8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): November 30, 2004

POPULAR, INC.

(Exact name of registrant as specified in its charter)

COMMONWEALTH OF PUERTO RICO	NO. 0-13818	NO. 66-0416582
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

209 MUÑOZ RIVERA AVENUE
HATO REY, PUERTO RICO (Address of principal executive offices)	00918 (Zip Code)

Registrant’s telephone number, including area code: (787) 765-9800

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 8.01 OTHER EVENTS

     On November 30, 2004, Popular, Inc. (the “Corporation”) completed the public offering of 5,200,000 6.125% Cumulative Monthly Income Trust Preferred Securities (the “Preferred Securities”) of Popular Capital Trust II, a subsidiary of the Corporation (the “Trust”), at $25 per Preferred Security. Each Preferred Security will pay cumulative cash distributions at an annual rate of 6.125%, payable monthly commencing January 1, 2005. The Preferred Securities are fully and unconditionally guaranteed (to the extent described in the prospectus supplement included in the registration statement described below) by the Corporation. In connection with the issuance of the Preferred Securities, the Corporation issued an aggregate principal amount of $134,021,000 of its 6.125% Junior Subordinated Debentures, Series A, due December 1, 2034 (the “Debentures”) to the Trust. The Preferred Securities and the Debentures were issued pursuant to the shelf registration statement on Form S-3 (Registration Statement Nos. 333-120340 and 333-120340-03) of the Corporation and the Trust.

Item 9.01. Financial Statements and Exhibits

(c)     Exhibits

     The following exhibits shall be deemed to be filed for purposes of the Securities Exchange Act of 1934, as amended.

1	Underwriting Agreement, dated as of November 24, 2004, among the Corporation, the Trust and Popular Securities, Inc., as representative of the several underwriters named therein.
4.1	Amended and Restated Declaration of Trust and Trust Agreement, dated as of November 30, 2004, among the Corporation, J.P. Morgan Trust Company, National Association, Chase Manhattan Bank USA, National Association, the Administrative Trustees named therein and the holders from time to time, of the undivided beneficial ownership interests in the assets of the Trust.
4.2	Indenture, dated as of October 31, 2003, between the Corporation and J.P. Morgan Trust Company, National Association (formerly Bank One Trust Company, N.A.) (incorporated by reference to Exhibit 4.2 to Popular’s Current Report on Form 8-K dated September 3, 2003).
4.3	Second Supplemental Indenture, dated November 30, 2004, between the Corporation and J.P. Morgan Trust Company, National Association.
4.5	Global Capital Securities Certificate
4.6	Certificate of Junior Subordinated Debenture
8	Opinion of Pietrantoni Méndez & Alvarez LLP regarding tax matters

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	POPULAR, INC.
	(Registrant)
Date: December 3, 2004	By:	/s/ Ileana Gonzalez
	Name: Title:	Ileana Gonzalez Senior Vice President and Comptroller

Exhibit Index

Exhibit Number	Description
1	Underwriting Agreement, dated as of November 24, 2004, among the Corporation, the Trust and Popular Securities, Inc., as representative of the several underwriters named therein.
4.1	Amended and Restated Declaration of Trust and Trust Agreement, dated as of November 30, 2004, among the Corporation, J.P. Morgan Trust Company, National Association, Chase Manhattan Bank USA, National Association, the Administrative Trustees named therein and the holders from time to time, of the undivided beneficial ownership interests in the assets of the Trust.
4.2	Indenture, dated as of October 31, 2003, between the Corporation and J.P. Morgan Trust Company, National Association (formerly Bank One Trust Company, N.A.) (incorporated by reference to Exhibit 4.2 to Popular’s Current Report on Form 8-K dated September 3, 2003).
4.3	Second Supplemental Indenture, dated November 30, 2004, between the Corporation and J.P. Morgan Trust Company, National Association.
4.5	Global Capital Securities Certificate
4.6	Certificate of Junior Subordinated Debenture
8	Opinion of Pietrantoni Mendez & Alvarez LLP regarding tax matters

EX-1

                                                                      Exhibit 1


                                   5,200,000

                            POPULAR CAPITAL TRUST II
          6.125% Cumulative Monthly Income Trust Preferred Securities,
        Guaranteed to the extent set forth in the Guarantee Agreement by

                                 POPULAR, INC.

                             UNDERWRITING AGREEMENT


                                                              November 24, 2004


Popular Securities, Inc.
As representative
of the several Underwriters named in Schedule 1
Hato Rey, Puerto Rico 00918

Ladies and Gentlemen:

         POPULAR CAPITAL TRUST II, a statutory trust created under the
Statutory Trust Act (the "Delaware Act") of the state of Delaware (the
"Trust"), proposes, subject to the terms and conditions stated herein, to issue
and sell to you and the other underwriters named in Schedule 1 hereto
(collectively, the "Underwriters"), for whom you are acting as the
representative (the "Representative") 5,200,000 of its 6.125% Cumulative
Monthly Income Trust Preferred Securities (the "Trust Preferred Securities").
The Trust Preferred Securities shall have the terms described in the Prospectus
(as defined below).

         The Trust Preferred Securities shall be guaranteed by Popular, Inc.
(the "Company") to the extent set forth in the Prospectus, with respect to the
distributions and amounts payable upon liquidation and redemption, pursuant to
the Guarantee Agreement, to be dated as of the Closing Date (as defined below)
(the "Guarantee Agreement"), and to be executed and delivered by the Company
and J.P. Morgan Trust Company, National Association (formerly Bank One Trust
Company, N.A.), a national banking association ("J.P. Morgan"). The proceeds
from the sale of the Trust Preferred Securities will be aggregated with the
proceeds from the sale by the Trust to the Company of the Common Securities of
the Trust (the "Common Securities") and will be used by the Trust to purchase
6.125% junior subordinated debt securities (the "Debentures") issued by the
Company. The Trust Preferred Securities and the Common Securities will be
issued pursuant to an Amended and Restated Declaration of Trust and Trust
Agreement (the "Trust Agreement") among the Company, Chase Manhattan Bank USA,
National Association, a national banking association (the


                                       1

"Delaware Trustee"), Jorge A. Junquera and Richard Barrios, both of whom are
employees or officers of or affiliated with the Company (the "Administrative
Trustees"), and J.P. Morgan, as "Property Trustee" and "Guarantee Trustee" (the
Delaware Trustee, the Administrative Trustees, the Property Trustee and the
Guarantee Trustee, collectively, the "Trustees"). The Debentures will be issued
pursuant to a Junior Subordinated Indenture dated as of October 31, 2003 (the
"Indenture"), among the Company and J.P. Morgan, as trustee (the "Indenture
Trustee"). You have agreed to act as representative of the underwriters (the
"Underwriters") in connection with the sale of the Trust Preferred Securities.

