8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): June 23, 2004

POPULAR, INC.

(Exact Name of Registrant as Specified in Charter)

Puerto Rico	0-13818	66-0416582
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer 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: (787) 765-9800

ITEMS 1-4. Not Applicable.

ITEM 5. OTHER EVENTS.

The exhibits listed in Item 7 are filed with reference to and are hereby incorporated by reference (a) into the Registration Statement on Form S-3 (File No. 333-111007), as amended, filed with the Securities and Exchange Commission by Popular, Inc. and certain of its subsidiaries and (b) herein.

ITEM 6. Not Applicable.

ITEM 7. EXHIBITS

(1)(a)	Distribution Agreement, dated June 30, 2004, among Popular, Inc., UBS Securities LLC, Banc of America Securities LLC, Keefe, Bruyette & Woods, Inc. and Popular Securities, Inc.
(1)(b)	Distribution Agreement, dated June 23, 2004, among Popular North America, Inc., UBS Securities LLC, Banc of America Securities LLC, Keefe, Bruyette & Woods, Inc. and Popular Securities, Inc.
(4)(a)	Senior Indenture of Popular, Inc., dated as of February 15, 1995, as supplemented by the First Supplemental Indenture thereto, dated as of May 8, 1997, each between Popular, Inc. and Bank One, NA (formerly known as The First National Bank of Chicago), as trustee (incorporated by reference from Exhibit 4(d) to the Registration Statement No. 333-26941 of Popular, Inc., Popular International Bank, Inc. and Popular North America, Inc., as filed with the SEC on May 12, 1997).
(4)(b)	Second Supplemental Indenture of Popular, Inc., dated as of August 5, 1999, between Popular, Inc. and Bank One, NA (formerly know as The First National Bank of Chicago), as trustee (incorporated by reference from Exhibit 4(e) to Popular, Inc.’s Current Report on Form 8-K (File No. 002-96018), dated August 5, 1999, as filed with the SEC on August 17, 1999).
(4)(c)	Senior Indenture of Popular North America, Inc., dated as of October 1, 1991, as supplemented by the First Supplemental Indenture thereto, dated as of February 28, 1995, and the Second Supplemental Indenture thereto, dated as of May 8, 1997, each among Popular North America, Inc., Popular, Inc., as guarantor, and Bank One, NA (formerly known as The First National Bank of Chicago), as trustee (incorporated by reference to Exhibit 4(f) to the Registration Statement No. 333-26941 of Popular, Inc., Popular International Bank, Inc. and Popular North America, Inc., as filed with the SEC on May 12, 1997).
(4)(d)	Third Supplemental Indenture of Popular North America, Inc., dated as of August 5, 1999, among Popular North America, Inc., Popular, Inc., as guarantor, and Bank One, NA (formerly known as The First National Bank of Chicago), as trustee (incorporated by reference from Exhibit 4(h) to Popular, Inc.’s Current Report on Form 8-K (File No. 002-96018), dated August 5, 1999, as filed with the SEC on August 17, 1999).
4)(e)	Form of Fixed Rate Medium-Term Note, Series 5, of Popular, Inc.
(4)(f)	Form of Floating Rate Medium-Term Note, Series 5, of Popular, Inc.
(4)(g)	Form of Fixed Rate Medium-Term Note, Series F, of Popular North America, Inc., endorsed with the guarantee of Popular, Inc.
(4)(h)	Form of Floating Rate Medium-Term Note, Series F, of Popular North America, Inc., endorsed with the guarantee of Popular, Inc.
(10)(a)	Administrative Procedures governing Medium-Term Notes, Series 5, of Popular, Inc.
(10)(b)	Administrative Procedures governing Medium-Term Notes, Series F, of Popular North America, Inc., fully guaranteed by Popular, Inc.
(10)(c)	Interest Calculation Agency Agreement, dated as of June 30, 2004, between Popular, Inc. and J.P. Morgan Trust Company, National Association.
(10)(d)	Interest Calculation Agency Agreement, dated as of June 30, 2004, between Popular North America, Inc. and J.P. Morgan Trust Company, National Association.

ITEMS 8-9. Not Applicable.

SIGNATURES

     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.

	POPULAR, INC.
Date: July 2, 2004	By: /s/ Jorge A. Junquera Name: Jorge A. Junquera Title: Senior Executive Vice President

EX-1.(A)

                                                                  EXECUTION COPY

                                  POPULAR, INC.

                              MEDIUM-TERM NOTES DUE
                       9 MONTHS OR MORE FROM DATE OF ISSUE

                             DISTRIBUTION AGREEMENT



                                                                   June 30, 2004


UBS SECURITIES LLC
677 Washington Blvd
Stamford, Connecticut  06901

BANC OF AMERICA SECURITIES LLC
9 West 57th Street
New York, New York 10019

KEEFE, BRUYETTE & WOODS, INC.
787 Seventh Avenue
New York, New York 10019

POPULAR SECURITIES, INC.
209 Munoz Rivera Avenue
Hato Rey, Puerto Rico 00918


Ladies and Gentlemen:

         Popular, Inc., a Puerto Rico corporation (the "Company"), confirms its
agreement with Credit Suisse First Boston LLC, J.P. Morgan Securities Inc.,
Keefe, Bruyette & Woods, Inc., Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Popular Securities, Inc. and UBS Warburg LLC (each,
an "Agent," and collectively, the "Agents", which term shall also include any
Agent acting as principal substituted as hereinafter provided in Section 17
hereof) 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 5, 1995, as amended and supplemented from time
to time (the "Indenture"), between the Company and J.P. Morgan Trust Company,
National Association (as successor to Bank One, N.A.), 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 $2,500,000,000 (or
the equivalent thereof in other currencies or currency units) less an amount
equal to the aggregate proceeds from the sale prior to or after the date hereof
of securities other than the Notes registered under the Prospectus, dated
December 29, 2003, relating to debt securities and preferred stock of the
Company, Popular International Bank, Inc. and Popular North America, Inc. to or
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 one or more Agents as principal for resale to investors and other
purchasers and for the sale of the Notes by the Company directly to investors
(as may from time to time be agreed to by the Company and the applicable
Agent(s), in which case each applicable Agent will act as an agent of the
Company in soliciting offers for the purchase of Notes.

         The Company has filed with the Securities and Exchange Commission (the
"SEC") a registration statement on Form S-3 (Nos. 333-111007, 333-111007-01 and
333-111007-02) 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"), and the Company has filed such post-effective amendments thereto as may
be required prior to the Company's acceptance of any offer for the purchase of
Notes and each such post-effective amendment has been declared effective by the
SEC. Such registration statement (as so amended, if applicable) is referred to
herein as the "Registration Statement"; and the final prospectus and all
applicable amendments or supplements thereto (including the final prospectus
supplement and pricing supplement relating to the offering of Notes), in the
form first furnished to the applicable Agent(s) for use in confirming sales of
Notes, are collectively referred to herein as the "Prospectus"; provided,
however, that all references to the "Registration Statement" and the
"Prospectus" shall also be deemed to include all documents incorporated therein
by reference that are filed pursuant to the Securities Exchange Act of 1934, as
amended (the "1934 Act"), prior to any acceptance by the Company of an offer for
the purchase of Notes; provided further, that if the Company files a
registration statement with the SEC pursuant to Rule 462(b) of the 1933 Act
Regulations (the "Rule 462(b) Registration Statement"), then, after such filing,
all references to the "Registration Statement" shall also be deemed to include
the Rule 462(b) Registration Statement. A "preliminary prospectus" shall be
deemed to refer to any prospectus used before the Registration Statement became
effective and any prospectus furnished by the Company after the registration
statement became effective and before any acceptance by the Company of an offer
for the purchase of Notes which omitted information to be included upon pricing
of such Notes in a form of prospectus filed with the SEC pursuant to Rule 424(b)
of the 1933 Act Regulations. For purposes of this Agreement, all references to
the "Registration Statement," "Prospectus" or "preliminary prospectus" or to any
amendment or supplement thereto shall be deemed to include any copy filed with
the SEC pursuant to its Electronic Data Gathering, Analysis and Retrieval system
("EDGAR").

         All references in this Agreement to financial statements and schedules
and other information which is "disclosed," "contained," "included" or "stated"
(or other references of like import) in the Registration Statement, Prospectus
or preliminary prospectus or any amendment or supplement thereto shall be deemed
to include all such financial statements and schedules and other information
incorporated therein by reference at or prior to the acceptance of any
particular offer for the purchase of Notes; and all references in this Agreement
to amendments or supplements to the Registration Statement, Prospectus or
preliminary prospectus shall be deemed



                                       2

to include the filing of any document under the 1934 Act incorporated therein by
reference after the acceptance of any particular offer for the purchase of
Notes.

SECTION 1.        Appointment as Agents.

         (a) Appointment. 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 agrees that Notes shall be sold exclusively
to or through the Agents. The Company agrees that it will not appoint any other
agents to act on its behalf, or to assist it, in the placement of the Notes.

         Notwithstanding anything to the contrary contained herein, the Company
may authorize any other person, partnership or corporation (an "Additional
Agent") to act as its agent to solicit offers for the purchase of all of the
Notes or a specific tranche of Notes. 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
counterpart of this Agreement, the execution of such counterpart by the
Additional Agent, and the prompt delivery of executed copies of such counterpart
and any other contractual arrangements between the Company and such Additional
Agent relating thereto to the Agents and their counsel. Thereafter, with respect
to all of the Notes or the specific tranche of Notes, as the case may be, the
term "Agent" or "Agents," as used in this Agreement, shall mean the Agents and
such Additional Agent. Upon its appointment, the Additional Agent shall specify
its requirement for the delivery of certificates, letters and opinions as are
set forth in Section 5 hereof.

         (b) Sale of Notes. The Company shall not sell or approve the
solicitation of offers for the purchase of Notes in excess of the amount which
shall be authorized by the Company from time to time or in excess of the
aggregate initial offering price of Notes registered for sale pursuant to the
Registration Statement. The Agents shall have no responsibility for maintaining
records with respect to the aggregate initial offering price of Notes sold, or
of otherwise monitoring the availability of Notes for sale, under the
Registration Statement.

         (c) Purchases as Principal; Solicitations as Agent. The Agents shall
not have any obligation to purchase Notes from the Company as principal.
However, absent an agreement between an Agent and the Company that such Agent
shall be acting solely as an agent for the Company, such Agent shall be deemed
to be acting as principal in connection with any offering of Notes by the
Company through such Agent. Accordingly, the Agents, individually or in a
syndicate, may agree from time to time to purchase Notes from the Company as
principal for resale to investors and other purchasers determined by such
Agents. Any purchase of Notes from the Company by an Agent as principal shall be
made in accordance with Section 3(b) hereof. If agreed upon between an Agent and
the Company, such Agent, acting solely as an agent for the Company and not as
principal, shall solicit offers for the purchase of Notes. Such Agent shall make
reasonable efforts to assist the Company in obtaining performance by each
purchaser whose offer for the purchase of Notes has been solicited by it on an
agency basis and accepted by the Company. Such Agent shall have the right, in
its discretion reasonably exercised, to reject any offer for the purchase of
Notes, in whole or in part, and any such rejection shall not be deemed a breach
of its agreement contained herein. Such Agent shall not have any liability to
the Company in the event that any such purchase is not consummated for


                                       3

any reason, except in the event that such sale is not consummated due to the
failure of such Agent to perform its obligations hereunder.

         (d) Reliance. The Company and the Agents agree that any Notes purchased
from the Company by one or more Agents as principal shall be purchased, and any
Notes the placement of which an Agent arranges as an agent of the Company shall
be placed by such Agent, 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 one or more Agents as
principal), as of the date of each delivery of Notes (whether through an Agent
as agent or to one or more Agents as principal) (the date of each such delivery
to one or more Agents 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 that
relates exclusively to an offering of 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 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 its jurisdiction of incorporation 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 (each, a "Significant Subsidiary"), as defined
         in Rule 1-02 of Regulation S-X promulgated under the 1933 Act, 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 prospects of the Company and its subsidiaries considered as
         one enterprise; and all of the issued and outstanding shares of capital
         stock of each such Significant Subsidiary have been duly authorized and
         validly issued, are 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



                                       4

         associations) and, except as otherwise disclosed in the Prospectus and
         except for directors' qualifying shares, are 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. The Company meets
         the requirements for use of Form S-3 under the 1933 Act; the
         Registration Statement (or any Rule 462(b) Registration Statement) has
         become effective under the 1933 Act and no stop order suspending the
         effectiveness of the Registration Statement (or any Rule 462(b)
         Registration Statement) has been issued under the 1933 Act and no
         proceedings for that purpose have been instituted or are pending or, to
         the knowledge of the Company, are contemplated by the SEC, and any
         request on the part of the SEC for additional information has been
         complied with; the Indenture has been duly qualified under the 1939
         Act; at the respective times that the Registration Statement (including
         any Rule 462(b) Registration Statement) and any post-effective
         amendment thereto (including the filing of the Company's most recent
         Annual Report on Form 10-K with the SEC (the "Annual Report on Form
         10-K")) became effective and at each Representation Date, the
         Registration Statement (including any Rule 462(b) Registration
         Statement but excluding any prospectus supplement with respect to an
         offering of securities other than the Notes that is contained therein)
         and any amendments thereto complied and 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
         under the 1939 Act (the "1939 Act Regulations") and 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 to make the
         statements therein not misleading; each preliminary prospectus and
         prospectus filed as part of the Registration Statement (excluding any
         prospectus supplement with respect to an offering of securities other
         than the Notes that is contained therein) as originally filed or as
         part of any amendment thereto, or filed pursuant to Rule 424 under the
         1933 Act, complied when so filed in all material respects with the 1933
         Act Regulations; each preliminary prospectus and the Prospectus
         delivered to the applicable Agent(s) for use in connection with the
         offering of Notes are identical to any electronically transmitted
         copies thereof filed with the SEC pursuant to EDGAR, except to the
         extent permitted by Regulation S-T; and at the date hereof, at the date
         of the Prospectus and each amendment or supplement thereto and at each
         Representation Date, neither the Prospectus nor any amendment or
         supplement thereto included or will include an untrue statement of a
         material fact or omitted or will 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 the 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 the Prospectus.


                                       5


                  (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 include an untrue statement of a material fact or omit to
         state a material fact required to be stated therein or necessary in
         order to make the statements therein, in the light of the circumstances
         under which they were or are made, not misleading.

                  (v) Independent Registered Public Accounting Firm. The
         independent registered public accounting firm that 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 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; the supporting schedules included or
         incorporated by reference in the Prospectus present fairly the
         information required to be stated therein; and any pro forma
         consolidated financial statements of the Company and its consolidated
         subsidiaries and the related notes thereto included in the Prospectus
         present fairly the information shown therein, have been prepared in
         accordance with the SEC's rules and guidelines with respect to pro
         forma financial statements and have been properly compiled on the basis
         described therein, and the assumptions used in the preparation thereof
         are reasonable and the adjustments used therein are appropriate to give
         effect to the transactions and circumstances referred to 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, 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; 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
         (as defined in Section 3(b)), will constitute valid and legally binding
         obligations of the Company enforceable in accordance with their terms,
         subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
         moratorium and similar laws of general applicability relating to or
         affecting creditors' rights generally and to general equity principles;
         the Notes and the Indenture will be substantially in the form


                                       6

         heretofore delivered to the Agent 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 by-laws 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,
         creation, 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 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.

                  (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.

                                       7


                  (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.

                  (xii) 1940 Act. The Company is not, and upon the issuance and
         sale of the Notes as herein contemplated and the application of the net
         proceeds therefrom as described in the Prospectus will not be, an
         "investment company" within the meaning of the Investment Company Act
         of 1940, as amended (the "1940 Act").

         (b) Additional Certifications. Any certificate signed by any officer of
the Company or a Significant Subsidiary and delivered to the Agents or to
counsel for the Agents in connection with an offering of Notes or the sale of
Notes to one or more Agents as principal shall be deemed a representation and
warranty by the Company or such Significant Subsidiary, as the case may be, to
the Agents as to the matters covered thereby on the date of such certificate.

SECTION 3. Solicitations as Agents; Purchases as Principal.

         (a) Solicitations as Agents. On the basis of the representations and
warranties herein contained, but subject to the terms and conditions herein set
forth, when agreed upon by the Company and an Agent, such Agent, as an agent of
the Company, will use its reasonable efforts to solicit offers to purchase the
Notes upon the terms and conditions set forth herein and in the Prospectus.

         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 an 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. The Agents 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 or formula, maturity date and other
terms of the Notes shall be agreed upon by the Company and the applicable 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


                                       8

Prospectus, the Notes will be issued in denominations of $1,000 and integral
multiples thereof. All Notes sold through an 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 one or more Agents as
principal shall be made in accordance with the terms contained herein and
(unless the Company and such Agent(s) 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(s). Each such separate agreement
(which may be an oral agreement) between one or more Agents 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 the applicable
Agent(s). 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 each applicable 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. The Agents may
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 one or more Agents as principal.

         (c) Administrative Procedures. Administrative procedures with respect
to the sale of Notes shall be agreed upon from time to time by the Agent and the
Company (the "Procedures"). The Agents, on the one hand, and the Company on the
other hand, agree to perform the respective duties and obligations specifically
provided to be performed by them in the Procedures.

         (d) Restrictions on Distribution in Puerto Rico. The Agents agree that
Popular Securities, Inc. shall have the sole right to solicit offers to purchase
the Notes as agent or to make any sales of the Notes as principal, as the case
may be, in Puerto Rico.

         (e) Restrictions on Sales to Discretionary Accounts. Each Agent hereby
agrees to refrain from sales to discretionary accounts under its supervision
except in accordance with procedures to obtain the prior specific written
approval of the customer that have been approved by the NASD in compliance with
NASD Conduct Rule 2720(l).

SECTION 4. Covenants of the Company.

         The Company covenants with the Agents as follows:

         (a) Notice of Certain Events. The Company will notify the Agents
immediately (i) of the effectiveness of any amendment to the Registration
Statement, (ii) of the filing of any


                                       9

supplement to the Prospectus relating to the Notes or any document 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 4, the Company will give the Agents 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 information solely with respect to the terms
of Notes (except with respect to the applicable Agent(s)) and other than an
amendment or supplement that relates to an offering of securities other than the
Notes), whether by the filing of documents pursuant to the 1934 Act, the 1933
Act or otherwise, and will furnish the Agents 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 required to be filed pursuant to the 1934 Act, which the
Company shall furnish to the Agents immediately after the filing thereof, and
will not file any such amendment or supplement other than a document required to
be filed pursuant to the 1934 Act in a form to which you or your counsel shall
reasonably object.

         (c) Copies of the Registration Statement and the Prospectus. The
Company will deliver to the Agents 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 the Agents may
reasonably request. The Company will furnish the Agents with as many copies of
the Prospectus (as amended or supplemented) as the Agents shall reasonably
request so long as the Agents are 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 or to the Agents pursuant to this
Agreement, a Pricing Supplement with respect to such Notes in a form previously
approved by the Agents. The Company will deliver such Pricing Supplement to the
applicable Agent(s) no later than 11:00 am, New York City time, on the business
day following the date of the Company's acceptance of the offer for the purchase
of such Notes and will file such Pricing Supplement pursuant to the applicable
clause of Rule 424(b) under the 1933 Act in accordance with the prescribed time
period therein.

         (e) Revisions of Prospectus -- Material Changes. Except as otherwise
provided in subsection (1) 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 Registration Statement or the Prospectus
or any amendment or supplement thereto in order that neither the Registration
Statement or the Prospectus nor any amendment or supplement thereto will include
an untrue statement of a material fact or omit to state any material fact
necessary in


                                       10

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 or any amendment or
supplement thereto 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 the Agents may
have purchased from the Company as principal, 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 or any amendment or supplement thereto
comply with such requirements.

         (f) Prospectus Revisions -- Periodic Financial Information. Except as
otherwise provided in subsection (1) of this Section, on or prior to 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 by reference capsule financial
information with respect to the results of operations of the Company and its
consolidated subsidiaries for such period and corresponding information for the
comparable period of the preceding fiscal year, as well as such other
information and explanations as shall be necessary for an understanding thereof
or as shall be required by the 1933 Act or the 1933 Act Regulations.

         (g) Prospectus Revisions -- Audited Financial Information. Except as
otherwise provided in subsection (1) of this Section, on or prior to the date on
which there shall be released to the general public financial information with
respect to the audited consolidated financial statements of the Company for the
preceding 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 by reference such audited consolidated financial statements and the
report or reports, and consent or consents to such inclusion or incorporation by
reference, of the independent registered public accounting firm with respect
thereto, as well as such other information and explanations as shall be
necessary for an understanding of such consolidated financial statements or as
shall be required by the 1933 Act or the 1933 Act Regulations.

         (h) Earnings Statements. The Company will timely file such reports
pursuant to the 1934 Act as are necessary in order to make generally available
to the security holders of the Company as soon as practicable an earnings
statement for the purposes of, and to provide the benefits contemplated by, the
last paragraph of Section 11(a) of the 1933 Act.

         (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,


                                       11


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 its 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) Reporting Requirements. The Company, during the period when the
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 within the time period prescribed by the 1934
Act and the 1934 Act Regulations.

         (k) Stand-Off Agreement. If required pursuant to the terms of a Terms
Agreement, between the date of any Terms Agreement and the Settlement Date with
respect to such Terms Agreement, the Company will not, without the consent of
the applicable Agent or Agents, 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 agent pursuant to a
request from the Company and (ii) the Agents shall not then hold any Notes
purchased from the Company as principal, 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 one or more Agents.

         (m) Public Reports. The Company will furnish to the Agents, at the
earliest time the Company makes the same available to others, copies of its
annual report and other financial reports furnished or made available to the
public generally.

SECTION 5. Conditions of Obligations.

         The obligations of the Agents to solicit offers to purchase the Notes
as agent of the Company, the obligations of any purchasers of the Notes sold
through an 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 its covenants and agreements herein contained
and to the following additional conditions precedent:

         (a) Legal Opinions. On the date hereof and, if required by any
applicable Terms Agreement, on the Settlement Date with respect to such Terms
Agreement, the Agents shall have received the following legal opinions, dated as
of the date hereof or such Settlement Date, as the case may be, in form and
substance satisfactory to the Agents:

                  (1) Opinion of Counsel to the Company. The opinion of Sullivan
         & Cromwell LLP, counsel to the Company, to the effect that:



                                       12


                           (i) The Company is duly registered as a bank holding
                  company under the Bank Holding Company 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 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.

                           (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 and 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 or such Settlement
                  Date, as the case may be, 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
                  the Agents in accordance with this Agreement have been
                  obtained or made; provided, however, that such counsel need
                  express no opinion with respect to state securities laws.

                           (v) This Agreement and, if applicable, such Terms
                  Agreement have each been duly authorized, executed and
                  delivered by the Company.

                           (vi) The execution and delivery by the Company of the
                  Indenture and this Agreement and, if applicable, such 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 this
                  Agreement and, if applicable, such Terms Agreement and the
                  performance by the Company of its obligations under the
                  Indenture, this Agreement and, if applicable, such Terms
                  Agreement and the Notes will not (a) violate the certificate
                  of incorporation or by-laws of the Company, in each case as in
                  effect at the date of such opinion, or (b) violate any
                  existing Federal law of the United States applicable to the
                  Company; provided, however, that, for the purposes of this
                  paragraph (vi), such counsel need express no opinion with
                  respect to the 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 citizens or residents of certain foreign countries or
                  specially designated nationals and organizations; provided,
                  further, that insofar as



                                       13


                  performance by the Company of its obligations under the
                  Indenture, this Agreement and, if applicable, such 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.

                           (vii) The Registration Statement is effective under
                  the 1933 Act and, to the best of such counsel's knowledge, (a)
                  no stop order suspending the effectiveness of the Registration
                  Statement has been issued under the 1933 Act and (b) no
                  proceedings therefor have been initiated or threatened by the
                  SEC.

                           (viii) As counsel for the Company, such counsel
                  reviewed the Registration Statement and the Prospectus, and
                  any amendment or supplement thereto, participated in
                  discussions with the Agents' representatives and those of the
                  Company and its independent registered public accounting firm,
                  and advised the Company as to the requirements of the 1933 Act
                  and the applicable 1933 Act Regulations, and on the basis of
                  the information that such counsel gained in the course of the
                  performance of the services referred to above, 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, they
                  confirm to the Agents 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
                  or, if applicable, the pricing supplement forming a part
                  thereof, appeared on their face to be appropriately
                  responsive, in all material respects relevant to the offering
                  of the Notes, to the requirements of the 1933 Act, the 1939
                  Act and the applicable rules and regulations of the SEC
                  thereunder, and nothing has come to their attention in the
                  course of such review that has caused them to believe that,
                  insofar as relevant to the offering of the Notes, any part of
                  the Registration Statement, when such part became effective,
                  contained any untrue statement of a material fact or omitted
                  to state any material fact required to be stated therein or
                  necessary to make the statements therein not misleading or
                  that, insofar as relevant to the offering of the Notes, the
                  Prospectus, as of the date of the prospectus supplement or, if
                  applicable, the pricing supplement forming a part thereof, or,
                  if applicable, the applicable Settlement Date, contained any
                  untrue statement of a material fact or omitted to state any
                  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, however, that they do
                  not assume any responsibility for the accuracy, completeness
                  or fairness of the statements contained in the Registration
                  Statement or the Prospectus, or any amendment or supplement
                  thereto, except (i) for those made under the captions
                  "Description of Debt Securities We May Offer" and "Plan of
                  Distribution" in the Prospectus, under the captions
                  "Description of Notes We May Offer" and "Supplemental Plan of
                  Distribution" in the prospectus supplement forming a part of
                  the Prospectus and under the captions "Description of the
                  Notes" and


                                       14

                  "Underwriting," or similar or comparable captions, in any
                  pricing supplement forming a part of the Prospectus, insofar
                  as they relate to provisions therein described, of the Notes,
                  the Indenture and this Agreement and, if applicable, such
                  Terms Agreement and (ii) the accuracy of the descriptions of
                  the Federal laws of the United States contained in the
                  prospectus supplement forming a part of the Prospectus under
                  the caption "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 or the Prospectus, or any amendment or supplement
                  thereto, or as to the statement of the eligibility of the
                  Trustee under the Indenture. Such counsel may also say that
                  their letter is furnished to the Agents by them as counsel for
                  the Company and is solely for the benefit of the Agents.

         Such counsel may base their opinions, as to certain matters, 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, Esq., delivered pursuant to Section 5(a)(2) hereof.

                  (2) Opinion of Puerto Rico Counsel to the Company. The opinion
         of Brunilda Santos de Alvarez, Esq., 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 to 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 a
                  bank in good standing under the laws of the jurisdiction of
                  its incorporation, has the corporate or other organizational
                  power and authority to own, lease and operate its properties
                  and to 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



                                       15


                  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 and, if applicable, such Terms
                  Agreement, have 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) All regulatory consents, authorizations,
                  approvals and filings required to be obtained or made by the
                  Company on or prior to the date hereof or such Settlement
                  Date, as the case may be, under the laws of the Commonwealth
                  of Puerto Rico for the issuance, sale and delivery of the
                  Notes by the Company to or through the Agents in accordance
                  with this Agreement have been obtained or made; provided,
                  however, that such counsel need express no opinion with
                  respect to state securities laws.

                           (viii) To the best of such counsel's knowledge,
                  neither the Company nor any of the Significant Subsidiaries is
                  in violation of its charter or by-laws 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, this 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 this
                  Agreement, and the performance by the Company of its
                  obligations under the Indenture, this Agreement, the Notes and
                  any Terms Agreement will not (a) violate the certificate of
                  incorporation or by-laws of the Company as in effect as at the
                  date of such opinion, (b) violate any existing Federal law of
                  the United States or any existing law of the Commonwealth of
                  Puerto Rico applicable to the Company, (c) 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 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 or (d) violate
                  any administrative or court decree as applicable to the
                  Company or having jurisdiction over the Company, which breach,
                  default, creation, imposition or violation would, in each
                  case, have a material adverse effect on the Company and its
                  subsidiaries considered as a whole; provided, however, that,
                  for purposes of this paragraph



                                       16


                  (viii), 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 citizens or
                  residents of certain foreign countries or specially designated
                  nationals and organizations; provided, further, that insofar
                  as performance by the Company of its obligations under the
                  Indenture, this 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.

                           (ix) 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.

                           (x) 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.

                           (xi) 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.

                           (xii) Each document filed pursuant to the 1934 Act
                  and incorporated by reference in the Prospectus complied when
                  filed as to form in all material respects with the 1934 Act
                  and the 1934 Act Regulations.

                           (xiii) As counsel to the Company such counsel has
                  reviewed the Registration Statement and the Prospectus, and
                  any amendment or supplement thereto, participated in
                  discussions with representatives of the Agents and those of
                  the Company and its accountants, 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 or, if applicable, the pricing
                  supplement forming a part thereof, appeared on their face to
                  be appropriately responsive in all material respects to the


                                       17

                  requirements of the 1933 Act, the 1939 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, contained any
                  untrue statement of a material fact 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 or, if
                  applicable, the pricing supplement forming a 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, contained any untrue statement of
                  a material fact 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, or any
                  amendment or supplement thereto, except for those made under
                  the captions "Description of Debt Securities We May Offer" and
                  "Plan of Distribution" in the Prospectus, under the captions
                  "Description of Notes We May Offer" and "Supplemental Plan of
                  Distribution" in the prospectus supplement forming a part of
                  the Prospectus and under the captions "Description of the
                  Notes" and "Underwriting," or similar or comparable captions,
                  in any pricing supplement forming a part of the Prospectus,
                  insofar as they relate to provisions therein described of the
                  Notes, the Indenture and this Agreement and, if applicable,
                  such Terms Agreement and under "Item 1 -- Business --
                  Regulation and Supervision" in the Company's Annual Report on
                  Form 10-K 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 or the Prospectus, or
                  any amendment or supplement thereto, or as to the statement of
                  eligibility 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 matters, on
certificates of officers of the Company and may rely as to all matters relating
to the laws of the State of New York and the General Corporation Law of the
State of Delaware upon the opinion of Sullivan & Cromwell LLP, delivered
pursuant to Section 5(a)(1).

                  (3) Opinion of Counsel to the Agents. The opinion of Sidley
         Austin Brown & Wood LLP, counsel to the Agents, covering the matters
         referred to in subparagraph (1) above under the subheadings (ii),
         (iii), (v), (vii) and (viii). Sidley Austin Brown & Wood LLP shall
         additionally state that no facts have come to their attention that
         would cause them to believe that (other than (i) the financial
         statements, schedules and other financial data included or incorporated
         by reference therein or omitted therefrom and (ii) the statement of
         eligibility of the Trustee, as to which such counsel is not requested
         to comment) the Registration Statement, at the time it became effective
         or, if an amendment


                                       18

         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, 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, as the case may be, contained an untrue statement of a
         material fact or omitted to state a material fact required to be stated
         therein or necessary to make the statements therein not misleading or
         that the Prospectus, 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 or at the Settlement Date with respect thereto, as the case
         may be, included or includes, as the case may be, an untrue statement
         of a material fact or omitted or omits, as the case may be, 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, and, if required in any
applicable Terms Agreement, on the Settlement Date with respect to such Terms
Agreement, the Agents shall have received certificates of the President or Vice
President of the Company, dated as of the date hereof or such Settlement Date,
as the case may be, 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 its part to be performed or satisfied at or prior to
the date of such certificate and (iv) 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. On the date hereof and, if required by any
applicable Terms Agreement, the Settlement Date with respect to such Terms
Agreement, the Agents or the applicable Agent(s), as the case may be, shall
receive a letter from PricewaterhouseCoopers LLP, the Company's independent
public accountants, dated as of the date hereof or such Settlement Date, as the
case may be, in form and substance reasonably satisfactory to the Agents or the
applicable Agent(s), as the case may be, containing statements and information
of the type ordinarily included in accountants' "comfort letters" to
underwriters 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 Regulations.

         (d) Other Documents. On the date hereof and, if counsel to the Agents
is required to deliver its opinion in accordance with any applicable Terms
Agreement, on each Settlement Date with respect to such 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




                                       19


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.

         If any condition specified in this Section 5 shall not have been
fulfilled when and as required to be fulfilled, this Agreement (or, at the
option of the applicable Agent(s), any applicable Terms Agreement) may be
terminated by the Agents or the applicable Agent(s), as the case may be, 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
concerning the representations, warranties and agreements to survive delivery of
Section 11 hereof, the provisions set forth under "Parties" of Section 15 hereof
and the provisions of Sections 14 and 16 hereof shall remain in effect.

SECTION 6. Delivery of and Payment for Notes Sold through the Agents.

         Delivery of Notes sold through an Agent as agent shall be made by the
Company to such Agent for the account of any purchaser only against payment
therefor in immediately available funds. In the event that a purchaser shall
fail either to accept delivery of or to make payment for a Note on the date
fixed for settlement, such Agent shall promptly notify the Company and deliver
the Note to the Company, and, if such Agent has theretofore paid the Company for
such Note, the Company will promptly return such funds to such Agent. If such
failure occurred for any reason other than default by such Agent in the
performance of its obligations hereunder, the Company will reimburse such Agent
on an equitable basis for its 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 one or
more Agents 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 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, 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 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 information solely with respect to
the terms of Notes and other than by an amendment or supplement which relates
exclusively to an offering of securities other than the Notes) and each time
that the Company sells Notes to or through one or more Agents, unless waived by
the


                                       20


Agent(s) participating in such sale, the Company shall furnish or cause to be
furnished to the Agents or the applicable Agent(s), as the case may be,
forthwith certificates dated the date of filing with the SEC of such supplement,
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 the applicable Agent(s), 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 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 information solely with respect to
the terms of Notes 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 securities
other than the Notes) and each time that the Company sells Notes to or through
one or more Agents, unless received by the Agent(s) participating in such sale,
the Company shall furnish or cause to be furnished forthwith to the Agents or
the applicable Agent(s), as the case may be, with a copy to counsel to the
Agents, a written opinion or opinions of counsel to the Company satisfactory to
the Agents or the applicable Agent(s), as the case may be, dated the date of
filing with the SEC of such supplement, 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 the applicable Agent(s), as the case may be, of
the same tenor as the opinions referred to in Section 5(a) (1) and (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 shall furnish the Agents or the applicable Agent(s), as the case may
be, with a letter to the effect that the Agents or the applicable Agent(s), 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 and each time that the Company sells
Notes to or through one or more Agents, unless waived by the Agent(s)
participating in such sale, the Company shall cause PricewaterhouseCoopers LLP
forthwith to furnish the Agents or the applicable Agent(s), as the case may be,
with a letter, dated the date of effectiveness of such amendment or supplement,
or the date of such sale, as the case may be, in form and substance reasonably
satisfactory to the Agents or the applicable Agent(s), 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,
PricewaterhouseCoopers LLP may limit the scope of such letter to the unaudited


                                       21


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 the
applicable Agent(s), as the case may be, such letter should cover such other
information.

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 or Section 20 of the 1934 Act as
follows:

                  (i) against any and all loss, liability, claim, damage and
         expense whatsoever, as incurred, arising out of any untrue statement or
         alleged untrue statement of a material fact contained in the
         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 included in any preliminary prospectus or 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 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 such Agent),
         reasonably incurred in investigating, preparing or defending against
         any litigation, or any 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 subparagraph (i) or (ii) above.

         The indemnity is subject to the conditions that, insofar as it relates
to any untrue statement or omission, or any alleged untrue statement or
omission, made in a preliminary prospectus or the Prospectus but eliminated or
remedied in the Prospectus or in an amended or supplemented Prospectus, as the
case may be, at the time of the sale of the related Note, it shall not inure to
the benefit of an Agent (or to the benefit of any person who controls such
Agent) if a copy of the Prospectus or the Prospectus as amended or supplemented
at the time of the sale of such Note, as the case may be, excluding documents
incorporated therein by reference, was delivered by the Company to such Agent a
reasonable amount of time in advance of the delivery


                                       22

of written confirmations by such Agent to investors but such Agent failed to
deliver such Prospectus or the Prospectus as amended or supplemented, as the
case may be, to the person in question at or prior to the time required by the
1933 Act and the receipt of such Prospectus or the Prospectus as amended or
supplemented, as the case may be, would have constituted a sufficient defense to
the claim asserted by such person.

         (b) Indemnification of Company, Directors and Officers. Each Agent
severally agrees to indemnify and hold harmless the Company, its directors, each
of its 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 or
Section 20 of the 1934 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in Section 8(a) hereof, 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 any preliminary prospectus 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 such preliminary prospectus
or the Prospectus (or any amendment or supplement thereto).

         (c) Actions Against Parties; Notification. 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. In the case of parties indemnified pursuant to Section 8(a) hereof,
counsel to the indemnified parties shall be selected by the applicable Agent(s)
and, in the case of parties indemnified pursuant to Section 8(b) hereof, counsel
to the indemnified parties shall be selected by the Company. An indemnifying
party may participate at its own expense in the defense of any such action;
provided, however, that counsel to the indemnifying party shall not (except with
the consent of each indemnified party) also be counsel to any indemnified party.
In no event shall the indemnifying parties be liable for fees and expenses of
more than one counsel (in addition to any local counsel) separate from their own
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.

         No indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 8 or Section 9 hereof (whether or not the indemnified parties
are actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.


                                       23


SECTION 9. Contribution. If the indemnification provided for in Section 8 hereof
is for any reason unavailable to or insufficient to hold harmless an indemnified
party in respect of any losses, liabilities, claims, damages or expenses
referred to therein, then each indemnifying party shall contribute to the
aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company, on the one
hand, and the applicable Agent(s), on the other hand, from the offering of the
Notes that were the subject of the claim for indemnification or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company, on the one
hand, and the applicable Agent(s), on the other hand, in connection with the
statements or omissions which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable considerations.

         The relative benefits received by the Company, on the one hand, and the
applicable Agent(s), on the other hand, in connection with the offering of the
Notes that were the subject of the claim for indemnification shall be deemed to
be in the same respective proportions as the total net proceeds from the
offering of such Notes (before deducting expenses) received by the Company and
the total discount or commission received by each applicable Agent, as the case
may be, bears to the aggregate initial offering price of such Notes.

         The relative fault of the Company, on the one hand, and the applicable
Agent(s), on the other hand, shall be determined by reference to, among other
things, whether any untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the applicable Agent(s) and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.

         The Company and the Agents agree that it would not be just and
equitable if contribution pursuant to this Section 9 were determined by pro rata
allocation (even if the applicable Agent(s) were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 9. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 9 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any applicable untrue or alleged
untrue statement or omission or alleged omission.

         Notwithstanding the provisions of this Section 9, (i) no Agent shall be
required to contribute any amount in excess of the amount by which the total
discount or commission received by such Agent in connection with the offering of
the Notes that were the subject of the claim for indemnification exceeds the
amount of any damages which such Agent has otherwise been required to pay by
reason of any applicable untrue or alleged untrue statement or omission or
alleged omission and (ii) no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. In addition, in connection with an offering of Notes


                                       24


purchased from the Company by two or more Agents as principal, the respective
obligations of such Agents to contribute pursuant to this Section 9 are several,
and not joint, in proportion to the aggregate principal amount of Notes that
each such Agent has agreed to purchase from the Company.

         For purposes of this Section, each person, if any, who controls an
Agent within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934
Act shall have the same rights to contribution as such 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 or Section 20 of the 1934 Act shall have the same
rights to contribution as the Company.

SECTION 10. Payment of Expenses.

         The Company shall pay all expenses incident to the performance of its
respective 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 independent
         registered public accounting firm and counsel, of the Trustee and its
         counsel, and of any calculation agent or exchange rate agent;

                  (v) If provided in a Terms Agreement, the reasonable fees and
         disbursements of counsel to the Agents incurred from time to time in
         connection with an issuance of Notes;

                  (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 the Indenture and all supplements and
         amendments thereto;

                  (ix) Any fees charged by rating agencies for the rating of the
         Notes;


                                       25


                  (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 Indenture) 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 the Agents, 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 with one or more Agents to purchase Notes from the Company as
principal) may be terminated for any reason, at any time by the Company or by an
Agent, as to itself, upon the giving of prior written notice of such termination
to the other party hereto.

         (b) Termination of Terms Agreement to Purchase Notes as Principal. The
applicable Agent(s) may terminate any Terms Agreement with such Agent(s) to
purchase Notes from the Company as principal, immediately upon notice to the
Company, at or at any time prior to the Settlement Date relating thereto, if (i)
there has been, since the date of such Terms Agreement or since the respective
dates as of which information is given in the Prospectus, 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)
there has occurred any material adverse change in the financial markets in the
United States or, if such Notes are denominated and/or payable in, or indexed
to, one or more foreign currencies, in the international financial markets, or
any outbreak or escalation of hostilities or other national or international
calamity or crisis, in each case the effect of which is such as to make it, in
the judgment of such Agent(s), impracticable to market such Notes or enforce
contracts for the sale of such Notes, (iii) trading in any securities of the
Company has been suspended or materially limited by the SEC or a national
securities exchange, or if trading generally on the New York Stock Exchange or
the American Stock Exchange or in the Nasdaq National Market has been suspended
or materially limited, or minimum or maximum prices for trading have been fixed,
or maximum ranges for prices for securities have been required, by either of
said exchanges or by such system or by order of the SEC, the NASD or any other
governmental authority, (iv) a general banking moratorium has been declared by
U.S. federal, New York or Puerto Rico authorities or by the relevant authorities
in the country or countries of origin of any non-U.S. currency in which such
Notes are denominated and/or payable or (v) the rating assigned by any
nationally recognized statistical rating organization to the Medium-Term Note
Program or any debt securities (including the


                                       26

Notes) of the Company as of the date of such agreement shall have been lowered
or withdrawn since that date or if any such rating organization shall have
publicly announced that it has under surveillance or review (other than with
positive implications) its rating of the Medium-Term Note Program or any such
debt securities.

