transfer and deliver, and such successor Calculation Agent shall be entitled to receive and accept, copies of any available records maintained by the Calculation Agent in connection with performance of its obligations hereunder. Section 10. Indemnification. The Issuer shall indemnify and hold harmless the Calculation Agent, its officers and employees from and against all actions, claims, damages, liabilities, losses and expenses (including reasonable legal fees and expenses) relating to or arising out of actions or omissions in any capacity hereunder, except actions, claims, damages, liabilities, losses and expenses caused by the gross negligence or wilful misconduct of the Calculation Agent, its officers or employees. This Section 10 shall survive the payment in full of all obligations under the Notes, whether by redemption, repayment or otherwise. Section 11. Merger, Consolidation or Sale of Business by Calculation Agent. Any corporation into which the Calculation Agent may be merged, converted or consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Calculation Agent -7- 8 may be a party, or any corporation to which the Calculation Agent may sell or otherwise transfer all or substantially all of its corporate trust business, shall, to the extent permitted by applicable law, become the Calculation Agent under this Agreement without the execution of any paper or any further act by the parties hereto. Section 12. Notices. Any notice or other communication given hereunder shall be delivered in person, sent by letter, telecopy or telex or communicated by telephone (subject, in the case of communication by telephone, to written confirmation dispatched within 24 hours) to the addresses given below or such other address as the party to receive such notice may have previously specified: To the Issuer: BanPonce Financial Corp c/o BanPonce Corporation 209 Munoz Rivera Avenue Hato Rey, Puerto Rico 00918 Attention: Chief Financial Officer Facsimile: (809) 767-8948 To the Calculation Agent: The First National Bank of Chicago 153 W. 51st Street Suite 4011 New York, New York 10019 Attention: Corporate Trust Administration Facsimile: (212) 373-1383 -8- 9 To the Trustee: The First National Bank of Chicago One First National Plaza Suite 0126 Chicago, Illinois 60670-0126 Attention: Corporate Trust Administration Facsimile: (312) 407-1708 Any notice hereunder given by letter, telecopy or telex shall be deemed to have been received when it would have been received in the ordinary course of post or transmission, as the case may be. Section 13. Benefit of Agreement. Except as provided herein, this Agreement is solely for the benefit of the parties hereto and their successors and assigns and no other persons shall acquire or have any rights under or by virtue hereof. Section 14. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. Section 15. Counterparts. This Agreement may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument. -9- 10 IN WITNESS WHEREOF, this Agreement has been entered into the day and year first above written. BANPONCE FINANCIAL CORP. By: _______________________ Name: David H. Chafey, Jr. Title: President THE FIRST NATIONAL BANK OF CHICAGO By: ________________________ Name: Title: -10- -----END PRIVACY-ENHANCED MESSAGE-----