         The Company and the Trust hereby confirm as follows its agreements
with the Representative and the several other Underwriters.

         1.       Agreement to Sell and Purchase.

                  (a)      On the basis of the representations, warranties and
agreements of the Company and the Trust herein contained and subject to all the
terms and conditions of this Agreement, the Trust agrees to sell to each
Underwriter and each Underwriter, severally and not jointly, agrees to purchase
from the Trust at a purchase price of $25 per Trust Preferred Security, the
number of Trust Preferred Securities set forth opposite the name of such
Underwriter in Schedule 1 hereto, plus such additional number of Trust
Preferred Securities which such Underwriter may become obligated to purchase
pursuant to Section 9 hereof.

                  (b)      Because the proceeds from the sale of the Trust
Preferred Securities shall be used to purchase the Debentures from the Company,
as compensation for its services hereunder, the Company will pay to the
Underwriters a nonrefundable fee in immediately available funds equal to
$4,095,000, which shall be fully earned upon the delivery of the Trust
Preferred Securities on the Closing Date (as such term is defined below).

         2.       Delivery and Payment. Delivery of the Trust Preferred
Securities shall be made to the Representative for the accounts of the
Underwriters at the office of Pietrantoni Mendez & Alvarez LLP, counsel to the
Company, Banco Popular Center, 19th Floor, Hato Rey, Puerto Rico, against
payment of the purchase price by wire transfer of immediately available funds
to the bank account designated by the Company. Such payment shall be made at
10:00 a.m., New York City time, on the third full business day following the
date of this Agreement, or such other time on such other date, not later than
seven business days after the date of this Agreement, as may be agreed upon by
the Company and the Representative (such date is hereinafter referred to as the
"Closing Date"). Time shall be of the essence and delivery at the time and
place specified pursuant to this Agreement is a further condition of the
obligation of each Underwriter hereunder.

         Certificates evidencing the Trust Preferred Securities shall be in
definitive form and shall be registered in such names and in such denominations
as the Representative shall request at least two business days prior to the
Closing Date by written notice to the Trust. For the purpose of expediting the
checking and packaging of certificates for the Trust Preferred Securities, the
Trust agrees to make


                                       2

such certificates available for inspection at least 24 hours prior to the
Closing Date.

         Notwithstanding the other provisions of this Section 2, if
transactions in the Trust Preferred Securities can be settled through the
facilities of The Depository Trust Company ("DTC"), payment for and delivery of
the Trust Preferred Securities on the Closing Date will be made through the
facilities of DTC if you are a member, unless you have otherwise notified us
prior to the date specified by you, or, if you are not a member, settlement may
be made through a correspondent who is a member pursuant to instruction you may
send to us prior to such specified date. The cost of original issue tax stamps,
if any, in connection with the issuance, sale and delivery of the Trust
Preferred Securities by the Trust to the respective Underwriters shall be borne
by the Company. The Company will pay and save each Underwriter and any
subsequent holder of the Trust Preferred Securities harmless from any and all
liabilities with respect to or resulting from any failure or delay in paying
Federal, state or Commonwealth of Puerto Rico stamp and other transfer taxes,
if any, which may be payable or determined to be payable in connection with the
original issuance, sale or delivery to such Underwriter of the Trust Preferred
Securities.

         3.       Representations and Warranties. Each of the Trust and the
Company jointly and severally represents and warrants, and agrees with, each
Underwriter that:

                  (a)      The Company and the Trust, as co-registrant with the
Company, meet the requirements for use of Form S-3, and a registration
statement (Registration No. 333-120340) on Form S-3 with respect to the Trust
Preferred Securities, including a base Prospectus and such amendments to such
registration statement as may have been required to the date of this Agreement,
has been prepared by the Company in conformity with the requirements of the
Securities Act of 1933, as amended (the "Act"), and the rules and regulations
(the "Rules and Regulations") of the Securities and Exchange Commission (the
"Commission") thereunder, and has been filed with the Commission and has become
effective. No stop order suspending the effectiveness of the registration
statement or preventing or suspending the use of the Prospectus or any
Preliminary Prospectus (as defined below) has been issued and, to the Company's
knowledge, no proceeding for that purpose has been instituted or threatened by
the Commission. The term "Preliminary Prospectus" as used herein means a
preliminary prospectus relating to the Trust Preferred Securities included at
any time as part of the foregoing registration statement or any amendment
thereto before it became effective under the Act and any prospectus filed with
the Commission by the Company pursuant to Rule 424(b) of the Rules and
Regulations. Copies of such registration statement, any such amendment and each
related Preliminary Prospectus and all documents incorporated by reference
therein that were filed with the Commission on or prior to the date of this
Underwriting Agreement have been delivered to the Representative and its
counsel. A final prospectus relating to the Trust Preferred Securities
containing information permitted to be omitted at the time of effectiveness by
Rule 430A of the Rules and Regulations has been or will be prepared and filed
with the Commission pursuant to Rule 424(b) of the Rules and Regulations on or
before the second business day after the date hereof (or such earlier time as
may be required by the Rules and Regulations). The term "Registration
Statement" means such registration statement as amended at the time it became
effective (the "Effective Date"), including financial statements and all
exhibits


                                       3

and any information deemed by virtue of Rule 430A of the Rules and Regulations
to be included in such Registration Statement at the Effective Date (but
excluding the Forms T-1) and any prospectus supplement filed thereafter with
the Commission, and shall include the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 which were filed under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The term "Prospectus"
means, collectively, the base prospectus together with any prospectus
supplement, in the respective forms they are filed with the Commission pursuant
to Rule 424(b) of the Rules and Regulations. Any reference herein to the terms
"amend", "amendment" or "supplement" with respect to the Registration
Statement, the Prospectus or any Preliminary Prospectus shall be deemed to
refer to and include the filing of any document under the Exchange Act after
the Effective Date, or the date of any Preliminary Prospectus or the
Prospectus, as the case may be, that is incorporated therein by reference. For
purposes of this Underwriting Agreement, all references to the Registration
Statement, the Prospectus, any Preliminary Prospectus or any amendment or
supplement thereto shall be deemed to include any copy filed with the
Commission pursuant to its Electronic Data Gathering Analysis and Retrieval
System (EDGAR), and such copy shall be identical (except to the extent
permitted by Regulation S-T) to any Prospectus delivered to the Representative
for use in connection with the offering of the Trust Preferred Securities by
the Trust.