         (c) General. In the event of any such termination, no party will have
any liability to any other party hereto, except that (i) the Agents shall be
entitled to any commissions 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 by it from the Company as principal 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 such 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
10 hereof, the indemnity and contribution agreements set forth in Sections 8 and
9 hereof, and the provisions of Sections 11, 14, 15 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:

                  Popular, Inc.
                  209 Munoz Rivera Avenue
                  Hato Rey, Puerto Rico 00918
                  Attention:     Brunilda Santos de Alvarez, Esq.,
                  Telecopy No.:  (787) 756-0277

         If to the Agents:

                  UBS Securities LLC
                  677 Washington Blvd
                  Stamford, Connecticut  06901
                  Attention:  Fixed Income Syndicate
                  Telephone:  (203) 719-1088
                  Telecopy No.: (203) 719-0495

                  Banc of America Securities LLC
                  9 West 57th Street
                  NY1-301-2M-01
                  New York, New York 10019
                  Attention:  High Grade Debt Capital Markets
                  Transaction Management


                                       27



                  Keefe, Bruyette & Woods, Inc.
                  787 Seventh Avenue
                  New York, New York 10019
                  Attention:     Fixed Income Syndicate
                  Telecopy No.: (212) 582-5419

                  Popular Securities, Inc.
                  209 Munoz Rivera Avenue
                  Hato Rey, Puerto Rico 00918
                  Attention:     Ken McGrath
                  Telecopy No.:  (787) 766-3485


or at such other address as such parties 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 any Agent 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, the Company and their respective successors. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
person, firm or corporation, other than the parties hereto and their respective
successors and the controlling persons and officers and directors referred to in
Sections 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


                                       28


courts of the State of New York located in The City 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 consents and submits to the non-exclusive
jurisdiction of each such court in personam, generally and unconditionally with
respect to any action, suit or proceeding for itself and in respect of its
properties, assets and revenues.

         (b) The Company hereby irrevocably designates, appoints, and empowers
Brian Doran, with offices currently at Banco Popular North America, Legal
Division, 120 Broadway, 15th floor, New York, New York 10271, 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 its 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
such 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 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 to 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.


                                       29


SECTION 17. Default by One or More of the Agents Acting as Principal. If one or
more of the Agents acting as principal shall fail at any Settlement Date to
purchase the Notes that it or they are obligated to purchase under this
Agreement (the "Defaulted Notes"), the non-defaulting Agent(s) acting as
principal shall have the right, within 24 hours thereafter, to make arrangements
for one or more of the non-defaulting Agents acting as principal, or any other
underwriters, to purchase all, but not less than all, of the Defaulted Notes in
such amounts as may be agreed upon and upon the terms herein set forth; if,
however, the non-defaulting Agents acting as principal shall not have completed
such arrangements within such 24-hour period, then:

         (a) if the number of Defaulted Notes does not exceed 10% of the
aggregate principal amount of the Notes to be purchased hereunder, each of the
non-defaulting Agents acting as principal shall be obligated, severally and not
jointly, to purchase the full amount thereof in the proportions that their
respective underwriting obligations hereunder bear to the underwriting
obligations of all non-defaulting Agents acting as principal, or

         (b) if the number of Defaulted Notes exceeds 10% of the aggregate
principal amount of the Notes to be purchased hereunder, this Agreement shall
terminate without liability on the part of any non-defaulting Agents acting as
principal.

         No action taken pursuant to this Section shall relieve any defaulting
Agents acting as principal from liability in respect of its default.

         In the event of any such default which does not result in a termination
of this Agreement, either the non-defaulting Agent(s) acting as principal or the
Company shall have the right to postpone the Settlement Date for a period not
exceeding seven days in order to effect any required changes in the Registration
Statement or Prospectus or in any other documents or arrangements.

SECTION 18. Effect of Headings.

         The Section headings herein are for convenience only and shall not
affect the construction hereof.

SECTION 19. Counterparts.

         This Agreement may be executed in one or more counterparts and, if
executed in more than one counterpart, the executed counterparts hereof shall
constitute a single instrument.



                                       30

         If the foregoing is in accordance with the Agents' understanding of our
agreement, please sign and return to us a counterpart 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,

                                        POPULAR, INC.


                                        By: /s/ Jorge A. Junquera
                                            ---------------------------
                                            Name:  Jorge A. Junquera
                                            Title:    Chief Financial Officer



                                       31

Accepted:


UBS SECURITIES LLC


By:  /s/ Edward Arden
     ----------------------------
      Name:  Edward Arden
      Title:    Executive Director


By:  /s/ Joseph Moore
     ----------------------------
      Name: Joseph Moore
      Title: Director

BANC OF AMERICA SECURITIES LLC


By:  /s/ Lily Chang
     ----------------------------
      Name: Lily Chang
      Title: Principal

KEEFE, BRUYETTE & WOODS, INC.


By:  /s/ Maurice F. Beshlian III
     ----------------------------
      Name:  Maurice F. Beshlian III
      Title:    Managing Director

POPULAR SECURITIES, INC.


By:  /s/ Kenneth W. McGrath
     ----------------------------
      Name:  Kenneth W. McGrath
      Title:    President & Chief Executive Officer




                                       32

                                                                       EXHIBIT A


                                   SCHEDULE A

         As compensation for the services of the Agents hereunder, the Company
shall pay the applicable Agent, 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
                               MATURITY RANGES                                            PRINCIPAL AMOUNT
                               ---------------                                            ----------------
                                                                                       
From 9 months to less than 1 year..........................................                       .125%
From 1 year to less than 18 months.........................................                       .150
From 18 months to less than 2 years........................................                       .200
From 2 years to less than 3 years..........................................                       .250
From 3 years to less than 4 years..........................................                       .350
From 4 years to less than 5 years..........................................                       .450
From 5 years to less than 6 years..........................................                       .500
From 6 years to less than 7 years..........................................                       .550
From 7 years to less than 10 years.........................................                       .600
From 10 years to less than 15 years........................................                       .625
From 15 years to less than 20 years........................................                       .700
From 20 years to 30 years..................................................                       .750
Greater than 30 years......................................................                      *



- ---------------------
* As agreed to by the Company and the applicable Agent at the time of sale.



                                                                  EXECUTION COPY


                                                                       EXHIBIT A

                                  PRICING TERMS

         Principal Amount: $_______
                  (or principal amount of foreign or composite currency)

         Interest Rate or Formula:
                  If Fixed Rate Note,
                           Interest Rate:
                           Regular Record Dates:
                           Interest Payment Dates:
                  If Floating Rate Note,
                           Interest Rate Basis:
                           Index Maturity:
                           Spread and/or Spread Multiplier, if any:
                           Initial Interest Rate, if any:
                           Maximum Rate, if any:
                           Minimum Rate, if any:
                           Interest Reset Dates:
                           Interest Determination Dates:
                           Interest Payment Dates:
                           Calculation Agent:

         Redemption Provisions:
                  Redemption Commencement Date, if any:
         Repayment Provisions:
                  Repayment Date(s), if any:

         Original Issue Date:
         Stated Maturity Date:
         Specified Currency:
         Exchange Rate Agent:
         Denomination:
         Purchase Price:  ___%, plus accrued interest, if any, from ___________

         Price to Public:  ___%, plus accrued interest, if any, from __________

         Issue Price:
         Settlement Date and Time:
         Additional/Other Terms:

Also, in connection with the purchase of Notes from the Company by one or more
Agents as principal, agreement as to whether the following will be required:

         Officers' Certificates pursuant to Section 7(b) of the Distribution
Agreement.

         Legal Opinions pursuant to Section 7(c) of the Distribution Agreement.

         Comfort Letter pursuant to Section 7(d) of the Distribution Agreement.


                                      A-1

EX-1.(B)

                                                                  EXECUTION COPY

                           POPULAR NORTH AMERICA, INC.

                              MEDIUM-TERM NOTES DUE
                       9 MONTHS OR MORE FROM DATE OF ISSUE

                    UNCONDITIONALLY GUARANTEED AS TO PAYMENT
                 OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST BY
                                  POPULAR, INC.

                             DISTRIBUTION AGREEMENT

                                                                   June 23, 2004


UBS SECURITIES LLC
677 Washington Blvd
Stamford, Connecticut  06901

BANC OF AMERICA SECURITIES LLC
9 West 57th Street
New York, New York 10019

KEEFE, BRUYETTE & WOODS, INC.
787 Seventh Avenue
New York, New York 10019

POPULAR SECURITIES, INC.
209 Munoz Rivera Avenue
Hato Rey, Puerto Rico 00918


Ladies and Gentlemen:

         Popular North America, Inc., a Delaware corporation (the "Company"),
confirms its agreement with UBS Securities LLC, Banc of America Securities LLC,
Keefe, Bruyette & Woods, Inc. and Popular Securities, Inc. (each, an "Agent,"
and collectively, the "Agents", which term shall also include any Agent acting
as a principal substituted as hereinafter provided in Section 17 hereof) with
respect to the issue and sale by the Company of its Medium-Term Notes described
herein (the "Notes"). The Notes will be unconditionally guaranteed as to payment
of principal, premium, if any, and interest (the "Guarantees") by Popular, Inc.
(the "Guarantor"). The Notes and the Guarantees are to be issued pursuant to an
Indenture, dated as of October 1, 1991, as amended and supplemented from time to
time (the "Indenture"), among the Company, the Guarantor and J.P. Morgan Trust
Company, National Association (as successor to Bank One, N.A.), 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 $2,500,000,000 (or
the equivalent thereof in other currencies or currency units) less an amount
equal to the aggregate proceeds from the sale prior



to the date hereof of Notes and prior to or after the date hereof of securities
other than the Notes registered under the Prospectus, dated December 29, 2003,
relating to debt securities and preferred stock of the Company, Popular, Inc.
and Popular International Bank, Inc. to or 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 one or more Agents as principal for resale to investors and other
purchasers and for the sale of the Notes by the Company directly to investors
(as may from time to time be agreed to by the Company and the applicable
Agent(s), in which case each applicable Agent will act as an agent of the
Company in soliciting offers for the purchase of Notes.

         The Company and the Guarantor have filed with the Securities and
Exchange Commission (the "SEC") a registration statement on Form S-3 (Nos.
333-111007, 333-111007-01 and 333-111007-02) for the registration of debt
securities, including the Notes, and guarantees thereof, including the
Guarantees, 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"), and the Company and the Guarantor have filed such post-effective
amendments thereto as may be required prior to the Company's acceptance of any
offer for the purchase of Notes and each such post-effective amendment has been
declared effective by the SEC. Such registration statement (as so amended, if
applicable) is referred to herein as the "Registration Statement"; and the final
prospectus and all applicable amendments or supplements thereto (including the
final prospectus supplement and pricing supplement relating to the offering of
Notes), in the form first furnished to the applicable Agent(s) for use in
confirming sales of Notes, are collectively referred to herein as the
"Prospectus"; provided, however, that all references to the "Registration
Statement" and the "Prospectus" shall also be deemed to include all documents
incorporated therein by reference that are filed pursuant to the Securities
Exchange Act of 1934, as amended (the "1934 Act"), prior to any acceptance by
the Company of an offer for the purchase of Notes; provided further, that if the
Company and the Guarantor file a registration statement with the SEC pursuant to
Rule 462(b) of the 1933 Act Regulations (the "Rule 462(b) Registration
Statement"), then, after such filing, all references to the "Registration
Statement" shall also be deemed to include the Rule 462(b) Registration
Statement. A "preliminary prospectus" shall be deemed to refer to any prospectus
used before the Registration Statement became effective and any prospectus
furnished by the Company and the Guarantor after the registration statement
became effective and before any acceptance by the Company of an offer for the
purchase of Notes which omitted information to be included upon pricing of such
Notes in a form of prospectus filed with the SEC pursuant to Rule 424(b) of the
1933 Act Regulations. For purposes of this Agreement, all references to the
"Registration Statement," "Prospectus" or "preliminary prospectus" or to any
amendment or supplement thereto shall be deemed to include any copy filed with
the SEC pursuant to its Electronic Data Gathering, Analysis and Retrieval system
("EDGAR").


                                       2


         All references in this Agreement to financial statements and schedules
and other information which is "disclosed," "contained," "included" or "stated"
(or other references of like import) in the Registration Statement, Prospectus
or preliminary prospectus or any amendment or supplement thereto shall be deemed
to include all such financial statements and schedules and other information
incorporated therein by reference at or prior to the acceptance of any
particular offer for the purchase of Notes; and all references in this Agreement
to amendments or supplements to the Registration Statement, Prospectus or
preliminary prospectus shall be deemed to include the filing of any document
under the 1934 Act incorporated therein by reference after the acceptance of any
particular offer for the purchase of Notes.

SECTION 1. Appointment as Agents.

         (a) Appointment. 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 agrees that Notes shall be sold exclusively
to or through the Agents. The Company agrees that it will not appoint any other
agents to act on its behalf, or to assist it, in the placement of the Notes.

         Notwithstanding anything to the contrary contained herein, the Company
may authorize any other person, partnership or corporation (an "Additional
Agent") to act as its agent to solicit offers for the purchase of all of the
Notes or a specific tranche of Notes. 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
counterpart of this Agreement, the execution of such counterpart by the
Additional Agent, and the prompt delivery of executed copies of such counterpart
and any other contractual arrangements between the Company and such Additional
Agent relating thereto to the Agents and their counsel. Thereafter, with respect
to all of the Notes or the specific tranche of Notes, as the case may be, the
term "Agent" or "Agents," as used in this Agreement, shall mean the Agents and
such Additional Agent. Upon its appointment, the Additional Agent shall specify
its requirement for the delivery of certificates, letters and opinions as are
set forth in Section 5 hereof.

         (b) Sale of Notes. The Company shall not sell or approve the
solicitation of offers for the purchase of Notes in excess of the amount which
shall be authorized by the Company from time to time or in excess of the
aggregate initial offering price of Notes registered for sale pursuant to the
Registration Statement. The Agents shall have no responsibility for maintaining
records with respect to the aggregate initial offering price of Notes sold, or
of otherwise monitoring the availability of Notes for sale, under the
Registration Statement.

         (c) Purchases as Principal; Solicitations as Agent. The Agents shall
not have any obligation to purchase Notes from the Company as principal.
However, absent an agreement between an Agent and the Company that such Agent
shall be acting solely as an agent for the Company, such Agent shall be deemed
to be acting as principal in connection with any offering of Notes by the
Company through such Agent. Accordingly, the Agents, individually or in a
syndicate, may agree from time to time to purchase Notes from the Company as
principal for resale to investors and other purchasers determined by such
Agents. Any purchase of Notes from the Company by an Agent as principal shall be
made in accordance with Section 3(b) hereof. If agreed upon between an Agent and
the Company, such Agent, acting solely as an


                                       3


agent for the Company and not as principal, shall solicit offers for the
purchase of Notes. Such Agent shall make reasonable efforts to assist the
Company in obtaining performance by each purchaser whose offer for the purchase
of Notes has been solicited by it on an agency basis and accepted by the
Company. Such Agent shall have the right, in its discretion reasonably
exercised, to reject any offer for the purchase of Notes, in whole or in part,
and any such rejection shall not be deemed a breach of its agreement contained
herein. Such Agent shall not have any liability to the Company in the event that
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.

         (d) Reliance. The Company and the Agents agree that any Notes purchased
from the Company by one or more Agents as principal shall be purchased, and any
Notes the placement of which an Agent arranges as an agent of the Company shall
be placed by such Agent, in reliance on the representations, warranties,
covenants and agreements of the Company and the Guarantor contained herein and
on the terms and conditions and in the manner provided herein.

SECTION 2. Representations and Warranties of the Company and the Guarantor.

         (a) The Company and the Guarantor jointly and severally represent and
warrant 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 one or more Agents as principal), as of the date of each delivery
of Notes (whether through an Agent as agent or to one or more Agents as
principal) (the date of each such delivery to one or more Agents 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 that relates exclusively to an offering of
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 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. Each of the Guarantor
         and the Company has been duly incorporated and is validly existing as a
         corporation in good standing under the laws of its respective
         jurisdiction of incorporation with corporate power and authority to
         own, lease and operate its properties and to conduct its business as
         described in the Prospectus; each of the Guarantor and 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
         each of the Guarantor and the Company 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 prospects of
         the Guarantor and its subsidiaries considered as one enterprise.

                  (ii) Subsidiaries. Each subsidiary of the Guarantor or the
         Company which is a significant subsidiary (each, a "Significant
         Subsidiary"), as defined in Rule 1-02 of


                                       4


         Regulation S-X promulgated under the 1933 Act, 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 prospects of the Guarantor and its subsidiaries considered as
         one enterprise; and all of the issued and outstanding shares of capital
         stock of each such Significant Subsidiary have been duly authorized and
         validly issued, are 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, are 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.

                  (iii) Registration Statement and Prospectus. The Company and
         the Guarantor meet the requirements for use of Form S-3 under the 1933
         Act; the Registration Statement (or any Rule 462(b) Registration
         Statement) has become effective under the 1933 Act and no stop order
         suspending the effectiveness of the Registration Statement (or any Rule
         462(b) Registration Statement) has been issued under the 1933 Act and
         no proceedings for that purpose have been instituted or are pending or,
         to the knowledge of the Company and the Guarantor, are contemplated by
         the SEC, and any request on the part of the SEC for additional
         information has been complied with; the Indenture has been duly
         qualified under the 1939 Act; at the respective times that the
         Registration Statement (including any Rule 462(b) Registration
         Statement) and any post-effective amendment thereto (including the
         filing of the Guarantor's most recent Annual Report on Form 10-K with
         the SEC (the "Annual Report on Form 10-K")) became effective and at
         each Representation Date, the Registration Statement (including any
         Rule 462(b) Registration Statement but excluding any prospectus
         supplement with respect to an offering of securities other than the
         Notes that is contained therein) and any amendments thereto complied
         and 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 under the 1939 Act (the "1939 Act
         Regulations") and 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 to make the statements therein not misleading;
         each preliminary prospectus and prospectus filed as part of the
         Registration Statement (excluding any prospectus supplement with
         respect to an offering of securities other than the Notes that is
         contained therein) as originally filed or as part of any amendment
         thereto, or filed pursuant to Rule 424 under the 1933 Act, complied
         when so filed in all material respects with the 1933 Act Regulations;
         each preliminary prospectus and the


                                       5


         Prospectus delivered to the applicable Agent(s) for use in connection
         with the offering of Notes are identical to any electronically
         transmitted copies thereof filed with the SEC pursuant to EDGAR, except
         to the extent permitted by Regulation S-T; and at the date hereof, at
         the date of the Prospectus and each amendment or supplement thereto and
         at each Representation Date, neither the Prospectus nor any amendment
         or supplement thereto included or will include an untrue statement of a
         material fact or omitted or will 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 the 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 the Prospectus.

                  (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 include an untrue statement of a material fact or omit to
         state a material fact required to be stated therein or necessary in
         order to make the statements therein, in the light of the circumstances
         under which they were or are made, not misleading.

                  (v) Independent Registered Public Accounting Firm. The
         independent registered public accounting firm that 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 Prospectus present fairly the consolidated financial
         position of the Guarantor 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; the supporting schedules included or
         incorporated by reference in the Prospectus present fairly the
         information required to be stated therein; and any pro forma
         consolidated financial statements of the Guarantor and its consolidated
         subsidiaries and the related notes thereto included in the Prospectus
         present fairly the information shown therein, have been prepared in
         accordance with the SEC's rules and guidelines with respect to pro
         forma financial statements and have been properly compiled on the basis
         described therein, and the assumptions used in the preparation thereof
         are reasonable and the adjustments used therein are appropriate to give
         effect to the transactions and circumstances referred to therein.

                  (vii) Authorization and Validity of this Agreement, the
         Indenture, the Guarantees and the Notes. This Agreement has been duly
         authorized, executed and delivered by the


                                       6


         Guarantor and the Company; the Indenture has been duly authorized,
         executed and delivered by the Guarantor and the Company and constitutes
         a valid and legally binding obligation of the Company and 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; 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 (as defined in Section 3(b)), will constitute valid and
         legally binding obligations of the Company enforceable in accordance
         with their terms, subject to bankruptcy, insolvency, fraudulent
         transfer, reorganization, moratorium and similar laws of general
         applicability relating to or affecting creditors' rights generally and
         to general equity principles; the Guarantees have been duly authorized
         and, upon due issuance, authentication and delivery of the related
         Notes and due endorsement of the Guarantees, the Guarantees will have
         been duly executed, issued and delivered and will be valid and legally
         binding obligations of the Guarantor enforceable in accordance with
         their terms, subject to bankruptcy, insolvency, fraudulent transfer,
         reorganization, moratorium and similar laws of general applicability
         relating to or affecting creditors' rights generally and to general
         equity principles; the Notes, the Guarantees and the Indenture will be
         substantially in the form heretofore delivered to the Agent and conform
         in all material respects to all statements relating thereto contained
         in the Prospectus; and the Notes and the Guarantees 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 or the Guarantor 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,
         the Guarantor nor any of the Significant Subsidiaries is in violation
         of its charter or by-laws 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, the
         Guarantor or any of the Significant Subsidiaries pursuant to any
         contract, indenture, mortgage, loan agreement, note, lease or other
         instrument to which the Company, the Guarantor 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, the Guarantor or
         any such


                                       7


         subsidiary is subject, nor will such action result in any violation of
         the provisions of the charter or by-laws of the Company, the Guarantor
         or any such subsidiary or any law, administrative regulation or
         administrative or court order or decree which breach, default,
         creation, imposition or violation would, in each case, have a material
         adverse effect on the Guarantor 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
         Guarantor or the Company of the transactions contemplated by this
         Agreement, except such 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.

                  (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 Guarantor or the
         Company, threatened against or affecting, the Company, the Guarantor 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 Guarantor 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
         the Guarantor 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, the Guarantor 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, the Guarantor or the
         Significant Subsidiaries; and neither the Company, the Guarantor 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 Guarantor and its subsidiaries
         considered as one enterprise.

                  (xii) 1940 Act. Neither the Company nor the Guarantor is, or
         upon the issuance and sale of the Notes as herein contemplated and the
         application of the net proceeds therefrom as described in the
         Prospectus will be, an "investment company" within the meaning of the
         Investment Company Act of 1940, as amended (the "1940 Act").

         (b) Additional Certifications. Any certificate signed by any officer of
the Guarantor, the Company or a Significant Subsidiary and delivered to the
Agents or to counsel for the Agents in connection with an offering of Notes and
related Guarantees or the sale of Notes to one or more Agents as principal shall
be deemed a representation and warranty by the Company, the Guarantor or such
Significant Subsidiary, as the case may be, to the Agents as to the matters
covered thereby on the date of such certificate.


                                       8

SECTION 3. Solicitations as Agents; Purchases as Principal.

         (a) Solicitations as Agents. On the basis of the representations and
warranties herein contained, but subject to the terms and conditions herein set
forth, when agreed upon by the Company and an Agent, such Agent, as an agent of
the Company, will use its reasonable efforts to solicit offers to purchase the
Notes upon the terms and conditions set forth herein and in the Prospectus.

         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 an 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. The Agents 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 or formula, maturity date and other
terms of the Notes shall be agreed upon by the Company and the applicable 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 an 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 one or more Agents as
principal shall be made in accordance with the terms contained herein and
(unless the Company and such Agent(s) 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(s). Each such separate agreement
(which may be an oral agreement) between one or more Agents 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 the applicable
Agent(s). 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 and the Guarantor 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 each
applicable 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. The Agents may utilize a selling or dealer group in connection with the
resale of the Notes purchased.


                                       9


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 one or more Agents as principal.

         (c) Administrative Procedures. Administrative procedures with respect
to the sale of Notes shall be agreed upon from time to time by the Agent, the
Company and the Guarantor (the "Procedures"). The Agents, on the one hand, and
the Company and the Guarantor, jointly and severally on the other hand, agree to
perform the respective duties and obligations specifically provided to be
performed by them in the Procedures.

         (d) Restrictions on Distribution in Puerto Rico. The Agents agree that
Popular Securities, Inc. shall have the sole right to solicit offers to purchase
the Notes as agent or to make any sales of the Notes as principal, as the case
may be, in Puerto Rico.

         (e) Restrictions on Sales to Discretionary Accounts. Each Agent hereby
agrees to refrain from sales to discretionary accounts under its supervision
except in accordance with procedures to obtain the prior specific written
approval of the customer that have been approved by the NASD in compliance with
NASD Conduct Rule 2720(l).

SECTION 4. Covenants of the Company and the Guarantor.

         The Company and the Guarantor jointly and severally covenant with the
Agents as follows:

         (a) Notice of Certain Events. The Company and the Guarantor will notify
the Agents 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 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 and the Guarantor 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 4, the Company and the Guarantor will give the
Agents notice of its intention to file or prepare any additional registration
statement with respect to the registration of additional Notes and related
Guarantees, any amendment to the Registration Statement or any amendment or
supplement to the Prospectus (other than an amendment or supplement providing
information solely with respect to the terms of Notes (except with respect to
the applicable Agent(s)) and other than an amendment or supplement that relates
to an offering of securities other than the Notes), whether by the filing of
documents pursuant to the 1934 Act, the 1933 Act or otherwise, and will furnish
the Agents 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 required to be
filed pursuant to the


                                       10


1934 Act, which the Company or the Guarantor shall furnish to the Agents
immediately after the filing thereof, and will not file any such amendment or
supplement other than a document required to be filed pursuant to the 1934 Act
in a form to which you or your counsel shall reasonably object.

         (c) Copies of the Registration Statement and the Prospectus. The
Company and the Guarantor will deliver to the Agents 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
the Agents may reasonably request. The Company and the Guarantor will furnish
the Agents with as many copies of the Prospectus (as amended or supplemented) as
the Agents shall reasonably request so long as the Agents are required to
deliver a Prospectus in connection with sales or solicitations of offers to
purchase the Notes.

         (d) Preparation of Pricing Supplements. The Company and Guarantor will
prepare, with respect to any Notes to be sold through or to the Agents pursuant
to this Agreement, a Pricing Supplement with respect to such Notes in a form
previously approved by the Agents. The Company will deliver such Pricing
Supplement to the applicable Agent(s) no later than 11:00 am, New York City
time, on the business day following the date of the Company's acceptance of the
offer for the purchase of such Notes and will file such Pricing Supplement
pursuant to the applicable clause of Rule 424(b) under the 1933 Act in
accordance with the prescribed time period therein.

         (e) Revisions of Prospectus -- Material Changes. Except as otherwise
provided in subsection (1) 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 Registration Statement or the Prospectus
or any amendment or supplement thereto in order that neither the Registration
Statement or the Prospectus nor any amendment or supplement thereto will 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 or
any amendment or supplement thereto 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 the Agents may have purchased from the Company as principal, and the
Company and the Guarantor 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 or any
amendment or supplement thereto comply with such requirements.

         (f) Prospectus Revisions -- Periodic Financial Information. Except as
otherwise provided in subsection (1) of this Section, on or prior to the date on
which there shall be released to the general public interim consolidated
financial statement information related to the Guarantor 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 Guarantor shall furnish such
information to the Agents, confirmed in writing, and promptly thereafter shall
cause the


                                       11


Registration Statement and the Prospectus to be amended or supplemented to
include or incorporate by reference capsule financial information with respect
to the results of operations of the Guarantor and its consolidated subsidiaries
for such period and corresponding information for the comparable period of the
preceding fiscal year, as well as such other information and explanations as
shall be necessary for an understanding thereof or as shall be required by the
1933 Act or the 1933 Act Regulations.

         (g) Prospectus Revisions -- Audited Financial Information. Except as
otherwise provided in subsection (1) of this Section, on or prior to the date on
which there shall be released to the general public financial information with
respect to the audited consolidated financial statements of the Guarantor for
the preceding fiscal year, the Guarantor 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 by reference such audited consolidated financial
statements and the report or reports, and consent or consents to such inclusion
or incorporation by reference, of the independent registered public accounting
firm with respect thereto, as well as such other information and explanations as
shall be necessary for an understanding of such consolidated financial
statements or as shall be required by the 1933 Act or the 1933 Act Regulations.

         (h) Earnings Statements. The Guarantor will timely file such reports
pursuant to the 1934 Act as are necessary in order to make generally available
to the security holders of the Company as soon as practicable an earnings
statement for the purposes of, and to provide the benefits contemplated by, the
last paragraph of Section 11(a) of the 1933 Act.

         (i) Blue Sky Qualifications. The Company and the Guarantor will
endeavor, in cooperation with the Agents, to qualify the Notes and related
Guarantees 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 and related Guarantees; provided, however, that the
Company and the Guarantor shall not be required to submit to general service of
process in any jurisdiction. The Company and the Guarantor will promptly advise
the Agents of their receipt of any notification with respect to the suspension
of the qualification of the Notes and related Guarantees for sale in any such
state or jurisdiction or the initiating or threatening of any proceeding for
such purpose.

         (j) Reporting Requirements. The Guarantor and the Company, during the
period when the 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 within the time period
prescribed by the 1934 Act and the 1934 Act Regulations.

         (k) Stand-Off Agreement. If required pursuant to the terms of a Terms
Agreement, between the date of any Terms Agreement and the Settlement Date with
respect to such Terms Agreement, the Company and the Guarantor will not, without
the consent of the applicable Agent or Agents, offer or sell, or enter into any
agreement to sell, any debt securities of the Company or the Guarantor (other
than the Notes that are to be sold pursuant to such Terms Agreement and
commercial paper).


                                       12


         (l) Suspension of Certain Obligations. The Company and the Guarantor
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 agent
pursuant to a request from the Company and the Guarantor and (ii) the Agents
shall not then hold any Notes purchased from the Company as principal, to the
time the Company and the Guarantor shall determine that solicitation of
purchases of the Notes should be resumed or shall subsequently enter into a new
Terms Agreement with one or more Agents.

         (m) Public Reports. The Company and the Guarantor will furnish to the
Agents, at the earliest time the Company and the Guarantor make 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 the Agents to solicit offers to purchase the Notes
as agent of the Company, the obligations of any purchasers of the Notes sold
through an 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 and the Guarantor
contained herein and to the accuracy of the statements of the officers of the
Company and the Guarantor made in any certificate furnished pursuant to the
provisions hereof, to the performance and observance by the Company and the
Guarantor of all their respective covenants and agreements herein contained and
to the following additional conditions precedent:

         (a) Legal Opinions. On the first Settlement Date under a Terms
Agreement after the date hereof and, thereafter, if required by any applicable
Terms Agreement, on the Settlement Date with respect to such Terms Agreement,
the Agents shall have received the following legal opinions, dated as of the
date hereof or such Settlement Date, as the case may be, in form and substance
satisfactory to the Agents:

                  (1) Opinion of Counsel to the Company and the Guarantor. The
         opinion of Sullivan & Cromwell LLP, counsel to the Company and the
         Guarantor, to the effect that:

                           (i) The Company has been duly incorporated and is an
                  existing corporation in good standing under the laws of the
                  State of Delaware.

                           (ii) The Company has the corporate power and
                  authority to own, lease and operate its properties and to
                  conduct its business as described in the Registration
                  Statement.

                           (iii) Each of the Company and the Guarantor is duly
                  registered as a bank holding company under the Bank Holding
                  Company Act.

                           (iv) The Indenture has been duly authorized, executed
                  and delivered by the Company and the Guarantor and duly
                  qualified under the Trust Indenture Act of 1939 and
                  constitutes a valid and legally binding obligation of the
                  Company and the Guarantor enforceable in accordance with its
                  terms, subject to bankruptcy, insolvency, fraudulent transfer,
                  reorganization, moratorium and similar laws of


                                       13


                  general applicability relating to or affecting creditors'
                  rights and to general equity principles.

                           (v) 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 and 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.

                           (vi) 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 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 and the Guarantee endorsed on such Note 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.

                           (vii) All regulatory consents, authorizations,
                  approvals and filings required to be obtained or made by the
                  Company or the Guarantor on or prior to the date hereof or
                  such Settlement Date, as the case may be, under the Federal
                  laws of the United States, the laws of the State of New York
                  and the General Corporation Law of the State of Delaware for
                  the issuance, sale and delivery of the Notes by the Company to
                  or through the Agents in accordance with this Agreement have
                  been obtained or made; provided, however, that such counsel
                  need express no opinion with respect to state securities laws.

                           (viii) This Agreement and, if applicable, such Terms
                  Agreement have each been duly authorized, executed and
                  delivered by the Company and the Guarantor.

                           (ix) The execution and delivery by the Company and
                  the Guarantor of the Indenture and this Agreement and, if
                  applicable, such Terms Agreement do not, and the preparation,
                  execution and issuance of each particular Note and Guarantee
                  in accordance with the Indenture, the sale by the Company of
                  such Note in accordance with this Agreement and, if
                  applicable, such Terms Agreement and the performance by the
                  Company and the Guarantor of their respective obligations
                  under the Indenture, this Agreement and, if applicable, such
                  Terms


                                       14


                  Agreement, the Notes and the Guarantees will not (a) violate
                  the certificate of incorporation or by-laws of the Company, in
                  each case as in effect at the date of such opinion, (b)
                  violate any existing Federal law of the United States
                  applicable to the Company or the Guarantor or (c) violate the
                  existing General Corporation Law of the State of Delaware;
                  provided, however, that, for the purposes of this paragraph
                  (ix), such counsel need express no opinion with respect to the
                  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 citizens or
                  residents of certain foreign countries or specially designated
                  nationals and organizations; provided, further, that insofar
                  as performance by the Company and the Guarantor of their
                  respective obligations under the Indenture, this Agreement
                  and, if applicable, such Terms Agreement, the Notes and the
                  Guarantees 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) The Registration Statement is effective under the
                  1933 Act and, to the best of such counsel's knowledge, (a) no
                  stop order suspending the effectiveness of the Registration
                  Statement has been issued under the 1933 Act and (b) no
                  proceedings therefor have been initiated or threatened by the
                  SEC.

                           (xi) As counsel for the Company and the Guarantor,
                  such counsel reviewed the Registration Statement and the
                  Prospectus, and any amendment or supplement thereto,
                  participated in discussions with the Agents' representatives
                  and those of the Company and the Guarantor and their
                  independent registered public accounting firm, and advised the
                  Company and the Guarantor as to the requirements of the 1933
                  Act and the applicable 1933 Act Regulations, and on the basis
                  of the information that such counsel gained in the course of
                  the performance of the services referred to above, 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, they
                  confirm to the Agents 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
                  or, if applicable, the pricing supplement forming a part
                  thereof, appeared on their face to be appropriately
                  responsive, in all material respects relevant to the offering
                  of the Notes, to the requirements of the 1933 Act, the 1939
                  Act and the applicable rules and regulations of the SEC
                  thereunder, and nothing has come to their attention in the
                  course of such review that has caused them to believe that,
                  insofar as relevant to the offering of the Notes, any part of
                  the Registration Statement, when such part became effective,
                  contained any untrue statement of a material fact


                                       15


                  or omitted to state any material fact required to be stated
                  therein or necessary to make the statements therein not
                  misleading or that, insofar as relevant to the offering of the
                  Notes, the Prospectus, as of the date of the prospectus
                  supplement or, if applicable, the pricing supplement forming a
                  part thereof, or, if applicable, the applicable Settlement
                  Date, contained any untrue statement of a material fact or
                  omitted to state any 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,
                  however, that they do not assume any responsibility for the
                  accuracy, completeness or fairness of the statements contained
                  in the Registration Statement or the Prospectus, or any
                  amendment or supplement thereto, except (i) for those made
                  under the captions "Description of Debt Securities We May
                  Offer" and "Plan of Distribution" in the Prospectus, under the
                  captions "Description of Notes We May Offer" and "Supplemental
                  Plan of Distribution" in the prospectus supplement forming a
                  part of the Prospectus and under the captions "Description of
                  the Notes" and "Underwriting," or similar or comparable
                  captions, in any pricing supplement forming a part of the
                  Prospectus, insofar as they relate to provisions therein
                  described, of the Notes, the Guarantees, the Indenture and
                  this Agreement and, if applicable, such Terms Agreement and
                  (ii) the accuracy of the descriptions of the Federal laws of
                  the United States contained in the prospectus supplement
                  forming a part of the Prospectus under the caption "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 or the Prospectus, or
                  any amendment or supplement thereto, or as to the statement of
                  the eligibility of the Trustee under the Indenture. Such
                  counsel may also say that their letter is furnished to the
                  Agents by them as counsel for the Company and the Guarantor
                  and is solely for the benefit of the Agents.

         Such counsel may base their opinions, as to certain matters, on
certificates of officers of the Company and the Guarantor 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, Esq., delivered pursuant to Section 5(a)(2)
hereof.

                  (2) Opinion of Puerto Rico Counsel to the Company and the
         Guarantor. The opinion of Brunilda Santos de Alvarez, Esq., Puerto Rico
         Counsel to the Company and the Guarantor, to the effect that:

                           (i) The Guarantor 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 Guarantor has corporate power and authority
                  to own, lease and operate its properties and to conduct its
                  business as described in the Registration Statement.

                           (iii) The Guarantor 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 a
                  bank in good standing under the laws of the


                                       16


                  jurisdiction of its incorporation, has the corporate or other
                  organizational power and authority to own, lease and operate
                  its properties and to 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 Guarantor 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 Guarantor free and clear of any security
                  interest, mortgage, pledge, lien, encumbrance, claim or
                  equity.

                           (v) This Agreement and, if applicable, such Terms
                  Agreement, have been duly authorized, executed and delivered
                  by the Guarantor.

                           (vi) The Indenture has been duly and validly
                  authorized, executed and delivered by the Company and the
                  Guarantor and constitutes a valid and legally binding
                  obligation of the Company and 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.

                           (vii) 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 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, and the Guarantee endorsed on such Note 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; and the Guarantees will be
                  entitled to the benefits of the Indenture.

                           (viii) All regulatory consents, authorizations,
                  approvals and filings required to be obtained or made by the
                  Company or the Guarantor on or prior to the date hereof or
                  such Settlement Date, as the case may be, under the laws of
                  the Commonwealth of Puerto Rico for the issuance, sale and
                  delivery of the Notes by the Company to or through the Agents
                  in accordance with this Agreement have


                                       17


                  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, the Guarantor nor any of the Significant
                  Subsidiaries is in violation of its charter or by-laws 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 and the Guarantor of the Indenture,
                  this Agreement and any Terms Agreement do not, and the
                  preparation, execution and issuance of each particular Note
                  and Guarantee in accordance with the Indenture, the sale by
                  the Company of such Note in accordance with this Agreement,
                  and the performance by the Company and the Guarantor of their
                  respective obligations under the Indenture, this Agreement,
                  the Notes, any Terms Agreement and the Guarantees will not (a)
                  violate the certificate of incorporation or by-laws of the
                  Company or the Guarantor as in effect as at the date of such
                  opinion, (b) violate any existing Federal law of the United
                  States or any existing law of the Commonwealth of Puerto Rico
                  applicable to the Company or the Guarantor, (c) 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, the Guarantor or any
                  Significant Subsidiaries pursuant to any contract, indenture,
                  mortgage, loan agreement, note, lease or other instrument
                  known to such counsel to which the Company, the Guarantor 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, the Guarantor or any of the Significant
                  Subsidiaries is subject or (d) violate any administrative or
                  court decree as applicable to the Company, the Guarantor or
                  any Significant Subsidiary or having jurisdiction over the
                  Company, the Guarantor or any Significant Subsidiary, which
                  breach, default, creation, imposition or violation would, in
                  each case, have a material adverse effect on the Guarantor and
                  its subsidiaries considered as a whole; provided, however,
                  that, for purposes of this paragraph (ix), 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 citizens or residents of certain foreign
                  countries or specially designated nationals and organizations;
                  provided, further, that insofar as performance by the Company
                  and the Guarantor of their respective obligations under the
                  Indenture, this Agreement, any Terms Agreement, the Notes and
                  the Guarantees 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, the Guarantor or any of its subsidiaries is a party
                  or to which any of its property or assets is subject


                                       18


                  which are not described in the Registration Statement,
                  including ordinary routine litigation incidental to the
                  business of the Company, the Guarantor 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.

                           (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) Each document filed pursuant to the 1934 Act
                  and incorporated by reference in the Prospectus complied when
                  filed as to form in all material respects with the 1934 Act
                  and the 1934 Act Regulations.

                           (xiv) As counsel to the Company and the Guarantor
                  such counsel has reviewed the Registration Statement and the
                  Prospectus, and any amendment or supplement thereto,
                  participated in discussions with representatives of the Agents
                  and those of the Guarantor, the Company and their independent
                  registered public accounting firm, 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 or, if applicable, the pricing
                  supplement forming a part thereof, appeared on their face to
                  be appropriately responsive in all material respects to the
                  requirements of the 1933 Act, the 1939 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, contained any
                  untrue statement of a material fact 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 or, if
                  applicable, the pricing supplement forming a 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, contained any untrue statement of
                  a material fact 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


                                       19


                  assume any responsibility for the accuracy, completeness or
                  fairness of the statements contained in the Registration
                  Statement or the Prospectus, or any amendment or supplement
                  thereto, except for those made under the captions "Description
                  of Debt Securities We May Offer" and "Plan of Distribution" in
                  the Prospectus, under the captions "Description of Notes We
                  May Offer" and "Supplemental Plan of Distribution" in the
                  prospectus supplement forming a part of the Prospectus and
                  under the captions "Description of the Notes" and
                  "Underwriting," or similar or comparable captions, in any
                  pricing supplement forming a part of the Prospectus, insofar
                  as they relate to provisions therein described of the Notes,
                  the Guarantees, the Indenture and this Agreement and, if
                  applicable, such Terms Agreement and under "Item 1 -- Business
                  -- Regulation and Supervision" in the Guarantor's Annual
                  Report on Form 10-K 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 or the
                  Prospectus, or any amendment or supplement thereto, or as to
                  the statement of eligibility of the Trustee under the
                  Indenture; and that her letter is furnished as counsel for the
                  Company and the Guarantor to the Agents and is solely for the
                  benefit of the Agents.