                  (b)      Each part of the Registration Statement, when such
part became or becomes effective, each Preliminary Prospectus, on the date of
filing thereof with the Commission, and the Prospectus and any amendments or
supplement thereto, on the date of filing thereof with the Commission and at
the Closing Date, conformed or will conform in all material respects with the
requirements of the Act, the Trust Indenture Act of 1939 (the "Trust Indenture
Act") and the Rules and Regulations; each part of the Registration Statement
(excluding any prospectus supplement with respect to an offering of securities
other than the offering of the Trust Preferred Securities contemplated hereby),
when such part became or becomes effective, did not or 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, on the date of filing thereof with the
Commission, and the Prospectus and any amendment or supplement thereto, on the
date of filing thereof with the Commission and at the Closing Date, did not or
will not include an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; the foregoing shall
not apply to the statements in or omissions from any such document relating to
any Underwriter in reliance upon, and in conformity with, written information
relating to such Underwriter furnished to the Company by the Representative, or
by any Underwriter through the Representative, specifically for use in the
preparation thereof. The Company has not distributed any offering material in
connection with the offering or sale of the Trust Preferred Securities other
than the Registration Statement, any Preliminary Prospectus, the Prospectus or
any other materials, if any, permitted by the Act.

                  (c)      The documents incorporated by reference in the
Registration Statement, the Prospectus and any amendment or supplement to such
Registration Statement or such Prospectus, when they became or become effective
under the Act or were or are filed with the Commission under


                                       4

the Exchange Act, as the case may be, conformed or will conform in all material
respects with the requirements of the Act, the Trust Indenture Act, the Rules
and Regulations, the Exchange Act and the rules and regulations of the
Commission thereunder (the "Exchange Act Rules and Regulations"), as
applicable.

                  (d)      The Trust has been duly formed and is validly
existing and in good standing as a statutory trust under Delaware law with
power and authority to own its property and conduct its business as described
in the Prospectus. All of the outstanding beneficial interests of the Trust
have been duly authorized and validly issued and are fully paid and
nonassessable undivided beneficial interests in the assets of the Trust; the
holders of such beneficial interests of the Trusts have no preemptive or other
rights to acquire Trust Preferred Securities or Common Securities.

                  (e)      The Trust Agreement has been duly authorized; and
when the Trust Preferred Securities are delivered and paid for pursuant to this
Agreement on the Closing Date, the Trust Agreement will have been duly executed
and delivered and will constitute a valid and legally binding instrument,
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.

                  (f)      The Indenture has been duly authorized, executed and
delivered by the Company, has been duly qualified under the Trust Indenture
Act, as amended, and constitutes a valid and legally binding instrument
enforceable against the Company 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 generally and to general equity principles. The Guarantee Agreement has
been duly authorized; and when the Trust Preferred Securities are delivered and
paid for pursuant to this Agreement on the Closing Date, the Guarantee
Agreement will have been duly executed and delivered and will constitute a
valid and legally binding instrument 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.

                  (g)      The Trust Preferred Securities have been duly
authorized; when the Trust Preferred Securities are delivered and paid for
pursuant to this Agreement on the Closing Date, such Trust Preferred Securities
will (i) have been validly issued and fully paid, (ii) represent nonassessable
undivided beneficial interest in the assets of the Trust, (iii) be entitled to
the benefits set forth in the Trust Agreement and (iv) conform to the
description thereof contained in the Registration Statement, the Prospectus and
any amendment or supplement to such Registration Statement or such Prospectus;
the issuance of the Trust Preferred Securities is not subject to preemptive or
other similar rights; and the holders of the Trust Preferred Securities will be
entitled to the same limitation of personal liability extended to stockholders
of private corporations for profit incorporated under the General Corporation
Law of the State of Delaware.

                  (h)      The Common Securities have been duly authorized;
when the Common


                                       5

Securities are delivered and paid for pursuant to this Agreement on the Closing
Date, such Common Securities will (i) have been validly issued and fully paid,
(ii) represent nonassessable undivided beneficial interest in the assets of the
Trust, (iii) be entitled to the benefits set forth in the Trust Agreement and
(iv) conform to the description thereof contained in the Registration
Statement, the Prospectus and any amendment or supplement to such Registration
Statement or such Prospectus; the issuance of the Common Securities is not
subject to preemptive or other similar rights; and the holders of the Common
Securities will be entitled to the same limitation of personal liability
extended to stockholders of private corporations for profit incorporated under
the General Corporation Law of the State of Delaware; and at the Closing Date,
all of the issued and outstanding Common Securities of the Trust will be
directly owned by the Company free and clear of any security interest,
mortgage, pledge, lien encumbrance, claim or equity.