         Such counsel may base her opinion, as to certain matters, on
certificates of officers of the Company and the Guarantor and may rely as to all
matters relating to the laws of the State of New York and the General
Corporation Law of the State of Delaware upon the opinion of Sullivan & Cromwell
LLP, delivered pursuant to Section 5(a)(1).

                  (3) Opinion of Counsel to the Agents. The opinion of Sidley
         Austin Brown & Wood LLP, counsel to the Agents, covering the matters
         referred to in subparagraph (1) above under the subheadings (i), (iv),
         (v), (vi), (viii) and (x). Sidley Austin Brown & Wood LLP shall
         additionally state that no facts have come to their attention that
         would cause them to believe that (other than (i) the financial
         statements, schedules and other financial data included or incorporated
         by reference therein or omitted therefrom and (ii) the statement of
         eligibility of the Trustee, as to which such counsel is not requested
         to comment) the Registration Statement, at the time it became effective
         or, if an amendment to the Registration Statement or an Annual Report
         on Form 10-K has been filed by the Guarantor 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, 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, as the case may be, contained an
         untrue statement of a material fact or omitted to state a material fact
         required to be stated therein or necessary to make the statements
         therein not misleading or that the Prospectus, 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 or at the Settlement Date with
         respect thereto, as the case may be, included or includes, as the case
         may be, an untrue statement of a material fact or omitted or omits, as
         the case may be, 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.


                                       20


         (b) Officer's Certificates. On the first Settlement Date under a Terms
Agreement after the date hereof and, thereafter, if required in any applicable
Terms Agreement, on the Settlement Date with respect to such Terms Agreement,
the Agents shall have received certificates of the President or Vice President
of each of the Company and the Guarantor, dated as of the date hereof or such
Settlement Date, as the case may be, 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
Guarantor 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 and the Guarantor 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 and the Guarantor have
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) 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. On the first Settlement Date under a Terms
Agreement after the date hereof and, thereafter, if required by any applicable
Terms Agreement, the Settlement Date with respect to such Terms Agreement, the
Agents or the applicable Agent(s), as the case may be, shall receive a letter
from PricewaterhouseCoopers LLP, the Guarantor's independent registered public
accounting firm, dated as of the date hereof or such Settlement Date, as the
case may be, in form and substance reasonably satisfactory to the Agents or the
applicable Agent(s), as the case may be, containing statements and information
of the type ordinarily included in accountants' "comfort letters" to
underwriters 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 public
accountants within the meaning of the 1933 Act and the 1933 Act Regulations.

         (d) Other Documents. On the first Settlement Date under a Terms
Agreement after the date hereof and, thereafter, if required by any applicable
Terms Agreement, if counsel to the Agents is required to deliver its opinion in
accordance with any applicable Terms Agreement, on each Settlement Date with
respect to such 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 and issuance
of the related Guarantees as herein contemplated and related proceedings and all
proceedings taken by the Company or the Guarantor in connection with the
issuance and sale of Notes or issuance of the related Guarantees, as the case
may be, as herein contemplated shall be satisfactory in form and substance to
the Agents and to counsel to the Agents.

         If any condition specified in this Section 5 shall not have been
fulfilled when and as required to be fulfilled, this Agreement (or, at the
option of the applicable Agent(s), any applicable Terms Agreement) may be
terminated by the Agents or the applicable Agent(s), as the case may be, 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


                                       21


8 and 9 hereof, the provisions concerning the representations, warranties and
agreements to survive delivery of Section 11 hereof, the provisions set forth
under "Parties" of Section 15 hereof and the provisions of Sections 14 and 16
hereof shall remain in effect.

SECTION 6. Delivery of and Payment for Notes Sold through the Agents.

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

         The Company and the Guarantor jointly and severally covenant 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 one or
more Agents pursuant to a Terms Agreement, shall be deemed to be an affirmation
that the representations and warranties of the Company and the Guarantor
contained in this Agreement and in any certificate theretofore delivered to the
Agents pursuant hereto are true and correct at the time of such acceptance or
sale, as the case may be, and an undertaking that such representations and
warranties will be true and correct at the time of delivery to the purchaser or
his agent, or to the Agents, 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 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 information solely with respect to
the terms of Notes and other than by an amendment or supplement which relates
exclusively to an offering of securities other than the Notes) and each time
that the Company sells Notes to or through one or more Agents, unless waived by
the Agent(s) participating in such sale, the Company shall furnish or cause to
be furnished to the Agents or the applicable Agent(s), as the case may be,
forthwith certificates dated the date of filing with the SEC of such supplement,
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 the applicable Agent(s), 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 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


                                       22


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 information solely with respect to
the terms of Notes 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 securities
other than the Notes) and each time that the Company sells Notes to or through
one or more Agents, unless waived by the Agent(s) participating in such sale,
the Company shall furnish or cause to be furnished forthwith to the Agents or
the applicable Agent(s), as the case may be, with a copy to counsel to the
Agents, a written opinion or opinions of counsel to the Company and the
Guarantor satisfactory to the Agents or the applicable Agent(s), as the case may
be, dated the date of filing with the SEC of such supplement, 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 the applicable Agent(s), as
the case may be, of the same tenor as the opinions referred to in Section 5(a)
(1) and (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 shall furnish the Agents or the applicable
Agent(s), as the case may be, with a letter to the effect that the Agents or the
applicable Agent(s), 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 and each time that the Company sells
Notes to or through one or more Agents, unless waived by the Agent(s)
participating in such sale, the Guarantor shall cause PricewaterhouseCoopers LLP
forthwith to furnish the Agents or the applicable Agent(s), as the case may be,
with a letter, dated the date of effectiveness of such amendment or supplement,
or the date of such sale, as the case may be, in form and substance reasonably
satisfactory to the Agents or the applicable Agent(s), 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,
PricewaterhouseCoopers 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 the
applicable Agent(s), as the case may be, such letter should cover such other
information.

SECTION 8. Indemnification.

         (a) Indemnification of the Agents. The Company and the Guarantor
jointly and severally agree to indemnify and hold harmless each Agent and each
person, if any, who controls such


                                       23


Agent within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934
Act as follows:

                  (i) against any and all loss, liability, claim, damage and
         expense whatsoever, as incurred, arising out of any untrue statement or
         alleged untrue statement of a material fact contained in the
         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 included in any preliminary prospectus or 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 and the
         Guarantor 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 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 the
         Guarantor; and

                  (iii) against any and all expense whatsoever, as incurred
         (including the fees and disbursements of counsel chosen by such Agent),
         reasonably incurred in investigating, preparing or defending against
         any litigation, or any 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 subparagraph (i) or (ii) above.

         The indemnity is subject to the conditions that, insofar as it relates
to any untrue statement or omission, or any alleged untrue statement or
omission, made in a preliminary prospectus or the Prospectus but eliminated or
remedied in the Prospectus or in an amended or supplemented Prospectus, as the
case may be, at the time of the sale of the related Note, it shall not inure to
the benefit of an Agent (or to the benefit of any person who controls such
Agent) if a copy of the Prospectus or the Prospectus as amended or supplemented
at the time of the sale of such Note, as the case may be, excluding documents
incorporated therein by reference, was delivered by the Company or the Guarantor
to such Agent a reasonable amount of time in advance of the delivery of written
confirmations by such Agent to investors but such Agent failed to deliver such
Prospectus or the Prospectus as amended or supplemented, as the case may be, to
the person in question at or prior to the time required by the 1933 Act and the
receipt of such Prospectus or the Prospectus as amended or supplemented, as the
case may be, would have constituted a sufficient defense to the claim asserted
by such person.


                                       24


         (b) Indemnification of Company, Guarantor, Directors and Officers. Each
Agent severally agrees to indemnify and hold harmless the Company and the
Guarantor, their directors, each of their officers who signed the Registration
Statement and each person, if any, who controls the Company or the Guarantor
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
against any and all loss, liability, claim, damage and expense described in the
indemnity contained in Section 8(a) hereof, 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 any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Company or the Guarantor by such Agent expressly for use in the Registration
Statement (or any amendment thereto) or such preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).

         (c) Actions Against Parties; Notification. 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. In the case of parties indemnified pursuant to Section 8(a) hereof,
counsel to the indemnified parties shall be selected by the applicable Agent(s)
and, in the case of parties indemnified pursuant to Section 8(b) hereof, counsel
to the indemnified parties shall be selected by the Company and the Guarantor.
An indemnifying party may participate at its own expense in the defense of any
such action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of each indemnified party) also be counsel to any
indemnified party. In no event shall the indemnifying parties be liable for fees
and expenses of more than one counsel (in addition to any local counsel)
separate from their own 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.

         No indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 8 or Section 9 hereof (whether or not the indemnified parties
are actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.


                                       25


SECTION 9. Contribution. If the indemnification provided for in Section 8 hereof
is for any reason unavailable to or insufficient to hold harmless an indemnified
party in respect of any losses, liabilities, claims, damages or expenses
referred to therein, then each indemnifying party shall contribute to the
aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Guarantor, on the one hand, and the applicable Agent(s), on the other hand, from
the offering of the Notes that were the subject of the claim for indemnification
or (ii) if the allocation provided by clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
Company or the Guarantor, on the one hand, and the applicable Agent(s), on the
other hand, in connection with the statements or omissions which resulted in
such losses, liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations.

         The relative benefits received by the Company and the Guarantor, on the
one hand, and the applicable Agent(s), on the other hand, in connection with the
offering of the Notes that were the subject of the claim for indemnification
shall be deemed to be in the same respective proportions as the total net
proceeds from the offering of such Notes (before deducting expenses) received by
the Company and the Guarantor and the total discount or commission received by
each applicable Agent, as the case may be, bears to the aggregate initial
offering price of such Notes.

         The relative fault of the Company or the Guarantor, on the one hand,
and the applicable Agent(s), on the other hand, shall be determined by reference
to, among other things, whether any untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company, the Guarantor or by the applicable
Agent(s) and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.

         The Company, the Guarantor and the Agents agree that it would not be
just and equitable if contribution pursuant to this Section 9 were determined by
pro rata allocation (even if the applicable Agent(s) were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section 9. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 9 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any applicable untrue or alleged
untrue statement or omission or alleged omission.

         Notwithstanding the provisions of this Section 9, (i) no Agent shall be
required to contribute any amount in excess of the amount by which the total
discount or commission received by such Agent in connection with the offering of
the Notes that were the subject of the claim for indemnification exceeds the
amount of any damages which such Agent has otherwise been required to pay by
reason of any applicable untrue or alleged untrue statement or omission or
alleged omission and (ii) no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who was not


                                       26


guilty of such fraudulent misrepresentation. In addition, in connection with an
offering of Notes purchased from the Company by two or more Agents as principal,
the respective obligations of such Agents to contribute pursuant to this Section
9 are several, and not joint, in proportion to the aggregate principal amount of
Notes that each such Agent has agreed to purchase from the Company.

         For purposes of this Section, each person, if any, who controls an
Agent within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934
Act shall have the same rights to contribution as such Agent, and each director
of the Company or the Guarantor, each officer of the Company or the Guarantor
who signed the Registration Statement and each person, if any, who controls the
Company or the Guarantor within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as the
Company or the Guarantor, as the case may be.

SECTION 10. Payment of Expenses.

         The Company and the Guarantor shall pay all expenses incident to the
performance of their respective 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 and the related Guarantees, including any fees and expenses
         relating to the use of book-entry notes;

                  (iv) The fees and disbursements of the Company's independent
         registered public accounting firm and counsel, of the Trustee and its
         counsel, and of any calculation agent or exchange rate agent;

                  (v) If provided in a Terms Agreement, the reasonable fees and
         disbursements of counsel to the Agents incurred from time to time in
         connection with an issuance of Notes;

                  (vi) The qualification of the Notes and the related Guarantees
         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 the Indenture and all supplements and
         amendments thereto;


                                       27


                  (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 and the
         Guarantor;

                  (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 Indenture) 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 or the Guarantor
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 the Agents, or by or on behalf of the Company or
the Guarantor, 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 with one or more Agents to purchase Notes from the Company as
principal) may be terminated for any reason, at any time by either the Company
and the Guarantor or an Agent, as to itself, upon the giving of prior written
notice of such termination to the other party hereto.

         (b) Termination of a Terms Agreement to Purchase Notes as Principal.
The applicable Agent(s) may terminate any Terms Agreement with such Agent(s) to
purchase Notes from the Company as principal, immediately upon notice to the
Company and the Guarantor, at or at any time prior to the Settlement Date
relating thereto, if (i) there has been, since the date of such Terms Agreement
or since the respective dates as of which information is given in the
Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Guarantor and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, (ii) there has occurred any material
adverse change in the financial markets in the United States or, if such Notes
are denominated and/or payable in, or indexed to, one or more foreign
currencies, in the international financial markets, or any outbreak or
escalation of hostilities or other national or international calamity or crisis,
in each case the effect of which is such as to make it, in the judgment of such
Agent(s), impracticable to market such Notes or enforce contracts for the sale
of such Notes, (iii) trading in any securities of the Company or the Guarantor
has been suspended or materially limited by the SEC or a national securities
exchange, or if trading generally on the New York Stock Exchange or the American
Stock Exchange or in the Nasdaq National Market has been suspended or materially
limited, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices for securities have been required, by either of said exchanges
or by such system or by order of the SEC, the NASD or any other governmental
authority, (iv) a general banking moratorium has been declared by U.S. federal,
New York or Puerto Rico authorities or by the relevant authorities in the
country or countries of origin of any non-U.S. currency in which such Notes are
denominated and/or payable or (v) the


                                       28


rating assigned by any nationally recognized statistical rating organization to
the Medium-Term Note Program or any debt securities (including the Notes) of the
Company or the Guarantor as of the date of such agreement shall have been
lowered or withdrawn since that date or if any such rating organization shall
have publicly announced that it has under surveillance or review (other than
with positive implications) its rating of the Medium-Term Note Program or any
such debt securities.

         (c) General. In the event of any such termination, no party will have
any liability to any other party hereto, except that (i) the Agents shall be
entitled to any commissions 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 by it from the Company as principal 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 such 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
10 hereof, the indemnity and contribution agreements set forth in Sections 8 and
9 hereof, and the provisions of Sections 11, 14, 15 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 or the Guarantor:

                  Popular, Inc.
                  209 Munoz Rivera Avenue
                  Hato Rey, Puerto Rico 00918
                  Attention:     Brunilda Santos de Alvarez, Esq.,
                  Telecopy No.:  (787) 756-0277


                                       29


         If to the Agents:

                  UBS Securities LLC
                  677 Washington Blvd
                  Stamford, Connecticut  06901
                  Attention:  Fixed Income Syndicate
                  Telephone:  (203) 719-1088
                  Telecopy No.: (203) 719-0495

                  Banc of America Securities LLC
                  9 West 57th Street
                  NY1-301-2M-01
                  New York, New York  10019
                  Attention:     High Grade Debt Capital Markets
                                 Transaction Management
                  Telecopy No.: (212) 847-5184

                  Keefe, Bruyette & Woods, Inc.
                  787 Seventh Avenue
                  New York, New York 10019
                  Attention:     Fixed Income Syndicate
                  Telecopy No.: (212) 582-5419

                  Popular Securities, Inc.
                  209 Munoz Rivera Avenue
                  Hato Rey, Puerto Rico 00918
                  Attention:     Ken McGrath
                  Telecopy No.:  (787) 766-3485

or at such other address as such parties 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 or the Guarantor against any Agent
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, the Company, the Guarantor and their respective successors. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person, firm or corporation, other than the parties hereto and their
respective successors and the controlling persons and officers and


                                       30


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 Guarantor 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, any Terms Agreement or the
Guarantees may be brought in the courts of the State of New York located in The
City 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 or the Guarantees have been paid, or until any such legal action, suit
or proceeding commenced prior to such payment has been concluded, hereby
irrevocably consents and submits to the non-exclusive jurisdiction of each such
court in personam, generally and unconditionally with respect to any action,
suit or proceeding for itself and in respect of its properties, assets and
revenues.

         (b) The Guarantor hereby irrevocably designates, appoints, and empowers
Brian Doran, with offices currently at Banco Popular North America, Legal
Division, 120 Broadway, 15th floor, New York, New York 10271, 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 Guarantor in any
such United States or State court with respect to its obligations, liabilities
or any other matter arising out of or in connection with this Agreement, any
Terms Agreement or the Guarantees and that may be made on such designee,
appointee and agent in accordance with legal procedures prescribed for such
courts. If for any reason such designated agent shall cease to be available to
act as such, the Guarantor 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 Guarantor 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 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 to the Guarantor at its
address specified in or designated pursuant to this Agreement. The Guarantor
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 Guarantor or
bring actions, suits or proceedings against the Guarantor in such other
jurisdictions, and in such manner, as may be permitted by applicable law. The
Guarantor hereby irrevocably and


                                       31


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 or the Guarantees 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.

SECTION 17. Default by One or More of the Agents Acting as Principal. If one or
more of the Agents acting as principal shall fail at any Settlement Date to
purchase the Notes that it or they are obligated to purchase under this
Agreement (the "Defaulted Notes"), the non-defaulting Agent(s) acting as
principal shall have the right, within 24 hours thereafter, to make arrangements
for one or more of the non-defaulting Agents acting as principal, or any other
underwriters, to purchase all, but not less than all, of the Defaulted Notes in
such amounts as may be agreed upon and upon the terms herein set forth; if,
however, the non-defaulting Agents acting as principal shall not have completed
such arrangements within such 24-hour period, then:

         (a) if the number of Defaulted Notes does not exceed 10% of the
aggregate principal amount of the Notes to be purchased hereunder, each of the
non-defaulting Agents acting as principal shall be obligated, severally and not
jointly, to purchase the full amount thereof in the proportions that their
respective underwriting obligations hereunder bear to the underwriting
obligations of all non-defaulting Agents acting as principal, or

         (b) if the number of Defaulted Notes exceeds 10% of the aggregate
principal amount of the Notes to be purchased hereunder, this Agreement shall
terminate without liability on the part of any non-defaulting Agents acting as
principal.

         No action taken pursuant to this Section shall relieve any defaulting
Agents acting as principal from liability in respect of its default.

         In the event of any such default which does not result in a termination
of this Agreement, either the non-defaulting Agent(s) acting as principal or the
Company shall have the right to postpone the Settlement Date for a period not
exceeding seven days in order to effect any required changes in the Registration
Statement or Prospectus or in any other documents or arrangements.

SECTION 18. Effect of Headings.

         The Section headings herein are for convenience only and shall not
affect the construction hereof.

SECTION 19. Counterparts.

         This Agreement may be executed in one or more counterparts and, if
executed in more than one counterpart, the executed counterparts hereof shall
constitute a single instrument.


                                       32


         If the foregoing is in accordance with the Agents' understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement among the
Agents and the Company and the Guarantor in accordance with its terms.



                                Very truly yours,

                                POPULAR NORTH AMERICA, INC.




                                By: /s/ Eric J. Pacheco
                                    ------------------------
                                    Name:  Eric J. Pacheco
                                    Title:    Vice President

                                POPULAR, INC.




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


                                       33


Accepted:


UBS SECURITIES LLC




By:  /s/ Edward Arden
     --------------------
      Name: Edward Arden
      Title: Executive Director




By:  /s/ Joseph Moore
     -------------------------
      Name: Edward Arden
      Title:    Director

BANC OF AMERICA SECURITIES LLC




By:  /s/ Lily Chang
     --------------------------
      Name:  Lily Chang
      Title:    Principal

KEEFE, BRUYETTE & WOODS, INC.




By:  /s/ Maurice F. Beshlian III
     --------------------------------
      Name:  Maurice F. Beshlian III
      Title:    Managing Director

POPULAR SECURITIES, INC.




By:  /s/ Kenneth W. McGrath
     ---------------------------
      Name:  Kenneth W. McGrath
      Title:    President


                                       34


                                                                  EXECUTION COPY

                                                                       EXHIBIT A

                                   SCHEDULE A

         As compensation for the services of the Agents hereunder, the Company
shall pay the applicable Agent, 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
                               MATURITY RANGES                                            PRINCIPAL AMOUNT
                               ---------------                                            ----------------
                                                                                       
From 9 months to less than 1 year..........................................                       .125%
From 1 year to less than 18 months.........................................                       .150
From 18 months to less than 2 years........................................                       .200
From 2 years to less than 3 years..........................................                       .250
From 3 years to less than 4 years..........................................                       .350
From 4 years to less than 5 years..........................................                       .450
From 5 years to less than 6 years..........................................                       .500
From 6 years to less than 7 years..........................................                       .550
From 7 years to less than 10 years.........................................                       .600
From 10 years to less than 15 years........................................                       .625
From 15 years to less than 20 years........................................                       .700
From 20 years to 30 years..................................................                       .750
Greater than 30 years......................................................                      *


- ------------------
*       As agreed to by the Company and the applicable Agent at the time of
sale.




                                                                  EXECUTION COPY

                                                                       EXHIBIT A

                                  PRICING TERMS

         Principal Amount: $_______
                  (or principal amount of foreign or composite currency)

         Interest Rate or Formula:
                  If Fixed Rate Note,
                           Interest Rate:
                           Regular Record Dates:
                           Interest Payment Dates:
                  If Floating Rate Note,
                           Interest Rate Basis:
                           Index Maturity:
                           Spread and/or Spread Multiplier, if any:
                           Initial Interest Rate, if any:
                           Maximum Rate, if any:
                           Minimum Rate, if any:
                           Interest Reset Dates:
                           Interest Determination Dates:
                           Interest Payment Dates:
                           Calculation Agent:

         Redemption Provisions:
                  Redemption Commencement Date, if any:
         Repayment Provisions:
                  Repayment Date(s), if any:

         Original Issue Date:
         Stated Maturity Date:
         Specified Currency:
         Exchange Rate Agent:
         Denomination:
         Purchase Price:  ___%, plus accrued interest, if any, from ___________

         Price to Public:  ___%, plus accrued interest, if any, from __________

         Issue Price:
         Settlement Date and Time:
         Additional/Other Terms:

Also, in connection with the purchase of Notes from the Company by one or more
Agents as principal, agreement as to whether the following will be required:

         Officers' Certificates pursuant to Section 7(b) of the Distribution
Agreement.

         Legal Opinions pursuant to Section 7(c) of the Distribution Agreement.




         Comfort Letter pursuant to Section 7(d) of the Distribution Agreement.


                                      A-2

EX-4.(E)

                      [Form of Fixed Rate Medium-Term Note]

                               (FACE OF SECURITY)

                  [IF A GLOBAL SECURITY, INSERT - THIS SECURITY IS A GLOBAL
SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY
NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER
OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY
PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.]

                  [IF DTC IS THE DEPOSITARY, INSERT - UNLESS THIS CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW
YORK CORPORATION ("DTC"), TO POPULAR, INC. OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO 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.]

                  [INSERT ANY LEGEND REQUIRED BY THE INTERNAL REVENUE CODE AND
THE REGULATIONS THEREUNDER.]













REGISTERED NO. FXR ______                                     CUSIP NO. _______

                                  POPULAR, INC.

                           MEDIUM-TERM NOTES, SERIES 5
                                  (Fixed Rate)

            The following terms apply to this Security, as and to the
extent shown below:


PRINCIPAL AMOUNT:

STATED MATURITY DATE:

SPECIFIED CURRENCY: U.S. dollars for all payments unless otherwise specified
below:

- -        payments of principal and any premium:

- -        payments of interest:

- -        Exchange Rate Agent:

INTEREST RATE:  _____% per annum

INTEREST PAYMENT DATE(S):

ORIGINAL ISSUE DATE*:

REGULAR RECORD DATE(S):

ORIGINAL ISSUE DISCOUNT SECURITY:

- -        Total Amount of OID:
- -        Yield to Maturity:
- -        Initial Accrual Period OID:
- -        OID Default Amount:
- -        Default Rate:

REDEMPTION COMMENCEMENT DATE:

REPAYMENT DATE(S):

REDEMPTION OR REPAYMENT PRICE(S):

OTHER TERMS:


                  Terms left blank or marked "N/A", "No", "None" or in a similar
manner do not apply to this Security except as otherwise may be specified.

                  Whenever used in this Security, the terms specified above that
apply to this Security have the meanings specified above, unless the context
requires otherwise. Other terms used in this Security that are not defined
herein but that are defined in the Indenture referred to in Section 1 on the
reverse of this Security are used herein as defined therein.

                  Popular, Inc., a corporation duly organized and existing under
the laws of the Commonwealth of Puerto Rico (hereinafter called the "Company",
which term

- ----------

*        This date shall be the issue date of this Security, unless there is
         Predecessor Security, in which case this date shall be the issue date
         of the first Predecessor Security.

                    (Face of Security continued on next page)


                                      -2-


includes any successor Person under the Indenture), for value received, hereby
promises to pay to _____________, or registered assigns, as principal the
Principal Amount on the Stated Maturity Date and to pay interest thereon, from
the Original Issue Date or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, on the Interest Payment Date(s) in
each year, commencing on the first such date that is at least 15 calendar days
after the Original Issue Date, and at the Maturity of the principal hereof, at
the rate per annum equal to the Interest Rate specified on the face hereof,
until the principal hereof is paid or made available for payment.
Notwithstanding the foregoing, interest on any principal that is overdue shall
be payable on demand.

                  The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in the Indenture, be paid to
the Person in whose name this Security (or one or more Predecessor Securities)
is registered at the close of business on the 15th calendar day (whether or not
a Business Day, as such term is defined in Section 3 on the reverse hereof) next
preceding such Interest Payment Date, unless otherwise provided on the face
hereof (a "Regular Record Date"). Any interest so payable, but not punctually
paid or duly provided for, on any Interest Payment Date will forthwith cease to
be payable to the Holder on such Regular Record Date and such Defaulted Interest
either may be paid to the Person in whose name this Security (or one or more
Predecessor Securities) 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, notice whereof shall be given to the Holder of this Security not less
than 10 days prior to such Special Record Date, or may be paid in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which this Security may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in the Indenture.

                  If this Security is issued with an original issue discount,
(i) if an Event of Default with respect to the Securities of this series shall
have occurred and be continuing, the amount of principal of this Security 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 (ii) in the case of a
default in payment of principal upon acceleration, redemption, repayment at the
option of the Holder or at the Stated Maturity Date hereof, in lieu of any
interest otherwise payable, the overdue principal of this Security 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 Stated 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.

                    (Face of Security continued on next page)

                                      -3-


         CURRENCY OF PAYMENT

                  Payment of principal of (and premium, if any) and interest on
this Security will be made in the Specified Currency for such payment, except as
provided in this and the next three paragraphs. The Specified Currency for any
payment shall be the currency specified as such on the face of this Security
unless, at the time of such payment, such currency is not legal tender for the
payment of public and private debts in the country issuing such currency on the
Original Issue Date, in which case the Specified Currency for such payment shall
be such coin or currency as at the time of such payment is legal tender for the
payment of public and private debts in such country.

                  Except as provided in the next paragraph, any payment to be
made on this Security in a Specified Currency other than U.S. dollars will be
made in U.S. dollars if the Person entitled to receive such payment transmits a
written request for such payment to be made in U.S. dollars to the Trustee at
its Corporate Trust Office, Attention: Securities Processing Division, on or
before the fifth Business Day before the payment is to be made. Such written
request may be mailed, hand delivered, telecopied or delivered in any other
manner approved by the Trustee. Any such request made with respect to any
payment on this Security payable to a particular Holder will remain in effect
for all later payments on this Security payable to such Holder, unless such
request is revoked on or before the fifth Business Day before a payment is to be
made, in which case such revocation shall be effective for such and all later
payments. In the case of any payment of interest payable on an Interest Payment
Date, such written request must be made by the Person who is the registered
Holder of this Security on the relevant Regular Record Date.

                  The U.S. dollar amount of any payment made pursuant to the
immediately preceding paragraph will be determined by the Exchange Rate Agent
based upon the highest bid quotation received by the Exchange Rate Agent as of
11:00 A.M., New York City time, on the second Business Day preceding the
applicable payment date, from three (or, if three are not available, then two)
recognized foreign exchange dealers selected by the Exchange Rate Agent in The
City of New York, in each case for the purchase by the quoting dealer, for U.S.
dollars and for settlement on such payment date of an amount of the Specified
Currency for such payment equal to the aggregate amount of such Specified
Currency payable on such payment date to all Holders of Securities of this or
any other series who elect to receive U.S. dollar payments on such payment date,
and at which the applicable dealer commits to execute a contract. If the
Exchange Rate Agent determines that two such bid quotations are not available on
such second Business Day, such payment will be made in the Specified Currency
for such payment. All currency exchange costs associated with any payment in
U.S. dollars on this Security will be borne by the Holder entitled to receive
such payment, by deduction from such payment.

                  Notwithstanding the foregoing, if any amount payable on this
Security is payable on any day (including at Maturity) in a Specified Currency
other than U.S. dollars, and if such Specified Currency is not available to the
Company on the two

                    (Face of Security continued on next page)



                                      -4-


Business Days before such day, due to the imposition of exchange controls,
disruption in a currency market or any other circumstances beyond the control of
the Company, the Company will be entitled to satisfy its obligation to pay such
amount in such Specified Currency by making such payment in U.S. dollars. The
amount of such payment in U.S. dollars shall be determined by the Exchange Rate
Agent on the basis of the noon buying rate for cable transfers in The City of
New York for such Specified Currency (the "Exchange Rate") as of the latest day
before the day on which such payment is to be made. Any payment made under such
circumstances in U.S. dollars where the required payment is in other than U.S.
dollars will not constitute an Event of Default under the Indenture or this
Security.

         MANNER OF PAYMENT - U.S. DOLLARS

                  Except as provided in the next paragraph, payment of any
amount payable on this Security in U.S. dollars will be made at the office or
agency of the Company maintained for that purpose in The City of New York (or at
any other office or agency maintained by the Company for that purpose), against
surrender of this Security in the case of any payment due at the Maturity of the
principal hereof (other than any payment of interest that first becomes due on
an Interest Payment Date); provided, however, that, at the option of the Company
and subject to the next paragraph, payment of interest may be made by check
mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register.

                  Payment of any amount payable on this Security in U.S. dollars
will be made by wire transfer of immediately available funds to an account
maintained by the payee with a bank located in the Borough of Manhattan, The
City of New York, if (i) the principal of this Security is at least $10,000,000
and (ii) the Holder entitled to receive such payment transmits a written request
for such payment to be made in such manner to the Paying Agent at its Corporate
Trust Office, Attention: Securities Processing Division, on or before the
Regular Record Date preceding the day on which such payment is to be made;
provided that, in the case of any such payment due at the Maturity of the
principal hereof (other than any payment of interest that first becomes due on
an Interest Payment Date), this Security must be surrendered at the office or
agency of the Company maintained for that purpose in The City of New York (or at
any other office or agency maintained by the Company for that purpose) in time
for the Paying Agent to make such payment in such funds in accordance with its
normal procedures. Any such request made with respect to any payment on this
Security payable to a particular Holder will remain in effect for all later
payments on this Security payable to such Holder, unless such request is revoked
on or before the Regular Record Date preceding the day on which such payment is
to be made, in which case such revocation shall be effective for such payment
and all later payments; provided that in the case of any payment due at Maturity
of the principal of this Security to be effective any request for revocation
must be made no later than the 15th day prior to the Maturity of the principal
of this Security. In the case of any payment of interest payable on an Interest
Payment Date, such written request must be made by the Person who is the
registered Holder of this Security on the relevant Regular

                    (Face of Security continued on next page)



                                      -5-


Record Date. The Company will pay any administrative costs imposed by banks in
connection with making payments by wire transfer with respect to this Security,
but any tax, assessment or other governmental charge imposed upon any payment
will be borne by the Holder of this Security and may be deducted from the
payment by the Company or the Paying Agent.

         MANNER OF PAYMENT - OTHER SPECIFIED CURRENCIES

                  Payment of any amount payable on this Security in a Specified
Currency other than U.S. dollars will be made by wire transfer of immediately
available funds to such account as is maintained in such Specified Currency at a
bank or other financial institution acceptable to the Company and the Trustee
and as shall have been designated at least five Business Days prior to the
applicable payment date by the Person entitled to receive such payment; provided
that, in the case of any such payment due at the Maturity of the principal
hereof (other than any payment of interest that first becomes due on an Interest
Payment Date), this Security must be surrendered at the office or agency of the
Company maintained for that purpose in The City of New York (or at any other
office or agency maintained by the Company for that purpose) in time for the
Paying Agent to make such payment in such funds in accordance with its normal
procedures. Such account designation shall be made by transmitting the
appropriate information to the Trustee at its Corporate Trust Office in the
Borough of Manhattan, The City of New York, by mail, hand delivery, telecopier
or in any other manner approved by the Trustee. Unless revoked, any such account
designation made with respect to this Security by the Holder hereof will remain
in effect with respect to any further payments with respect to this Security
payable to such Holder. If a payment in a Specified Currency other than U.S.
dollars with respect to this Security cannot be made by wire transfer because
the required account designation has not been received by the Trustee on or
before the requisite date or for any other reason, the Company will cause a
notice to be given to the Holder of this Security at its registered address
requesting an account designation pursuant to which such wire transfer can be
made and such payment will be made within five Business Days after the Trustee's
receipt of such a designation meeting the requirements specified above, with the
same force and effect as if made on the due date. The Company will pay any
administrative costs imposed by banks in connection with making payments by wire
transfer with respect to this Security, but any tax, assessment or other
governmental charge imposed upon any payment will be borne by the Holder of this
Security and may be deducted from the payment by the Company or the Paying
Agent.

         MANNER OF PAYMENT - GLOBAL SECURITIES

                  Notwithstanding any provision of this Security or the
Indenture, if this Security is a Global Security, the Company may make any and
all payments of principal, premium and interest on this Security pursuant to the
Applicable Procedures of the Depositary for this Security as permitted in the
Indenture.



                    (Face of Security continued on next page)



                                      -6-


         PAYMENTS DUE ON A BUSINESS DAY

                  Unless otherwise specified on the face of this Security, the
following sentence shall apply to this Security. Notwithstanding any provision
of this Security or the Indenture, if any amount of principal, premium or
interest would otherwise be due on this Security on a day (the "Specified Day")
that is not a Business Day, such amount may be paid or made available for
payment on the next succeeding Business Day with the same force and effect as if
such amount were paid on the Specified Day. The provisions of this paragraph
shall apply to the Security in lieu of the provisions of Section 113 of the
Indenture.

                              ---------------------

                  Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.

                  Unless the certificate of authentication hereon has been
executed by the Trustee by manual signature, this Security shall not be entitled
to any benefit under the Indenture or be valid or obligatory for any purpose.




                    (Face of Security continued on next page)



                                      -7-



                  IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed.

Dated:
                                         POPULAR, INC.


                                         By:____________________________
                                              Name:
                                              Title:


                                         By:____________________________
                                              Name:
                                              Title:


                                         Attest: ______________________


                  This Security is one of the Securities of the series
designated herein and referred to in the within-mentioned Indenture.

                                         J.P. MORGAN TRUST COMPANY,
                                         NATIONAL ASSOCIATION
                                         as Trustee


                                         By:_______________________________
                                              Authorized Officer





                                      -8-


                              (Reverse of Security)


                  1. SECURITIES AND INDENTURE

                  This Security is one of a duly authorized issue of securities
of the Company (herein called the "Securities") issued and to be issued in one
or more series under an Indenture, dated as of February 15, 1995, as
supplemented by the First Supplemental Indenture, dated as of May 8, 1997, and
the Second Supplemental Indenture, dated as of August 5, 1999 (together herein
called the "Indenture", which term shall have the meaning assigned to it in such
instrument), between the Company and J.P. Morgan Trust Company, National
Association (successor in interest to Bank One, N.A.), as Trustee (herein called
the "Trustee", which term includes any successor trustee under the Indenture),
and reference is hereby made to the Indenture for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Company,
the Trustee and the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered.

                  2. SERIES AND DENOMINATIONS

                  This Security is one of the series designated on the face
hereof, limited to an aggregate initial offering price not to exceed
$2,500,000,000 (or the equivalent thereof in any other currency or currencies or
currency units) less the aggregate initial offering price of "Securities" (as
defined in the Prospectus dated December 29, 2003 relating to debt securities
and preferred stock of the Company, Popular International Bank, Inc. and Popular
North America, Inc.) authenticated and delivered upon initial issuance, other
than the Securities of this series, which amount may be increased at the option
of the Company if in the future it determines that it may wish to sell
additional Securities of this series. References herein to "this series" mean
the series of securities designated on the face hereof.

                  The Securities of this series are issuable only in registered
form without coupons in "Authorized Denominations", which term shall have the
following meaning. For each Security of this series having a principal amount
payable in U.S. dollars, the Authorized Denominations shall be $1,000 and any
integral multiples of $1,000. For each Security of this series having a
principal amount payable in a Specified Currency other than U.S. dollars, the
Authorized Denominations shall be the amount of such Specified Currency
equivalent, at the Exchange Rate on the first Business Day next preceding the
date on which the Company accepts the offer to purchase such Security, to $1,000
and any integral multiples of $1,000.

                  3. EXCHANGE RATE AGENT AND RELATED TERMS

                  If the principal of or interest on this Security is payable in
a Specified Currency other than U.S. dollars, the Company has initially
appointed the institution named on the face of this Security as Exchange Rate
Agent to act as such agent with respect to this Security, but the Company may,
in its sole discretion, appoint any other institution (including any Affiliate
of the Company) to serve as any such agent from time

                  (Reverse of Security continued on next page)



                                      -9-


to time. The Company will give the Trustee prompt written notice of any change
in any such appointment. Insofar as this Security provides for any such agent to
obtain rates, quotes or other data from a bank, dealer or other institution for
use in making any determination hereunder, such agent may do so from any
institution or institutions of the kind contemplated hereby notwithstanding that
any one or more of such institutions are such agent, Affiliates of such agent,
any of the agents named on the cover of the Company's Prospectus Supplement
dated June 30, 2004 relating to the Company's Medium-Term Notes, Series 5 or any
Affiliate of any such agent or Affiliates of the Company.

                  All determinations made by the Exchange Rate Agent may be made
by such agent in its sole discretion and, absent manifest error, shall be
conclusive for all purposes and binding on the Holder of this Security and the
Company. The Exchange Rate Agent shall not have any liability therefor.

                  Unless otherwise specified on the face hereof, for all
purposes of this Security, the term "Business Day" means (i) a Monday, Tuesday,
Wednesday, Thursday or Friday that is neither a legal holiday nor a day on which
commercial banking institutions in New York City generally are authorized or
required by law, regulation or executive order to close and (ii) if the
Specified Currency for payment of principal of or interest on this Security is
other than U.S. dollars, is also a day on which banking institutions are not
authorized or required by law, regulation or executive order to close in the
principal financial center of the country issuing such Specified Currency. With
respect to any particular location, the close of business on any day on which
business is not being conducted shall be deemed to mean 5:00 P.M., New York City
time, on that day.

                  References in this Security to U.S. dollars shall mean, as of
any time, the coin or currency that is then legal tender for the payment of
public and private debts in the United States of America.

                  References in this Security to a particular currency other
than U.S. dollars shall mean, as of any time, the coin or currency that is then
legal tender for the payment of public and private debts in the country issuing
such currency on the Original Issue Date.

                  4. REDEMPTION AT THE COMPANY'S OPTION

                  Unless a Redemption Commencement Date is specified on the face
hereof, except as provided below, this Security shall not be redeemable at the
option of the Company before the Stated Maturity Date. If a Redemption
Commencement Date is so specified, and unless otherwise specified on the face
hereof, this Security is subject to redemption upon not less than 30 days' nor
more than 60 days' notice at any time and from time to time on or after the
Redemption Commencement Date, in each case as a whole or in part, at the
election of the Company and at the applicable Redemption Price

                  (Reverse of Security continued on next page)



                                      -10-


specified on the face hereof (expressed as a percentage of the principal amount
of this Security to be redeemed), together with accrued interest to the
Redemption Date, but interest installments due on or prior to such Redemption
Date will be payable to the Holder of this Security, or one or more Predecessor
Securities, of record at the close of business on the relevant record date, all
as provided in the Indenture; provided, however, that the first two paragraphs
of Section 1103 of the Indenture shall not apply to this Security, and if less
than all of the Securities of this series are to be redeemed, the Company may
select, from Securities of this series that are subject to redemption pursuant
to the terms thereof, the Security or Securities, or portion or portions
thereof, to be redeemed.

                  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 this Security as a whole at a redemption
price of 100% of the principal amount thereof (or, if this Security is issued
with an original issue discount, 100% of the OID Default Amount) together with
accrued interest to the date fixed for redemption.

                  5. REPAYMENT AT THE HOLDER'S OPTION

                  Except as otherwise may be provided on the face hereof, if one
or more Repayment Dates are specified on the face hereof, this Security will be
repayable in whole or in part in an amount equal to any Authorized Denomination
(provided that the remaining principal amount of any Security surrendered for
partial repayment shall at least equal an Authorized Denomination), on any such
Repayment Date, in each case at the option of the Holder and at the applicable
Repayment Price specified on the face hereof (expressed as a percentage of the
principal amount to be repaid), together with accrued interest to the applicable
Repayment Date (but interest installments due on or prior to such Repayment Date
will be payable to the Holder of this Security, or one or more Predecessor
Securities, of record at the close of business on the relevant record date as
provided in the Indenture). If this Security provides for more than one
Repayment Date and the Holder exercises its option to elect repayment, the
Holder shall be deemed to have elected repayment on the earliest Repayment Date
after all conditions to such exercise have been satisfied, and references herein
to the "applicable Repayment Date" shall mean such earliest Repayment Date.

                  In order for the exercise of such option to be effective and
this Security 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 Security), on any
Business Day not later than the 30th, and not earlier than the 60th, calendar
day prior to the applicable Repayment Date (or, if either such calendar day is
not a Business Day, the next succeeding Business Day), either (i) this Security,
with the form below entitled "Option to Elect Repayment" duly completed and
signed, 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., a commercial bank or a trust company in the United
States of America


                  (Reverse of Security continued on next page)



                                      -11-


setting forth (a) the name, address and telephone number of the Holder of this
Security, (b) the principal amount of this Security and the amount of this
Security to be repaid, (c) a statement that the option to elect repayment is
being exercised thereby and (d) a guarantee stating that the Company will
receive this Security, with the form below entitled "Option to Elect Repayment"
duly completed and signed, not later than five Business Days after the date of
such telegram, telex, facsimile transmission or letter (provided that this
Security and form duly completed and signed are received by the Company by such
fifth Business Day). Any such election shall be irrevocable. The address to
which such deliveries are to be made is Bank One, NA, Attention: Securities
Processing Division, 55 Water Street, 1st Floor, Jeanette Park Entrance, New
York, New York 10041 (or at such other places as the Company or the Paying Agent
shall notify the Holder of this Security). All questions as to the validity,
eligibility (including time of receipt) and acceptance of any Security for
repayment will be determined by the Company, whose determination will be final
and binding. Notwithstanding the foregoing, (x) if this Security is a Global
Security, the option of the Holder to elect repayment may be exercised in
accordance with the Applicable Procedures of the Depositary for this Security at
least 30 calendar days prior to the applicable Repayment Date and (y) whether or
not this Security is a Global Security, the option of the Holder to elect
repayment may be exercised in any such manner as the Company may approve.

                  6. TRANSFER AND EXCHANGE

                  As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is registrable in
the Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in any place where the principal
of and any premium and interest on this Security are payable, duly endorsed by,
or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his or
her attorney duly authorized in writing, and thereupon one or more new
Securities of this series and of like tenor, of Authorized Denominations and for
the same aggregate principal amount, will be issued to the designated transferee
or transferees.

                  As provided in the Indenture and subject to certain
limitations therein set forth, Securities of this series are exchangeable for a
like aggregate principal amount of Securities of this series and of like tenor
of a different Authorized Denomination, as requested by the Holder surrendering
the same.

                  No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.

                  Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or

                  (Reverse of Security continued on next page)



                                      -12-


not this Security be overdue, and neither the Company nor the Trustee nor any
such agent shall be affected by notice to the contrary.

                  If this Security is a Global Security, this Security shall be
subject to the provisions of the Indenture relating to Global Securities,
including the limitations in Section 305 thereof on transfers and exchanges of
Global Securities.

                  7. [RESERVED].

                  8. REMEDIES.

                  If an Event of Default with respect to Securities of this
series shall occur and be continuing, the principal of the Securities of this
series may be declared due and payable in the manner and with the effect
provided in the Indenture.

                  As provided in and subject to the provisions of the Indenture,
the Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee indemnity reasonably satisfactory to
it, and the Trustee shall not have received from the Holders of a majority in
principal amount of Securities of this series at the time Outstanding a
direction inconsistent with such request, and shall have failed to institute any
such proceeding, for 60 days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to any suit instituted by the Holder of
this Security for the enforcement of any payment of principal hereof or any
premium or interest hereon on or after the respective due dates expressed
herein.

                  No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest on this Security at the times, place and rate, and
in the coin or currency, herein prescribed.

                  9. MODIFICATION AND WAIVER.

                  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 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 a majority in principal amount of
the Securities at the time Outstanding of all series to be affected (considered
together as one class for this purpose). The Indenture also contains provisions
(i) permitting the Holders of a majority in principal amount of the Securities
at

                  (Reverse of Security continued on next page)



                                      -13-


the time Outstanding of all series to be affected under the Indenture
(considered together as one class for this purpose), on behalf of the Holders of
all Securities of such series, to waive compliance by the Company with certain
provisions of the Indenture (ii) and permitting the Holders of a majority in
principal amount of the Securities at the time Outstanding of any series to be
affected under the Indenture (with each such series considered separately for
this purpose), on behalf of the Holders of all Securities of such series, to
waive certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and binding
upon such Holder and upon all future Holders of this Security and of any
Security 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 Security.

                  10. GOVERNING LAW.

                  THIS SECURITY AND THE INDENTURE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
























                  (Reverse of Security continued on next page)



                                      -14-


                              (Reverse of Security)


                                              REGISTERED NO. FXR __________

                                                       CUSIP NO. __________

                                            ORIGINAL ISSUE DATE: __________


                                  POPULAR, INC.
                           MEDIUM-TERM NOTE, SERIES 5

                            OPTION TO ELECT REPAYMENT

               TO BE COMPLETED ONLY IF THIS SECURITY IS REPAYABLE
                   AT THE OPTION OF THE HOLDER AND THE HOLDER
                          ELECTS TO EXERCISE SUCH RIGHT


                  The undersigned hereby irrevocably requests and instructs the
Company to repay the Security referred to in this notice (or the portion thereof
specified below) at the applicable Repayment Price, together with interest to
the Repayment Date, all as provided for in such Security, to the undersigned,
whose name, address and telephone number are as follows:


- -------------------------------------------------------------------------------
                     (please print name of the undersigned)


- -------------------------------------------------------------------------------
                    (please print address of the undersigned)


- -------------------------------------------------------------------------------
               (please print telephone number of the undersigned)


                  If such Security provides for more than one Repayment Date,
the undersigned requests repayment on the earliest Repayment Date after the
requirements for exercising this option have been satisfied, and references in
this notice to the Repayment Date mean such earliest Repayment Date. Terms used
in this notice that are defined in such Security are used herein as defined
therein.

                  For such Security to be repaid the Company must receive at the
applicable address of the Trustee set forth below or at such other place or
places of which the Company or the Trustee shall from time to time notify the
Holder of such Security, on any Business Day not later than the 30th or earlier
than the 60th calendar day prior to the Repayment Date (or, if either such
calendar day is not a Business Day, the next succeeding Business Day), either
(i) such Security, with this "Option to Elect Repayment" form duly completed and
signed, 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., a commercial bank or a trust company in the




                                      -15-


United States of America setting forth (a) the name, address and telephone
number of the Holder of such Security, (b) the principal amount of such Security
and the amount of such Security to be repaid, (c) a statement that the option to
elect repayment is being exercised thereby and (d) a guarantee stating that such
Security to be repaid with the form entitled "Option to Elect Repayment" on the
addendum to the Security duly completed and signed will be received by the
Company not later than five Business Days after the date of such telegram,
telex, facsimile transmission or letter (provided that such Security and form
duly completed and signed are received by the Company by such fifth Business
Day). The address to which such deliveries are to be made is:

                  J.P. Morgan Trust Company, National Association
                  Attention:  Institutional Trust Services/George N. Reaves
                  227 W. Monroe Street/Suite 2600
                  Chicago, IL  60607

or at such other place as the Company or the Paying Agent shall notify the
Holder of such Security.

                  If less than the entire principal amount of such Security is
to be repaid, specify the portion thereof (which shall equal any Authorized
Denomination) that the Holder elects to have repaid:

                          ----------------------------

and specify the denomination or denominations (which shall equal any Authorized
Denomination) of the Security or Securities to be issued to the Holder in
respect of the portion of such Security not being repaid (in the absence of any
specification, one Security will be issued in respect of the portion not being
repaid):

                          ----------------------------

Date: ______________________    ______________________________________________
                                Notice:  The signature to this Option to Elect
                                Repayment must correspond with the name of the
                                Holder as written on the face  of such
                                Security in every particular without
                                alteration or enlargement or any other change
                                whatsoever.






                                      -16-




                                  ABBREVIATIONS

                  The following abbreviations, when used in the inscription on
the face of this Security, shall be construed as though they were written out in
full according to applicable laws or regulations.

                  TEN COM -        as tenants in common

                  TEN ENT -        as tenants by the entireties

                  JT TEN -     as joint tenants with the right of
                               survivorship and not as tenants in
                               common

                  UNIF GIFT MIN ACT - ________________ Custodian _______________
                                           (Cust)                    (Minor)
                               under Uniform Gifts to Minors Act

                      ____________________________________

                                     (State)

                    Additional abbreviations may also be used
                         though not in the above list.

                      ____________________________________



                                      -17-




                                   ASSIGNMENT

                  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 attached Security and all rights thereunder, and hereby irrevocably

constitutes and appoints ______________________________________________________


_______________________________________________________________________________


to transfer said Security on the books of the Company, with full power of

substitution in the premises.


Dated:______________

Signature Guaranteed


                                         ______________________________________
NOTICE: Signature must be guaranteed.    NOTICE:  The signature to this
                                         assignment must correspond with the
                                         name of the Holder as written upon the
                                         face of the attached Security in every
                                         particular, without alteration or
                                         enlargement or any change whatever.






                                      -18-

EX-4.(F)

                    [Form of Floating Rate Medium-Term Note]

                               (Face of Security)

                  [IF A GLOBAL SECURITY, INSERT - THIS SECURITY IS A GLOBAL
SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY
NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER
OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY
PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.]

                  [IF DTC IS THE DEPOSITARY, INSERT - UNLESS THIS CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW
YORK CORPORATION ("DTC"), TO POPULAR, INC., OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO 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.]

                  [INSERT ANY LEGEND REQUIRED BY THE INTERNAL REVENUE CODE AND
THE REGULATIONS THEREUNDER.]





REGISTERED NO. FLR___                                         CUSIP NO. _______


                                  POPULAR, INC.

                           MEDIUM-TERM NOTES, SERIES 5
                                 (Floating Rate)

         The following terms apply to this Security, as and to the extent shown
below:

PRINCIPAL AMOUNT:

STATED MATURITY DATE:

SPECIFIED CURRENCY:
U.S. dollars for all payments unless otherwise specified below:

     -        payments of principal and any premium:

     -        payments of interest:

     -        Exchange Rate Agent:


ORIGINAL ISSUE DATE*:

REGULAR RECORD DATE(S):

ORIGINAL ISSUE DISCOUNT SECURITY:

     -        Total Amount of OID:

     -        Yield to Maturity:

     -        Initial Accrual Period OID:

     -        OID Default Amount:

     -        Default Rate:

REDEMPTION COMMENCEMENT DATE:

REPAYMENT DATE(S):

REDEMPTION OR REPAYMENT PRICE(S):

BASE RATE:

     -        Commercial Paper Rate:

     -        Prime Rate:

     -        LIBOR:

              -        Moneyline Telerate LIBOR Page:

              -        Reuters Screen LIBOR Page:

              -        Index Currency:

     -        Treasury Rate:

     -        CMT Rate:

              -        Moneyline Telerate Page 7051:

              -        Moneyline Telerate Page 7052
                       (weekly/monthly)

              -        CMT Index Maturity

     -        CD Rate:

     -        Federal Funds Rate:

     -        11th District Rate:

________________

*        This date shall be the issue date of this Security, unless there is a
         Predecessor Security, in which case this date shall be the issue date
         of the first Predecessor Security.


                    (Face of Security continued on next page)
                                       -2-



INDEX MATURITY:


SPREAD:


SPREAD MULTIPLIER:


INITIAL BASE RATE:


MAXIMUM RATE:


MINIMUM RATE:


INTEREST RESET PERIOD:

     -        if semi-annual, reset will occur in each of the following two
              months in each year:

     -        if annual, reset will occur in the following month in each year:

     -        otherwise, reset will occur daily, weekly, monthly or quarterly in
              each year as follows:

INTEREST RESET DATE(S): as provided in Section 3(a) on the reverse of this
Security (unless otherwise specified)

INTEREST DETERMINATION DATE(S): as provided in Sections 3(b) through 3(j), as
applicable, on the reverse of this Security (unless otherwise specified)

INTEREST PAYMENT DATE(S): unless otherwise specified, the third Wednesday of the
following:

     -        each of the 12 calendar months in each year

     -        each March, June, September and December in each year

     -        each of the following two calendar months in each year:

     -        the following calendar month in each year:

subject to the second paragraph under "Payments Due on a Business Day" below

CALCULATION DATE(S): as provided in Section 3(n) on the reverse of this Security
(unless otherwise specified)

CALCULATION AGENT:

OTHER TERMS:


                  Terms left blank or marked "N/A", "No", "None" or in a similar
manner do not apply to this Security except as otherwise may be specified.

                  Whenever used in this Security, the terms specified above that
apply to this Security have the meanings specified above, unless the context
requires otherwise. Other terms used in this Security that are not defined
herein but that are defined in the Indenture referred to in Section 1 on the
reverse of this Security are used herein as defined therein.

                  Popular, Inc., a corporation duly organized and existing under
the laws of the Commonwealth of Puerto Rico (hereinafter called the "Company",
which term includes any successor Person under the Indenture), for value
received, hereby promises


                    (Face of Security continued on next page)
                                       -3-






to pay to _____________, or registered assigns, as principal the Principal
Amount on the Stated Maturity Date and to pay interest thereon, from the
Original Issue Date or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, on the Interest Payment Date(s) in
each year, commencing on the first such date that is at least 15 calendar days
after the Original Issue Date, and at the Maturity of the principal hereof, at a
rate per annum determined in accordance with the applicable provisions of
Section 3 on the reverse hereof, until the principal hereof is paid or made
available for payment. Notwithstanding the foregoing, interest on any principal
that is overdue shall be payable on demand.

                  The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in the Indenture, be paid to
the Person in whose name this Security (or one or more Predecessor Securities)
is registered at the close of business on the 15th calendar day (whether or not
a Business Day, as such term is defined in Section 3(n) on the reverse hereof)
next preceding such Interest Payment Date, unless otherwise provided on the face
hereof (a "Regular Record Date"). Any interest so payable, but not punctually
paid or duly provided for, on any Interest Payment Date will forthwith cease to
be payable to the Holder on such Regular Record Date and such Defaulted Interest
either may be paid to the Person in whose name this Security (or one or more
Predecessor Securities) 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, notice whereof shall be given to the Holder of this Security not less
than 10 days prior to such Special Record Date, or may be paid in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which this Security may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in the Indenture.

                  If this Security is issued with an original issue discount,
(i) if an Event of Default with respect to the Securities of this series shall
have occurred and be continuing, the amount of principal of this Security 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 (ii) in the case of a
default in payment of principal upon acceleration, redemption, repayment at the
option of the Holder or at the Stated Maturity Date hereof, in lieu of any
interest otherwise payable, the overdue principal of this Security 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 Stated 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.

           CURRENCY OF PAYMENT

                  Payment of principal of (and premium, if any) and interest on
this Security will be made in the Specified Currency for such payment, except as
provided in this and the next three paragraphs. The Specified Currency for any
payment shall be the currency


                    (Face of Security continued on next page)
                                       -4-






specified as such on the face of this Security unless, at the time of such
payment, such currency is not legal tender for the payment of public and private
debts in the country issuing such currency on the Original Issue Date, in which
case the Specified Currency for such payment shall be such coin or currency as
at the time of such payment is legal tender for the payment of public and
private debts in such country.

                  Except as provided in the next paragraph, any payment to be
made on this Security in a Specified Currency other than U.S. dollars will be
made in U.S. dollars if the Person entitled to receive such payment transmits a
written request for such payment to be made in U.S. dollars to the Trustee at
its Corporate Trust Office, Attention: Securities Processing Division, on or
before the fifth Business Day before the payment is to be made. Such written
request may be mailed, hand delivered, telecopied or delivered in any other
manner approved by the Trustee. Any such request made with respect to any
payment on this Security payable to a particular Holder will remain in effect
for all later payments on this Security payable to such Holder, unless such
request is revoked on or before the fifth Business Day before a payment is to be
made, in which case such revocation shall be effective for such and all later
payments. In the case of any payment of interest payable on an Interest Payment
Date, such written request must be made by the Person who is the registered
Holder of this Security on the relevant Regular Record Date.

                  The U.S. dollar amount of any payment made pursuant to the
preceding paragraph will be determined by the Exchange Rate Agent based upon the
highest bid quotation received by the Exchange Rate Agent as of 11:00 A.M., New
York City time, on the second Business Day preceding the applicable payment
date, from three (or, if three are not available, then two) recognized foreign
exchange dealers selected by the Exchange Rate Agent in The City of New York, in
each case for the purchase by the quoting dealer, for U.S. dollars and for
settlement on such payment date of an amount of the Specified Currency for such
payment equal to the aggregate amount of such Specified Currency payable on such
payment date to all Holders of Securities of this or any other series who elect
to receive U.S. dollar payments on such payment date, and at which the
applicable dealer commits to execute a contract. If the Exchange Rate Agent
determines that two such bid quotations are not available on such second
Business Day, such payment will be made in the Specified Currency for such
payment. All currency exchange costs associated with any payment in U.S. dollars
on this Security will be borne by the Holder entitled to receive such payment,
by deduction from such payment.

                  Notwithstanding the foregoing, if any amount payable on this
Security is payable on any day (including at Maturity) in a Specified Currency
other than U.S. dollars, and if such Specified Currency is not available to the
Company on the two Business Days before such day, due to the imposition of
exchange controls, disruption in a currency market or any other circumstances
beyond the control of the Company, the Company will be entitled to satisfy its
obligation to pay such amount in such Specified Currency by making such payment
in U.S. dollars. The amount of such payment in U.S. dollars shall be determined
by the Exchange Rate Agent on the basis of the noon buying rate for cable
transfers in The City of New York for such Specified Currency (the "Exchange
Rate") as of the latest day before the day on which such payment is to be


                    (Face of Security continued on next page)
                                       -5-





made. Any payment made under such circumstances in U.S. dollars where the
required payment is in other than U.S. dollars will not constitute an Event of
Default under the Indenture or this Security.

           MANNER OF PAYMENT - U.S. DOLLARS

                  Except as provided in the next paragraph, payment of any
amount payable on this Security in U.S. dollars will be made at the office or
agency of the Company maintained for that purpose in The City of New York (or at
any other office or agency maintained by the Company for that purpose), against
surrender of this Security in the case of any payment due at the Maturity of the
principal hereof (other than any payment of interest that first becomes due on
an Interest Payment Date); provided, however, that, at the option of the Company
and subject to the next paragraph, payment of interest may be made by check
mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register.

                  Payment of any amount payable on this Security in U.S. dollars
will be made by wire transfer of immediately available funds to an account
maintained by the payee with a bank located in the Borough of Manhattan, The
City of New York, if (i) the principal of this Security is at least $10,000,000
and (ii) the Holder entitled to receive such payment transmits a written request
for such payment to be made in such manner to the Paying Agent at its Corporate
Trust Office, Attention: Securities Processing Division, on or before the
Regular Record Date preceding the day on which such payment is to be made;
provided that, in the case of any such payment due at the Maturity of the
principal hereof (other than any payment of interest that first becomes due on
an Interest Payment Date), this Security must be surrendered at the office or
agency of the Company maintained for that purpose in The City of New York (or at
any other office or agency maintained by the Company for that purpose) in time
for the Paying Agent to make such payment in such funds in accordance with its
normal procedures. Any such request made with respect to any payment on this
Security payable to a particular Holder will remain in effect for all later
payments on this Security payable to such Holder, unless such request is revoked
on or before the Regular Record Date preceding the day on which such payment is
to be made, in which case such revocation shall be effective for such and all
later payments; provided that in the case of any payment due at Maturity of the
principal of this Security to be effective any request for revocation must be
made no later than the 15th day prior to the Maturity of the principal of this
Security. In the case of any payment of interest payable on an Interest Payment
Date, such written request must be made by the Person who is the registered
Holder of this Security on the relevant Regular Record Date. The Company will
pay any administrative costs imposed by banks in connection with making payments
by wire transfer with respect to this Security, but any tax, assessment or other
governmental charge imposed upon any payment will be borne by the Holder of this
Security and may be deducted from the payment by the Company or the Paying
Agent.

                    (Face of Security continued on next page)
                                       -6-




           MANNER OF PAYMENT - OTHER SPECIFIED CURRENCIES

                  Payment of any amount payable on this Security in a Specified
Currency other than U.S. dollars will be made by wire transfer of immediately
available funds to such account as is maintained in such Specified Currency at a
bank or other financial institution acceptable to the Company and the Trustee
and as shall have been designated at least five Business Days prior to the
applicable payment date by the Person entitled to receive such payment; provided
that, in the case of any such payment due at the Maturity of the principal
hereof (other than any payment of interest that first becomes due on an Interest
Payment Date), this Security must be surrendered at the office or agency of the
Company maintained for that purpose in The City of New York (or at any other
office or agency maintained by the Company for that purpose) in time for the
Paying Agent to make such payment in such funds in accordance with its normal
procedures. Such account designation shall be made by transmitting the
appropriate information to the Trustee at its Corporate Trust Office in the
Borough of Manhattan, The City of New York, by mail, hand delivery, telecopier
or in any other manner approved by the Trustee. Unless revoked, any such account
designation made with respect to this Security by the Holder hereof will remain
in effect with respect to any further payments with respect to this Security
payable to such Holder. If a payment in a Specified Currency other than U.S.
dollars with respect to this Security cannot be made by wire transfer because
the required account designation has not been received by the Trustee on or
before the requisite date or for any other reason, the Company will cause a
notice to be given to the Holder of this Security at its registered address
requesting an account designation pursuant to which such wire transfer can be
made and such payment will be made within five Business Days after the Trustee's
receipt of such a designation meeting the requirements specified above, with the
same force and effect as if made on the due date. The Company will pay any
administrative costs imposed by banks in connection with making payments by wire
transfer with respect to this Security, but any tax, assessment or other
governmental charge imposed upon any payment will be borne by the Holder of this
Security and may be deducted from the payment by the Company or the Paying
Agent.

           MANNER OF PAYMENT - GLOBAL SECURITIES

                  Notwithstanding any provision of this Security or the
Indenture, if this Security is a Global Security, the Company may make any and
all payments of principal, premium and interest on this Security pursuant to the
Applicable Procedures of the Depositary for this Security as permitted in the
Indenture.

           PAYMENTS DUE ON A BUSINESS DAY

                  Unless otherwise specified on the face of this Security, the
following sentence shall apply to this Security. Notwithstanding any provision
of this Security or the Indenture other than the following paragraph, if any
amount of principal, premium or interest would otherwise be due on this Security
on a day (the "Specified Day") that is not a Business Day, such amount may be
paid or made available for payment on the next succeeding Business Day (unless
the Base Rate is LIBOR and such next succeeding


                    (Face of Security continued on next page)
                                       -7-




Business Day falls in the next calendar month, in which case such amount may be
paid or made available for payment on the next preceding Business Day) with the
same force and effect as if such amount were paid on the Specified Day. The
provisions of this paragraph shall apply to this Security in lieu of the
provisions of Section 113 of the Indenture.

                  Unless otherwise specified on the face of this Security, the
following sentence shall apply to each Interest Payment Date other than one that
falls on the date of Maturity of the principal hereof. If any such Interest
Payment Date would otherwise be a day that is not a Business Day, such Interest
Payment Date shall be deferred to the next succeeding Business Day, provided
that, if the Base Rate is LIBOR and the next succeeding Business Day would fall
in the next calendar month, then such Interest Payment Date will be advanced to
the next preceding Business Day.

                              --------------------

                  Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.

                  Unless the certificate of authentication hereon has been
executed by the Trustee by manual signature, this Security shall not be entitled
to any benefit under the Indenture or be valid or obligatory for any purpose.


                    (Face of Security continued on next page)
                                       -8-





                  IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed.

Dated:

                                           POPULAR, INC.


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


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



                                           Attest:
                                                  ----------------------------



                  This Security is one of the Securities of the series
designated herein and referred to in the within-mentioned Indenture.



                                           J.P. MORGAN TRUST COMPANY, NATIONAL
                                           ASSOCIATION
                                           as Trustee


                                           By
                                             ----------------------------------
                                                      Authorized Officer







                              (Reverse of Security)


                  1.       SECURITIES AND INDENTURE

                  This Security is one of a duly authorized issue of securities
of the Company (herein called the "Securities") issued and to be issued in one
or more series under an Indenture, dated as of February 15, 1995, as
supplemented by the First Supplemental Indenture, dated as of May 8, 1997, and
the Second Supplemental Indenture, dated as of August 5, 1999 (together herein
called the "Indenture", which term shall have the meaning assigned to it in such
instrument), between the Company and J.P. Morgan Trust Company, National
Association (successor in interest to Bank One, N.A.), as Trustee (herein called
the "Trustee", which term includes any successor trustee under the Indenture),
and reference is hereby made to the Indenture for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Company,
the Trustee and the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered.

                  2.       SERIES AND DENOMINATIONS

                  This Security is one of the series designated on the face
hereof, limited to an aggregate initial offering price not to exceed
$2,500,000,000 (or the equivalent thereof in any other currency or currencies or
currency units) less the aggregate initial offering price of "Securities" (as
defined in the Prospectus dated December 29, 2003 relating to debt securities
and preferred stock of the Company, Popular International Bank, Inc. and Popular
North America, Inc.) authenticated and delivered upon initial issuance, other
than the Securities of this series, which amount may be increased at the option
of the Company if in the future it determines that it may wish to sell
additional Securities of this series. References herein to "this series" mean
the series of securities designated on the face hereof.

                  The Securities of this series are issuable only in registered
form without coupons in "Authorized Denominations", which term shall have the
following meaning. For each Security of this series having a principal amount
payable in U.S. dollars, the Authorized Denominations shall be $1,000 and any
integral multiples of $1,000. For each Security of this series having a
principal amount payable in a Specified Currency other than U.S. dollars, the
Authorized Denominations shall be the amount of such Specified Currency
equivalent, at the Exchange Rate on the first Business Day next preceding the
date on which the Company accepts the offer to purchase such Security, to $1,000
and any integral multiples of $1,000.

                  3.       INTEREST RATE

                  (a)      INTEREST RATE RESET. The interest rate on this
Security will be reset from time to time, as provided in this Section 3, and
each date upon which such rate is reset as so provided is hereinafter called an
"Interest Reset Date". Unless otherwise specified on the face hereof, the
Interest Reset Dates with respect to this Security will be as follows:


                  (Reverse of Security continued on next page)
                                      -10-



                  (i) if the Interest Reset Period is daily, each Business Day;

                  (ii) if the Interest Reset Period is weekly and the Base Rate
         is not the Treasury Rate, the Wednesday of each week;

                  (iii) if the Interest Reset Period is weekly and the Base Rate
         is the Treasury Rate, except as otherwise provided in the definition of
         "Treasury Interest Determination Date" in Section 3(n) below, the
         Tuesday of each week;

                  (iv) if the Interest Reset Period is monthly and the Base Rate
         is not the 11th District Rate, the third Wednesday of each month;

                  (v) if the Interest Reset Period is monthly and the Base Rate
         is the 11th District Rate, the first calendar day of the month;

                  (vi) if the Interest Reset Period is quarterly, the third
         Wednesday of each March, June, September and December;

                  (vii) if the Interest Reset Period is semi-annual, the third
         Wednesday of each of two months in each year specified under "Interest
         Reset Period" on the face hereof; and

                  (viii) if the Interest Reset Period is annual, the third
         Wednesday of the month in each year specified under "Interest Reset
         Period" on the face hereof;

provided, however, that (x) the Base Rate in effect from the Original Issue Date
to but excluding the first Interest Reset Date will be the Initial Base Rate and
(y) if the Interest Reset Period is daily or weekly, the Base Rate in effect for
each day following the second Business Day immediately prior to an Interest
Payment Date to but excluding such Interest Payment Date, and for each day
following the second Business Day immediately prior to the day of Maturity of
the principal hereof to but excluding such day of Maturity, will be the Base
Rate in effect on such applicable second Business Day; and provided, further,
that, if any Interest Reset Date would otherwise be a day that is not a Business
Day, such Interest Reset Date shall be the next succeeding day that is a
Business Day, except that, unless otherwise specified on the face hereof, if the
Base Rate is LIBOR and such next succeeding Business Day falls in the next
succeeding calendar month, such Interest Reset Date shall be the immediately
preceding Business Day.

                  Subject to applicable provisions of law and except as
otherwise specified herein, on each Interest Reset Date the interest rate on
this Security shall be the rate determined in accordance with such of the
following Sections 3(b) through 3(j) as provided for determination of the Base
Rate for this Security. The Calculation Agent shall determine the interest rate
of this Security in accordance with the applicable Section below.

                  Unless the Base Rate is LIBOR, the Calculation Agent will
determine the interest rate of this Security that takes effect on any Interest
Reset Date on a day no later


                  (Reverse of Security continued on next page)
                                      -11-



than the Calculation Date (as defined in Section 3(n) below) corresponding to
such Interest Reset Date. However, the Calculation Agent need not wait until the
Calculation Date to determine such interest rate if the rate information it
needs to make such determination in the manner specified in the applicable
provisions of Sections 3(b) through 3(j) hereof is available from the relevant
sources specified in such applicable provisions.

                  Upon request of the Holder to the Calculation Agent, the
Calculation Agent will provide the interest rate then in effect on this Security
and, if determined, the interest rate that will become effective on the next
Interest Reset Date.

                  (b)      DETERMINATION OF COMMERCIAL PAPER RATE. If the Base
Rate is the Commercial Paper Rate, the Base Rate that takes effect on any
Interest Reset Date shall equal the Money Market Yield (as defined in Section
3(n) below) of the rate, for the second Business Day immediately preceding such
Interest Reset Date (the "Commercial Paper Interest Determination Date"), for
commercial paper having the Index Maturity, as published in H.15(519) (as
defined in Section 3(n) below) under the heading "Commercial Paper -
Nonfinancial". If the Commercial Paper Rate cannot be determined as described
above, the following procedures will apply in determining the Commercial Paper
Rate:

                  (i) If the rate described above is not published in H.15(519)
         by 3:00 P.M., New York City time, on the Calculation Date (as defined
         in Section 3(n) below) corresponding to such Commercial Paper Interest
         Determination Date, then the Commercial Paper Rate will be the rate,
         for such Commercial Paper Interest Determination Date, for commercial
         paper having the Index Maturity, as published in H.15 Daily Update (as
         defined in Section 3(n) below) or any other recognized electronic
         source used for displaying that rate, under the heading "Commercial
         Paper - Nonfinancial".

                  (ii) If the rate described in clause (i) above does not appear
         in H.15(519), H.15 Daily Update or another recognized electronic source
         by 3:00 P.M., New York City time, on such Calculation Date (unless the
         calculation is made earlier and the rate is available from one of those
         sources at that time), the Commercial Paper Rate will be the Money
         Market Yield of the arithmetic mean of the following offered rates for
         U.S. dollar commercial paper that has the Index Maturity and is placed
         for an industrial issuer whose bond rating is "Aa", or the equivalent,
         from a nationally recognized rating agency: the rates offered as of
         11:00 A.M., New York City time, on such Commercial Paper Interest
         Determination Date by three leading U.S. dollar commercial paper
         dealers in New York City selected by the Calculation Agent.

                  (iii) If fewer than three dealers selected by the Calculation
         Agent are quoting as described in clause (ii) above, the Commercial
         Paper Rate shall be the Commercial Paper Rate in effect on such
         Commercial Paper Interest Determination Date (or, if the Initial Base
         Rate has been in effect for the prior Interest Reset Period, the
         Initial Base Rate).


                  (Reverse of Security continued on next page)
                                      -12-



                  The Base Rate determined in accordance with this Section 3(b)
will be adjusted by the addition or subtraction of the Spread, if any, or by
multiplying such Base Rate by the Spread Multiplier, if any.

                  (c)      DETERMINATION OF PRIME RATE. If the Base Rate is the
Prime Rate, the Base Rate that takes effect on any Interest Reset Date shall
equal the rate, for the second Business Day immediately preceding such Interest
Reset Date (the "Prime Interest Determination Date"), published in H.15(519)
under the heading "Bank Prime Loan". If the Prime Rate cannot be determined as
described above, the following procedures will apply in determining the Prime
Rate:

                           (i) If the rate described above is not published in
                  H.15(519) by 3:00 P.M., New York City time, on the Calculation
                  Date corresponding to such Prime Interest Determination Date,
                  then the Prime Rate will be the rate, for such Prime Interest
                  Determination Date, as published in H.15 Daily Update or
                  another recognized electronic source used for the purpose of
                  displaying that rate, under the heading "Bank Prime Loan".

                           (ii) If the rate described in clause (i) above is not
                  published in H.15(519), H.15 Daily Update or another
                  recognized electronic source by 3:00 P.M., New York City time,
                  on such Calculation Date (unless the calculation is made
                  earlier and the rate is available from one of those sources at
                  that time), then the Prime Rate will be the arithmetic mean of
                  the following rates as they appear on the Reuters Screen US
                  PRIME 1 Page (as defined in Section 3(n) below): the rate of
                  interest publicly announced by each bank appearing on that
                  page as that bank's prime rate or base lending rate, as of
                  11:00 A.M., New York City time, on such Prime Interest
                  Determination Date.

                           (iii) If fewer than four of the rates referred to in
                  clause (ii) above appear on the Reuters Screen US PRIME 1
                  Page, the Prime Rate will be the arithmetic mean of the prime
                  rates or base lending rates, as of the close of business on
                  such Prime Interest Determination Date, of three major banks
                  in New York City selected by the Calculation Agent. For this
                  purpose, the Calculation Agent will use rates quoted on the
                  basis of the actual number of days in the year divided by a
                  360-day year.

                           (iv) If fewer than three banks selected by the
                  Calculation Agent are quoting as described in clause (iii)
                  above, the Prime Rate shall be the Prime Rate in effect on
                  such Prime Interest Determination Date (or, if the Initial
                  Base Rate has been in effect for the prior Interest Reset
                  Period, the Initial Base Rate).

                  The Base Rate determined in accordance with this Section 3(c)
will be adjusted by the addition or subtraction of the Spread, if any, or by
multiplying such Base Rate by the Spread Multiplier, if any.

                  (d)      DETERMINATION OF LIBOR. If the Base Rate is LIBOR,
the Base Rate that takes effect on any Interest Reset Date shall be LIBOR on the
corresponding


                  (Reverse of Security continued on next page)
                                      -13-





LIBOR Interest Determination Date (as defined in Section 3(n) below) and shall
be determined in accordance with the following provisions:

                  LIBOR will be either of the following rates, whichever appears
on the face hereof:

                           (x) the offered rate appearing on the Moneyline
                  Telerate LIBOR Page (as defined in Section 3(n) below); or

                           (y) the arithmetic mean of the offered rates
                  appearing on the Reuters Screen LIBOR Page (as defined in
                  Section 3(n) below) unless that page by its terms cites only
                  one rate, in which case that rate;

in either case, as of 11:00 A.M., London time, on such LIBOR Interest
Determination Date for deposits of the Index Currency having the Index Maturity
beginning on such Interest Reset Date. If no reference page is specified on the
face hereof, Moneyline Telerate LIBOR Page will apply to this Security:

                  (i) If Moneyline Telerate LIBOR Page is specified on the face
         hereof and the rate referenced in clause (x) above does not appear on
         that page, or if Reuters Screen LIBOR Page is specified on the face
         hereof and fewer than two of the rates referenced in clause (y) above
         appear on that page or no rate appears on any page on which only one
         rate normally appears, then LIBOR will be determined on the basis of
         the rates, at approximately 11:00 A.M., London time, on such LIBOR
         Interest Determination Date, at which deposits of the following kind
         are offered to prime banks in the London interbank market by four major
         banks in that market selected by the Calculation Agent: deposits of the
         Index Currency having the Index Maturity beginning on such Interest
         Reset Date and in a Representative Amount (as defined in Section 3(n)
         below). The Calculation Agent will request the principal London office
         of each such bank to provide a quotation of its rate. If at least two
         quotations are provided, LIBOR for such LIBOR Interest Determination
         Date will be the arithmetic mean of the quotations.

                  (ii) If fewer than two quotations are provided as described in
         clause (i) above, LIBOR for such LIBOR Interest Determination Date will
         be the arithmetic mean of the rates for loans of the following kind to
         leading European banks quoted, at approximately 11:00 A.M. in the
         principal financial center for the country issuing the Index Currency,
         on such LIBOR Interest Determination Date, by three major banks in that
         financial center selected by the Calculation Agent: loans of the Index
         Currency having the Index Maturity beginning on such Interest Reset
         Date and in a Representative Amount.

                  (iii) If fewer than three banks selected by the Calculation
         Agent are quoting as described in clause (ii) above, LIBOR will be the
         LIBOR in effect on such LIBOR Interest Determination Date (or, if the
         Initial Base Rate has been in effect for the prior Interest Reset
         Period, the Initial Base Rate).


                  (Reverse of Security continued on next page)
                                      -14-



                  The Base Rate determined in accordance with this Section 3(d)
will be adjusted by the addition or subtraction of the Spread, if any, or by
multiplying such Base Rate by the Spread Multiplier, if any. If the Base Rate is
LIBOR and no currency is specified on the face hereof as the Index Currency, the
Index Currency shall be U.S. dollars.

                  (e)      [RESERVED]

                  (f)      DETERMINATION OF TREASURY RATE. If the Base Rate is
the Treasury Rate, the Base Rate that takes effect on any Interest Reset Date
shall equal the rate for the auction on the corresponding Treasury Interest
Determination Date (as defined in Section 3(n) below) of direct obligations of
the United States ("Treasury Bills") having the Index Maturity, as that rate
appears on Moneyline Telerate Page 56 or 57 under the heading "Investment Rate".
If the Treasury Rate cannot be determined as described above, the following
procedures will apply in determining the Treasury Rate:

                  (i) If the rate described above does not appear on either
         Moneyline Telerate Page 56 or 57 at 3:00 P.M., New York City time, on
         the Calculation Date corresponding to such Treasury Interest
         Determination Date (unless the calculation is made earlier and the rate
         is available from that source at that time), the Treasury Rate will be
         the Bond Equivalent Yield (as defined in Section 3(n) below) of the
         rate, for such Treasury Interest Determination Date and for Treasury
         Bills having the Index Maturity, as published in H.15 Daily Update, or
         another recognized electronic source used for displaying that rate,
         under the heading "U.S. Government Securities/Treasury Bills/Auction
         High".

                  (ii) If the rate described in clause (i) above does not appear
         in H.15 Daily Update or another recognized electronic source by 3:00
         P.M., New York City time, on such Calculation Date (unless the
         calculation is made earlier and the rate is available from one of those
         sources at that time), the Treasury Rate will be the Bond Equivalent
         Yield of the auction rate, for such Treasury Interest Determination
         Date and for Treasury Bills having the Index Maturity, as announced by
         the U.S. Department of the Treasury.

                  (iii) If the auction rate described in clause (ii) above is
         not so announced by 3:00 P.M., New York City time, on such Calculation
         Date, or if no such auction is held for the relevant week, then the
         Treasury Rate will be the Bond Equivalent Yield of the rate, for such
         Treasury Interest Determination Date and for Treasury Bills having the
         Index Maturity, as published in H.15(519) under the heading "U.S.
         Government Securities/Treasury Bills/Secondary Market".

                  (iv) If the rate described in clause (iii) above does not
         appear in H.15(519) by 3:00 P.M., New York City time, on such
         Calculation Date, then the Treasury Rate will be the rate, for such
         Treasury Interest Determination Date and for Treasury Bills having the
         Index Maturity, as published in H.15 Daily Update, or another
         recognized electronic source used for displaying that


                  (Reverse of Security continued on next page)
                                      -15-



           rate, under the heading "U.S. Government Securities/ Treasury Bills
           Secondary Market".

                      (v) If the rate described in clause (iv) above does not
           appear in H.15 Daily Update or another recognized electronic source
           by 3:00 P.M., New York City time, on such Calculation Date (unless
           the calculation is made earlier and the rate is available from one of
           those sources at that time), the Treasury Rate will be the Bond
           Equivalent Yield of the arithmetic mean of the following secondary
           market bid rates for the issue of Treasury Bills with a remaining
           maturity closest to the Index Maturity: the rates bid as of
           approximately 3:30 P.M., New York City time, on such Treasury
           Interest Determination Date, by three primary U.S. government
           securities dealers in New York City selected by the Calculation
           Agent.

                      (vi) If fewer than three dealers selected by the
           Calculation Agent are quoting as described in clause (v) above, the
           Treasury Rate shall be the Treasury Rate in effect on such Treasury
           Interest Determination Date (or, if the Initial Base Rate has been in
           effect for the prior Interest Reset Period, the Initial Base Rate).

                  The Base Rate determined in accordance with this Section 3(f)
will be adjusted by the addition or subtraction of the Spread, if any, or by
multiplying such Base Rate by the Spread Multiplier, if any, specified on the
face hereof.

                   (g) DETERMINATION OF CMT RATE. If the Base Rate is the CMT
Rate, the Base Rate that takes effect on any Interest Reset Date shall equal the
CMT Rate on the second Business Day immediately preceding such Interest Reset
Date (the "CMT Interest Determination Date"). "CMT Rate" means the following
rate displayed on the Designated CMT Moneyline Telerate Page (as defined in
Section 3(n) below) under the heading "- Treasury Constant Maturities", under
the column for the Designated CMT Index Maturity (as defined in Section 3(n)
below):

                   (x) if the Designated CMT Moneyline Telerate Page is
           Moneyline Telerate Page 7051, the rate for such CMT Interest
           Determination Date; or

                   (y) if the Designated CMT Moneyline Telerate Page is
           Moneyline Telerate Page 7052, the weekly or monthly average, as
           specified on the face hereof, for the week that ends immediately
           before the week in which such CMT Interest Determination Date falls,
           or for the month that ends immediately before the month in which such
           CMT Interest Determination Date falls, as applicable.