                  (i)      The only direct or indirect subsidiaries of the
Company ("Subsidiaries") that are "significant subsidiaries" as defined in Rule
405 of Regulation C of the Rules and Regulations under the Act (each, a
"Significant Subsidiary") are Banco Popular de Puerto Rico, a Puerto Rico
corporation ("Banco Popular"), Popular International Bank, Inc., a Puerto Rico
corporation, Popular North America, Inc., a Delaware corporation, Banco Popular
North America, Inc., a New York corporation, and Equity One, Inc., a Delaware
corporation. The Company has been and, at the Closing Date, will be duly
organized and validly existing as a corporation under the laws of the
Commonwealth of Puerto Rico and is and, at the Closing Date, will be in good
standing in the Commonwealth of Puerto Rico. The Company is and will be as of
the Closing Date registered with the Board of Governors of the Federal Reserve
System (the "Federal Reserve") as a bank holding company under the Bank Holding
Company Act of 1956 (the "BHCA") and its election to be treated as a financial
holding company under the BHCA, as amended by the Gramm-Leach-Bliley Act, is
and will remain in full force and effect. Each of the Significant Subsidiaries
is and, at the Closing Date, will be a corporation duly organized, validly
existing and in good standing under the laws of its respective jurisdiction of
incorporation. Each of the Company and its Significant Subsidiaries is and, at
the Closing Date, will be duly qualified and in good standing as a foreign
corporation in each jurisdiction in which the character or location of its
properties (owned, leased or licensed) or the nature or conduct of its business
or use of its property and assets makes such qualification necessary, except
where the failure to so qualify would not have a material adverse effect on the
condition, financial or otherwise, or the earnings, prospects or business
affairs of the Company and its Subsidiaries considered as a single enterprise
(a "Material Adverse Effect"). All of the outstanding shares of capital stock
of each Significant Subsidiary have been duly and validly authorized and issued
and are fully paid and nonassessable (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 are owned directly or indirectly
by the Company free and clear of any perfected security interest and, to the
knowledge of such counsel, any other security interests, claims, liens or
encumbrances.

                  (j)      The outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable and are not subject to any preemptive or similar rights. The
Debentures to be issued and sold by the Company will be, upon such issuance and
payment therefore, duly authorized, valid, binding and enforceable obligations
of


                                       6

the Company. The Company has, and, upon completion of the sale of the
Debentures, will have, an authorized, issued and outstanding capitalization as
set forth in the Registration Statement and the Prospectus. The description of
the securities of the Company in the Registration Statement, the Preliminary
Prospectus and the Prospectus is, and at the Closing Date, will be, complete
and accurate in all respects. No holders of securities of the Company are
entitled to have such securities registered under the Registration Statement,
except where such rights have been waived.

                  (k)      The consolidated financial statements and the
related notes of the Company included in the Registration Statement or
incorporated by reference therein and in the Prospectus present fairly the
financial condition of the Company and its Subsidiaries as of the dates
indicated and the consolidated results of operations and cash flows of the
Company and its Subsidiaries for the periods covered thereby, all in conformity
with generally accepted accounting principles ("GAAP") applied on a consistent
basis throughout the entire periods involved. PricewaterhouseCoopers LLP (the
"Accountants"), who have reported on those of such financial statements and
related notes which are audited, are independent accountants with respect to
the Company and its Subsidiaries within the meaning of the Act and the
applicable and published rules and regulations.

                  (l)      The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorization, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
accountability for assets, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

                  (m)      Except as set forth in the Registration Statement
and Prospectus, subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus and prior to the Closing
Date, (i) there has not been, and will not have been, any material adverse
change in the business, properties, financial condition, net worth or results
of operations of the Company and its Subsidiaries considered as a single
enterprise, (ii) neither the Company nor any of its Significant Subsidiaries
have entered into, or will have entered into any transactions that would be
considered material to the Company and its Subsidiaries considered as a single
enterprise, other than pursuant to this Agreement, and (iii) the Company has
not, and will not have, paid or declared any dividends or other distributions
of any kind on any class of its capital stock, except for the payment or
declaration of quarterly dividends on the Company's common stock (the "Common
Stock"), and the payment of monthly dividends on the Company's preferred stock,
in each case in the ordinary course of its business.

                  (n)      Neither the Trust nor the Company is and, after
giving effect to the offering and sale of the Trust Preferred Securities and
the Debentures and the application of the proceeds thereof as described in the
Prospectus, neither of them will be, required to be registered under the
Investment Company Act of 1940, as amended (the "Investment Company Act").


                                       7

                  (o)      Except as set forth or incorporated by reference in
the Registration Statement and the Prospectus, there are no actions, suits,
arbitrations, claims, governmental or other proceedings (formal or informal),
or investigations pending or threatened against or affecting the Company or any
of its Significant Subsidiaries, or any directors, officers or shareholders of
the Company or any of its Significant Subsidiaries in their respective
capacities as such, or any of the properties or assets owned or leased by the
Company or any of its Significant Subsidiaries, before or by any Federal, state
or Commonwealth of Puerto Rico court, commission, regulatory board,
administrative agency or other governmental body, domestic or foreign
(collectively, a "Governmental Body"), wherein an unfavorable ruling, decision
or finding would adversely affect the business, prospects, financial condition,
net worth or results of operations of the Company and its Subsidiaries
considered as a single enterprise and would be required to be disclosed in the
Registration Statement and Prospectus. Neither the Company nor any Significant
Subsidiary is in violation of, or in default with respect to, any law, rule, or
regulation, or any order, judgment, or decree, except as described in the
Prospectus or such as in the aggregate do not now have and can reasonably be
expected in the future not to have a material adverse effect upon the
operations, business, properties, or assets of the Company and its Subsidiaries
considered as a single enterprise; nor is the Company or any Significant
Subsidiary presently required under any order, judgment or decree to take any
action in order to avoid any such violation or default, except as described in
the Prospectus.

                  (p)      The Company and each of its Significant Subsidiaries
possess and, at the Closing Date, will possess adequate governmental permits,
consents, orders, approvals, franchises, certificates and other authorizations
(collectively, "Licenses") necessary to carry on their respective businesses
and own or lease their respective properties as contemplated in the
Registration Statement and Prospectus. The Company and each of its Significant
Subsidiaries have and, at the Closing Date, will have complied in all material
respects with all laws, regulations and orders applicable to it or its
business, assets and properties, except for such violations, individually or in
the aggregate, which are not reasonably expected to have a material adverse
effect upon the operations, business, properties or assets of the Company and
its Significant Subsidiaries considered as a single enterprise. Neither the
Company nor any of its Significant Subsidiaries is, nor, at the Closing Date,
will be in default (nor has any event occurred which, with notice or lapse of
time or both, would constitute a default) in the due performance and
observation of any term, covenant or condition of any indenture, mortgage, deed
of trust, voting trust agreement, loan agreement, bond, debenture, note
agreement or other evidence of indebtedness, lease, contract or other agreement
or instrument (collectively, a "contract or other agreement") to which they are
a party or by which their respective properties are bound or affected, the
violation of which would individually or in the aggregate have a material
adverse effect on the condition, financial or otherwise, or the earnings,
prospects or business affairs of the Company and its Subsidiaries considered as
a single enterprise. There are no governmental proceedings or actions pending
or threatened for the purpose of suspending, modifying or revoking any License
held by the Company or any of its Significant Subsidiaries, except where such
suspension, modification or revocation would not individually or in the
aggregate have a material adverse effect on the condition, financial or
otherwise, or the earnings, prospects or business affairs of the Company and
its Subsidiaries considered as a single enterprise.