If the CMT Rate cannot be determined as described above, the following
procedures will apply in determining the CMT Rate:

                   (i) If the applicable rate described above is not displayed
           on the relevant Designated CMT Moneyline Telerate Page at 3:00 P.M.,
           New York City time, on the Calculation Date corresponding to such CMT
           Interest Determination


                  (Reverse of Security continued on next page)

                                      -16-


           Date (unless the calculation is made earlier and the rate is
           available from that source at that time), then the CMT Rate will be
           the applicable Treasury constant maturity rate described above -
           i.e., for the Designated CMT Index Maturity and for either such CMT
           Interest Determination Date or the weekly or monthly average, as
           applicable - as published in H.15(519).

                   (ii) If the applicable rate described in clause (i) above is
           not published in H.15(519) by 3:00 P.M., New York City time, on such
           Calculation Date, then the CMT Rate will be the Treasury constant
           maturity rate, or other U.S. Treasury rate, for the Designated CMT
           Index Maturity and with reference to such CMT Interest Determination
           Date, that:

                (a)     is published by the Board of Governors of the Federal
                        Reserve System, or the U.S. Department of the Treasury,
                        and

                (b)     is determined by the Calculation Agent to be comparable
                        to the applicable rate formerly displayed on the
                        Designated CMT Moneyline Telerate Page and published in
                        H.15(519).

                   (iii) If the rate described in clause (ii) above is not
           published by 3:00 P.M., New York City time, on such Calculation Date,
           then the CMT Rate will be the yield to maturity of the arithmetic
           mean of the following secondary market offered rates for the most
           recently issued Treasury Notes (as defined in Section 3(n) below)
           having an original maturity of approximately the Designated CMT Index
           Maturity, having a remaining term to maturity of not less than the
           Designated CMT Index Maturity minus one year and in a Representative
           Amount: the offered rates, as of approximately 3:30 P.M., New York
           City time, on such CMT Interest Determination Date, of three primary
           U.S. government securities dealers in New York City selected by the
           Calculation Agent. In selecting such offered rates, the Calculation
           Agent will request quotations from five such primary dealers and will
           disregard the highest quotation - or, if there is equality, one of
           the highest - and the lowest quotation - or, if there is equality,
           one of the lowest.

                   (iv) If fewer than five but more than two such primary
           dealers are quoting as described in clause (iii) above, then the CMT
           Rate for such CMT Interest Determination Date will be based on the
           arithmetic mean of the offered rates so obtained, and neither the
           highest nor the lowest of such quotations will be disregarded.

                   (v) If the Calculation Agent is unable to obtain three
           quotations of the kind described in clause (iii) above, the CMT Rate
           will be the yield to maturity of the arithmetic mean of the following
           secondary market offered rates for Treasury Notes having an original
           maturity longer than the Designated CMT Index Maturity, having a
           remaining term to maturity closest to the Designated CMT Index
           Maturity and in a Representative Amount: the offered rates, as of
           approximately 3:30 P.M., New York City time, on such CMT Interest

                  (Reverse of Security continued on next page)

                                      -17-


           Determination Date, of three primary U.S. government securities
           dealers in New York City selected by the Calculation Agent. In
           selecting such offered rates, the Calculation Agent will request
           quotations from five such primary dealers and will disregard the
           highest quotation - or, if there is equality, one of the highest -
           and the lowest quotation - or, if there is equality, one of the
           lowest. If two Treasury Notes with an original maturity longer than
           the Designated CMT Index Maturity have remaining terms to maturity
           that are equally close to the Designated CMT Index Maturity, the
           Calculation Agent will obtain quotations for the Treasury Note with
           the shorter remaining term to maturity.

                   (vi) If fewer than five but more than two such primary
           dealers are quoting as described in clause (v) above, then the CMT
           Rate for such CMT Interest Determination Date will be based on the
           arithmetic mean of the offered rates so obtained, and neither the
           highest nor the lowest of such quotations will be disregarded.

                   (vii) If two or fewer primary dealers selected by the
           Calculation Agent are quoting as described in clause (v) above, the
           CMT Rate shall be the CMT Rate in effect on such CMT Interest
           Determination Date (or, if the Initial Base Rate has been in effect
           for the prior Interest Reset Period, the Initial Base Rate).

                  The Base Rate determined in accordance with this Section 3(g)
will be adjusted by the addition or subtraction of the Spread, if any, or by
multiplying such Base Rate by the Spread Multiplier, if any.

                   (h) DETERMINATION OF CD RATE. If the Base Rate is the CD
Rate, the Base Rate that takes effect on any Interest Reset Date shall equal the
rate, on the second Business Day immediately preceding such Interest Reset Date
(the "CD Interest Determination Date"), for negotiable U.S. dollar certificates
of deposit having the Index Maturity as published in H.15(519) under the heading
"CDs (Secondary Market)". If the CD Rate cannot be determined as described
above, the following procedures will apply in determining the CD Rate:

                      (i) If the rate described above is not published in
           H.15(519) by 3:00 P.M., New York City time, on the Calculation Date
           corresponding to such CD Interest Determination Date, then the CD
           Rate shall be the rate described above as published in H.15 Daily
           Update, or another recognized electronic source used for displaying
           that rate, under the heading "CDs (Secondary Market)".

                      (ii) If the rate described in clause (i) above is not
           published in H.15(519), H.15 Daily Update or another recognized
           electronic source by 3:00 P.M., New York City time, on such
           Calculation Date (unless the calculation is made earlier and the rate
           is available from one of those sources at that time), the CD Rate
           shall be the arithmetic mean of the following secondary market
           offered rates for negotiable U.S. dollar certificates of deposit of
           major U.S. money center banks having a remaining maturity closest to
           the Index Maturity and in a Representative Amount: the rates offered
           as of 10:00 A.M., New York City

                  (Reverse of Security continued on next page)

                                      -18-



           time, on such CD Interest Determination Date, by three leading
           nonbank dealers in negotiable U.S. dollar certificates of deposit in
           New York City, as selected by the Calculation Agent.

                      (iii) If fewer than three dealers selected by the
           Calculation Agent are quoting as described in clause (ii) above, the
           CD Rate will be the CD Rate in effect on such CD Interest
           Determination Date (or, if the Initial Base Rate has been in effect
           for the prior Interest Reset Period, the Initial Base Rate).

                  The Base Rate determined in accordance with this Section 3(h)
will be adjusted by the addition or subtraction of the Spread, if any, or by
multiplying such Base Rate by the Spread Multiplier, if any.

                  (i) DETERMINATION OF FEDERAL FUNDS RATE. If the Base Rate is
the Federal Funds Rate, the Base Rate that takes effect on any Interest Reset
Date shall equal the rate, on the second Business Day immediately preceding such
Interest Reset Date (the "Federal Funds Interest Determination Date"), for U.S.
dollar Federal Funds as published in H.15(519) under the heading "Federal Funds
(Effective)", as that rate is displayed on Moneyline Telerate Page 120. If the
Federal Funds Rate cannot be determined as described above, the following
procedures will apply in determining the Federal Funds Rate:

                      (i) If the rate described above is not displayed on
           Moneyline Telerate Page 120 by 3:00 P.M., New York City time, on the
           Calculation Date corresponding to such Federal Funds Interest
           Determination Date (unless the calculation is made earlier and the
           rate is available from that source at that time), then the Federal
           Funds Rate will be the rate described above, on such Federal Funds
           Interest Determination Date, as published in H.15 Daily Update, or
           another recognized electronic source used for displaying that rate,
           under the heading "Federal Funds (Effective)".

                      (ii) If the rates described above are not displayed on
           Moneyline Telerate Page 120 or are not published in H.15 (519), H.15
           Daily Update or another recognized electronic source by 3:00 P.M.,
           New York City time, on such Calculation Date (unless the calculation
           is made earlier and the rate is available from one of those sources
           at that time), the Federal Funds Rate will be the arithmetic mean of
           the rates for the last transaction in overnight U.S. dollar federal
           funds arranged, before 9:00 A.M., New York City time, on such Federal
           Funds Interest Determination Date, by three leading brokers of U.S.
           dollar federal funds transactions in New York City selected by the
           Calculation Agent.

                      (iii) If fewer than three brokers selected by the
           Calculation Agent are quoting as described in clause (ii) above, the
           Federal Funds Rate will be the Federal Funds Rate in effect on such
           Federal Funds Interest Determination Date (or, if the Initial Base
           Rate has been in effect for the prior Interest Reset Period, the
           Initial Base Rate).


                  (Reverse of Security continued on next page)


                                      -19-


                  The interest rate determined in accordance with this Section
3(i) will be adjusted by the addition or subtraction of the Spread, if any, or
by multiplying such Base Rate by the Spread Multiplier, if any.

                  (j) DETERMINATION OF 11TH DISTRICT RATE. If the Base Rate is
the 11th District Rate, the Base Rate that takes effect on any Interest Reset
Date shall equal the 11th District Rate on the 11th District Interest
Determination Date (as defined in Section 3(n) below) corresponding to such
Interest Reset Date. The 11th District Rate on any 11th District Interest
Determination Date shall be the rate equal to the monthly weighted average cost
of funds for the calendar month immediately before such date, as displayed on
Moneyline Telerate Page 7058 under the heading "11th District" as of 11:00 A.M.,
San Francisco time, on such date. If the 11th District Rate cannot be determined
as described above, the following procedures will apply in determining the 11th
District Rate:

                      (i) If the rate described above does not appear on
           Moneyline Telerate Page 7058 on such 11th District Interest
           Determination Date, then the 11th District Rate on such date will be
           the monthly weighted average cost of funds paid by institutions that
           are members of the Eleventh Federal Home Loan Bank District for the
           calendar month immediately preceding such date, as most recently
           announced by the Federal Home Loan Bank of San Francisco as such
           monthly weighted average cost of funds.

                      (ii) If the Federal Home Loan Bank of San Francisco fails
           to announce the cost of funds described in clause (i) above on or
           before such 11th District Interest Determination Date, the 11th
           District Rate that takes effect on such Interest Reset Date will be
           the 11th District Rate in effect on such 11th District Interest
           Determination Date (or, if the Initial Base Rate has been in effect
           for the prior Interest Reset Period, the Initial Base Rate).

                  The interest rate determined in accordance with this Section
3(j) will be adjusted by the addition or subtraction of the Spread, if any, or
by multiplying such Base Rate by the Spread Multiplier, if any.

                  (k) MINIMUM AND MAXIMUM LIMITS. Notwithstanding the foregoing,
the rate at which interest accrues on this Security (i) shall not at any time be
higher than the Maximum Rate, if any, or less than the Minimum Rate, if any,
specified on the face hereof, in each case on an accrual basis, and (ii) shall
not at any time be higher than the maximum rate permitted by New York law, as
the same may be modified by United States law of general application.

                  (l) CALCULATION OF INTEREST. Payments of interest hereon with
respect to any Interest Payment Date or at the Maturity of the principal hereof
will include interest accrued to but excluding such Interest Payment Date or the
date of such Maturity, as the case may be. Accrued interest from the date of
issue or from the last date to which interest has been paid or duly provided for
shall be calculated by the Calculation Agent by multiplying the Principal Amount
by an accrued interest factor. Such accrued interest


                  (Reverse of Security continued on next page)


                                      -20-


factor shall be computed by adding the interest factors calculated for each day
from and including the Original Issue Date or from and including the last date
to which interest has been paid or duly provided for, to but excluding the date
for which accrued interest is being calculated. The interest factor for each
such day shall be expressed as a decimal and computed by dividing the interest
rate (also expressed as a decimal) in effect on such day by 360, if the Base
Rate is the Commercial Paper Rate, Prime Rate, LIBOR, CD Rate, Federal Funds
Rate or 11th District Rate, or by the actual number of days in the year, if the
Base Rate is the Treasury Rate or CMT Rate.

                  All percentages resulting from any calculation with respect to
this Security will be rounded upward or downward, as appropriate, to the next
higher or lower one hundred-thousandth of a percentage point (e.g., 9.876541%
(or .09876541) being rounded down to 9.87654% (or .0987654) and 9.876545% (or
..09876545) being rounded up to 9.87655% (or .0987655) ). All amounts used in or
resulting from any calculation with respect to this Security will be rounded
upward or downward, as appropriate, to the nearest cent, in the case of U.S.
dollars, or to the nearest corresponding hundredth of a unit, in the case of a
currency other than U.S. dollars, with one-half cent or one-half of a
corresponding hundredth of a unit or more being rounded upward.

                  (m) CALCULATION AGENT AND EXCHANGE RATE AGENT. Calculation
Agent and Exchange Rate Agent. The Company has initially appointed the
institutions named on the face of this Security as Calculation Agent and
Exchange Rate Agent, respectively, to act as such agents with respect to this
Security, but the Company may, in its sole discretion, appoint any other
institution (including any Affiliate of the Company) to serve as any such agent
from time to time. The Company will give the Trustee prompt written notice of
any change in any such appointment. Insofar as this Security provides for any
such agent to obtain rates, quotes or other data from a bank, dealer or other
institution for use in making any determination hereunder, such agent may do so
from any institution or institutions of the kind contemplated hereby
notwithstanding that any one or more of such institutions are any such agent,
Affiliates of any such agent, any of the agents named on the cover of the
Company's Prospectus Supplement dated June 30, 2004 relating to the Company's
Medium-Term Notes, Series 4 or any Affiliate of any such agent or Affiliates of
the Company.

                  All determinations made by the Calculation Agent or the
Exchange Rate Agent may be made by such agent in its sole discretion and, absent
manifest error, shall be conclusive for all purposes and binding on the Holder
of this Security and the Company. Neither the Calculation Agent nor the Exchange
Rate Agent shall have any liability therefor.

                  (n) DEFINITIONS OF CALCULATION TERMS. As used in this
Security, the following terms have the meanings set forth below:

                  "Bond Equivalent Yield" means a yield expressed as a
percentage and calculated in accordance with the following formula:



                  (Reverse of Security continued on next page)


                                      -21-


                  Bond Equivalent Yield =            D x N           x 100,
                                                -----------------
                                                 360 - (D x M)


         where

           o      "D" equals the annual rate for Treasury Bills quoted on a
                  bank discount basis and expressed as a decimal;

           o      "N" equals 365 or 366, as the case may be; and

           o      "M" equals the actual number of days in the period from and
                  including the relevant Interest Reset Date to but excluding
                  the next succeeding Interest Reset Date.

                  "Business Day" means, for this Security, a day that meets the
requirements set forth in each of clauses (i) through (iii) below, in each case
to the extent such requirements apply to this Security as specified below:

  (i)             is a Monday, Tuesday, Wednesday, Thursday or Friday that is
                  neither a legal holiday nor a day on which commercial banking
                  institutions in New York City generally are authorized or
                  required by law, regulation or executive order to close;

 (ii)             if the Base Rate is LIBOR, is also a London Banking Day; and

(iii)             if the Specified Currency for payment of principal of or
                  interest on this Security is other than U.S. dollars, is also
                  a day on which banking institutions are not authorized or
                  required by law, regulation or executive order to close in the
                  principal financial center of the country issuing such
                  Specified Currency.

Solely when used in the third paragraph under the heading "Currency of Payment"
on the face of this Security, the meaning of the term "Business Day" shall be
determined as if the Base Rate for this Security is not LIBOR. With respect to
any particular location, the close of business on any day on which business is
not being conducted at that location shall be deemed to mean 5:00 P.M., New York
City time, on that day.

                  The "Calculation Date" corresponding to any Commercial Paper
Interest Determination Date, Prime Interest Determination Date, LIBOR Interest
Determination Date, Treasury Interest Determination Date, CMT Interest
Determination Date, CD Interest Determination Date, Federal Funds Interest
Determination Date or 11th District Interest Determination Date, as the case may
be, means the earlier of:

                  (i) the tenth day after such interest determination date or,
         if any such day is not a Business Day, the next succeeding Business
         Day; and


                  (Reverse of Security continued on next page)

                                      -22-


                  (ii) the Business Day immediately preceding the Interest
         Payment Date or the date of Maturity of the principal hereof, whichever
         is the day on which the next payment of interest will be due.

The Calculation Date corresponding to any Interest Reset Date means the
Calculation Date corresponding to the relevant interest determination date
immediately preceding such Interest Reset Date.

                  "Designated CMT Index Maturity" means, if the Base Rate is the
CMT Rate, the Index Maturity for this Security and will be the original period
to maturity of a U.S. Treasury security - either 1, 2, 3, 5, 7, 10, 20 or 30
years - specified on the face hereof, provided that, if no such original
maturity period is so specified, the Designated CMT Index Maturity will be 2
years.

                  "Designated CMT Moneyline Telerate Page" means, if the Base
Rate is the CMT Rate, the Moneyline Telerate Page specified on the face hereof
that displays Treasury constant maturities as reported in H.15(519), provided
that, if no Moneyline Telerate Page is so specified, then the applicable page
will be Moneyline Telerate Page 7052 and provided, further, that if Moneyline
Telerate Page 7052 applies but it is not specified on the face hereof whether
the weekly or monthly average applies, the weekly average will apply.

                  The "11th District Interest Determination Date" corresponding
to a particular Interest Reset Date will be the last working day in San
Francisco, in the first calendar month preceding such Interest Reset Date, on
which the Federal Home Loan Bank of San Francisco publishes the monthly average
cost of funds paid by member institutions of the Eleventh Federal Home Loan Bank
District for the second calendar month preceding such Interest Reset Date.

                  "H.15(519)" means the weekly statistical release entitled
"Statistical Release H.15 (519)", or any successor publication, published by the
Board of Governors of the Federal Reserve System.

                  "H.15 Daily Update" means the daily update of H.15 (519)
available through the worldwide-web site of the Board of Governors of the
Federal Reserve System, at http://www.federalreserve.gov/releases/h15/update, or
any successor site or publication.

                  The "LIBOR Interest Determination Date" corresponding to any
Interest Reset Date means the second London Banking Day preceding such Interest
Reset Date, unless the Index Currency is pounds sterling, in which case the
LIBOR Interest Determination Date will be the Interest Reset Date.

                  "London Banking Day" means a day on which commercial banks are
open for business (including dealings in the Index Currency) in London.


                  (Reverse of Security continued on next page)


                                      -23-


                  "Money Market Yield" means a yield expressed as a percentage
and calculated in accordance with the following formula:

                  Money Market Yield =           D x 360           x 100,
                                           ------------------
                                              360 - (D x M)

where

           o      "D" equals the per annum rate for commercial paper quoted
                  on a bank discount basis and expressed as a decimal; and

           o      "M" equals the actual number of days in the period from and
                  including the relevant Interest Reset Date to but excluding
                  the next succeeding Interest Reset Date.

                  "Moneyline Telerate LIBOR Page" means Moneyline Telerate Page
3750 or any replacement page or pages on which London interbank rates of major
banks for the Index Currency are displayed.

                  "Moneyline Telerate Page" means the display on Moneyline
Telerate, Inc., or any successor service, on the page or pages specified on the
face hereof, or any replacement page or pages on that service.

                  "Representative Amount" means an amount that, in the
Calculation Agent's judgment, is representative of a single transaction in the
relevant market at the relevant time.

                  "Reuters Screen LIBOR Page" means the display on the Reuters
Monitor Money Rates Service, or any successor service, on the page designated as
"LIBO" or any replacement page or pages on which London interbank rates of major
banks for the Index Currency are displayed.

                  "Reuters Screen US PRIME 1 Page" means the display on the "US
PRIME 1" page on the Reuters Monitor Money Rates Service, or any successor
service, or any replacement page or pages on that service, for the purpose of
displaying prime rates or base lending rates of major U.S. banks.

                  The "Treasury Interest Determination Date" corresponding to
any Interest Reset Date means the day of the week in which such Interest Reset
Date falls on which Treasury bills would normally be auctioned. If, as the
result of a legal holiday, an auction is so held on the Friday in the week
immediately preceding the week in which such Interest Reset Date falls, such
Friday will be the corresponding Treasury Interest Determination Date. If no
auction is held for the week in which such Interest Reset Date falls, then the
Interest Reset Date with respect to such week shall be the first Business Day of
such week. If an auction date shall fall on a day that would otherwise be an
Interest Reset Date, then such Interest Reset Date shall instead be the first
Business Day immediately following such auction date.

                  (Reverse of Security continued on next page)

                                      -24-



                  "Treasury Notes" means direct, noncallable, fixed rate
obligations of the U.S. government.

                  References in this Security to U.S. dollars shall mean, as of
any time, the coin or currency that is then legal tender for the payment of
public and private debts in the United States of America.

                  References in this Security to a particular currency other
than U.S. dollars shall mean, as of any time, the coin or currency that is then
legal tender for the payment of public and private debts in the country issuing
such currency on the Original Issue Date.

                  References in this Security to a particular heading or
headings on any of Designated CMT Moneyline Telerate Page, H.15(519), H.15 Daily
Update, Moneyline Telerate LIBOR Page, Moneyline Telerate Page, Reuters Screen
LIBOR Page or Reuters Screen US Prime 1 Page include any successor or
replacement heading or headings as determined by the Calculation Agent.

                  4. REDEMPTION AT THE COMPANY'S OPTION

                  Unless a Redemption Commencement Date is specified on the face
hereof, except as provided below, this Security shall not be redeemable at the
option of the Company before the Stated Maturity Date. If a Redemption
Commencement Date is so specified, and unless otherwise specified on the face
hereof, this Security is subject to redemption upon not less than 30 days' nor
more than 60 days' notice at any time and from time to time on or after the
Redemption Commencement Date, in each case as a whole or in part, at the
election of the Company and at the applicable Redemption Price specified on the
face hereof (expressed as a percentage of the principal amount of this Security
to be redeemed), together with accrued interest to the Redemption Date, but
interest installments due on or prior to such Redemption Date will be payable to
the Holder of this Security, or one or more Predecessor Securities, of record at
the close of business on the relevant record date, all as provided in the
Indenture; provided, however, that the first two paragraphs of Section 1103 of
the Indenture shall not apply to this Security, and if less than all of the
Securities of this series are to be redeemed, the Company may select, from
Securities of this series that are subject to redemption pursuant to the terms
thereof, the Security or Securities, or portion or portions thereof, to be
redeemed.

                  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 this Security as a whole at a redemption
price of 100% of the principal amount thereof (or, if this Security is issued
with an original issue discount, 100% of the OID Default Amount) together with
accrued interest to the date fixed for redemption.


                  (Reverse of Security continued on next page)

                                      -25-


                  5. REPAYMENT AT THE HOLDER'S OPTION

                  Except as otherwise may be provided on the face hereof, if one
or more Repayment Dates are specified on the face hereof, this Security will be
repayable in whole or in part in increments of $1,000 (provided that the
remaining principal amount of any Security surrendered for partial repayment
shall at least equal an Authorized Denomination), on any such Repayment Date, in
each case at the option of the Holder and at the applicable Repayment Price
specified on the face hereof (expressed as a percentage of the principal amount
to be repaid), together with accrued interest to the applicable Repayment Date
(but interest installments due on or prior to such Repayment Date will be
payable to the Holder of this Security, or one or more Predecessor Securities,
of record at the close of business on the relevant record date as provided in
the Indenture). If this security provides for more than one Repayment Date, and
the Holder exercises its option to elect repayment, the Holder shall be deemed
to have elected repayment on the earliest Repayment Date after all conditions to
such exercise have been satisfied, and references herein to the applicable
Repayment Date shall mean such earliest Repayment Date.

                  In order for the exercise of such option to be effective and
this Security 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 Security), on any
Business Day not later than the 30th, and not earlier than the 60th, calendar
day prior to the applicable Repayment Date (or, if either such calendar day is
not a Business Day, the next succeeding Business Day), either (i) this Security,
with the form below entitled "Option to Elect Repayment" duly completed and
signed, 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., 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 Security, (b) the principal amount of this Security and the
amount of this Security to be repaid, (c) a statement that the option to elect
repayment is being exercised thereby and (d) a guarantee stating that the
Company will receive this Security, with the form below entitled "Option to
Elect Repayment" duly completed and signed, not later than five Business Days
after the date of such telegram, telex, facsimile transmission or letter
(provided that this Security and form duly completed and signed are received by
the Company by such fifth Business Day). Any such election shall be irrevocable.
The address to which such deliveries are to be made is Bank One, NA, Attention:
Securities Processing Division, 55 Water Street, 1st Floor, Jeanette Park
Entrance, New York, New York 10041 (or at such other places as the Company or
the Paying Agent shall notify the Holder of this Security). All questions as to
the validity, eligibility (including time of receipt) and acceptance of any
Security for repayment will be determined by the Company, whose determination
will be final and binding. Notwithstanding the foregoing, (x) if this Security
is a Global Security, the option of the Holder to elect repayment may be
exercised in accordance with the Applicable Procedures of the Depositary for
this Security at least 15 calendar days prior to the applicable Repayment


                  (Reverse of Security continued on next page)


                                      -26-


Date and (y) whether or not this Security is a Global Security, the option of
the Holder to elect repayment may be exercised in any such manner as the Company
may approve.

                  6. TRANSFER AND EXCHANGE

                  As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is registrable in
the Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in any place where the principal
of and any premium and interest on this Security are payable, duly endorsed by,
or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his or
her attorney duly authorized in writing, and thereupon one or more new
Securities of this series and of like tenor, of Authorized Denominations and for
the same aggregate principal amount, will be issued to the designated transferee
or transferees.

                  As provided in the Indenture and subject to certain
limitations therein set forth, Securities of this series are exchangeable for a
like aggregate principal amount of Securities of this series and of like tenor
of a different Authorized Denomination, as requested by the Holder surrendering
the same.

                  No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.

                  Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company nor the Trustee nor any such agent shall be affected by notice to
the contrary.

                  If this Security is a Global Security, this Security shall be
subject to the provisions of the Indenture relating to Global Securities,
including the limitations in Section 305 thereof on transfers and exchanges of
Global Securities.

                  7. [RESERVED.]

                  8. REMEDIES.

                  If an Event of Default with respect to Securities of this
series shall occur and be continuing, the principal of the Securities of this
series may be declared due and payable in the manner and with the effect
provided in the Indenture.

                  As provided in and subject to the provisions of the Indenture,
the Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of


                  (Reverse of Security continued on next page)

                                      -27-


not less than 25% in principal amount of the Securities of this series at the
time Outstanding shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default as Trustee and offered the
Trustee indemnity reasonably satisfactory to it, and the Trustee shall not have
received from the Holders of a majority in principal amount of Securities of
this series at the time Outstanding a direction inconsistent with such request,
and shall have failed to institute any such proceeding, for 60 days after
receipt of such notice, request and offer of indemnity. The foregoing shall not
apply to any suit instituted by the Holder of this Security for the enforcement
of any payment of principal hereof or any premium or interest hereon on or after
the respective due dates expressed herein.

                  No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest on this Security at the times, place and rate, and
in the coin or currency, herein prescribed.

                  9. MODIFICATION AND WAIVER.

                  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 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 a majority in principal amount of
the Securities at the time Outstanding of all series to be affected (considered
together as one class for this purpose). The Indenture also contains provisions
(i) permitting the Holders of a majority in principal amount of the Securities
at the time Outstanding of all series to be affected under the Indenture
(considered together as one class for this purpose), on behalf of the Holders of
all Securities of such series, to waive compliance by the Company with certain
provisions of the Indenture and (ii) permitting the Holders of a majority in
principal amount of the Securities at the time Outstanding of any series to be
affected under the Indenture (with each such series considered separately for
this purpose), on behalf of the Holders of all Securities of such series, to
waive certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and binding
upon such Holder and upon all future Holders of this Security and of any
Security 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 Security.

                  10. GOVERNING LAW.

                  THIS SECURITY AND THE INDENTURE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.


                  (Reverse of Security continued on next page)


                                      -28-



                                                           CUSIP NO. __________

                                                ORIGINAL ISSUE DATE: __________



                                  POPULAR, INC.
                           MEDIUM-TERM NOTE, SERIES 5

                            OPTION TO ELECT REPAYMENT

               TO BE COMPLETED ONLY IF THIS SECURITY IS REPAYABLE
                   AT THE OPTION OF THE HOLDER AND THE HOLDER
                          ELECTS TO EXERCISE SUCH RIGHT


                  The undersigned hereby irrevocably requests and instructs the
Company to repay the Security referred to in this notice (or the portion thereof
specified below) at the applicable Repayment Price, together with interest to
the Repayment Date, all as provided for in such Security, to the undersigned,
whose name, address and telephone number are as follows:


- --------------------------------------------------------------------------------
                     (please print name of the undersigned)


- --------------------------------------------------------------------------------
                    (please print address of the undersigned)


- --------------------------------------------------------------------------------
               (please print telephone number of the undersigned)

                  If such Security provides for more than one Repayment Date,
the undersigned requests repayment on the earliest Repayment Date after the
requirements for exercising this option have been satisfied, and references in
this notice to the Repayment Date mean such earliest Repayment Date. Terms used
in this notice that are defined in such Security are used herein as defined
therein.

                  For such Security 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 such
Security, on any Business Day not later than the 30th or earlier than the 60th
calendar day prior to the Repayment Date (or, if either such calendar day is not
a Business Day, the next succeeding Business Day), either (i) such Security,
with this "Option to Elect Repayment" form duly completed and signed, 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., 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 such Security,

                  (Reverse of Security continued on next page)


                                      -29-


(b) the principal amount of such Security and the amount of such Security to be
repaid, (c) a statement that the option to elect repayment is being exercised
thereby and (d) a guarantee stating that such Security to be repaid with the
form entitled "Option to Elect Repayment" on the addendum to the Security duly
completed and signed will be received by the Company not later than five
Business Days after the date of such telegram, telex, facsimile transmission or
letter (provided that such Security and form duly completed and signed are
received by the Company by such fifth Business Day). The address to which such
deliveries are to be made is:

                  J.P. Morgan Trust Company, National Association
                  Attention:  Institutional Trust Services/George N. Reaves
                  227 W. Monroe Street/ Suite 2600
                  Chicago, IL  60607

or at such other place as the Company or the Paying Agent shall notify the
Holder of such Security.

                  If less than the entire principal amount of such Security is
to be repaid, specify the portion thereof (which shall equal any Authorized
Denomination) that the Holder elects to have repaid:

                            -------------------------

and specify the denomination or denominations (which shall equal any Authorized
Denomination) of the Security or Securities to be issued to the Holder in
respect of the portion of such Security not being repaid (in the absence of any
specification, one Security will be issued in respect of the portion not being
repaid):

                            -------------------------

Date:
     ---------------------


                                            ------------------------------------
                                            Notice: The signature to this Option
                                            to Elect Repayment must correspond
                                            with the name of the Holder as
                                            written on the face of such Security
                                            in every particular without
                                            alteration or enlargement or any
                                            other change whatsoever.



                  (Reverse of Security continued on next page)


                                      -30-



                                  ABBREVIATIONS

                  The following abbreviations, when used in the inscription on
the face of this Security, shall be construed as though they were written out in
full according to applicable laws or regulations.

                  TEN COM -    as tenants in common

                  TEN ENT -    as tenants by the entireties

                  JT TEN -     as joint tenants with the right of
                               survivorship and not as tenants in
                               common

                  UNIF GIFT MIN ACT -                    Custodian
                                         --------------             ------------
                                            (Cust)                     (Minor)

                               under Uniform Gifts to Minors Act



                        --------------------------------
                                     (State)

                    Additional abbreviations may also be used
                          though not in the above list.




                  (Reverse of Security continued on next page)



                                      -31-


                                   ASSIGNMENT


                  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 attached Security and all rights thereunder, and hereby irrevocably

constitutes and appoints
                        --------------------------------------------------------

- --------------------------------------------------------------------------------

to transfer said Security on the books of the Company, with full power of

substitution in the premises.



Dated:______________

Signature Guaranteed


- -----------------------------------         ------------------------------------
NOTICE: Signature must be guaranteed.       NOTICE: The signature to this
                                            assignment must correspond with the
                                            name of the Holder as written upon
                                            the face of the attached Security in
                                            every particular, without alteration
                                            or enlargement or any change
                                            whatever.




                  (Reverse of Security continued on next page)


                                      -32-

EX-4.(G)

                      [Form of Fixed Rate Medium-Term Note]

                               (FACE OF SECURITY)

                  [IF A GLOBAL SECURITY, INSERT -- THIS SECURITY IS A GLOBAL
SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY
NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER
OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY
PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.]

                  [IF DTC IS THE DEPOSITARY, INSERT -- UNLESS THIS CERTIFICATE
IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A
NEW YORK CORPORATION ("DTC"), TO POPULAR NORTH AMERICA, INC. OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
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.]

                  [INSERT ANY LEGEND REQUIRED BY THE INTERNAL REVENUE CODE AND
THE REGULATIONS THEREUNDER.]




REGISTERED NO. FXR ______                                    CUSIP NO. _______

                           POPULAR NORTH AMERICA, INC.

                           MEDIUM-TERM NOTES, SERIES F
                                  (Fixed Rate)

                     Payment of Principal, Premium, if any,
                           and Interest Guaranteed by

                                  POPULAR, INC.

                  The following terms apply to this Security, as and to the
extent shown below:


                                                 
PRINCIPAL AMOUNT:                                   REGULAR RECORD DATE(S):

STATED MATURITY DATE:                               ORIGINAL ISSUE DISCOUNT SECURITY:

SPECIFIED CURRENCY:  U.S.                               -        Total Amount of OID:
dollars for all payments                                -        Yield to Maturity:
unless otherwise specified                              -        Initial Accrual Period OID:
below:                                                  -        OID Default Amount:
        -  payments of principal and any premium:       -        Default Rate:

        -  payments of interest:                        REDEMPTION COMMENCEMENT DATE:

        -  Exchange Rate Agent:                         REPAYMENT DATE(S):

INTEREST RATE:  _____% per                              REDEMPTION OR REPAYMENT PRICE(S):
annum

INTEREST PAYMENT DATE(S):                               OTHER TERMS:

ORIGINAL ISSUE DATE*:



                  Terms left blank or marked "N/A", "No", "None" or in a similar
manner do not apply to this Security except as otherwise may be specified.

                  Whenever used in this Security, the terms specified above that
apply to this Security have the meanings specified above, unless the context
requires otherwise. Other terms used in this Security that are not defined
herein but that are defined in the

- --------------------
*  This date shall be the issue date of this Security, unless there is a
   Predecessor Security, in which case this date shall be the issue date of the
   first Predecessor Security.

                    (Face of Security continued on next page)
                                       -2-




Indenture referred to in Section 1 on the reverse of this Security are used
herein as defined therein.


                  Popular North America, Inc., a corporation duly organized and
existing under the laws of the State of Delaware (hereinafter called the
"Company", which term includes any successor Person under the Indenture), for
value received, hereby promises to pay to _____________, or registered assigns,
as principal the Principal Amount on the Stated Maturity Date and to pay
interest thereon, from the Original Issue Date or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, on the
Interest Payment Date(s) in each year, commencing on the first such date that is
at least 15 calendar days after the Original Issue Date, and at the Maturity of
the principal hereof, at the rate per annum equal to the Interest Rate specified
on the face hereof, until the principal hereof is paid or made available for
payment. Notwithstanding the foregoing, interest on any principal that is
overdue shall be payable on demand.

                  The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in the Indenture, be paid to
the Person in whose name this Security (or one or more Predecessor Securities)
is registered at the close of business on the 15th calendar day (whether or not
a Business Day, as such term is defined in Section 3 on the reverse hereof) next
preceding such Interest Payment Date, unless otherwise provided on the face
hereof (a "Regular Record Date"). Any interest so payable, but not punctually
paid or duly provided for, on any Interest Payment Date will forthwith cease to
be payable to the Holder on such Regular Record Date and such Defaulted Interest
either may be paid to the Person in whose name this Security (or one or more
Predecessor Securities) 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, notice whereof shall be given to the Holder of this Security not less
than 10 days prior to such Special Record Date, or may be paid in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which this Security may be listed, and upon such notice as may be required by
such exchange, all as more fully provided in the Indenture.

                  If this Security is issued with an original issue discount,
(i) if an Event of Default with respect to the Securities of this series shall
have occurred and be continuing, the amount of principal of this Security 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 (ii) in the case of a
default in payment of principal upon acceleration, redemption, repayment at the
option of the Holder or at the Stated Maturity Date hereof, in lieu of any
interest otherwise payable, the overdue principal of this Security 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 Stated Maturity Date, as the case may
be, to the date payment has been made or duly



                    (Face of Security continued on next page)
                                      -3-

provided for or such default has been waived in accordance with the terms of the
Indenture.

         CURRENCY OF PAYMENT

                  Payment of principal of (and premium, if any) and interest on
this Security will be made in the Specified Currency for such payment, except as
provided in this and the next three paragraphs. The Specified Currency for any
payment shall be the currency specified as such on the face of this Security
unless, at the time of such payment, such currency is not legal tender for the
payment of public and private debts in the country issuing such currency on the
Original Issue Date, in which case the Specified Currency for such payment shall
be such coin or currency as at the time of such payment is legal tender for the
payment of public and private debts in such country.

                  Except as provided in the next paragraph, any payment to be
made on this Security in a Specified Currency other than U.S. dollars will be
made in U.S. dollars if the Person entitled to receive such payment transmits a
written request for such payment to be made in U.S. dollars to the Trustee at
its Corporate Trust Office, Attention: Securities Processing Division, on or
before the fifth Business Day before the payment is to be made. Such written
request may be mailed, hand delivered, telecopied or delivered in any other
manner approved by the Trustee. Any such request made with respect to any
payment on this Security payable to a particular Holder will remain in effect
for all later payments on this Security payable to such Holder, unless such
request is revoked on or before the fifth Business Day before a payment is to be
made, in which case such revocation shall be effective for such and all later
payments. In the case of any payment of interest payable on an Interest Payment
Date, such written request must be made by the Person who is the registered
Holder of this Security on the relevant Regular Record Date.

                  The U.S. dollar amount of any payment made pursuant to the
immediately preceding paragraph will be determined by the Exchange Rate Agent
based upon the highest bid quotation received by the Exchange Rate Agent as of
11:00 A.M., New York City time, on the second Business Day preceding the
applicable payment date, from three (or, if three are not available, then two)
recognized foreign exchange dealers selected by the Exchange Rate Agent in The
City of New York, in each case for the purchase by the quoting dealer, for U.S.
dollars and for settlement on such payment date of an amount of the Specified
Currency for such payment equal to the aggregate amount of such Specified
Currency payable on such payment date to all Holders of Securities of this or
any other series who elect to receive U.S. dollar payments on such payment date,
and at which the applicable dealer commits to execute a contract. If the
Exchange Rate Agent determines that two such bid quotations are not available on
such second Business Day, such payment will be made in the Specified Currency
for such payment. All currency exchange costs associated with any payment in
U.S. dollars on this Security will be borne by the Holder entitled to receive
such payment, by deduction from such payment.


                    (Face of Security continued on next page)
                                      -4-


                  Notwithstanding the foregoing, if any amount payable on this
Security is payable on any day (including at Maturity) in a Specified Currency
other than U.S. dollars, and if such Specified Currency is not available to the
Company on the two Business Days before such day, due to the imposition of
exchange controls, disruption in a currency market or any other circumstances
beyond the control of the Company, the Company will be entitled to satisfy its
obligation to pay such amount in such Specified Currency by making such payment
in U.S. dollars. The amount of such payment in U.S. dollars shall be determined
by the Exchange Rate Agent on the basis of the noon buying rate for cable
transfers in The City of New York for such Specified Currency (the "Exchange
Rate") as of the latest day before the day on which such payment is to be made.
Any payment made under such circumstances in U.S. dollars where the required
payment is in other than U.S. dollars will not constitute an Event of Default
under the Indenture or this Security.

         MANNER OF PAYMENT - U.S. DOLLARS

                  Except as provided in the next paragraph, payment of any
amount payable on this Security in U.S. dollars will be made at the office or
agency of the Company maintained for that purpose in The City of New York (or at
any other office or agency maintained by the Company for that purpose), against
surrender of this Security in the case of any payment due at the Maturity of the
principal hereof (other than any payment of interest that first becomes due on
an Interest Payment Date); provided, however, that, at the option of the Company
and subject to the next paragraph, payment of interest may be made by check
mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register.

                  Payment of any amount payable on this Security in U.S. dollars
will be made by wire transfer of immediately available funds to an account
maintained by the payee with a bank located in the Borough of Manhattan, The
City of New York, if (i) the principal of this Security is at least $10,000,000
and (ii) the Holder entitled to receive such payment transmits a written request
for such payment to be made in such manner to the Paying Agent at its Corporate
Trust Office, Attention: Securities Processing Division, on or before the
Regular Record Date preceding the day on which such payment is to be made;
provided that, in the case of any such payment due at the Maturity of the
principal hereof (other than any payment of interest that first becomes due on
an Interest Payment Date), this Security must be surrendered at the office or
agency of the Company maintained for that purpose in The City of New York (or at
any other office or agency maintained by the Company for that purpose) in time
for the Paying Agent to make such payment in such funds in accordance with its
normal procedures. Any such request made with respect to any payment on this
Security payable to a particular Holder will remain in effect for all later
payments on this Security payable to such Holder, unless such request is revoked
on or before the Regular Record Date preceding the day on which such payment is
to be made, in which case such revocation shall be effective for such payment
and all later payments; provided that in the case of any payment due at Maturity
of the principal of this Security to be effective any request for revocation
must be made no later



                    (Face of Security continued on next page)
                                      -5-

than the 15th day prior to the Maturity of the principal of this Security. In
the case of any payment of interest payable on an Interest Payment Date, such
written request must be made by the Person who is the registered Holder of this
Security on the relevant Regular Record Date. The Company will pay any
administrative costs imposed by banks in connection with making payments by wire
transfer with respect to this Security, but any tax, assessment or other
governmental charge imposed upon any payment will be borne by the Holder of this
Security and may be deducted from the payment by the Company or the Paying
Agent.

         MANNER OF PAYMENT - OTHER SPECIFIED CURRENCIES

                  Payment of any amount payable on this Security in a Specified
Currency other than U.S. dollars will be made by wire transfer of immediately
available funds to such account as is maintained in such Specified Currency at a
bank or other financial institution acceptable to the Company and the Trustee
and as shall have been designated at least five Business Days prior to the
applicable payment date by the Person entitled to receive such payment; provided
that, in the case of any such payment due at the Maturity of the principal
hereof (other than any payment of interest that first becomes due on an Interest
Payment Date), this Security must be surrendered at the office or agency of the
Company maintained for that purpose in The City of New York (or at any other
office or agency maintained by the Company for that purpose) in time for the
Paying Agent to make such payment in such funds in accordance with its normal
procedures. Such account designation shall be made by transmitting the
appropriate information to the Trustee at its Corporate Trust Office in the
Borough of Manhattan, The City of New York, by mail, hand delivery, telecopier
or in any other manner approved by the Trustee. Unless revoked, any such account
designation made with respect to this Security by the Holder hereof will remain
in effect with respect to any further payments with respect to this Security
payable to such Holder. If a payment in a Specified Currency other than U.S.
dollars with respect to this Security cannot be made by wire transfer because
the required account designation has not been received by the Trustee on or
before the requisite date or for any other reason, the Company will cause a
notice to be given to the Holder of this Security at its registered address
requesting an account designation pursuant to which such wire transfer can be
made and such payment will be made within five Business Days after the Trustee's
receipt of such a designation meeting the requirements specified above, with the
same force and effect as if made on the due date. The Company will pay any
administrative costs imposed by banks in connection with making payments by wire
transfer with respect to this Security, but any tax, assessment or other
governmental charge imposed upon any payment will be borne by the Holder of this
Security and may be deducted from the payment by the Company or the Paying
Agent.

         MANNER OF PAYMENT - GLOBAL SECURITIES

                  Notwithstanding any provision of this Security or the
Indenture, if this Security is a Global Security, the Company may make any and
all payments of principal,


                    (Face of Security continued on next page)
                                      -6-

premium and interest on this Security pursuant to the Applicable Procedures of
the Depositary for this Security as permitted in the Indenture.

         PAYMENTS DUE ON A BUSINESS DAY

                  Unless otherwise specified on the face of this Security, the
following sentence shall apply to this Security. Notwithstanding any provision
of this Security or the Indenture, if any amount of principal, premium or
interest would otherwise be due on this Security on a day (the "Specified Day")
that is not a Business Day, such amount may be paid or made available for
payment on the next succeeding Business Day with the same force and effect as if
such amount were paid on the Specified Day. The provisions of this paragraph
shall apply to the Security in lieu of the provisions of Section 113 of the
Indenture.

                              ---------------------

                  Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.

                  Unless the certificate of authentication hereon has been
executed by the Trustee by manual signature, this Security shall not be entitled
to any benefit under the Indenture or be valid or obligatory for any purpose.



                                      -7-

                  IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed.

Dated:
                                POPULAR NORTH AMERICA, INC.


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


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


                                Attest:
                                       ---------------------------------------


                  This Security is one of the Securities of the series
designated herein and referred to in the within-mentioned Indenture.

                                J.P. MORGAN TRUST COMPANY,
                                NATIONAL ASSOCIATION
                                as Trustee


                                By:
                                   -------------------------------------------
                                     Authorized Officer




                                      -8-

                              (Reverse of Security)


                  1. SECURITIES AND INDENTURE

                  This Security is one of a duly authorized issue of securities
of the Company (herein called the "Securities"), all unconditionally guaranteed
by Popular, Inc. (hereinafter called the "Guarantor") and issued and to be
issued in one or more series under an Indenture, dated as of October 1, 1991, as
supplemented by the First Supplemental Indenture, dated as of February 28, 1995,
the Second Supplemental Indenture, dated as of May 8, 1997, and the Third
Supplemental Indenture, dated as of August 5, 1999 (together herein called the
"Indenture", which term shall have the meaning assigned to it in such
instrument), duly executed and delivered by the Company and the Guarantor to
J.P. Morgan Trust Company, National Association (successor in interest to Bank
One, N.A.) as Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture) and as Successor Trustee to Citibank,
N.A., and reference is hereby made to the Indenture for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Guarantor, the Trustee and the Holders of the Securities and of
the terms upon which the Securities are, and are to be, authenticated and
delivered.

                  2. SERIES AND DENOMINATIONS

                  This Security is one of the series designated on the face
hereof, limited to an aggregate initial offering price not to exceed
$2,500,000,000 (or the equivalent thereof in any other currency or currencies or
currency units) less the aggregate initial offering price of "Securities" (as
defined in the Prospectus dated December 29, 2003 relating to debt securities
and preferred stock of the Company, Popular International Bank, Inc. and the
Guarantor) authenticated and delivered upon initial issuance, other than the
Securities of this series, which amount may be increased at the option of the
Company if in the future it determines that it may wish to sell additional
Securities of this series. References herein to "this series" mean the series of
securities designated on the face hereof.

                  The Securities of this series are issuable only in registered
form without coupons in "Authorized Denominations", which term shall have the
following meaning. For each Security of this series having a principal amount
payable in U.S. dollars, the Authorized Denominations shall be $1,000 and any
integral multiples of $1,000. For each Security of this series having a
principal amount payable in a Specified Currency other than U.S. dollars, the
Authorized Denominations shall be the amount of such Specified Currency
equivalent, at the Exchange Rate on the first Business Day next preceding the
date on which the Company accepts the offer to purchase such Security, to $1,000
and any integral multiples of $1,000.

                  3. EXCHANGE RATE AGENT AND RELATED TERMS

                  If the principal of or interest on this Security is payable in
a Specified Currency other than U.S. dollars, the Company has initially
appointed the institution


                  (Reverse of Security continued on next page)
                                      -9-

named on the face of this Security as Exchange Rate Agent to act as such agent
with respect to this Security, but the Company may, in its sole discretion,
appoint any other institution (including any Affiliate of the Company) to serve
as any such agent from time to time. The Company will give the Trustee prompt
written notice of any change in any such appointment. Insofar as this Security
provides for any such agent to obtain rates, quotes or other data from a bank,
dealer or other institution for use in making any determination hereunder, such
agent may do so from any institution or institutions of the kind contemplated
hereby notwithstanding that any one or more of such institutions are such agent,
Affiliates of such agent, any of the agents named on the cover of the Company's
Prospectus Supplement dated June 23, 2004 relating to the Company's Medium-Term
Notes, Series F or any Affiliate of any such agent or Affiliates of the Company.

                  All determinations made by the Exchange Rate Agent may be made
by such agent in its sole discretion and, absent manifest error, shall be
conclusive for all purposes and binding on the Holder of this Security and the
Company. The Exchange Rate Agent shall not have any liability therefor.

                  Unless otherwise specified on the face hereof, for all
purposes of this Security, the term "Business Day" means (i) a Monday, Tuesday,
Wednesday, Thursday or Friday that is neither a legal holiday nor a day on which
commercial banking institutions in New York City generally are authorized or
required by law, regulation or executive order to close and (ii) if the
Specified Currency for payment of principal of or interest on this Security is
other than U.S. dollars, is also a day on which banking institutions are not
authorized or required by law, regulation or executive order to close in the
principal financial center of the country issuing such Specified Currency. With
respect to any particular location, the close of business on any day on which
business is not being conducted shall be deemed to mean 5:00 P.M., New York City
time, on that day.

                  References in this Security to U.S. dollars shall mean, as of
any time, the coin or currency that is then legal tender for the payment of
public and private debts in the United States of America.

                  References in this Security to a particular currency other
than U.S. dollars shall mean, as of any time, the coin or currency that is then
legal tender for the payment of public and private debts in the country issuing
such currency on the Original Issue Date.

                  4. REDEMPTION AT THE COMPANY'S OPTION

                  Unless a Redemption Commencement Date is specified on the face
hereof, except as provided below, this Security shall not be redeemable at the
option of the Company before the Stated Maturity Date. If a Redemption
Commencement Date is so specified, and unless otherwise specified on the face
hereof, this Security is subject to


                  (Reverse of Security continued on next page)
                                      -10-

redemption upon not less than 30 days' nor more than 60 days' notice at any time
and from time to time on or after the Redemption Commencement Date, in each case
as a whole or in part, at the election of the Company and at the applicable
Redemption Price specified on the face hereof (expressed as a percentage of the
principal amount of this Security to be redeemed), together with accrued
interest to the Redemption Date, but interest installments due on or prior to
such Redemption Date will be payable to the Holder of this Security, or one or
more Predecessor Securities, of record at the close of business on the relevant
record date, all as provided in the Indenture; provided, however, that the first
two paragraphs of Section 1103 of the Indenture shall not apply to this
Security, and if less than all of the Securities of this series are to be
redeemed, the Company may select, from Securities of this series that are
subject to redemption pursuant to the terms thereof, the Security or Securities,
or portion or portions thereof, to be redeemed.

                  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 this Security as a whole at a redemption
price of 100% of the principal amount thereof (or, if this Security is issued
with an original issue discount, 100% of the OID Default Amount) together with
accrued interest to the date fixed for redemption.

                  5. REPAYMENT AT THE HOLDER'S OPTION

                  Except as otherwise may be provided on the face hereof, if one
or more Repayment Dates are specified on the face hereof, this Security will be
repayable in whole or in part in an amount equal to any Authorized Denomination
(provided that the remaining principal amount of any Security surrendered for
partial repayment shall at least equal an Authorized Denomination), on any such
Repayment Date, in each case at the option of the Holder and at the applicable
Repayment Price specified on the face hereof (expressed as a percentage of the
principal amount to be repaid), together with accrued interest to the applicable
Repayment Date (but interest installments due on or prior to such Repayment Date
will be payable to the Holder of this Security, or one or more Predecessor
Securities, of record at the close of business on the relevant record date as
provided in the Indenture). If this Security provides for more than one
Repayment Date and the Holder exercises its option to elect repayment, the
Holder shall be deemed to have elected repayment on the earliest Repayment Date
after all conditions to such exercise have been satisfied, and references herein
to the "applicable Repayment Date" shall mean such earliest Repayment Date.

                  In order for the exercise of such option to be effective and
this Security 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 Security), on any
Business Day not later than the 30th, and not earlier than the 60th, calendar
day prior to the applicable Repayment Date (or, if either such calendar day is
not a Business Day, the next succeeding Business Day), either (i) this Security,
with the form below entitled "Option to Elect Repayment" duly


                  (Reverse of Security continued on next page)
                                      -11-

completed and signed, 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., 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 Security, (b) the principal amount of this Security
and the amount of this Security to be repaid, (c) a statement that the option to
elect repayment is being exercised thereby and (d) a guarantee stating that the
Company will receive this Security, with the form below entitled "Option to
Elect Repayment" duly completed and signed, not later than five Business Days
after the date of such telegram, telex, facsimile transmission or letter
(provided that this Security and form duly completed and signed are received by
the Company by such fifth Business Day). Any such election shall be irrevocable.
The address to which such deliveries are to be made is J.P. Morgan Trust
Company, National Association, Attention: Institutional Trust Services/George N.
Reaves, 227 W. Monroe Street/Suite 2600, Chicago, IL 60607 (or at such other
places as the Company or the Paying Agent shall notify the Holder of this
Security). All questions as to the validity, eligibility (including time of
receipt) and acceptance of any Security for repayment will be determined by the
Company, whose determination will be final and binding. Notwithstanding the
foregoing, (x) if this Security is a Global Security, the option of the Holder
to elect repayment may be exercised in accordance with the Applicable Procedures
of the Depositary for this Security at least 30 calendar days prior to the
applicable Repayment Date and (y) whether or not this Security is a Global
Security, the option of the Holder to elect repayment may be exercised in any
such manner as the Company may approve.

                  6. TRANSFER AND EXCHANGE

                  As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is registrable in
the Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in any place where the principal
of and any premium and interest on this Security are payable, duly endorsed by,
or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his or
her attorney duly authorized in writing, and thereupon one or more new
Securities of this series and of like tenor, of Authorized Denominations and for
the same aggregate principal amount, will be issued to the designated transferee
or transferees.

                  As provided in the Indenture and subject to certain
limitations therein set forth, Securities of this series are exchangeable for a
like aggregate principal amount of Securities of this series and of like tenor
of a different Authorized Denomination, as requested by the Holder surrendering
the same.

                  No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.


                  (Reverse of Security continued on next page)
                                      -12-

                  Prior to due presentment of this Security for registration of
transfer, the Company, the Guarantor, the Trustee and any agent of the Company,
the Guarantor or the Trustee may treat the Person in whose name this Security is
registered as the owner hereof for all purposes, whether or not this Security be
overdue, and neither the Company nor the Guarantor nor the Trustee nor any such
agent shall be affected by notice to the contrary.

                  If this Security is a Global Security, this Security shall be
subject to the provisions of the Indenture relating to Global Securities,
including the limitations in Section 305 thereof on transfers and exchanges of
Global Securities.

                  7. [RESERVED].

                  8. REMEDIES.

                  If an Event of Default with respect to Securities of this
series shall occur and be continuing, the principal of the Securities of this
series may be declared due and payable in the manner and with the effect
provided in the Indenture.

                  As provided in and subject to the provisions of the Indenture,
the Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the
Securities of this series, the Holders of not less than 25% in principal amount
of the Securities of this series at the time Outstanding shall have made written
request to the Trustee to institute proceedings in respect of such Event of
Default as Trustee and offered the Trustee indemnity reasonably satisfactory to
it, and the Trustee shall not have received from the Holders of a majority in
principal amount of Securities of this series at the time Outstanding a
direction inconsistent with such request, and shall have failed to institute any
such proceeding, for 60 days after receipt of such notice, request and offer of
indemnity. The foregoing shall not apply to any suit instituted by the Holder of
this Security for the enforcement of any payment of principal hereof or any
premium or interest hereon on or after the respective due dates expressed
herein.
                  No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest on this Security at the times, place and rate, and
in the coin or currency, herein prescribed.

                  9. MODIFICATION AND WAIVER.

                  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 Securities of each series to be


                  (Reverse of Security continued on next page)
                                      -13-

affected under the Indenture at any time by the Company, the Guarantor and the
Trustee with the consent of the Holders of a majority in principal amount of the
Securities at the time Outstanding of all series to be affected (considered
together as one class for this purpose). The Indenture also contains provisions
(i) permitting the Holders of a majority in principal amount of the Securities
at the time Outstanding of all series to be affected under the Indenture
(considered together as one class for this purpose), on behalf of the Holders of
all Securities of such series, to waive compliance by the Company and the
Guarantor with certain provisions of the Indenture and (ii) permitting the
Holders of a majority in principal amount of the Securities at the time
Outstanding of any series to be affected under the Indenture (with each such
series considered separately for this purpose), on behalf of the Holders of all
Securities of such series, to waive certain past defaults under the Indenture
and their consequences. Any such consent or waiver by the Holder of this
Security shall be conclusive and binding upon such Holder and upon all future
Holders of this Security and of any Security 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 Security.

                  10. GOVERNING LAW.

                  THIS SECURITY AND THE INDENTURE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.


                  (Reverse of Security continued on next page)
                                      -14-

                                    GUARANTEE
                                       OF
                                  POPULAR, INC.

                  Popular, Inc. (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 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.


                  (Reverse of Security continued on next page)
                                      -15-


                  This guarantee is governed by and construed in accordance with
the laws of the State of New York.

                  IN WITNESS WHEREOF, Popular, Inc. 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.

                                        POPULAR, INC.



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



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


Attested:
         -------------------------



                  (Reverse of Security continued on next page)
                                      -16-


                                                   REGISTERED NO. FXR __________

                                                            CUSIP NO. __________

                                                 ORIGINAL ISSUE DATE: __________


                           POPULAR NORTH AMERICA, INC.
                           MEDIUM-TERM NOTE, SERIES F

                            OPTION TO ELECT REPAYMENT

               TO BE COMPLETED ONLY IF THIS SECURITY IS REPAYABLE
                   AT THE OPTION OF THE HOLDER AND THE HOLDER
                          ELECTS TO EXERCISE SUCH RIGHT


                  The undersigned hereby irrevocably requests and instructs the
Company to repay the Security referred to in this notice (or the portion thereof
specified below) at the applicable Repayment Price, together with interest to
the Repayment Date, all as provided for in such Security, to the undersigned,
whose name, address and telephone number are as follows:



- -------------------------------------------------------------------------------
                     (please print name of the undersigned)


- -------------------------------------------------------------------------------
                    (please print address of the undersigned)


- -------------------------------------------------------------------------------
               (please print telephone number of the undersigned)


                  If such Security provides for more than one Repayment Date,
the undersigned requests repayment on the earliest Repayment Date after the
requirements for exercising this option have been satisfied, and references in
this notice to the Repayment Date mean such earliest Repayment Date. Terms used
in this notice that are defined in such Security are used herein as defined
therein.

                  For such Security to be repaid the Company must receive at the
applicable address of the Trustee set forth below or at such other place or
places of which the Company or the Trustee shall from time to time notify the
Holder of such Security, on any Business Day not later than the 30th or earlier
than the 60th calendar day prior to the Repayment Date (or, if either such
calendar day is not a Business Day, the next succeeding Business Day), either
(i) such Security, with this "Option to Elect Repayment" form duly completed and
signed, 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., a commercial bank or a trust company in the


                                      -17-

United States of America setting forth (a) the name, address and telephone
number of the Holder of such Security, (b) the principal amount of such Security
and the amount of such Security to be repaid, (c) a statement that the option to
elect repayment is being exercised thereby and (d) a guarantee stating that such
Security to be repaid with the form entitled "Option to Elect Repayment" on the
addendum to the Security duly completed and signed will be received by the
Company not later than five Business Days after the date of such telegram,
telex, facsimile transmission or letter (provided that such Security and form
duly completed and signed are received by the Company by such fifth Business
Day). The address to which such deliveries are to be made is:

                  J.P. Morgan Trust Company, National Association
                  Attention:  Institutional Trust Services/Georges N. Reaves
                  227 W. Monroe Street/Suite 2600
                  Chicago, IL  60607

or at such other place as the Company or the Paying Agent shall notify the
Holder of such Security.

                  If less than the entire principal amount of such Security is
to be repaid, specify the portion thereof (which shall equal any Authorized
Denomination) that the Holder elects to have repaid:

                  ----------------------------

and specify the denomination or denominations (which shall equal any Authorized
Denomination) of the Security or Securities to be issued to the Holder in
respect of the portion of such Security not being repaid (in the absence of any
specification, one Security will be issued in respect of the portion not being
repaid):

                  ----------------------------

Date:
     -----------------------        -------------------------------------------
                                    Notice: The signature to this Option to
                                    Elect Repayment must correspond with the
                                    name of the Holder as written on the face of
                                    such Security in every particular without
                                    alteration or enlargement or any other
                                    change whatsoever.


                                      -18-

                                  ABBREVIATIONS

                  The following abbreviations, when used in the inscription on
the face of this Security, shall be construed as though they were written out in
full according to applicable laws or regulations.

                  TEN COM  -       as tenants in common

                  TEN ENT  -       as tenants by the entireties

                  JT TEN   -       as joint tenants with the right of
                                   survivorship and not as tenants in
                                   common

                  UNIF GIFT MIN ACT               Custodian
                                     -------------          ------------------
                                        (Cust)                    (Minor)

                        under Uniform Gifts to Minors Act


                             ---------------------
                                    (State)

                    Additional abbreviations may also be used
                          though not in the above list.


                             ---------------------


                                      -19-

                                   ASSIGNMENT

                  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 attached Security and all rights thereunder, and hereby irrevocably
constitutes and

appoints
        -----------------------------------------------------------------------

- -------------------------------------------------------------------------------

to transfer said Security on the books of the Company, with full power of
substitution in

the premises.

Dated:
      -----------------

Signature Guaranteed



- --------------------------          ------------------------------------------
NOTICE: Signature must be           NOTICE:  The signature to this
guaranteed.                         assignment must correspond with the name of
                                    the Holder as written upon the face of the
                                    attached Security in every particular,
                                    without alteration or enlargement or any
                                    change whatever.


                                      -20-

EX-4.(H)

                    [Form of Floating Rate Medium-Term Note]

                               (Face of Security)

                  [IF A GLOBAL SECURITY, INSERT - - THIS SECURITY IS A GLOBAL
SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY
NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER
OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY
PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.]

                  [IF DTC IS THE DEPOSITARY, INSERT -- UNLESS THIS CERTIFICATE
IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A
NEW YORK CORPORATION ("DTC"), TO POPULAR NORTH AMERICA, INC., OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
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.]

                  [INSERT ANY LEGEND REQUIRED BY THE INTERNAL REVENUE CODE AND
THE REGULATIONS THEREUNDER.]




REGISTERED NO. FLR___                                        CUSIP NO. _______

                           POPULAR NORTH AMERICA, INC.

                           MEDIUM-TERM NOTES, SERIES F
                                 (Floating Rate)

                     Payment of Principal, Premium, if any,
                           and Interest Guaranteed by

                                  POPULAR, INC.

            The following terms apply to this Security, as and to the
extent shown below:

                                                     
PRINCIPAL AMOUNT:                                       REPAYMENT DATE(S):

STATED MATURITY DATE:                                   REDEMPTION OR REPAYMENT PRICE(S):

SPECIFIED CURRENCY:  U.S. dollars for
all payments unless otherwise specified                 BASE RATE:
below:

        -        payments of principal and any premium:         -        Commercial Paper Rate:

        -        payments of interest:                          -        Prime Rate:

        -        Exchange Rate Agent:                           -        LIBOR:

                                                                         -        Moneyline Telerate LIBOR Page:

                                                                         -        Reuters Screen LIBOR Page:

                                                                         -        Index Currency:

ORIGINAL ISSUE DATE*:                                           -        Treasury Rate:

REGULAR RECORD DATE(S):                                         -        CMT Rate:

ORIGINAL ISSUE DISCOUNT SECURITY:                       REDEMPTION COMMENCEMENT DATE:

        -        Total Amount of OID:                           -        Moneyline Telerate Page 7051:
        -        Yield to Maturity:
        -        Initial Accrual Period OID:                    -        Moneyline Telerate Page 7052
        -        OID Default Amount:                                     (weekly/monthly)
        -        Default Rate:
                                                                -        CMT Index Maturity



- --------------------------
*        This date shall be the issue date of this Security, unless there is a
         Predecessor Security, in which case this date shall be the issue date
         of the first Predecessor Security.


                    (Face of Security continued on next page)
                                       -2-



- -     CD Rate:                          INDEX MATURITY:

- -     Federal Funds Rate:               SPREAD:

- -     11th District Rate:               SPREAD MULTIPLIER:

                                        INITIAL BASE RATE:


                                        MAXIMUM RATE:


                                        MINIMUM RATE:


                                        INTEREST RESET PERIOD:

                                          -  if semi-annual, reset will occur in
                                             each of the following two months in
                                             each year:

                                          -  if annual, reset will occur in the
                                             following month in each year:

                                          -  otherwise, reset will occur daily,
                                             weekly, monthly or quarterly in
                                             each year as follows:

                                    INTEREST RESET DATE(S): as provided in
                                    Section 3(a) on the reverse of this Security
                                    (unless otherwise specified)

                                    INTEREST DETERMINATION DATE(S): as provided
                                    in Sections 3(b) through 3(j), as
                                    applicable, on the reverse of this Security
                                    (unless otherwise specified)

                                    INTEREST PAYMENT DATE(S): unless otherwise
                                    specified, the third Wednesday of the
                                    following:


                    (Face of Security continued on next page)
                                       -3-



                                                                     
- -        each of the 12 calendar months in each year                    subject to the second paragraph under "Payments Due on a
                                                                        Business Day" below

- -        each March, June, September and December in each year          CALCULATION DATE(S): as provided in Section 3(n) on the
                                                                        reverse of this Security (unless otherwise specified)

- -        each of the following two calendar months in each year:

- -        the following calendar month in each year:                     CALCULATION AGENT:


                                                                        OTHER TERMS:



                  Terms left blank or marked "N/A", "No", "None" or in a similar
manner do not apply to this Security except as otherwise may be specified.

                  Whenever used in this Security, the terms specified above that
apply to this Security have the meanings specified above, unless the context
requires otherwise. Other terms used in this Security that are not defined
herein but that are defined in the Indenture referred to in Section 1 on the
reverse of this Security are used herein as defined therein.

                  Popular North America, Inc., a corporation duly organized and
existing under the laws of the State of Delaware (hereinafter called the
"Company", which term includes any successor Person under the Indenture), for
value received, hereby promises to pay to _____________, or registered assigns,
as principal the Principal Amount on the Stated Maturity Date and to pay
interest thereon, from the Original Issue Date or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, on the
Interest Payment Date(s) in each year, commencing on the first such date that is
at least 15 calendar days after the Original Issue Date, and at the Maturity of
the principal hereof, at a rate per annum determined in accordance with the
applicable provisions of Section 3 on the reverse hereof, until the principal
hereof is paid or made available for payment. Notwithstanding the foregoing,
interest on any principal that is overdue shall be payable on demand.

                  The interest so payable, and punctually paid or duly provided
for, on any Interest Payment Date will, as provided in the Indenture, be paid to
the Person in whose name this Security (or one or more Predecessor Securities)
is registered at the close of business on the 15th calendar day (whether or not
a Business Day, as such term is defined in Section 3(n) on the reverse hereof)
next preceding such Interest Payment Date, unless otherwise provided on the face
hereof (a "Regular Record Date"). Any interest so payable, but not punctually
paid or duly provided for, on any Interest Payment Date will forthwith cease to
be payable to the Holder on such Regular Record Date and such Defaulted Interest
either may be paid to the Person in whose name this Security (or one or more
Predecessor Securities) 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, notice whereof shall be given to the Holder of this Security not less
than 10 days prior to such


                    (Face of Security continued on next page)
                                      -4-


Special Record Date, or may be paid in any other lawful manner not inconsistent
with the requirements of any securities exchange on which this Security may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in the Indenture.

                  If this Security is issued with an original issue discount,
(i) if an Event of Default with respect to the Securities of this series shall
have occurred and be continuing, the amount of principal of this Security 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 (ii) in the case of a
default in payment of principal upon acceleration, redemption, repayment at the
option of the Holder or at the Stated Maturity Date hereof, in lieu of any
interest otherwise payable, the overdue principal of this Security 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 Stated 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.

         CURRENCY OF PAYMENT

                  Payment of principal of (and premium, if any) and interest on
this Security will be made in the Specified Currency for such payment, except as
provided in this and the next three paragraphs. The Specified Currency for any
payment shall be the currency specified as such on the face of this Security
unless, at the time of such payment, such currency is not legal tender for the
payment of public and private debts in the country issuing such currency on the
Original Issue Date, in which case the Specified Currency for such payment shall
be such coin or currency as at the time of such payment is legal tender for the
payment of public and private debts in such country.

                  Except as provided in the next paragraph, any payment to be
made on this Security in a Specified Currency other than U.S. dollars will be
made in U.S. dollars if the Person entitled to receive such payment transmits a
written request for such payment to be made in U.S. dollars to the Trustee at
its Corporate Trust Office, Attention: Securities Processing Division, on or
before the fifth Business Day before the payment is to be made. Such written
request may be mailed, hand delivered, telecopied or delivered in any other
manner approved by the Trustee. Any such request made with respect to any
payment on this Security payable to a particular Holder will remain in effect
for all later payments on this Security payable to such Holder, unless such
request is revoked on or before the fifth Business Day before a payment is to be
made, in which case such revocation shall be effective for such and all later
payments. In the case of any payment of interest payable on an Interest Payment
Date, such written request must be made by the Person who is the registered
Holder of this Security on the relevant Regular Record Date.

                    (Face of Security continued on next page)
                                      -5-


                  The U.S. dollar amount of any payment made pursuant to the
preceding paragraph will be determined by the Exchange Rate Agent based upon the
highest bid quotation received by the Exchange Rate Agent as of 11:00 A.M., New
York City time, on the second Business Day preceding the applicable payment
date, from three (or, if three are not available, then two) recognized foreign
exchange dealers selected by the Exchange Rate Agent in The City of New York, in
each case for the purchase by the quoting dealer, for U.S. dollars and for
settlement on such payment date of an amount of the Specified Currency for such
payment equal to the aggregate amount of such Specified Currency payable on such
payment date to all Holders of Securities of this or any other series who elect
to receive U.S. dollar payments on such payment date, and at which the
applicable dealer commits to execute a contract. If the Exchange Rate Agent
determines that two such bid quotations are not available on such second
Business Day, such payment will be made in the Specified Currency for such
payment. All currency exchange costs associated with any payment in U.S. dollars
on this Security will be borne by the Holder entitled to receive such payment,
by deduction from such payment.

                  Notwithstanding the foregoing, if any amount payable on this
Security is payable on any day (including at Maturity) in a Specified Currency
other than U.S. dollars, and if such Specified Currency is not available to the
Company on the two Business Days before such day, due to the imposition of
exchange controls, disruption in a currency market or any other circumstances
beyond the control of the Company, the Company will be entitled to satisfy its
obligation to pay such amount in such Specified Currency by making such payment
in U.S. dollars. The amount of such payment in U.S. dollars shall be determined
by the Exchange Rate Agent on the basis of the noon buying rate for cable
transfers in The City of New York for such Specified Currency (the "Exchange
Rate") as of the latest day before the day on which such payment is to be made.
Any payment made under such circumstances in U.S. dollars where the required
payment is in other than U.S. dollars will not constitute an Event of Default
under the Indenture or this Security.

         MANNER OF PAYMENT - U.S. DOLLARS

                  Except as provided in the next paragraph, payment of any
amount payable on this Security in U.S. dollars will be made at the office or
agency of the Company maintained for that purpose in The City of New York (or at
any other office or agency maintained by the Company for that purpose), against
surrender of this Security in the case of any payment due at the Maturity of the
principal hereof (other than any payment of interest that first becomes due on
an Interest Payment Date); provided, however, that, at the option of the Company
and subject to the next paragraph, payment of interest may be made by check
mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register.

                  Payment of any amount payable on this Security in U.S. dollars
will be made by wire transfer of immediately available funds to an account
maintained by the payee with a bank located in the Borough of Manhattan, The
City of New York, if (i) the principal of this Security is at least $10,000,000
and (ii) the Holder entitled to receive such payment transmits a written request
for such payment to be made in such manner to


                    (Face of Security continued on next page)
                                      -6-

the Paying Agent at its Corporate Trust Office, Attention: Securities Processing
Division, on or before the Regular Record Date preceding the day on which such
payment is to be made; provided that, in the case of any such payment due at the
Maturity of the principal hereof (other than any payment of interest that first
becomes due on an Interest Payment Date), this Security must be surrendered at
the office or agency of the Company maintained for that purpose in The City of
New York (or at any other office or agency maintained by the Company for that
purpose) in time for the Paying Agent to make such payment in such funds in
accordance with its normal procedures. Any such request made with respect to any
payment on this Security payable to a particular Holder will remain in effect
for all later payments on this Security payable to such Holder, unless such
request is revoked on or before the Regular Record Date preceding the day on
which such payment is to be made, in which case such revocation shall be
effective for such and all later payments; provided that in the case of any
payment due at Maturity of the principal of this Security to be effective any
request for revocation must be made no later than the 15th day prior to the
Maturity of the principal of this Security. In the case of any payment of
interest payable on an Interest Payment Date, such written request must be made
by the Person who is the registered Holder of this Security on the relevant
Regular Record Date. The Company will pay any administrative costs imposed by
banks in connection with making payments by wire transfer with respect to this
Security, but any tax, assessment or other governmental charge imposed upon any
payment will be borne by the Holder of this Security and may be deducted from
the payment by the Company or the Paying Agent.

         MANNER OF PAYMENT - OTHER SPECIFIED CURRENCIES

                  Payment of any amount payable on this Security in a Specified
Currency other than U.S. dollars will be made by wire transfer of immediately
available funds to such account as is maintained in such Specified Currency at a
bank or other financial institution acceptable to the Company and the Trustee
and as shall have been designated at least five Business Days prior to the
applicable payment date by the Person entitled to receive such payment; provided
that, in the case of any such payment due at the Maturity of the principal
hereof (other than any payment of interest that first becomes due on an Interest
Payment Date), this Security must be surrendered at the office or agency of the
Company maintained for that purpose in The City of New York (or at any other
office or agency maintained by the Company for that purpose) in time for the
Paying Agent to make such payment in such funds in accordance with its normal
procedures. Such account designation shall be made by transmitting the
appropriate information to the Trustee at its Corporate Trust Office in the
Borough of Manhattan, The City of New York, by mail, hand delivery, telecopier
or in any other manner approved by the Trustee. Unless revoked, any such account
designation made with respect to this Security by the Holder hereof will remain
in effect with respect to any further payments with respect to this Security
payable to such Holder. If a payment in a Specified Currency other than U.S.
dollars with respect to this Security cannot be made by wire transfer because
the required account designation has not been received by the Trustee on or
before the requisite date or for any other reason, the Company will cause a
notice to be given to the Holder of this Security at its registered address
requesting an account designation


                    (Face of Security continued on next page)
                                      -7-


pursuant to which such wire transfer can be made and such payment will be made
within five Business Days after the Trustee's receipt of such a designation
meeting the requirements specified above, with the same force and effect as if
made on the due date. The Company will pay any administrative costs imposed by
banks in connection with making payments by wire transfer with respect to this
Security, but any tax, assessment or other governmental charge imposed upon any
payment will be borne by the Holder of this Security and may be deducted from
the payment by the Company or the Paying Agent.

         MANNER OF PAYMENT - GLOBAL SECURITIES

                  Notwithstanding any provision of this Security or the
Indenture, if this Security is a Global Security, the Company may make any and
all payments of principal, premium and interest on this Security pursuant to the
Applicable Procedures of the Depositary for this Security as permitted in the
Indenture.

         PAYMENTS DUE ON A BUSINESS DAY

                  Unless otherwise specified on the face of this Security, the
following sentence shall apply to this Security. Notwithstanding any provision
of this Security or the Indenture other than the following paragraph, if any
amount of principal, premium or interest would otherwise be due on this Security
on a day (the "Specified Day") that is not a Business Day, such amount may be
paid or made available for payment on the next succeeding Business Day (unless
the Base Rate is LIBOR and such next succeeding Business Day falls in the next
calendar month, in which case such amount may be paid or made available for
payment on the next preceding Business Day) with the same force and effect as if
such amount were paid on the Specified Day. The provisions of this paragraph
shall apply to this Security in lieu of the provisions of Section 113 of the
Indenture.

                  Unless otherwise specified on the face of this Security, the
following sentence shall apply to each Interest Payment Date other than one that
falls on the date of Maturity of the principal hereof. If any such Interest
Payment Date would otherwise be a day that is not a Business Day, such Interest
Payment Date shall be deferred to the next succeeding Business Day, provided
that, if the Base Rate is LIBOR and the next succeeding Business Day would fall
in the next calendar month, then such Interest Payment Date will be advanced to
the next preceding Business Day.

                              --------------------

                  Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.

                  Unless the certificate of authentication hereon has been
executed by the Trustee by manual signature, this Security shall not be entitled
to any benefit under the Indenture or be valid or obligatory for any purpose.


                    (Face of Security continued on next page)
                                      -8-

                  IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed.

Dated:

                                           POPULAR NORTH AMERICA, INC.


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


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



                                           Attest:
                                                  -----------------------------


                  This Security is one of the Securities of the series
designated herein and referred to in the within-mentioned Indenture.



                                           J.P. MORGAN TRUST COMPANY, NATIONAL
                                           ASSOCIATION
                                           as Trustee


                                           By
                                             ----------------------------------
                                                    Authorized Officer




                              (Reverse of Security)

         1. SECURITIES AND INDENTURE

         This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), all unconditionally guaranteed by
Popular, Inc. (hereinafter called the "Guarantor") and issued and to be issued
in one or more series under an Indenture, dated as of October 1, 1991, as
supplemented by the First Supplemental Indenture, dated as of February 28, 1995,
the Second Supplemental Indenture, dated as of May 8, 1997 and the Third
Supplemental Indenture, dated as of August 5, 1999 (together herein called the
"Indenture", which term shall have the meaning assigned to it in such
instrument), duly executed and delivered by the Company and the Guarantor to
J.P. Morgan Trust Company, National Association (successor in interest to Bank
One, N.A.), as Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture) and as Successor Trustee to Citibank,
N.A., and reference is hereby made to the Indenture for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Guarantor, the Trustee and the Holders of the Securities and of
the terms upon which the Securities are, and are to be, authenticated and
delivered.

         2. SERIES AND DENOMINATIONS

         This Security is one of the series designated on the face hereof,
limited to an aggregate initial offering price not to exceed $2,500,000,000 (or
the equivalent thereof in any other currency or currencies or currency units)
less the aggregate initial offering price of "Securities" (as defined in the
Prospectus dated December 29, 2003 relating to debt securities and preferred
stock of the Company, Popular International Bank, Inc. and the Guarantor)
authenticated and delivered upon initial issuance, other than the Securities of
this series, which amount may be increased at the option of the Company if in
the future it determines that it may wish to sell additional Securities of this
series. References herein to "this series" mean the series of securities
designated on the face hereof.

         The Securities of this series are issuable only in registered form
without coupons in "Authorized Denominations", which term shall have the
following meaning. For each Security of this series having a principal amount
payable in U.S. dollars, the Authorized Denominations shall be $1,000 and any
integral multiples of $1,000. For each Security of this series having a
principal amount payable in a Specified Currency other than U.S. dollars, the
Authorized Denominations shall be the amount of such Specified Currency
equivalent, at the Exchange Rate on the first Business Day next preceding the
date on which the Company accepts the offer to purchase such Security, to $1,000
and any integral multiples of $1,000.

         3. INTEREST RATE

         (a) INTEREST RATE RESET. The interest rate on this Security will be
reset from time to time, as provided in this Section 3, and each date upon which
such rate



                  (Reverse of Security continued on next page)
                                      -10-


is reset as so provided is hereinafter called an "Interest Reset Date". Unless
otherwise specified on the face hereof, the Interest Reset Dates with respect to
this Security will be as follows:

                  (i) if the Interest Reset Period is daily, each Business Day;

                  (ii) if the Interest Reset Period is weekly and the Base Rate
         is not the Treasury Rate, the Wednesday of each week;

                  (iii) if the Interest Reset Period is weekly and the Base Rate
         is the Treasury Rate, except as otherwise provided in the definition of
         "Treasury Interest Determination Date" in Section 3(n) below, the
         Tuesday of each week;

                  (iv) if the Interest Reset Period is monthly and the Base Rate
         is not the 11th District Rate, the third Wednesday of each month;

                  (v) if the Interest Reset Period is monthly and the Base Rate
         is the 11th District Rate, the first calendar day of the month;

                  (vi) if the Interest Reset Period is quarterly, the third
         Wednesday of each March, June, September and December;

                  (vii) if the Interest Reset Period is semi-annual, the third
         Wednesday of each of two months in each year specified under "Interest
         Reset Period" on the face hereof; and

                  (viii) if the Interest Reset Period is annual, the third
         Wednesday of the month in each year specified under "Interest Reset
         Period" on the face hereof;

provided, however, that (x) the Base Rate in effect from the Original Issue Date
to but excluding the first Interest Reset Date will be the Initial Base Rate and
(y) if the Interest Reset Period is daily or weekly, the Base Rate in effect for
each day following the second Business Day immediately prior to an Interest
Payment Date to but excluding such Interest Payment Date, and for each day
following the second Business Day immediately prior to the day of Maturity of
the principal hereof to but excluding such day of Maturity, will be the Base
Rate in effect on such applicable second Business Day; and provided, further,
that, if any Interest Reset Date would otherwise be a day that is not a Business
Day, such Interest Reset Date shall be the next succeeding day that is a
Business Day, except that, unless otherwise specified on the face hereof, if the
Base Rate is LIBOR and such next succeeding Business Day falls in the next
succeeding calendar month, such Interest Reset Date shall be the immediately
preceding Business Day.

         Subject to applicable provisions of law and except as otherwise
specified herein, on each Interest Reset Date the interest rate on this Security
shall be the rate determined in accordance with such of the following Sections
3(b) through 3(j) as provided for determination of the Base Rate for this
Security. The Calculation Agent


                  (Reverse of Security continued on next page)

                                      -11-


shall determine the interest rate of this Security in accordance with the
applicable Section below.

                  Unless the Base Rate is LIBOR, the Calculation Agent will
determine the interest rate of this Security that takes effect on any Interest
Reset Date on a day no later than the Calculation Date (as defined in Section
3(n) below) corresponding to such Interest Reset Date. However, the Calculation
Agent need not wait until the Calculation Date to determine such interest rate
if the rate information it needs to make such determination in the manner
specified in the applicable provisions of Sections 3(b) through 3(j) hereof is
available from the relevant sources specified in such applicable provisions.

                  Upon request of the Holder to the Calculation Agent, the
Calculation Agent will provide the interest rate then in effect on this Security
and, if determined, the interest rate that will become effective on the next
Interest Reset Date.