                                       8

                  (q)      No consent, approval, authorization or order of, or
any filing or declaration with, any Governmental Body is required for the
consummation of the transactions contemplated by this Agreement or in
connection with the issuance and sale of the Trust Preferred Securities by the
Trust or in connection with the issuance and sale of the Debentures by the
Company, except such as have been obtained and such as may be required under
state or Commonwealth of Puerto Rico securities or blue sky laws or the bylaws
and rules of the National Association of Securities Dealers, Inc. (the "NASD")
in connection with the purchase and distribution by the Underwriters of the
Trust Preferred Securities to be sold hereby.

                  (r)      Both the Trust and the Company have full power
(corporate and other) and authority to enter into this Agreement and to carry
out all the terms and provisions hereof to be carried out by it. This Agreement
has been duly authorized, executed and delivered by the Trust and the Company
and constitutes a valid and binding agreement of each of them and is
enforceable against each of them in accordance with the terms hereof, except as
rights to indemnity and contribution may be limited by federal, state or
Commonwealth of Puerto Rico securities laws or the public policy underlying
such laws. Except as disclosed in the Registration Statement and the
Prospectus, the execution, delivery and the performance of this Agreement and
the consummation of the transactions contemplated hereby will not result in the
creation or imposition of any Encumbrance upon any of the properties or assets
of the Trust, the Company or any of the Significant Subsidiaries pursuant to
the terms or provisions of, or result in a breach or violation of or conflict
with any of the terms or provisions of, or constitute a default under, or give
any other party a right to terminate any of its obligations under, or result in
the acceleration of any obligation under, (i) the Trust Agreement or the
Certificate of Incorporation or By-laws of the Company or any Significant
Subsidiary, in each case as amended, or (ii) any contract or other agreement to
which the Trust or the Company or any of the Significant Subsidiaries is a
party or by which it or any of their respective assets or properties are bound
or affected, the violation of which, in the case of the Company and the
Significant Subsidiaries, would individually or in the aggregate have a
material adverse effect on the condition, financial or otherwise, or the
earnings, prospects or business affairs of the Company and its Subsidiaries
considered as a single enterprise, or (iii) any judgment, ruling, decree,
order, law, statute, rule or regulation of any Governmental Body applicable to
the Trust, the Company or any of the Significant Subsidiaries or their
respective businesses or properties, the violation of which, in the case of the
Company and the Significant Subsidiaries, would individually or in the
aggregate have a material adverse effect on the financial condition or the
earnings, prospects or business affairs of the Company and its Subsidiaries
considered as a single enterprise.

                  (s)      No statement, representation, or warranty made by
the Trust or by the Company in this Agreement or made in any certificate or
document required by this Agreement to be delivered to the Representative was
or will be, when made, inaccurate, untrue or incorrect in any material respect.
Each certificate signed by an officer of the Company and delivered to the
Representative or counsel for the Underwriters shall be deemed to be a
representation and warranty by the Company to each Underwriter as to the
matters covered thereby.


                                       9

                  (t)      Neither the Trust, the Company nor any of their
directors, officers or affiliates has taken, nor will he, she or it take,
directly or indirectly, any action designed, or which might reasonably be
expected in the future, to cause or result in, under the Act or otherwise, or
which has constituted, stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Trust Preferred
Securities or otherwise.

                  (u)      Neither the Company nor any of its Significant
Subsidiaries is involved in any collective labor dispute with its employees nor
is any such dispute threatened or imminent.

                  (v)      Neither the Trust, the Company nor any of its
Significant Subsidiaries nor, to their best knowledge, any employee or agent of
the Trust, the Company or any Significant Subsidiary has made any payment of
funds of the Trust, the Company or any Significant Subsidiary or received or
retained any payment of funds of the Trust, the Company or any Significant
Subsidiary in violation of any law, rule or regulation, which payment, receipt
or retention of funds is of a character required to be disclosed in the
Prospectus.

                  (w)      The business, operations and facilities of the
Trust, the Company and its Significant Subsidiaries have been and are being
conducted in compliance with all applicable laws, ordinances, rules,
regulations, licenses, permits, approvals, plans, authorizations or
requirements relating to occupational safety and health, or pollution, or
protection of health or the environment (including, without limitation, those
relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants or hazardous or toxic substances, materials or wastes
into ambient air, surface water, groundwater or land, or relating to the
manufacture, processing, distribution, use, treatment storage, disposal,
transport or handling of chemical substances, pollutants, contaminants or
hazardous or toxic substances, materials or wastes, whether solid, gaseous or
liquid in nature) of any governmental department, commission, board, bureau,
agency or instrumentality of the United States, any state, or the Commonwealth
of Puerto Rico or any political subdivision thereof, and all applicable
judicial or administrative agency or regulatory decrees, awards, judgments and
orders relating thereto; and neither the Company nor any of its Significant
Subsidiaries has received any notice from any governmental instrumentality or
any third party alleging any violation thereof or liability thereunder
(including, without limitation, liability for costs of investigating or
remediating sites containing hazardous substances or damages to natural
resources), except where failure to so comply would not have a material adverse
effect on the financial condition, or the earnings or business affairs of the
Company and its Subsidiaries considered as a single enterprise.

                  (x)      The Trust, the Company and each of its Significant
Subsidiaries has filed all foreign, federal, state and local tax returns that
are required to be filed or has requested extensions thereof and has paid all
taxes required to be paid by it and any other assessment, fine or penalty
levied against it, to the extent that any of the foregoing is due and payable,
except, in the case of the Company and each of its Significant Sub sidiaries,
for any failure to file that would not have a material adverse effect on the
financial condition, or the earnings or business affairs of the Company and its
Subsidiaries considered as a single enterprise.


                                      10

                  (y)      The Company and the Trust meet the requirements for
use of Form S-3 under the Rules and Regulations and the use of Rule 415 under
the Rules and Regulations.