                  (b) DETERMINATION OF COMMERCIAL PAPER RATE. If the Base Rate
is the Commercial Paper Rate, the Base Rate that takes effect on any Interest
Reset Date shall equal the Money Market Yield (as defined in Section 3(n) below)
of the rate, for the second Business Day immediately preceding such Interest
Reset Date (the "Commercial Paper Interest Determination Date"), for commercial
paper having the Index Maturity, as published in H.15(519) (as defined in
Section 3(n) below) under the heading "Commercial Paper -- Nonfinancial". If the
Commercial Paper Rate cannot be determined as described above, the following
procedures will apply in determining the Commercial Paper Rate:

                  (i) If the rate described above is not published in H.15(519)
         by 3:00 P.M., New York City time, on the Calculation Date (as defined
         in Section 3(n) below) corresponding to such Commercial Paper Interest
         Determination Date, then the Commercial Paper Rate will be the rate,
         for such Commercial Paper Interest Determination Date, for commercial
         paper having the Index Maturity, as published in H.15 Daily Update (as
         defined in Section 3(n) below) or any other recognized electronic
         source used for displaying that rate, under the heading "Commercial
         Paper -- Nonfinancial".

                  (ii) If the rate described in clause (i) above does not appear
         in H.15(519), H.15 Daily Update or another recognized electronic source
         by 3:00 P.M., New York City time, on such Calculation Date (unless the
         calculation is made earlier and the rate is available from one of those
         sources at that time), the Commercial Paper Rate will be the Money
         Market Yield of the arithmetic mean of the following offered rates for
         U.S. dollar commercial paper that has the Index Maturity and is placed
         for an industrial issuer whose bond rating is "Aa", or the equivalent,
         from a nationally recognized rating agency: the rates offered as of
         11:00 A.M., New York City time, on such Commercial Paper Interest
         Determination Date by three leading U.S. dollar commercial paper
         dealers in New York City selected by the Calculation Agent.


                  (Reverse of Security continued on next page)
                                      -12-

                  (iii) If fewer than three dealers selected by the Calculation
         Agent are quoting as described in clause (ii) above, the Commercial
         Paper Rate shall be the Commercial Paper Rate in effect on such
         Commercial Paper Interest Determination Date (or, if the Initial Base
         Rate has been in effect for the prior Interest Reset Period, the
         Initial Base Rate).


                  The Base Rate determined in accordance with this Section 3(b)
will be adjusted by the addition or subtraction of the Spread, if any, or by
multiplying such Base Rate by the Spread Multiplier, if any.

                  (c) DETERMINATION OF PRIME RATE. If the Base Rate is the Prime
Rate, the Base Rate that takes effect on any Interest Reset Date shall equal the
rate, for the second Business Day immediately preceding such Interest Reset Date
(the "Prime Interest Determination Date"), published in H.15(519) under the
heading "Bank Prime Loan". If the Prime Rate cannot be determined as described
above, the following procedures will apply in determining the Prime Rate:

                  (i) If the rate described above is not published in H.15(519)
         by 3:00 P.M., New York City time, on the Calculation Date corresponding
         to such Prime Interest Determination Date, then the Prime Rate will be
         the rate, for such Prime Interest Determination Date, as published in
         H.15 Daily Update or another recognized electronic source used for the
         purpose of displaying that rate, under the heading "Bank Prime Loan".

                  (ii) If the rate described in clause (i) above is not
         published in H.15(519), H.15 Daily Update or another recognized
         electronic source by 3:00 P.M., New York City time, on such Calculation
         Date (unless the calculation is made earlier and the rate is available
         from one of those sources at that time), then the Prime Rate will be
         the arithmetic mean of the following rates as they appear on the
         Reuters Screen US PRIME 1 Page (as defined in Section 3(n) below): the
         rate of interest publicly announced by each bank appearing on that page
         as that bank's prime rate or base lending rate, as of 11:00 A.M., New
         York City time, on such Prime Interest Determination Date.

                  (iii) If fewer than four of the rates referred to in clause
         (ii) above appear on the Reuters Screen US PRIME 1 Page, the Prime Rate
         will be the arithmetic mean of the prime rates or base lending rates,
         as of the close of business on such Prime Interest Determination Date,
         of three major banks in New York City selected by the Calculation
         Agent. For this purpose, the Calculation Agent will use rates quoted on
         the basis of the actual number of days in the year divided by a 360-day
         year.

                  (iv) If fewer than three banks selected by the Calculation
         Agent are quoting as described in clause (iii) above, the Prime Rate
         shall be the Prime Rate in effect on such Prime Interest Determination
         Date (or, if the Initial Base Rate has been in effect for the prior
         Interest Reset Period, the Initial Base Rate).


                  (Reverse of Security continued on next page)
                                      -13-


                  The Base Rate determined in accordance with this Section 3(c)
will be adjusted by the addition or subtraction of the Spread, if any, or by
multiplying such Base Rate by the Spread Multiplier, if any.

                  (d) DETERMINATION OF LIBOR. If the Base Rate is LIBOR, the
Base Rate that takes effect on any Interest Reset Date shall be LIBOR on the
corresponding LIBOR Interest Determination Date (as defined in Section 3(n)
below) and shall be determined in accordance with the following provisions:

                 LIBOR will be either of the following rates, whichever appears
on the face hereof:

                  (x) the offered rate appearing on the Moneyline Telerate LIBOR
         Page (as defined in Section 3(n) below); or

                  (y) the arithmetic mean of the offered rates appearing on the
         Reuters Screen LIBOR Page (as defined in Section 3(n) below) unless
         that page by its terms cites only one rate, in which case that rate;

in either case, as of 11:00 A.M., London time, on such LIBOR Interest
Determination Date for deposits of the Index Currency having the Index Maturity
beginning on such Interest Reset Date. If no reference page is specified on the
face hereof, Moneyline Telerate LIBOR Page will apply to this Security:

                  (i) If Moneyline Telerate LIBOR Page is specified on the face
         hereof and the rate referenced in clause (x) above does not appear on
         that page, or if Reuters Screen LIBOR Page is specified on the face
         hereof and fewer than two of the rates referenced in clause (y) above
         appear on that page or no rate appears on any page on which only one
         rate normally appears, then LIBOR will be determined on the basis of
         the rates, at approximately 11:00 A.M., London time, on such LIBOR
         Interest Determination Date, at which deposits of the following kind
         are offered to prime banks in the London interbank market by four major
         banks in that market selected by the Calculation Agent: deposits of the
         Index Currency having the Index Maturity beginning on such Interest
         Reset Date and in a Representative Amount (as defined in Section 3(n)
         below). The Calculation Agent will request the principal London office
         of each such bank to provide a quotation of its rate. If at least two
         quotations are provided, LIBOR for such LIBOR Interest Determination
         Date will be the arithmetic mean of the quotations.

                  (ii) If fewer than two quotations are provided as described in
         clause (i) above, LIBOR for such LIBOR Interest Determination Date will
         be the arithmetic mean of the rates for loans of the following kind to
         leading European banks quoted, at approximately 11:00 A.M. in the
         principal financial center for the country issuing the Index Currency,
         on such LIBOR Interest Determination Date, by three major banks in that
         financial center selected by the Calculation Agent: loans of the Index
         Currency having the Index Maturity beginning on such Interest Reset
         Date and in a Representative Amount.



                  (Reverse of Security continued on next page)
                                      -14-


                  (iii) If fewer than three banks selected by the Calculation
         Agent are quoting as described in clause (ii) above, LIBOR will be the
         LIBOR in effect on such LIBOR Interest Determination Date (or, if the
         Initial Base Rate has been in effect for the prior Interest Reset
         Period, the Initial Base Rate).

                  The Base Rate determined in accordance with this Section 3(d)
will be adjusted by the addition or subtraction of the Spread, if any, or by
multiplying such Base Rate by the Spread Multiplier, if any. If the Base Rate is
LIBOR and no currency is specified on the face hereof as the Index Currency, the
Index Currency shall be U.S. dollars.

                  (e) [RESERVED]

                  (f) DETERMINATION OF TREASURY RATE. If the Base Rate is the
Treasury Rate, the Base Rate that takes effect on any Interest Reset Date shall
equal the rate for the auction on the corresponding Treasury Interest
Determination Date (as defined in Section 3(n) below) of direct obligations of
the United States ("Treasury Bills") having the Index Maturity, as that rate
appears on Moneyline Telerate Page 56 or 57 under the heading "Investment Rate".
If the Treasury Rate cannot be determined as described above, the following
procedures will apply in determining the Treasury Rate:

                  (i) If the rate described above does not appear on either
         Moneyline Telerate Page 56 or 57 at 3:00 P.M., New York City time, on
         the Calculation Date corresponding to such Treasury Interest
         Determination Date (unless the calculation is made earlier and the rate
         is available from that source at that time), the Treasury Rate will be
         the Bond Equivalent Yield (as defined in Section 3(n) below) of the
         rate, for such Treasury Interest Determination Date and for Treasury
         Bills having the Index Maturity, as published in H.15 Daily Update, or
         another recognized electronic source used for displaying that rate,
         under the heading "U.S. Government Securities/Treasury Bills/Auction
         High".

                  (ii) If the rate described in clause (i) above does not appear
         in H.15 Daily Update or another recognized electronic source by 3:00
         P.M., New York City time, on such Calculation Date (unless the
         calculation is made earlier and the rate is available from one of those
         sources at that time), the Treasury Rate will be the Bond Equivalent
         Yield of the auction rate, for such Treasury Interest Determination
         Date and for Treasury Bills having the Index Maturity, as announced by
         the U.S. Department of the Treasury.

                  (iii) If the auction rate described in clause (ii) above is
         not so announced by 3:00 P.M., New York City time, on such Calculation
         Date, or if no such auction is held for the relevant week, then the
         Treasury Rate will be the Bond Equivalent Yield of the rate, for such
         Treasury Interest Determination Date and for Treasury Bills having the
         Index Maturity, as published in H.15(519) under the heading "U.S.
         Government Securities/Treasury Bills/Secondary Market".


                  (Reverse of Security continued on next page)
                                      -15-


                  (iv) If the rate described in clause (iii) above does not
         appear in H.15(519) by 3:00 P.M., New York City time, on such
         Calculation Date, then the Treasury Rate will be the rate, for such
         Treasury Interest Determination Date and for Treasury Bills having the
         Index Maturity, as published in H.15 Daily Update, or another
         recognized electronic source used for displaying that rate, under the
         heading "U.S. Government Securities/ Treasury Bills /Secondary Market".

                  (v) If the rate described in clause (iv) above does not appear
         in H.15 Daily Update or another recognized electronic source by 3:00
         P.M., New York City time, on such Calculation Date (unless the
         calculation is made earlier and the rate is available from one of those
         sources at that time), the Treasury Rate will be the Bond Equivalent
         Yield of the arithmetic mean of the following secondary market bid
         rates for the issue of Treasury Bills with a remaining maturity closest
         to the Index Maturity: the rates bid as of approximately 3:30 P.M., New
         York City time, on such Treasury Interest Determination Date, by three
         primary U.S. government securities dealers in New York City selected by
         the Calculation Agent.

                  (vi) If fewer than three dealers selected by the Calculation
         Agent are quoting as described in clause (v) above, the Treasury Rate
         shall be the Treasury Rate in effect on such Treasury Interest
         Determination Date (or, if the Initial Base Rate has been in effect for
         the prior Interest Reset Period, the Initial Base Rate).

                  The Base Rate determined in accordance with this Section 3(f)
will be adjusted by the addition or subtraction of the Spread, if any, or by
multiplying such Base Rate by the Spread Multiplier, if any, specified on the
face hereof.

                  (g) DETERMINATION OF CMT RATE. If the Base Rate is the CMT
Rate, the Base Rate that takes effect on any Interest Reset Date shall equal the
CMT Rate on the second Business Day immediately preceding such Interest Reset
Date (the "CMT Interest Determination Date"). "CMT Rate" means the following
rate displayed on the Designated CMT Telerate Page (as defined in Section 3(n)
below) under the heading " . . . Treasury Constant Maturities", under the column
for the Designated CMT Index Maturity (as defined in Section 3(n) below):

                  (x) if the Designated CMT Moneyline Telerate Page is Moneyline
         Telerate Page 7051, the rate for such CMT Interest Determination Date;
         or

                  (y) if the Designated CMT Moneyline Telerate Page is Moneyline
         Telerate Page 7052, the weekly or monthly average, as specified on the
         face hereof, for the week that ends immediately before the week in
         which such CMT Interest Determination Date falls, or for the month that
         ends immediately before the month in which such CMT Interest
         Determination Date falls, as applicable.

If the CMT Rate cannot be determined as described above, the following
procedures will apply in determining the CMT Rate:


                  (Reverse of Security continued on next page)
                                      -16-


                  (i) If the applicable rate described above is not displayed on
         the relevant Designated CMT Moneyline Telerate Page at 3:00 P.M., New
         York City time, on the Calculation Date corresponding to such CMT
         Interest Determination Date (unless the calculation is made earlier and
         the rate is available from that source at that time), then the CMT Rate
         will be the applicable Treasury constant maturity rate described above
         -- i.e., for the Designated CMT Index Maturity and for either such CMT
         Interest Determination Date or the weekly or monthly average, as
         applicable -- as published in H.15(519).

                  (ii) If the applicable rate described in clause (i) above is
         not published in H.15(519) by 3:00 P.M., New York City time, on such
         Calculation Date, then the CMT Rate will be the Treasury constant
         maturity rate, or other U.S. Treasury rate, for the Designated CMT
         Index Maturity and with reference to such CMT Interest Determination
         Date, that:

                  (x) is published by the Board of Governors of the Federal
         Reserve System, or the U.S. Department of the Treasury, and

                  (y) is determined by the Calculation Agent to be comparable to
         the applicable rate formerly displayed on the Designated CMT Moneyline
         Telerate Page and published in H.15(519).

                  (iii) If the rate described in clause (ii) above is not
         published by 3:00 P.M., New York City time, on such Calculation Date,
         then the CMT Rate will be the yield to maturity of the arithmetic mean
         of the following secondary market offered rates for the most recently
         issued Treasury Notes (as defined in Section 3(n) below) having an
         original maturity of approximately the Designated CMT Index Maturity,
         having a remaining term to maturity of not less than the Designated CMT
         Index Maturity minus one year and in a Representative Amount: the
         offered rates, as of approximately 3:30 P.M., New York City time, on
         such CMT Interest Determination Date, of three primary U.S. government
         securities dealers in New York City selected by the Calculation Agent.
         In selecting such offered rates, the Calculation Agent will request
         quotations from five such primary dealers and will disregard the
         highest quotation -- or, if there is equality, one of the highest --
         and the lowest quotation -- or, if there is equality, one of the
         lowest.

                  (iv) If fewer than five but more than two such primary dealers
         are quoting as described in clause (iii) above, then the CMT Rate for
         such CMT Interest Determination Date will be based on the arithmetic
         mean of the offered rates so obtained, and neither the highest nor the
         lowest of such quotations will be disregarded.

                  (v) If the Calculation Agent is unable to obtain three
         quotations of the kind described in clause (iii) above, the CMT Rate
         will be the yield to maturity of the arithmetic mean of the following
         secondary market offered rates for Treasury Notes having an original
         maturity longer than the Designated CMT Index


                  (Reverse of Security continued on next page)
                                      -17-


         Maturity, having a remaining term to maturity closest to the Designated
         CMT Index Maturity and in a Representative Amount: the offered rates,
         as of approximately 3:30 P.M., New York City time, on such CMT Interest
         Determination Date, of three primary U.S. government securities dealers
         in New York City selected by the Calculation Agent. In selecting such
         offered rates, the Calculation Agent will request quotations from five
         such primary dealers and will disregard the highest quotation -- or, if
         there is equality, one of the highest -- and the lowest quotation --
         or, if there is equality, one of the lowest. If two Treasury Notes with
         an original maturity longer than the Designated CMT Index Maturity have
         remaining terms to maturity that are equally close to the Designated
         CMT Index Maturity, the Calculation Agent will obtain quotations for
         the Treasury Note with the shorter remaining term to maturity.

                  (vi) If fewer than five but more than two such primary dealers
         are quoting as described in clause (v) above, then the CMT Rate for
         such CMT Interest Determination Date will be based on the arithmetic
         mean of the offered rates so obtained, and neither the highest nor the
         lowest of such quotations will be disregarded.

                  (vii) If two or fewer primary dealers selected by the
         Calculation Agent are quoting as described in clause (v) above, the CMT
         Rate shall be the CMT Rate in effect on such CMT Interest Determination
         Date (or, if the Initial Base Rate has been in effect for the prior
         Interest Reset Period, the Initial Base Rate).

                  The Base Rate determined in accordance with this Section 3(g)
will be adjusted by the addition or subtraction of the Spread, if any, or by
multiplying such Base Rate by the Spread Multiplier, if any.

                  (h) DETERMINATION OF CD RATE. If the Base Rate is the CD Rate,
the Base Rate that takes effect on any Interest Reset Date shall equal the rate,
on the second Business Day immediately preceding such Interest Reset Date (the
"CD Interest Determination Date"), for negotiable U.S. dollar certificates of
deposit having the Index Maturity as published in H.15(519) under the heading
"CDs (Secondary Market)". If the CD Rate cannot be determined as described
above, the following procedures will apply in determining the CD Rate:

                  (i) If the rate described above is not published in H.15(519)
         by 3:00 P.M., New York City time, on the Calculation Date corresponding
         to such CD Interest Determination Date, then the CD Rate shall be the
         rate described above as published in H.15 Daily Update, or another
         recognized electronic source used for displaying that rate, under the
         heading "CDs (Secondary Market)".

                  (ii) If the rate described in clause (i) above is not
         published in H.15(519), H.15 Daily Update or another recognized
         electronic source by 3:00 P.M., New York City time, on such Calculation
         Date (unless the calculation is made earlier and the rate is available
         from one of those sources at that time), the CD Rate shall be the
         arithmetic mean of the following secondary market offered rates for



                  (Reverse of Security continued on next page)
                                      -18-


         negotiable U.S. dollar certificates of deposit of major U.S. money
         center banks having a remaining maturity closest to the Index Maturity
         and in a Representative Amount: the rates offered as of 10:00 A.M., New
         York City time, on such CD Interest Determination Date, by three
         leading nonbank dealers in negotiable U.S. dollar certificates of
         deposit in New York City, as selected by the Calculation Agent.

                  (iii) If fewer than three dealers selected by the Calculation
         Agent are quoting as described in clause (ii) above, the CD Rate will
         be the CD Rate in effect on such CD Interest Determination Date (or, if
         the Initial Base Rate has been in effect for the prior Reset Period,
         the Initial Base Rate).

                  The Base Rate determined in accordance with this Section 3(h)
will be adjusted by the addition or subtraction of the Spread, if any, or by
multiplying such Base Rate by the Spread Multiplier, if any.

                  (i) DETERMINATION OF FEDERAL FUNDS RATE. If the Base Rate is
the Federal Funds Rate, the Base Rate that takes effect on any Interest Reset
Date shall equal the rate, on the second Business Day immediately preceding such
Interest Reset Date (the "Federal Funds Interest Determination Date"), for U.S.
dollar Federal Funds as published in H.15(519) under the heading "Federal Funds
(Effective)", as that rate is displayed on Moneyline Telerate Page 120. If the
Federal Funds Rate cannot be determined as described above, the following
procedures will apply in determining the Federal Funds Rate:

                  (i) If the rate described above is not displayed on Moneyline
         Telerate Page 120 by 3:00 P.M., New York City time, on the Calculation
         Date corresponding to such Federal Funds Interest Determination Date
         (unless the calculation is made earlier and the rate is available from
         that source at that time), then the Federal Funds Rate will be the rate
         described above, on such Federal Funds Interest Determination Date, as
         published in H.15 Daily Update, or another recognized electronic source
         used for displaying that rate, under the heading "Federal Funds
         (Effective)".

                  (ii) If the rates described above are not displayed on
         Moneyline Telerate Page 120 or are not published in H.15 (519), H.15
         Daily Update or another recognized electronic source by 3:00 P.M., New
         York City time, on such Calculation Date (unless the calculation is
         made earlier and the rate is available from one of those sources at
         that time), the Federal Funds Rate will be the arithmetic mean of the
         rates for the last transaction in overnight U.S. dollar federal funds
         arranged, before 9:00 A.M., New York City time, on such Federal Funds
         Interest Determination Date, by three leading brokers of U.S. dollar
         federal funds transactions in New York City selected by the Calculation
         Agent.

                  (iii) If fewer than three brokers selected by the Calculation
         Agent are quoting as described in clause (ii) above, the Federal Funds
         Rate will be the Federal Funds Rate in effect on such Federal Funds
         Interest Determination Date



                  (Reverse of Security continued on next page)
                                      -19-


         (or, if the Initial Base Rate has been in effect for the prior Interest
         Reset Period, the Initial Base Rate).

                  The interest rate determined in accordance with this Section
3(i) will be adjusted by the addition or subtraction of the Spread, if any, or
by multiplying such Base Rate by the Spread Multiplier, if any.

                  (j) DETERMINATION OF 11TH DISTRICT RATE. If the Base Rate is
the 11th District Rate, the Base Rate that takes effect on any Interest Reset
Date shall equal the 11th District Rate on the 11th District Interest
Determination Date (as defined in Section 3(n) below) corresponding to such
Interest Reset Date. The 11th District Rate on any 11th District Interest
Determination Date shall be the rate equal to the monthly weighted average cost
of funds for the calendar month immediately before such date, as displayed on
Moneyline Telerate Page 7058 under the heading "11th District" as of 11:00 A.M.,
San Francisco time, on such date. If the 11th District Rate cannot be determined
as described above, the following procedures will apply in determining the 11th
District Rate:

                  (i) If the rate described above does not appear on Moneyline
         Telerate Page 7058 on such 11th District Interest Determination Date,
         then the 11th District Rate on such date will be the monthly weighted
         average cost of funds paid by institutions that are members of the
         Eleventh Federal Home Loan Bank District for the calendar month
         immediately preceding such date, as most recently announced by the
         Federal Home Loan Bank of San Francisco as such monthly weighted
         average cost of funds.

                  (ii) If the Federal Home Loan Bank of San Francisco fails to
         announce the cost of funds described in clause (i) above on or before
         such 11th District Interest Determination Date, the 11th District Rate
         that takes effect on such Interest Reset Date will be the 11th District
         Rate in effect on such 11th District Interest Determination Date (or,
         if the Initial Base Rate has been in effect for the prior Interest
         Reset Period, the Initial Base Rate).

                  The interest rate determined in accordance with this Section
3(j) will be adjusted by the addition or subtraction of the Spread, if any, or
by multiplying such Base Rate by the Spread Multiplier, if any.

                  (k) MINIMUM AND MAXIMUM LIMITS. Notwithstanding the foregoing,
the rate at which interest accrues on this Security (i) shall not at any time be
higher than the Maximum Rate, if any, or less than the Minimum Rate, if any,
specified on the face hereof, in each case on an accrual basis, and (ii) shall
not at any time be higher than the maximum rate permitted by New York law, as
the same may be modified by United States law of general application.

                  (l) CALCULATION OF INTEREST. Payments of interest hereon with
respect to any Interest Payment Date or at the Maturity of the principal hereof
will include interest accrued to but excluding such Interest Payment Date or the
date of such Maturity,



                  (Reverse of Security continued on next page)
                                      -20-

as the case may be. Accrued interest from the date of issue or from the last
date to which interest has been paid or duly provided for shall be calculated by
the Calculation Agent by multiplying the Principal Amount by an accrued interest
factor. Such accrued interest factor shall be computed by adding the interest
factors calculated for each day from and including the Original Issue Date or
from and including the last date to which interest has been paid or duly
provided for, to but excluding the date for which accrued interest is being
calculated. The interest factor for each such day shall be expressed as a
decimal and computed by dividing the interest rate (also expressed as a decimal)
in effect on such day by 360, if the Base Rate is the Commercial Paper Rate,
Prime Rate, LIBOR, CD Rate, Federal Funds Rate or 11th District Rate, or by the
actual number of days in the year, if the Base Rate is the Treasury Rate or CMT
Rate.

                  All percentages resulting from any calculation with respect to
this Security will be rounded upward or downward, as appropriate, to the next
higher or lower one hundred-thousandth of a percentage point (e.g., 9.876541%
(or .09876541) being rounded down to 9.87654% (or .0987654) and 9.876545% (or
..09876545) being rounded up to 9.87655% (or .0987655) ). All amounts used in or
resulting from any calculation with respect to this Security will be rounded
upward or downward, as appropriate, to the nearest cent, in the case of U.S.
dollars, or to the nearest corresponding hundredth of a unit, in the case of a
currency other than U.S. dollars, with one-half cent or one-half of a
corresponding hundredth of a unit or more being rounded upward.

                  (m) CALCULATION AGENT AND EXCHANGE RATE AGENT. The Company has
initially appointed the institutions named on the face of this Security as
Calculation Agent and Exchange Rate Agent, respectively, to act as such agents
with respect to this Security, but the Company may, in its sole discretion,
appoint any other institution (including any Affiliate of the Company) to serve
as any such agent from time to time. The Company will give the Trustee prompt
written notice of any change in any such appointment. Insofar as this Security
provides for any such agent to obtain rates, quotes or other data from a bank,
dealer or other institution for use in making any determination hereunder, such
agent may do so from any institution or institutions of the kind contemplated
hereby notwithstanding that any one or more of such institutions are any such
agent, Affiliates of any such agent, any of the agents named on the cover of the
Company's Prospectus Supplement dated June 23, 2004 relating to the Company's
Medium-Term Notes, Series F or any Affiliate of any such agent or Affiliates of
the Company.

                  All determinations made by the Calculation Agent or the
Exchange Rate Agent may be made by such agent in its sole discretion and, absent
manifest error, shall be conclusive for all purposes and binding on the Holder
of this Security and the Company. Neither the Calculation Agent nor the Exchange
Rate Agent shall have any liability therefor.

                  (n) DEFINITIONS OF CALCULATION TERMS. As used in this
Security, the following terms have the meanings set forth below:


                  (Reverse of Security continued on next page)
                                      -21-


                  "Bond Equivalent Yield" means a yield expressed as a
percentage and calculated in accordance with the following formula:

                  Bond Equivalent Yield =                 D x N         x 100,
                                                     ---------------
                                                      360 - (D x M)

         where

         -        "D" equals the annual rate for Treasury Bills quoted on a bank
                  discount basis and expressed as a decimal;

         -        "N" equals 365 or 366, as the case may be; and

         -        "M" equals the actual number of days in the period from and
                  including the relevant Interest Reset Date to but excluding
                  the next succeeding Interest Reset Date.

                  "Business Day" means, for this Security, a day that meets the
requirements set forth in each of clauses (i) through (iii) below, in each case
to the extent such requirements apply to this Security as specified below:

(i)      is a Monday, Tuesday, Wednesday, Thursday or Friday that is neither a
         legal holiday nor a day on which commercial banking institutions in New
         York City generally are authorized or required by law, regulation or
         executive order to close;

(ii)     if the Base Rate is LIBOR, is also a London Banking Day; and

(iii)    if the Specified Currency for payment of principal of or interest on
         this Security is other than U.S. dollars, is also a day on which
         banking institutions are not authorized or required by law, regulation
         or executive order to close in the principal financial center of the
         country issuing such Specified Currency.

Solely when used in the third paragraph under the heading "Currency of Payment"
on the face of this Security, the meaning of the term "Business Day" shall be
determined as if the Base Rate for this Security is not LIBOR. With respect to
any particular location, the close of business on any day on which business is
not being conducted at that location shall be deemed to mean 5:00 P.M., New York
City time, on that day.

                  The "Calculation Date" corresponding to any Commercial Paper
Interest Determination Date, Prime Interest Determination Date, LIBOR Interest
Determination Date, Treasury Interest Determination Date, CMT Interest
Determination Date, CD Interest Determination Date, Federal Funds Interest
Determination Date or 11th District Interest Determination Date, as the case may
be, means the earlier of:


                  (Reverse of Security continued on next page)
                                      -22-


                  (i) the tenth day after such interest determination date or,
         if any such day is not a Business Day, the next succeeding Business
         Day; and

                  (ii) the Business Day immediately preceding the Interest
         Payment Date or the date of Maturity of the principal hereof, whichever
         is the day on which the next payment of interest will be due.

The Calculation Date corresponding to any Interest Reset Date means the
Calculation Date corresponding to the relevant interest determination date
immediately preceding such Interest Reset Date.

                  "Designated CMT Index Maturity" means, if the Base Rate is the
CMT Rate, the Index Maturity for this Security and will be the original period
to maturity of a U.S. Treasury security -- either 1, 2, 3, 5, 7, 10, 20 or 30
years -- specified on the face hereof, provided that, if no such original
maturity period is so specified, the Designated CMT Index Maturity will be 2
years.

                  "Designated CMT Moneyline Telerate Page" means, if the Base
Rate is the CMT Rate, the Moneyline Telerate Page specified on the face hereof
that displays Treasury constant maturities as reported in H.15(519), provided
that, if no Moneyline Telerate Page is so specified, then the applicable page
will be Moneyline Telerate Page 7052 and provided, further, that if Moneyline
Telerate Page 7052 applies but it is not specified on the face hereof whether
the weekly or monthly average applies, the weekly average will apply.

                  The "11th District Interest Determination Date" corresponding
to a particular Interest Reset Date will be the last working day in San
Francisco, in the first calendar month preceding such Interest Reset Date, on
which the Federal Home Loan Bank of San Francisco publishes the monthly average
cost of funds paid by member institutions of the Eleventh Federal Home Loan Bank
District for the second calendar month preceding such Interest Reset Date.

                  "H.15(519)" means the weekly statistical release entitled
"Statistical Release H.15 (519)", or any successor publication, published by the
Board of Governors of the Federal Reserve System.

                  "H.15 Daily Update" means the daily update of H.15 (519)
available through the worldwide-web site of the Board of Governors of the
Federal Reserve System, at http://www.federalreserve.gov/releases/h15/update, or
any successor site or publication.

                  The "LIBOR Interest Determination Date" corresponding to any
Interest Reset Date means the second London Banking Day preceding such Interest
Reset Date, unless the Index Currency is pounds sterling, in which case the
LIBOR Interest Determination Date will be the Interest Reset Date.

                  (Reverse of Security continued on next page)
                                      -23-



                  "London Banking Day" means a day on which commercial banks are
open for business (including dealings in the Index Currency) in London.

                  "Money Market Yield" means a yield expressed as a percentage
and calculated in accordance with the following formula:

                  Money Market Yield =       D x 360               x 100,
                                        ----------------
                                           360 - (D x M)

where

         -        "D" equals the per annum rate for commercial paper quoted on a
                  bank discount basis and expressed as a decimal; and

         -        "M" equals the actual number of days in the period from and
                  including the relevant Interest Reset Date to but excluding
                  the next succeeding Interest Reset Date.

                  "Moneyline Telerate LIBOR Page" means Moneyline Telerate Page
3750 or any replacement page or pages on which London interbank rates of major
banks for the Index Currency are displayed.

                  "Moneyline Telerate Page" means the display on Moneyline
Telerate, Inc., or any successor service, on the page or pages specified on the
face hereof, or any replacement page or pages on that service.

                  "Representative Amount" means an amount that, in the
Calculation Agent's judgment, is representative of a single transaction in the
relevant market at the relevant time.

                  "Reuters Screen LIBOR Page" means the display on the Reuters
Monitor Money Rates Service, or any successor service, on the page designated as
"LIBO" or any replacement page or pages on which London interbank rates of major
banks for the Index Currency are displayed.

                  "Reuters Screen US PRIME 1 Page" means the display on the "US
PRIME 1" page on the Reuters Monitor Money Rates Service, or any successor
service, or any replacement page or pages on that service, for the purpose of
displaying prime rates or base lending rates of major U.S. banks.

                  The "Treasury Interest Determination Date" corresponding to
any Interest Reset Date means the day of the week in which such Interest Reset
Date falls on which Treasury bills would normally be auctioned. If, as the
result of a legal holiday, an auction is so held on the Friday in the week
immediately preceding the week in which such Interest Reset Date falls, such
Friday will be the corresponding Treasury Interest Determination Date. If no
auction is held for the week in which such Interest Reset Date falls, then the
Interest Reset Date with respect to such week shall be the first Business



                  (Reverse of Security continued on next page)
                                      -24-


Day of such week. If an auction date shall fall on a day that would otherwise be
an Interest Reset Date, then such Interest Reset Date shall instead be the first
Business Day immediately following such auction date.

                  "Treasury Notes" means direct, noncallable, fixed rate
obligations of the U.S. government.

                  References in this Security to U.S. dollars shall mean, as of
any time, the coin or currency that is then legal tender for the payment of
public and private debts in the United States of America.

                  References in this Security to a particular currency other
than U.S. dollars shall mean, as of any time, the coin or currency that is then
legal tender for the payment of public and private debts in the country issuing
such currency on the Original Issue Date.

                  References in this Security to a particular heading or
headings on any of Designated CMT Telerate Page, H.15(519), H.15 Daily Update,
Moneyline Telerate LIBOR Page, Moneyline Telerate Page, Reuters Screen LIBOR
Page or Reuters Screen US Prime 1 Page include any successor or replacement
heading or headings as determined by the Calculation Agent.

                  4. REDEMPTION AT THE COMPANY'S OPTION

                  Unless a Redemption Commencement Date is specified on the face
hereof, except as provided below, this Security shall not be redeemable at the
option of the Company before the Stated Maturity Date. If a Redemption
Commencement Date is so specified, and unless otherwise specified on the face
hereof, this Security is subject to redemption upon not less than 30 days' nor
more than 60 days' notice at any time and from time to time on or after the
Redemption Commencement Date, in each case as a whole or in part, at the
election of the Company and at the applicable Redemption Price specified on the
face hereof (expressed as a percentage of the principal amount of this Security
to be redeemed), together with accrued interest to the Redemption Date, but
interest installments due on or prior to such Redemption Date will be payable to
the Holder of this Security, or one or more Predecessor Securities, of record at
the close of business on the relevant record date, all as provided in the
Indenture; provided, however, that the first two paragraphs of Section 1103 of
the Indenture shall not apply to this Security, and if less than all of the
Securities of this series are to be redeemed, the Company may select, from
Securities of this series that are subject to redemption pursuant to the terms
thereof, the Security or Securities, or portion or portions thereof, to be
redeemed.

                  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 this Security as a whole at a redemption
price of 100% of the principal amount thereof (or, if this Security is issued
with an original issue discount, 100% of the OID Default Amount) together with
accrued interest to the date fixed for redemption.


                  (Reverse of Security continued on next page)
                                     -25-


                  5. REPAYMENT AT THE HOLDER'S OPTION

                  Except as otherwise may be provided on the face hereof, if one
or more Repayment Dates are specified on the face hereof, this Security will be
repayable in whole or in part in increments of $1,000 (provided that the
remaining principal amount of any Security surrendered for partial repayment
shall at least equal an Authorized Denomination), on any such Repayment Date, in
each case at the option of the Holder and at the applicable Repayment Price
specified on the face hereof (expressed as a percentage of the principal amount
to be repaid), together with accrued interest to the applicable Repayment Date
(but interest installments due on or prior to such Repayment Date will be
payable to the Holder of this Security, or one or more Predecessor Securities,
of record at the close of business on the relevant record date as provided in
the Indenture). If this security provides for more than one Repayment Date, and
the Holder exercises its option to elect repayment, the Holder shall be deemed
to have elected repayment on the earliest Repayment Date after all conditions to
such exercise have been satisfied, and references herein to the applicable
Repayment Date shall mean such earliest Repayment Date.

                  In order for the exercise of such option to be effective and
this Security 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 Security), on any
Business Day not later than the 30th, and not earlier than the 60th, calendar
day prior to the applicable Repayment Date (or, if either such calendar day is
not a Business Day, the next succeeding Business Day), either (i) this Security,
with the form below entitled "Option to Elect Repayment" duly completed and
signed, 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., 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 Security, (b) the principal amount of this Security and the
amount of this Security to be repaid, (c) a statement that the option to elect
repayment is being exercised thereby and (d) a guarantee stating that the
Company will receive this Security, with the form below entitled "Option to
Elect Repayment" duly completed and signed, not later than five Business Days
after the date of such telegram, telex, facsimile transmission or letter
(provided that this Security and form duly completed and signed are received by
the Company by such fifth Business Day). Any such election shall be irrevocable.
The address to which such deliveries are to be made is J.P. Morgan Trust
Company, National Association, Attention: Institutional Trust Services/George N.
Reaves, 227 W. Monroe Street/Suite 2600, Chicago, IL 60607 (or at such other
places as the Company or the Paying Agent shall notify the Holder of this
Security). All questions as to the validity, eligibility (including time of
receipt) and acceptance of any Security for repayment will be determined by the
Company, whose determination will be final and binding. Notwithstanding the
foregoing, (x) if this Security is a Global Security, the option of the Holder
to elect repayment may be exercised in accordance with the Applicable Procedures
of the Depositary for this Security at least 15 calendar days prior to the
applicable Repayment Date and (y) whether or not this Security is a Global
Security, the



                  (Reverse of Security continued on next page)
                                      -26-

option of the Holder to elect repayment may be exercised in any such manner as
the Company may approve.

                  6. TRANSFER AND EXCHANGE

                  As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is registrable in
the Security Register, upon surrender of this Security for registration of
transfer at the office or agency of the Company in any place where the principal
of and any premium and interest on this Security are payable, duly endorsed by,
or accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his or
her attorney duly authorized in writing, and thereupon one or more new
Securities of this series and of like tenor, of Authorized Denominations and for
the same aggregate principal amount, will be issued to the designated transferee
or transferees.

                  As provided in the Indenture and subject to certain
limitations therein set forth, Securities of this series are exchangeable for a
like aggregate principal amount of Securities of this series and of like tenor
of a different Authorized Denomination, as requested by the Holder surrendering
the same.

                  No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.

                  Prior to due presentment of this Security for registration of
transfer, the Company, the Guarantor, the Trustee and any agent of the Company,
the Guarantor or the Trustee may treat the Person in whose name this Security is
registered as the owner hereof for all purposes, whether or not this Security be
overdue, and neither the Company nor the Guarantor nor the Trustee nor any such
agent shall be affected by notice to the contrary.

                  If this Security is a Global Security, this Security shall be
subject to the provisions of the Indenture relating to Global Securities,
including the limitations in Section 305 thereof on transfers and exchanges of
Global Securities.

                  7. [RESERVED.]

                  8. REMEDIES.

                  If an Event of Default with respect to Securities of this
series shall occur and be continuing, the principal of the Securities of this
series may be declared due and payable in the manner and with the effect
provided in the Indenture.

                  As provided in and subject to the provisions of the Indenture,
the Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a


                  (Reverse of Security continued on next page)
                                      -27-

continuing Event of Default with respect to the Securities of this series, the
Holders of not less than 25% in principal amount of the Securities of this
series at the time Outstanding shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default as Trustee and offered
the Trustee indemnity reasonably satisfactory to it, and the Trustee shall not
have received from the Holders of a majority in principal amount of Securities
of this series at the time Outstanding a direction inconsistent with such
request, and shall have failed to institute any such proceeding, for 60 days
after receipt of such notice, request and offer of indemnity. The foregoing
shall not apply to any suit instituted by the Holder of this Security for the
enforcement of any payment of principal hereof or any premium or interest hereon
on or after the respective due dates expressed herein.

                  No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest on this Security at the times, place and rate, and
in the coin or currency, herein prescribed.

                  9. MODIFICATION AND WAIVER.

                  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 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 a
majority in principal amount of the Securities at the time Outstanding of all
series to be affected (considered together as one class for this purpose). The
Indenture also contains provisions (i) permitting the Holders of a majority in
principal amount of the Securities at the time Outstanding of all series to be
affected under the Indenture (considered together as one class for this
purpose), on behalf of the


                  (Reverse of Security continued on next page)
                                      -28-

Holders of all Securities of such series, to waive compliance by the Company and
the Guarantor with certain provisions of the Indenture and (ii) permitting the
Holders of a majority in principal amount of the Securities at the time
Outstanding of any series to be affected under the Indenture (with each such
series considered separately for this purpose), on behalf of the Holders of all
Securities of such series, to waive certain past defaults under the Indenture
and their consequences. Any such consent or waiver by the Holder of this
Security shall be conclusive and binding upon such Holder and upon all future
Holders of this Security and of any Security 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 Security.

                  10. GOVERNING LAW.

                  THIS SECURITY AND THE INDENTURE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.




                                      -29-

                                    GUARANTEE
                                       OF
                                  POPULAR, INC.

                  Popular, Inc. (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 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.



                                      -30-


                  IN WITNESS WHEREOF, Popular, Inc. 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.

                                   POPULAR INC.


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


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

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

Attested:  ________________________



                                      -31-

                                                            CUSIP NO. __________

                                                 ORIGINAL ISSUE DATE: __________



                           POPULAR NORTH AMERICA, INC.
                           MEDIUM-TERM NOTE, SERIES F

                            OPTION TO ELECT REPAYMENT

               TO BE COMPLETED ONLY IF THIS SECURITY IS REPAYABLE
                   AT THE OPTION OF THE HOLDER AND THE HOLDER
                          ELECTS TO EXERCISE SUCH RIGHT


                  The undersigned hereby irrevocably requests and instructs the
Company to repay the Security referred to in this notice (or the portion thereof
specified below) at the applicable Repayment Price, together with interest to
the Repayment Date, all as provided for in such Security, to the undersigned,
whose name, address and telephone number are as follows:


- -------------------------------------------------------------------------------
                     (please print name of the undersigned)


- -------------------------------------------------------------------------------
                    (please print address of the undersigned)


- -------------------------------------------------------------------------------
               (please print telephone number of the undersigned)

                  If such Security provides for more than one Repayment Date,
the undersigned requests repayment on the earliest Repayment Date after the
requirements for exercising this option have been satisfied, and references in
this notice to the Repayment Date mean such earliest Repayment Date. Terms used
in this notice that are defined in such Security are used herein as defined
therein.