                  (z)      The deposit accounts of Banco Popular, and of each
of the other Significant Subsidiaries of the Company that are depository
institutions, are insured by the Bank Insurance Fund (the "BIF") of the Federal
Deposit Insurance Corporation ("FDIC") to the legal maximum, and no proceeding
for the termination or revocation of such insurance is pending or threatened.
Banco Popular is a member in good standing of the Federal Reserve Bank of New
York and of the Federal Home Loan Bank of New York.

                  (aa)     Neither of the Trust, the Company nor any of its
Significant Subsidiaries or any of their respective directors or officers is
subject to any order or directive of, or party to any agreement with, any
regulatory agency having jurisdiction with respect to its business or
operations, except as disclosed in the Prospectus and except, in the case of
the Company and its Significant Subsidiaries, for any such order, directive or
agreement that is not material to the Company and its Subsidiaries considered
as a single enterprise.

                  (bb)     The Company has derived on an annual basis more than
20% of its gross income from Puerto Rico sources or from the conduct of a trade
or business in Puerto Rico since its incorporation in accordance with the
applicable sourcing rules under the Puerto Rico Internal Revenue Code of 1994,
as amended.

                  (cc)     The Company is not a "passive foreign investment
company" ("PFIC") within the meaning of Section 1296 of the United States
Internal Revenue Code of 1986, as amended, and does not anticipate that it will
become a PFIC in the foreseeable future.

                  (dd)     The Company is not a party to any agreement or order
of any governmental entity or court that, as of the date hereof, and assuming
no material adverse change to the Company's financial condition, restricts its
ability to pay interest on a monthly basis on the Debentures or restricts the
ability of the Trust to make monthly distributions on the Trust Preferred
Securities.

                  (ee)     The Trust is not a party to any agreement and has
not conducted any activities other than those incidental to its organization
and to the issuance of the Trust Preferred Securities and the Common
Securities, and is not subject to any order of any court or other governmental
entity.

                  (ff)     The Trust Preferred Securities have been approved
for listing on the NASDAQ National Market.

                  (gg)     The Company has received a ruling from the Puerto
Rico Treasury Department (the "Ruling"), a copy of which has been provided to
the underwriters, to the effect that the Trust will not be treated as a taxable
entity and to the effect that monthly distributions made by the Trust will be
taxed for Puerto Rico income tax purposes at a 10% rate if made to investors
that have not opted out of the 10% tax rate.


                                      11

         4.       Agreements of the Company and the Trust. Each of the Trust
and the Company, jointly and severally covenants and agrees with each of the
several Underwriters as follows:

                  (a)      If a Prospectus Supplement has not been filed as
contemplated by Section 3(a) hereof, the Company and the Trust will cause the
Prospectus Supplement to be filed as contemplated by Section 3(a) hereof (but
only if the Representative has not reasonably objected thereto by notice to the
Company and the Trust after having been furnished a copy within a reasonable
time prior to filing) and will notify the Representative promptly of such
filing. The Company and the Trust will not during such period as the Prospectus
is required by law to be delivered in connection with sales of the Trust
Preferred Securities by any Underwriter or dealer (the "Prospectus Delivery
Period"), file any amendment or supplement to the Registration Statement or the
Prospectus, unless a copy thereof shall first have been submitted to the
Representative within a reasonable period of time prior to the filing thereof
and the Representative shall not have objected thereto in good faith.

                  (b)      Each of the Company and the Trust will use its best
efforts to cause the Registration Statement to remain effective through the
completion of the Underwriters' distribution of the Trust Preferred Securities,
and will notify the Representative promptly, and will confirm such advice in
writing, (i) of the preparation and filing (subject to Section 4(a)) of any
post-effective amendment to the Registration Statement and when any such
post-effective amendment becomes effective, (ii) of any request by the
Commission for amendments or supplements to the Registration Statement or the
Prospectus or for additional information, (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose or the threat
thereof, (iv) of the suspension of the qualification or registration of the
Trust Preferred Securities for offering or sale in any jurisdiction, or of the
initiation or threat of any proceeding for any such purpose; (v) of the
happening of any event during the Prospectus Delivery Period that in the
judgment of the Company makes any statement made in the Registration Statement
or the Prospectus untrue or that requires the making of any changes in the
Registration Statement or the Prospectus in order to make the statements
therein, in light of the circumstances in which they are made, not misleading
and (vi) of the receipt by the Company or any representative or attorney of the
Company of any other communication from the Commission relating to the Company,
the Registration Statement, any Preliminary Prospectus or the Prospectus. If at
any time the Commission or any jurisdiction shall threaten to issue, or shall
issue, any order suspending the effectiveness of the Registration Statement or
suspending the qualification or registration of the Trust Preferred Securities
for sale in any jurisdiction, the Company and the Trust will make every
reasonable effort to prevent the issuance of such order and, if such an order
should be issued, to obtain the withdrawal of such order at the earliest
possible moment. Each of the Company and the Trust will use its best efforts to
comply with the provisions of and make all requisite filings with the
Commission pursuant to Rule 430A and to notify the Representative promptly of
all such filings.

                  (c)      If, at any time when a Prospectus relating to the
Trust Preferred Securities is required to be delivered under the Act, any event
occurs as a result of which, in the judgment of the


                                      12

Company or the Underwriters, the Prospectus, as then amended or supplemented,
would include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading, or the
Registration Statement, as then amended or supplemented, would include any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein not misleading, or if for any other reason it is
necessary at any time to amend or supplement the Prospectus or the Registration
Statement to comply with the Act or the Rules and Regulations, the Trust and
the Company will promptly notify the Representative thereof and, subject to
Section 4(b) hereof, will prepare and file with the Commission, at the
Company's expense, an amendment to the Registration Statement or an amendment
or supplement to the Prospectus that corrects such statement or omission or
effects such compliance.

                  (d)      The Company will furnish to the Representative,
without charge, with a signed copy of the Registration Statement and of any
post-effective amendment thereto, including financial statements and schedules,
and all exhibits thereto and will furnish to the Representative, without
charge, for transmittal to each of the other Underwriters, copies of the
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules but without exhibits.

                  (e)      The Company will comply with all the provisions of
all undertakings contained in the Registration Statement.

                  (f)      During the Prospectus Delivery Period, the Company
will promptly furnish to the Underwriters, without charge, as many copies of
the Prospectus (containing the Prospectus Supplement) and any amendment or
supplement thereto as the Underwriters may from time to time reasonably
request. The Company consents to the use of the Prospectus, as amended or
supplemented from time to time, by the Underwriters and by all dealers to whom
the Trust Preferred Securities may be sold, both in connection with the
offering or sale of the Trust Preferred Securities and, thereafter, during the
Prospectus Delivery Period. If during the Prospectus Delivery Period any event
shall occur which in the judgment of the Company or the Underwriters should be
set forth in the Prospectus in order to make any statement therein, in the
light of the circumstances under which it was made, not misleading, or if, in
the judgment of the Company or the Underwriters, it is necessary to supplement
or amend the Prospectus to comply with law, the Company will forthwith prepare
and duly file with the Commission an appropriate supplement or amendment
thereto. Except as required by the Exchange Act or the Exchange Act Rules and
Regulations, the Company shall not file any document under the Exchange Act to
which the Representative reasonably objects before the termination of the
Prospectus Delivery Period if such document would be deemed to be incorporated
by reference into the Prospectus.

                  (g)      Prior to any public offering of the Trust Preferred
Securities by the Underwriters, the Trust and the Company will cooperate with
the Representative and its counsel in connection with the registration or
qualification of the Trust Preferred Securities for offer and sale under the
securities or blue sky laws of such jurisdictions as the Representative may
reasonably


                                      13

request; provided, that in no event shall the Company be obligated to qualify
to do business in any jurisdiction where it is not now so qualified or to take
any action which would subject it to general service of process in any
jurisdiction where it is not now so subject.

                  (h)      The Company will furnish to the Representative and
each other Underwriter who may so request copies of such financial statements
and other periodic and special reports as the Company may from time to time
distribute generally to the holders of any class of its capital stock, and will
furnish to the Representative and each other Underwriter who may so request a
copy of each annual or other report it shall be required to file with the
Commission.

                  (i)      The Company will timely file such reports pursuant
to the Exchange 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 for the benefits contemplated by,
the last paragraph of Section 11(a) of the Act.

                  (j)      The Trust and the Company will apply the net
proceeds from the offering and sale of the Trust Preferred Securities in the
manner set forth in the Prospectus under "Use of Proceeds" and in compliance
with the terms of the Ruling.

                  (k)      The Trust and the Company will not at any time,
directly or indirectly, take any action intended, or which might reasonably be
expected, to cause or result in, or which will constitute, stabilization of the
price of the shares of Trust Preferred Securities to facilitate the sale or
resale of any of the Trust Preferred Securities.

                  (l)      Until the 30th business day following the Closing
Date or such earlier time as you may notify the Trust or the Company, neither
the Company nor any entity controlled by it will, without the consent of the
Representative, publicly offer or sell, or announce the public offering of, any
debt securities within the Commonwealth of Puerto Rico.

         5.       Expenses.

                  (a)      Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the Company will
pay, or reimburse if paid by the Representative, all costs and expenses
incidental to the performance by the Trust of its obligations under this
Agreement, including, but not limited to, costs and expenses of or relating to
(i) the preparation, printing and filing by the Company of the Registration
Statement and exhibits thereto, each Preliminary Prospectus prior to or during
the period specified in the first sentence of Section 4(f) but not exceeding
nine months after the Effective Date, the Prospectus and any amendment or
supplement to the Registration Statement or the Prospectus, (ii) the
preparation and delivery of certificates representing the Trust Preferred
Securities, (iii) furnishing (including costs of shipping and mailing) such
copies of the Registration Statement, the Prospectus and any Preliminary
Prospectus, and all amendments and supplements thereto, as may be requested for
use in connection with the offering and sale of the Trust Preferred Securities
by the Underwriters or by dealers to


                                      14

whom Trust Preferred Securities may be sold, (iv) the filing fees and
out-of-pocket expenses relating to such filings for any filings required to be
made by the Underwriters with the NASD, (v) the registration or qualification
of the Trust Preferred Securities for offer and sale under the securities or
blue sky laws of such jurisdictions designated pursuant to Section 4(g) and the
preparation and printing of preliminary, supplemental and final blue sky
memoranda, (vi) counsel and accountants to the Company, and (vii) the transfer
agent for the Trust Preferred Securities. The Company will also pay all fees
and expenses of the Debenture Trustee, including the fees and disbursements of
counsel for the Debenture Trustee in connection with the Indenture and the
Debentures; the fees and expenses of the Property Trustee and the Delaware
Trustee, including the fees and disbursements of counsel for the Property
Trustee and the Delaware Trustee in connection with the Certificate of Trust
filed with the Delaware Secretary of State with respect to the Trust (the
"Certificate of Trust") and the Trust Agreement; and the fees and expenses of
the Guarantee Trustee, including the fees and disbursements of counsel for the
Guarantee Trustee in connection with the Guarantee and the Guarantee Agreement.

                  (b)      If the transactions contemplated by this Agreement
are not consummated or if this Agreement is terminated by the Company or the
Trust pursuant to any of the provisions hereof, the Company will reimburse the
Representative for all of their accountable out-of-pocket fees and expenses
(including the fees, disbursements and other charges of their counsel) incurred
by them in connection herewith.

         6.       Conditions of the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Trust Preferred Securities
shall be subject to the accuracy of the representations and warranties on the
part of the Trust and the Company contained herein as of the date hereof, as of
the date of the effectiveness of any amendment to the Registration Statement
filed after the date hereof and prior to the Closing Date (including the filing
of any document incorporated by reference therein) and as of the Closing Date,
to the accuracy of the statements of the Trust and the Company made in any
certificates pursuant to the provisions hereof, to the performance by the Trust
and the Company of their obligations hereunder and to the following additional
conditions:

                  (a)      All filings required under Rule 424 and 430A of the
Rules and Regulations to be made by the Company or the Trust prior to the
Closing shall have been made by the Company or the Trust, as the case may be.