                  For such Security 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 such
Security, on any Business Day not later than the 30th or earlier than the 60th
calendar day prior to the Repayment Date (or, if either such calendar day is not
a Business Day, the next succeeding Business Day), either (i) such Security,
with this "Option to Elect Repayment" form duly completed and signed, 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., 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 such Security,



                                      -32-


(b) the principal amount of such Security and the amount of such Security to be
repaid, (c) a statement that the option to elect repayment is being exercised
thereby and (d) a guarantee stating that such Security to be repaid with the
form entitled "Option to Elect Repayment" on the addendum to the Security duly
completed and signed will be received by the Company not later than five
Business Days after the date of such telegram, telex, facsimile transmission or
letter (provided that such Security and form duly completed and signed are
received by the Company by such fifth Business Day). The address to which such
deliveries are to be made is:

                  J.P. Morgan Trust Company National Association
                  Attention:  Institutional Trust Services/George N. Reaves
                  227 W. Monroe Street/Suite 2600
                  Chicago, IL  60607

or at such other place as the Company or the Paying Agent shall notify the
Holder of such Security.

                  If less than the entire principal amount of such Security is
to be repaid, specify the portion thereof (which shall equal any Authorized
Denomination) that the Holder elects to have repaid:

                  -------------------------

and specify the denomination or denominations (which shall equal any Authorized
Denomination) of the Security or Securities to be issued to the Holder in
respect of the portion of such Security not being repaid (in the absence of any
specification, one Security will be issued in respect of the portion not being
repaid):

                  -------------------------

Date:
     ---------------------          -------------------------------------------
                                    Notice: The signature to this Option to
                                    Elect Repayment must correspond with the
                                    name of the Holder as written on the face of
                                    such Security in every particular without
                                    alteration or enlargement or any other
                                    change whatsoever.


                                      -33-

                                  ABBREVIATIONS

                  The following abbreviations, when used in the inscription on
the face of this Security, shall be construed as though they were written out in
full according to applicable laws or regulations.

                  TEN COM  -       as tenants in common

                  TEN ENT  -       as tenants by the entireties

                  JT TEN  -       as joint tenants with the right of
                                  survivorship and not as tenants in
                                  common

                  UNIF GIFT MIN ACT  -              Custodian
                                      --------------           ----------------
                                        (Cust)                      (Minor)

                        under Uniform Gifts to Minors Act


                               -------------------
                                     (State)

              Additional abbreviations may also be used though not
                               in the above list.



                                      -34-

                                   ASSIGNMENT


                  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 attached Security and all rights thereunder, and hereby irrevocably
constitutes and

appoints
         ----------------------------------------------------------------------

to transfer said Security on the books of the Company, with full power of
substitution in

the premises.

Dated:
      -------------------------

Signature Guaranteed


NOTICE: Signature must be guaranteed.     NOTICE:  The signature to this
                                          assignment must correspond with the
                                          name of the Holder as written upon
                                          the face of the attached Security
                                          in every particular, without
                                          alteration or enlargement or any
                                          change whatever.



                                      -35-

EX-10.(A)

                                  POPULAR, INC.

                   MEDIUM-TERM NOTE ADMINISTRATIVE PROCEDURES
                           (Dated as of June 30, 2004)


         Medium-Term Notes, Series 5 (collectively, the "Notes") in the
aggregate principal amount of up to $2,500,000,000, less the aggregate initial
offering price of Securities (as defined in the Prospectus, dated December 29,
2003, relating to debt securities and preferred stock of the Company, Popular
International Bank, Inc. and Popular North America, Inc.) authenticated and
delivered upon original issuance other than the Notes prior to or after the date
hereof, are to be offered on a continuous basis by Popular, Inc. (the "Company")
through UBS Securities LLC, Banc of America Securities LLC, Keefe, Bruyette &
Woods, Inc. and Popular Securities, Inc., 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 and the Agents, dated as of June 30, 2004 (the "Distribution
Agreement"). The Notes will be issued pursuant to the Indenture, dated as of
February 15, 1995, as supplemented by the First Supplemental Indenture, dated as
of May 8, 1997 and the Second Supplemental Indenture, dated as of August 5, 1999
(together, the "Indenture"), each between the Company and J.P. Morgan Trust
Company, National Association (successor in interest to Bank One, N.A.), 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 Prospectus dated December 29, 2003, 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 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 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 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 the
                               applicable Agent(s) 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 are
                               herein referred to as "Indexed Notes."

Denominations:                 The Notes will be issued in denominations of a
                               minimum of $1,000 and integral multiples of
                               $1,000. Any Notes denominated other than in U.S.
                               dollars will be issuable in denominations as set
                               forth in the relevant Multi-Currency Note
                               Prospectus Supplement. For special provisions
                               relating to Multi-Currency Notes or Indexed
                               Notes, see the related Multi-Currency or Indexed
                               Note Prospectus 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



                                      -2-


                               the Notes on their respective Repayment Dates, if
                               any. 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 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 Redemption
                               Commencement Dates, if any. Redemption
                               Commencement 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 Redemption Commencement Dates are indicated
                               with respect to a Note, such Note will not be
                               redeemable prior to Maturity, except as set forth
                               in the Prospectus in the event that the Company
                               is obligated to pay Additional Amounts in respect
                               of the Notes.

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 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 and CMT 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

                                      -3-


                               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 Multi-Currency Notes or
                               Indexed Notes, see the related Multi-Currency or
                               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, 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 Securities Act of 1933, as
                               amended. 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 price to public is other than 100%);



                                      -4-


                                      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 A.2, A.3,
                               A.4, A.5, A.6, A.7, A.8 and A.9; and

                                      7. any other terms of the Notes not
                               otherwise specified in the Prospectus or
                               Prospectus Supplement, including, without
                               limitation, any other terms required by 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 Agent
                               at the following addresses:

                               To UBS Securities LLC:
                               UBS Securities LLC
                               677 Washington Boulevard
                               Stamford, Connecticut 06901
                               Attention: Fixed Income Syndicate
                               Telephone: (203) 719-1088
                               Telecopy: (203) 719-0495

                               To Banc of America Securities LLC:
                               Banc of America Securities LLC
                               9 West 57th Street
                               NY1-301-2M-01
                               New York, New York 10019
                               Attention: High Grade Debt Capital Markets
                                          Transaction Management
                               Telecopy: (212) 847-5184



                                      -5-


                               To Keefe, Bruyette & Woods, Inc.:
                               Keefe, Bruyette & Woods, Inc.
                               787 Seventh Avenue
                               New York, New York  10019
                               Attention: Fixed Income Syndicate
                               Telecopy:  (212) 582-5419

                               To Popular Securities, Inc.:
                               Popular Securities, Inc.
                               209 Munoz Rivera Avenue
                               Hato Rey, Puerto Rico  00918
                               Attention: Ken McGrath
                               Telecopy:  (787) 766-3485

                               The applicable 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 UBS Securities LLC:
                               UBS Securities LLC
                               677 Washington Boulevard
                               Stamford, Connecticut 06901
                               Attention: Fixed Income Syndicate
                               Telephone: (203) 719-1088
                               Telecopy:   (203) 719-0495

                               To Banc of America Securities LLC:
                               Banc of America Securities LLC
                               9 West 57th Street
                               NY1-103-2M-01
                               New York, New York 10019
                               Attention:  High Grade Debt Capital Markets
                                           Transaction Management
                               Telecopy:   (212) 847-5184



                                      -6-


                               To Keefe, Bruyette & Woods, Inc.:
                               Keefe, Bruyette & Woods, Inc.
                               787 Seventh Avenue
                               New York, New York  10019
                               Attention: Fixed Income Syndicate
                               Telecopy: (212) 582-5419

                               To Popular Securities, Inc.:
                               Popular Securities, Inc.
                               209 Munoz Rivera Avenue
                               Hato Rey, Puerto Rico  00918
                               Attention:  Ken McGrath
                               Telecopy:   (787) 766-3485

                               To the Trustee:
                               J.P. Morgan Trust Company, National Association
                               227 W. Monroe Street, Suite 2600
                               Chicago, IL  60606
                               Attention:  Institutional Trust Services/Georges
                                           N. Reaves
                               Telephone:  (312) 267-5121
                               Telecopy:   (312) 267-5209

                               In each instance that a Pricing Supplement is
                               prepared, the applicable 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 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



                                      -7-


                               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 an Agent
                               as principal, appropriate settlement details will
                               be set forth in the applicable Terms Agreement to
                               be entered into between the applicable 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."



                                      -8-


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:

                               To UBS Securities LLC:
                               UBS Securities LLC
                               677 Washington Boulevard
                               Stamford, Connecticut 06901
                               Attention: Fixed Income Syndicate
                               Telephone: (203) 719-1088
                               Telecopy:  (203) 719-0495

                               To Banc of America Securities LLC:
                               Banc of America Securities LLC
                               9 West 57th Street
                               NY1-301-2M-01
                               New York, New York 10019
                               Attention: High Grade Debt Capital Markets
                                          Transaction Management
                               Telecopy:  (212) 847-5184

                                      -9-


                               To Keefe, Bruyette & Woods, Inc.:
                               Keefe, Bruyette & Woods, Inc.
                               787 Seventh Avenue
                               New York, New York  10019
                               Attention: Fixed Income Syndicate
                               Telecopy:  (212) 582-5419

                               To Popular Securities, Inc.:
                               Popular Securities, Inc.
                               209 Munoz Rivera Avenue
                               Hato Rey, Puerto Rico  00918
                               Attention: Ken McGrath
                               Telecopy:  (787) 766-3485

                               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
  Signatures:                  The Agents will have no obligation or liability
                               to the 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.



                                      -10-


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" has the meaning set forth in the
                               Prospectus Supplement.



                                      -11-



                      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 and The First National Bank of Chicago to DTC, dated August 6, 1999, as
supplemented by a Bring-Down Letter of Representations from the Company and the
Trustee to DTC, dated June 30, 2004, and a Medium-Term Note Certificate
Agreement between The First National Bank of Chicago 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 11th District Rate, and 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 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



                                      -12-


                               stolen Book-Entry Note, the most recent Interest
                               Payment 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 Ratings Service, a division of the
                               McGraw-Hill Companies ("S&P"), 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 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
                               $500,000,000 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




                                      -13-


                               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.

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


                                      -14-


                               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 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 $500,000,000 in aggregate
                               principal amount, one replacement Book-Entry Note
                               will be authenticated and issued to represent
                               each $500,000,000 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 a
                               minimum of $1,000 and integral multiples of
                               $1,000. Book-Entry Notes will be denominated in
                               principal amounts not in excess of $500,000,000.
                               If one or more Book-Entry Notes having an
                               aggregate principal amount in excess of
                               $500,000,000 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 $500,000,000 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 be,
                               the Interest Payment Date, 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



                                      -15-


                               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. Unless otherwise specified in
                               the applicable Pricing Supplement, 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" and unless
                               otherwise specified in the applicable Pricing
                               Supplement, the Interest Payment Date for a
                               Floating Rate 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;
                               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. Unless otherwise specified
                               in the applicable Pricing Supplement, the Regular
                               Record Date with respect to any Interest Payment



                                      -16-


                               Date for a Fixed Rate Note shall be the June 1 or
                               December 1 (whether or not a Business Day)
                               preceding such Interest Payment Date. Unless
                               otherwise specified in the applicable Pricing
                               Supplement, 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
                               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          Payments of Interest Only. Promptly after each
  and Interest:                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


                                      -17-


                               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 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, premium, if any, and
                               interest 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 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, premium, if any, or
                               interest due on the Book-Entry Notes to such
                               Participants.



                                      -18-


                               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 applicable 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;

                                           (b)   Regular Record Dates; and

                                           (c)   Interest Payment Dates.

                                           Floating Rate Notes:

                                           (a)   interest rate basis;

                                           (b)   index maturity;

                                           (c)   spread and/or spread
                                                 multiplier, if any;

                                           (d)   initial interest rate;

                                           (e)   maximum interest rate, if any;

                                           (f)   minimum interest rate, if any;

                                           (g)   interest reset dates;

                                           (h)   interest determination dates;

                                           (i)   interest payment dates; and

                                           (j)   calculation agent.

                                     4.    Price to public of the Note.



                                      -19-


                                     5.    Trade date.

                                     6.    Settlement Date (Original Issue
                                           Date).

                                     7.    Stated Maturity.

                                     8.    Redemption provisions, if any:

                                           (a)   Redemption Commencement Date

                                           (b)   initial redemption percentage

                                           (c)   annual redemption percentage
                                                 reduction

                                     9.    Repayment Date(s), if any.

                                     10.   Net proceeds to the Company.

                                     11.   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
                                     applicable 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 applicable Agent
                                     of such CUSIP Number. The Trustee will
                                     communicate to DTC and the applicable 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
                                           applicable Agent.



                                      -20-


                                     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 (which in the
                                           case of Floating Rate Notes that
                                           reset daily or weekly will be the
                                           date five calendar days immediately
                                           preceding the applicable Interest
                                           Payment Date and in the case of all
                                           other Book-Entry Notes will be the
                                           Regular Record Date, as defined in
                                           the Notes) 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 applicable Agent 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 applicable Agent maintained
                                     by DTC and (ii) to debit the settlement
                                     account of the applicable Agent and credit
                                     the settlement account of the Trustee
                                     maintained by DTC, in an amount equal to
                                     the price of such Note less the applicable
                                     Agent's commission. Any entry of such a
                                     deliver order shall be deemed to constitute
                                     a representation



                                      -21-


                                     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 applicable Agent will enter an SDFS
                                     deliver order through DTC's Participant
                                     Terminal System instructing DTC (i) to
                                     debit such Note to the applicable Agent's
                                     participant account and credit such Note to
                                     the participant account of the appropriate
                                     Participants maintained by DTC and (ii) to
                                     debit the settlement accounts of such
                                     Participants and credit the settlement
                                     account of the applicable 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
                                     deliver orders described in Settlement
                                     Procedures G and H will be settled in
                                     accordance with SDFS operating procedures
                                     in effect on the Settlement Date.

                               J.    The 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 stamped "SPECIMEN" on each
                                     page to the Company together with a
                                     statement setting forth the principal
                                     amount of Notes Outstanding as of the
                                     related 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.



                                      -22-


                               L.    The applicable 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

                               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 rate has
                               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


                                      -23-


                               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 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




                                      -24-


                               Note by the beneficial purchaser thereof (or a
                               person, including an indirect participant in DTC,
                               acting on behalf of such purchaser), such
                               Participants and, in turn, the applicable Agent
                               may enter SDFS deliver orders through DTC's
                               Participant Terminal System reversing Settlement
                               Procedures G and H, respectively. Thereafter, 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
                               applicable Agent to perform its obligations
                               hereunder or under the Distribution Agreement,
                               the Company will reimburse the applicable 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.





                                      -25-




                      PART III: PROCEDURES FOR NOTES ISSUED
                              IN CERTIFICATED FORM


Denominations:                 The Certificated Notes, other than Indexed Notes
                               and Multi-Currency Notes, will be issued in
                               denominations of a minimum of $1,000 and integral
                               multiples of $1,000. Indexed Notes or
                               Multi-Currency Notes will be issued in the
                               denominations specified in the related
                               Multi-Currency or Indexed Note Prospectus
                               Supplement and Pricing Supplement.

Interest:                      Each Certificated Note will bear interest in
                               accordance with its 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. Unless
                               otherwise specified in the applicable Pricing
                               Supplement, 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. Unless
                               otherwise specified in the applicable Pricing
                               Supplement, the Regular Record Date with respect
                               to any Interest Payment Date for a Fixed Rate
                               Certificated Note shall be the June 1 or December
                               1 (whether or not a Business Day) 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" and unless otherwise specified in
                               the applicable Pricing Supplement, 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

                                      -26-


                               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; 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. Unless otherwise specified in the
                               applicable Pricing Supplement, 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.

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 next day 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 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 Trustee or such agent
                               not less than 16 days prior to the applicable
                               Interest Payment Date.

                               For special provisions relating to Multi-Currency
                               Notes or Indexed Notes, see the related
                               Multi-Currency or Indexed Note Prospectus
                               Supplement.



                                      -27-


                               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 or agent shall be destroyed, and the
                               Trustee or agent shall furnish to the Company a
                               certificate with respect to such destruction.

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;

                                           (b)   Regular Record Dates; and

                                           (c)   Interest Payment Dates.



                                      -28-


                                     Floating Rate Notes:

                                           (a)   interest rate basis or bases;

                                           (b)   index maturity;

                                           (c)   spread or spread multiplier, if
                                                 any;

                                           (d)   initial interest rate;

                                           (e)   maximum interest rate, if any;

                                           (f)   minimum interest rate, if any;

                                           (g)   interest reset dates;

                                           (h)   interest determination dates;

                                           (i)   interest payment dates; and

                                           (j)   calculation agent.


                                     Multi-Currency or Indexed Notes:

                                           (a)   specified currency;

                                           (b)   index, if any;

                                           (c)   base rate of exchange, if any;
                                                 and

                                           (d)   any other applicable terms.

                                     7.    Currency or currency unit in which
                                           the Certificated Note is to be
                                           denominated.

                                     8.    Price to public of the Certificated
                                           Note.

                                     9.    Settlement Date (Original Issue
                                           Date).

                                     10.   Stated Maturity.

                                     11.   Redemption provisions, if any:

                                           (a)   Redemption Commencement Date

                                           (b)   initial redemption percentage

                                           (c)   annual redemption percentage
                                                 reduction

                                     12.   Repayment Date(s), if any.

                                     13.   Net proceeds to the Company.

                                     14.   Agent's commission.


                               B.    The Company shall provide to the Trustee by
                                     telecopy or other method acceptable to the



                                      -29-


                                     Trustee the above Settlement information
                                     with respect to each Certificated Note
                                     received from the Agents and the name of
                                     the applicable 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 applicable Agent a copy
                                     of the applicable Pricing Supplement. The
                                     Company also shall provide to the Trustee
                                     and the applicable Agent a copy of a
                                     Multi-Currency or Indexed Note Prospectus
                                     Supplement, if applicable.

                               C.    The Trustee or its duly appointed agent
                                     will complete and authenticate the
                                     Certificated Notes in form approved by the
                                     Company.

                               D.    With respect to each trade, the Trustee
                                     will deliver the Certificated Note and one
                                     photocopy thereof stamped "SPECIMEN" on
                                     each page to the applicable Agent at the
                                     following addresses:

                               UBS Securities LLC
                               677 Washington Boulevard
                               Stamford, Connecticut 06901
                               Attention:  Fixed Income Syndicate
                               Telephone:  (203) 719-1088
                               Telecopy:   (203) 719-0495

                               Banc of America Securities LLC
                               9 West 57th Street
                               NY1-301-2M-01
                               New York, New York 10019
                               Attention: High Grade Debt Capital Markets
                                          Transaction Management


                                      -30-


                               Telecopy:   (212) 847-5184

                               Keefe, Bruyette & Woods, Inc.
                               787 Seventh Avenue
                               New York, New York 10019
                               Attention: Fixed Income Syndicate
                               Telecopy: (212) 582-5419

                               Popular Securities, Inc.
                               209 Munoz Rivera Avenue
                               Hato Rey, Puerto Rico 00918
                               Attention: Ken McGrath
                               Telecopy: (787) 766-3485

                               The Trustee will keep Stub 1. The applicable
                               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 has
                               been authorized, delivered and completed as
                               aforementioned, the applicable 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 applicable Agent will deliver the
                                     Certificated Note, 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
                                     Certificated Note stamped "SPECIMEN" on
                                     each page 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:



                                      -31-


                               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
                               applicable Agent will forthwith notify the
                               Trustee and the Company by telephone, confirmed
                               in writing, and return the Certificated Note to
                               the Trustee.

                               The Trustee or the Company's duly authorized
                               agent, upon receipt of the Certificated Note from
                               the applicable Agent, will immediately advise the
                               Company, and the Company will promptly arrange to
                               credit the account of the applicable Agent in an
                               amount of immediately available funds equal to
                               the amount previously paid by the applicable
                               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
                               applicable Agent to perform its obligations
                               hereunder or under the Distribution Agreement,
                               the Company will reimburse the applicable 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 the Company
                               in writing.





                                      -32-

EX-10.(B)

                           POPULAR NORTH AMERICA, INC.


                   MEDIUM-TERM NOTE ADMINISTRATIVE PROCEDURES
                           (Dated as of June 30, 2004)

         Medium-Term Notes, Series F (collectively, the "Notes") in the
aggregate principal amount of up to $2,500,000,000, less the aggregate initial
public offering price of Securities (as defined in the Prospectus, dated
December 29, 2003, relating to debt securities and preferred stock of the
Company, Popular, Inc. (the "Guarantor") and Popular International Bank, Inc.)
authenticated and delivered upon original issuance other than the Notes prior to
or after the date hereof, are to be offered on a continuous basis by Popular
North America, Inc. (the "Company"), through UBS Securities LLC, Banc of America
Securities LLC, Keefe, Bruyette & Woods, Inc. and Popular Securities, Inc., 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 principals for resale.

         The Notes are being sold pursuant to a Distribution Agreement among the
Company, the Agents and the Guarantor, dated as of June 23, 2004 (the
"Distribution Agreement"). The Notes will 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, the Second Supplemental Indenture,
dated as of May 8, 1997, and the Third Supplemental Indenture, dated as of
August 5, 1999 (together, the "Indenture"), each between the Company and J.P.
Morgan Trust Company, National Association (successor in interest to Bank One,
N.A.), 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 Prospectus dated December 29, 2003, 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 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 used but not otherwise defined herein shall have
the meanings ascribed thereto in the Indenture or the Notes, as the case may be.



                                      -2-



                   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 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 the applicable
                           Agent(s) 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 are herein referred to as "Indexed Notes."

Denominations:             The Notes will be issued in denominations of a
                           minimum of $1,000 and integral multiples of $1,000.
                           Any Notes denominated other than in U.S. dollars will
                           be issuable in denominations as set forth in the
                           relevant Multi-Currency Note Prospectus Supplement.
                           For special provisions relating to Multi-Currency
                           Notes or Indexed Notes, see the related
                           Multi-Currency or Indexed Prospectus 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


                                      -3-



                           the Holders thereof in accordance with the terms of
                           the Notes on their respective Repayment Dates, if
                           any. 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
                           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 Redemption
                           Commencement Dates, if any. Redemption Commencement
                           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 Redemption Commencement
                           Dates are indicated with respect to a Note, such Note
                           will not be redeemable prior to Maturity, except as
                           set forth in the Prospectus in the event that the
                           Guarantor is obligated to pay Additional Amounts in
                           respect of the Notes.

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 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 and
                           CMT 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


                                      -4-



                           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 Multi-Currency Notes or
                           Indexed Notes, see the related Multi-Currency or
                           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, 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
                           Securities Act of 1933, as amended. 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
                           price to public is other than 100%);

                                      -5-


                                    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 A.2, A.3, A.4, A.5,
                           A.6, A.7, A.8 and A.9; and

                                    7. any other terms of the Notes not
                           otherwise specified in the Prospectus or Prospectus
                           Supplement, including, without limitation, any other
                           terms required by 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 Agent at the
                           following addresses:

                           To UBS Securities LLC:
                           UBS Securities LLC
                           677 Washington Boulevard
                           Stamford, Connecticut 06901
                           Attention: Fixed Income Syndicate
                           Telephone: (203) 719-1088
                           Telecopy: (203) 719-0495

                           To Banc of America Securities LLC:
                           Banc of America Securities LLC
                           9 West 57th Street
                           NY1-301-2M-01
                           New York, New York 10019
                           Attention:  High Grade Debt Capital Markets
                                       Transaction Management
                           Telecopy:   (212) 847-5184

                           To Keefe, Bruyette & Woods, Inc.:
                           Keefe, Bruyette & Woods, Inc.
                           787 Seventh Avenue
                           New York, New York 10019
                           Attention: Fixed Income Syndicate

                                      -6-


                           Telecopy: (212) 582-5419

                           To Popular Securities, Inc.:
                           Popular Securities, Inc.
                           209 Munoz Rivera Avenue
                           Hato Rey, Puerto Rico  00918
                           Attention:  Ken McGrath
                           Telecopy:    (787) 766-3485

                           The applicable 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 UBS Securities LLC:
                           UBS Securities LLC
                           677 Washington Boulevard
                           Stamford, Connecticut 06901
                           Attention: Fixed Income Syndicate
                           Telephone: (203) 719-1088
                           Telecopy:  (203) 719-0495

                           To Banc of America Securities LLC:
                           Banc of America Securities LLC
                           9 West 57th Street
                           NY1-301-2M-01
                           New York, New York 10019
                           Attention:  High Grade Debt Capital Markets
                                       Transaction Management
                           Telecopy:   (212) 847-5184

                           To Keefe, Bruyette & Woods, Inc.:
                           Keefe, Bruyette & Woods, Inc.
                           787 Seventh Avenue
                           New York, New York  10019
                           Attention: Fixed Income Syndicate
                           Telecopy: (212) 582-5419


                                      -7-




                           To Popular Securities, Inc.:
                           Popular Securities, Inc.
                           209 Munoz Rivera Avenue
                           Hato Rey, Puerto Rico  00918
                           Attention:  Ken McGrath
                           Telecopy:    (787) 766-3485

                           To the Trustee:
                           J.P. Morgan Trust Company, National Association
                           227 W. Monroe Street, Suite 2600
                           Chicago, IL  60606
                           Telephone:  (312) 267-5121
                           Telecopy:   (312) 267-5209

                           In each instance that a Pricing Supplement is
                           prepared, the applicable 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 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 an Agent as
                           principal, appropriate settlement details will be set
                           forth in the applicable Terms Agreement to be entered
                           into between the applicable Agent and the Company


                                      -8-



                           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."

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:


                                      -9-




                           To UBS Securities LLC:
                           UBS Securities LLC
                           677 Washington Boulevard
                           Stamford, Connecticut 06901
                           Attention: Fixed Income Syndicate
                           Telephone: (203) 719-1088
                           Telecopy: (203) 719-0495

                           To Banc of America Securities LLC:
                           Banc of America Securities LLC
                           9 West 57th Street
                           NY1-301-2M-01
                           New York, New York 10019
                           Attention:  High Grade Debt Capital Markets
                                       Transaction Management
                           Telecopy:   (212) 847-5184

                           To Keefe, Bruyette & Woods, Inc.:
                           Keefe, Bruyette & Woods, Inc.
                           787 Seventh Avenue
                           New York, New York 10019
                           Attention: Fixed Income Syndicate
                           Telecopy: (212) 582-5419

                           To Popular Securities, Inc.:
                           Popular Securities, Inc.
                           209 Munoz Rivera Avenue
                           Hato Rey, Puerto Rico  00918
                           Attention:    Ken McGrath
                           Telecopy:    (787) 766-3485

                           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


                                      -10-




                           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
  Signatures:              The Agents will have no obligation or liability to
                           the 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" has the meaning set forth in the
                           Prospectus Supplement.



                                      -11-



                      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 and The First National Bank of Chicago to DTC, dated August 6, 1999, as
supplemented by a Bring-Down Letter of Representations from the Company and the
Trustee to DTC, dated June 30, 2004, and a Medium-Term Note Certificate
Agreement between The First National Bank of Chicago 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 11th District Rate, and 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 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


                                      -12-


                           Payment 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 Ratings Service, a division of the McGraw-Hill
                           Companies ("S&P"), 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 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
                           $500,000,000 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.


                                      -13-


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.

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

                                      -14-




                           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 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 $500,000,000
                           in aggregate principal amount, one replacement
                           Book-Entry Note will be authenticated and issued to
                           represent each $500,000,000 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 a
                           minimum of $1,000 and integral multiples of $1,000.
                           Book-Entry Notes will be denominated in principal
                           amounts not in excess of $500,000,000. If one or more
                           Book-Entry Notes having an aggregate principal amount
                           in excess of $500,000,000 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 $500,000,000 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.


                                      -15-


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 be, the Interest Payment Date, 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 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. Unless otherwise specified in the
                           applicable Pricing Supplement, 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" and unless
                           otherwise specified in the applicable Pricing
                           Supplement, the Interest Payment Date for a Floating
                           Rate 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

                                      -16-



                           of Floating Rate Notes which reset semiannually, on
                           the third Wednesday of the two months of each year
                           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. Unless otherwise specified in
                           the applicable Pricing Supplement, the Regular Record
                           Date with respect to any Interest Payment Date for a
                           Fixed Rate Note shall be the June 1 or December 1
                           (whether or not a Business Day) preceding such
                           Interest Payment Date. Unless otherwise specified in
                           the applicable Pricing Supplement, 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 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


                                      -17-



                           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 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
                           instruc-


                                      -18-



                           tions 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,
                           premium, if any, and interest 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
                           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, premium, if any, or interest due 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 applicable 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;

                                             (b)     Regular Record Dates; and

                                             (c)     Interest Payment Dates.

                                             Floating Rate Notes:



                                      -19-


                                             (a)     interest rate basis;

                                             (b)     index maturity;

                                             (c)     spread and/or spread
                                                     multiplier, if any;

                                             (d)     initial interest rate;

                                             (e)     maximum interest rate, if
                                                     any;

                                             (f)     minimum interest rate, if
                                                     any;

                                             (g)     interest reset dates;

                                             (h)     interest determination
                                                     dates;

                                             (i)     interest payment dates; and

                                             (j)     calculation agent.

                                    4.       Price to public of the Note.

                                    5.       Trade date.

                                    6.       Settlement Date (Original Issue
                                             Date).

                                    7.       Stated Maturity.

                                    8.       Redemption provisions, if any:

                                             (a)     Redemption Commencement
                                                     Date

                                             (b)     initial redemption
                                                     percentage

                                             (c)     annual redemption
                                                     percentage reduction

                                    9.       Repayment Date(s), if any.

                                    10.      Net proceeds to the Company.

                                    11.      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
                                    applicable 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


                                      -20-


                                    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 applicable Agent
                                    of such CUSIP Number. The Trustee will
                                    communicate to DTC and the applicable 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 applicable 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 (which
                                             in the case of Floating Rate Notes
                                             that reset daily or weekly will be
                                             the date five calendar days
                                             immediately preceding the
                                             applicable Interest Payment Date
                                             and in the case of all other
                                             Book-Entry Notes will be the
                                             Regular Record Date, as defined in
                                             the Notes) 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 applicable Agent and the Trustee.


                                      -21-




                           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
                                    applicable Agent maintained by DTC and (ii)
                                    to debit the settlement account of the
                                    applicable Agent and credit the settlement
                                    account of the Trustee maintained by DTC, in
                                    an amount equal to the price of such Note
                                    less the applicable Agent's commission. Any
                                    entry of such a deliver order shall 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 applicable Agent will enter an SDFS
                                    deliver order through DTC's Participant
                                    Terminal System instructing DTC (i) to debit
                                    such Note to the applicable Agent's
                                    participant account and credit such Note to
                                    the participant accounts of the appropriate
                                    Participants maintained by DTC and (ii) to
                                    debit the settlement accounts of such
                                    Participants and credit the settlement
                                    account of the applicable 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
                                    deliver orders described in Settlement
                                    Procedures G and H will be settled in
                                    accordance with SDFS operating procedures in
                                    effect on the Settlement Date.

                           J.       The Trustee will credit to an account of the
                                    Company maintained by the Trustee funds


                                      -22-






                                    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 stamped "SPECIMEN" on each
                                    page to the Company together with a
                                    statement setting forth the principal amount
                                    of Notes Outstanding as of the related
                                    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 applicable 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

                           If a sale is to be settled more than one Business Day


                                      -23-


                           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
                           rate has 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 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


                                      -24-



                           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 applicable Agent may
                           enter SDFS deliver orders through DTC's Participant
                           Terminal System reversing Settlement Procedures G and
                           H, respectively. Thereafter, 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 applicable Agent to perform its obligations
                           hereunder or under the Distribution Agreement, the
                           Company will reimburse the applicable 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.


                                      -25-


                           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 Indexed Notes and
                           Multi-Currency Notes, will be issued in denominations
                           of a minimum of $1,000 and integral multiples of
                           $1,000. Indexed Notes or Multi-Currency Notes will be
                           issued in the denominations specified in the related
                           Multi-Currency or Indexed Note Prospectus Supplement
                           and Pricing Supplement.

Interest:                  Each Certificated Note will bear interest in
                           accordance with its 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. Unless otherwise specified in the applicable
                           Pricing Supplement, 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. Unless otherwise
                           specified in the applicable Pricing Supplement, the
                           Regular Record Date with respect to any Interest
                           Payment Date for a Fixed


                                      -26-


                           Rate Certificated Note shall be the June 1 or
                           December 1 (whether or not a Business Day) 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" and unless otherwise specified in the
                           applicable Pricing Supplement, 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; 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. Unless otherwise specified in the
                           applicable Pricing Supplement, 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.

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 next day 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 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


                                      -27-



                           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 Trustee or such agent not less than 16 days
                           prior to the applicable Interest Payment Date.

                           For special provisions relating to Multi-Currency
                           Notes or Indexed Notes, see the related
                           Multi-Currency or 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
                           or agent shall be destroyed, and the Trustee or agent
                           shall furnish to the Company a certificate with
                           respect to such destruction.

 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


                                      -28-



                                             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;

                                             (b)     Regular Record Dates; and

                                             (c)     Interest Payment Dates.

                                    Floating Rate Notes:

                                             (a)     interest rate basis or
                                                     bases;

                                             (b)     index maturity;

                                             (c)     spread or spread
                                                     multiplier, if any;

                                             (d)     initial interest rate;

                                             (e)     maximum interest rate, if
                                                     any;

                                             (f)     minimum interest rate, if
                                                     any;

                                             (g)     interest reset dates;

                                             (h)     interest determination
                                                     dates;

                                             (i)     interest payment dates; and

                                             (j)     calculation agent.

                                    Multi-Currency or Indexed Notes:

                                             (a)     specified currency;

                                             (b)     index, if any;

                                             (c)     base rate of exchange, if
                                                     any; and

                                             (d)     any other applicable terms.

                                    7.       Currency or currency unit in which
                                             the Certificated Note is to be
                                             denominated.

                                    8.       Price to public of the Certificated
                                             Note.

                                    9.       Settlement Date (Original Issue
                                             Date).

                                    10.      Stated Maturity.


                                      -29-




                                    11.      Redemption provisions, if any:

                                             (a)     Redemption Commencement
                                                     Date

                                             (b)     initial redemption
                                                     percentage

                                             (c)     annual redemption
                                                     percentage reduction

                                    12.      Repayment Date(s), if any.

                                    13.      Net proceeds to the Company.

                                    14.      Agent's commission.

                           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 and the name of the
                                    applicable 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 applicable Agent a copy of the
                                    applicable Pricing Supplement. The Company
                                    also shall provide to the Trustee and the
                                    applicable Agent a copy of a Multi-Currency
                                    or Indexed Note Prospectus Supplement, if
                                    applicable.

                           C.       The Trustee or its duly appointed agent will
                                    complete and authenticate the Certificated
                                    Note, including the Guarantee, in form
                                    approved by the Company.

                           D.       With respect to each trade, the Trustee will
                                    deliver the Certificated Note and one
                                    photocopy thereof stamped "SPECIMEN" on each
                                    page to the applicable Agent at the


                                      -30-



                                    following addresses:

                           UBS Securities LLC
                           677 Washington Boulevard
                           Stamford, Connecticut 06901
                           Attention: Fixed Income Syndicate
                           Telephone: (203) 719-1088
                           Telecopy:   (203) 719-0495

                           Banc of America Securities LLC
                           9 West 57th Street
                           NY1-301-2M-01
                           New York, New York 10019
                           Attention:  High Grade Debt Capital Markets
                                       Transaction Management
                           Telecopy:    (212) 847-5184

                           Keefe, Bruyette & Woods, Inc.
                           787 Seventh Avenue
                           New York, New York  10019
                           Attention: Fixed Income Syndicate
                           Telecopy: (212) 582-5419

                           Popular Securities, Inc.
                           209 Munoz Rivera Avenue
                           Hato Rey, Puerto Rico  00918
                           Attention:  Ken McGrath
                           Telecopy:   (787) 766-3485

                           The Trustee will keep Stub 1. The applicable 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
                           applicable 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.


                                      -31-



                           E.       The applicable Agent will deliver the
                                    Certificated Note, 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
                                    Certificated Note stamped "SPECIMEN" on each
                                    page 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 applicable Agent will
                           forthwith notify the Trustee and the Company by
                           telephone, confirmed in writing, and return the
                           Certificated Note to the Trustee.

                           The Trustee or the Company's duly authorized agent,
                           upon receipt of the Certificated Note from the
                           applicable Agent, will immediately advise the
                           Company, and the Company will promptly arrange to
                           credit the account of the applicable Agent in an
                           amount of immediately available funds equal to the
                           amount previously paid by the applicable 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 follow-


                                      -32-

EX-10.(C)

                                                                  Execution Copy

                                  POPULAR, INC.

                      INTEREST CALCULATION AGENCY AGREEMENT

         INTEREST CALCULATION AGENCY AGREEMENT between Popular, Inc. a Puerto
Rico corporation (the "Issuer"), and J.P. Morgan Trust Company, National
Association, dated as of June 30, 2004.

                             PRELIMINARY STATEMENT

         1.       The Issuer proposes to issue and sell its Medium-Term Notes,
Series 5 (the "Notes") from time to time under, and pursuant to, the terms of an
Indenture, dated as of February 15, 1995, as supplemented by the First
Supplemental Indenture dated as of May 8, 1997 and the Second Supplemental
Indenture dated as of August 5, 1999 (together the "Indenture," the terms
defined being used herein as defined therein or in the Notes), between the
Issuer and J.P. Morgan Trust Company, National Association (successor in
interest to Bank One, N.A.), as 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 11th District Rate, the Commercial Paper Rate, the
Treasury Rate, the CD 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 J.P. Morgan Trust Company, National
Association hereby agree as follows:




         Section 1. Appointment of Calculation Agent. The Issuer hereby appoints
J.P. Morgan Trust Company, National Association 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 Notes) 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.

         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


                                      -2-


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, 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


                                      -3-


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 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


                                      -4-


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 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


                                      -5-


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 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


                                      -6-


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:

                  Popular, Inc.
                  209 Munoz Rivera Avenue
                  Hato Rey, Puerto Rico 00918
                  Attention:   Chief Financial Officer
                  Facsimile:   (787) 751-2137

                  To the Calculation Agent:

                  J.P. Morgan Trust Company, National Association
                  227 W. Monroe Street/Suite 2600
                  Chicago, Illinois 60606
                  Attention:   Brenda Cosey
                  Facsimile:   (312) 267-5209

                  To the Trustee:

                  J.P. Morgan Trust Company, National Association
                  227 W. Monroe Street/Suite 2600
                  Chicago, Illinois 60606
                  Attention:   Institutional Trust Services/George N. Reaves
                  Facsimile:   (312) 267-5209

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.


                                      -7-


         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.


                                      -8-


         IN WITNESS WHEREOF, this Agreement has been entered into the day and
year first above written.

                             POPULAR, INC.




                             By: /s/ Jorge A. Junquera
                                 -----------------------------------------
                                  Name:    Jorge A. Junquera
                                  Title:   Senior Executive Vice President



                             J.P. MORGAN TRUST COMPANY,
                             NATIONAL ASSOCIATION



                             By: /s/ George N. Reaves
                             ---------------------------------------------
                                  Name:    George N. Reaves
                                  Title:   Vice President


                                      -9-

EX-10.(D)

                                                                  Execution Copy

                           POPULAR NORTH AMERICA, INC.

                      INTEREST CALCULATION AGENCY AGREEMENT

         INTEREST CALCULATION AGENCY AGREEMENT between Popular North America,
Inc., a Delaware corporation (the "Issuer"), and J.P. Morgan Trust Company,
National Association, dated as of June 23, 2004.

         PRELIMINARY STATEMENT

         1.       The Issuer proposes to issue and sell its Medium-Term Notes,
Series F (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, by the Second Supplemental Indenture,
dated as of May 8, 1997 and by the Third Supplemental Indenture, dated as of
August 5, 1999 (together, the "Indenture," the terms defined being used herein
as defined therein or in the Notes), among the Issuer, Popular, Inc., a Puerto
Rico corporation, and J.P. Morgan Trust Company, National Association (successor
in interest to Bank One, N.A.), as 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 11th 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 J.P. Morgan Trust Company, National
Association hereby agree as follows:

         Section 1. Appointment of Calculation Agent. The Issuer hereby appoints
J.P. Morgan Trust Company, National Association 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.

         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


                                      -2-


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, 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


                                      -3-


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 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


                                      -4-

the 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 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


                                      -5-


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 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:


                                      -6-


                  To the Issuer:

                  Popular North America, Inc.
                  c/o Popular, Inc.
                  209 Munoz Rivera Avenue
                  Hato Rey, Puerto Rico 00918
                  Attention:   Chief Financial Officer
                  Facsimile:   (787) 767-8948

                  To the Calculation Agent:

                  J.P. Morgan Trust Company, National Association
                  227 W. Monroe Street/Suite 2600
                  Chicago, Illinois 60606
                  Attention:   Brenda Cosey
                  Facsimile:   (312) 267-5209

                  To the Trustee:

                  J.P. Morgan Trust Company, N.A.
                  227 W. Monroe Street/Suite 2600
                  Chicago, Illinois 60606
                  Attention:   Insitutional Trust Services/George N. Reaves
                  Facsimile:   (312) 267-5209

         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.


                                      -7-


         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.

         IN WITNESS WHEREOF, this Agreement has been entered into the day and
year first above written.

                                            POPULAR NORTH AMERICA, INC.




                                            By: /s/ Jorge A. Junquera
                                            ------------------------------
                                                Name:  Jorge A. Junquera
                                                Title:    President


                                            J.P. MORGAN TRUST COMPANY,
                                            NATIONAL ASSOCIATION




                                            By: /s/ George N. Reaves
                                            ------------------------------
                                                 Name: George N. Reaves
                                                 Title:   Vice President


                                      -8-