                  (b)      (i) No stop order suspending the effectiveness of
the Registration Statement shall have been issued and no proceedings for that
purpose shall be pending or threatened by the Commission, (ii) no order
suspending the effectiveness of the Registration Statement or the qualification
or registration of the Trust Preferred Securities under the securities or blue
sky laws of any jurisdiction shall be in effect, and no proceeding for such
purpose shall be pending before or threatened or contemplated by the Commission
or the authorities of any such jurisdiction, (iii) any request for additional
information on the part of the staff of the Commission or any such authorities
shall have been complied with to the satisfaction of the staff of the
Commission or such authorities, and (iv) after the date hereof no amendment or
supplement to the Registration Statement or the


                                      15

Prospectus shall have been filed unless a copy thereof was first submitted to
the Representative and the Representative did not object thereto in good faith,
and the Representative shall have received certificates, dated the Closing Date
and signed by the Chief Executive Officer, the President or any Senior
Executive Vice President of the Company and the Chief Financial Officer, the
Treasurer or the Chief Accounting Officer of the Company (who may, as to
proceedings threatened, rely upon the best of their information and belief), to
the effect of the foregoing clauses (i), (ii) and (iii).

                  (c)      Since the respective dates as of which information
is given in the Registration Statement and the Prospectus, (i) there shall not
have been a material adverse change in the general affairs, business,
properties, management, financial condition or results of operations of the
Trust, or of the Company and its Subsidiaries considered as a single
enterprise, whether or not arising from transactions in the ordinary course of
business, and (ii) the Trust, or the Company and its Subsidiaries considered as
a single enterprise, shall not have sustained any material loss or interference
with its business, assets or properties from fire, explosion, flood or other
casualty, or from any labor dispute or any court or legislative or other
governmental action, order or decree.

                  (d)      Since the respective dates as of which information
is given in the Registration Statement and the Prospectus, there shall have
been no litigation or other proceeding instituted against the Trust, the
Company or any Significant Subsidiary, or any of their officers, directors or
shareholders in their capacities as such, or any of their assets or properties,
before or by any Governmental Body in which litigation or proceeding, in the
case of the Company and its Significant Subsidiaries, an unfavorable ruling,
decision or finding would materially and adversely affect the business,
properties, financial condition, net worth or results of operations of the
Company and its Subsidiaries considered as a single enterprise.

                  (e)      Each of the representations and warranties of the
Trust and the Company contained herein shall be true and correct at the Closing
Date as if made on such date, and all covenants and agreements herein contained
to be performed on the part of the Trust or the Company and all conditions
herein contained to be fulfilled or complied with by the Trust or the Company
at or prior to the Closing Date shall have been fully performed, fulfilled or
complied with.

                  (f)      The Representative shall have received opinions,
dated the Closing Date, from Pietrantoni Mendez & Alvarez, LLP, counsel for the
Company, and Brunilda Santos de Alvarez, General Counsel of the Company, to the
following effect:

                           (A)      in the case of the opinion from Pietrantoni
Mendez & Alvarez, LLP:

                                    (i)      The Company has been duly
organized and is validly existing as a corporation and is in good standing
under the laws of the Commonwealth of Puerto Rico; Banco Popular is a banking
corporation duly organized, validly existing and in good standing under the
laws of the Commonwealth of Puerto Rico;

                                    (ii)     The Registration Statement is
effective under the Act; any


                                      16

required filing of the Prospectus Supplement pursuant to Rule 424(b) has been
made in the manner and within the time period required by Rule 424(b); and to
the best knowledge of such counsel, no stop order suspending the effectiveness
of the Registration Statement or any amendment thereto and no order directed at
any document incorporated by reference in the Registration Statement or any
amendment thereto has been issued, and no proceedings for that purpose have
been instituted or are pending or are threatened or contemplated under the Act;

                                    (iii)    The Registration Statement and the
Prospectus, as of their respective dates, appeared on their face to be
appropriately responsive, in all material respects (other than the documents
incorporated therein by reference and not including the financial statements,
schedules and other financial data contained therein, as to which such counsel
need not express any opinion), with the requirements of the Act and the related
Rules and Regulations thereunder;

                                    (iv)     The descriptions contained and
summarized in the Registration Statement or the Prospectus, or incorporated
therein by reference, are accurate and fairly represent in all material
respects the information required to be shown in the Registration Statement and
Prospectus by the Act and the Rules and Regulations; and the statements set
forth under the headings "Description of Junior Subordinated Debt Securities,"
"Description of Trust Preferred Securities," "Description of Guarantees,"
"Relationship Among Trust Preferred Securities, Junior Subordinated Debt
Securities and Guarantees," and "Plan of Distribution" in the Prospectus, and
under the headings "Description of Capital Securities," "Description of Junior
Subordinated Debentures," "Description of Guarantee," and "Relationship Among
the Capital Securities, the Junior Subordinated Debentures and the Guarantee"
in the Prospectus Supplement, insofar as such statements constitute a summary
of the legal matters, documents or proceedings referred to therein, provide an
accurate summary of such legal matters, documents and proceedings;

                                    (v)      The Company has full legal right,
power, and authority to enter into this Agreement and to consummate the
transactions provided for herein; and this Agreement has been duly authorized,
executed and delivered by the Company;

                                    (vi)     The Indenture has been duly
authorized, executed and delivered by the Company, has been duly qualified
under the Trust Indenture Act, as amended, and (assuming the Indenture has been
duly authorized, executed and delivered by the Debenture Trustee) constitutes a
valid and legally binding instrument enforceable against the Company in
accordance with its terms (subject, as to enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency, moratorium or other laws
affecting creditors' rights generally from time to time in effect and subject
to general equity principles; and the Debentures have been duly authorized and
executed by the Company and, when authenticated in accordance with the
provisions of the Indenture and delivered to and paid for by the Trust, the
Debentures will constitute valid and legally binding obligations of the Company
enforceable against the Company in accordance with their terms and entitled to
the benefits of the Indenture, subject, as to enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency, moratorium or other laws
affecting creditors' rights generally from time to time in effect and subject
to general equity principles;


                                      17

                                    (vii)    The Guarantee Agreement has been
duly authorized, executed and delivered by the Company, and (assuming the
Guarantee Agreement has been duly authorized, executed and delivered by the
Guarantee Trustee) constitutes a valid and legally binding instrument,
enforceable against the Company in accordance with its terms, subject, as to
enforcement of remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium or other laws affecting creditors' rights generally from time to
time in effect and subject to general equity principles; and the Trust
Agreement has been duly authorized, executed and delivered by the Company and
each of the Administrative Trustees.

                                    (viii)   None of the Company's execution or
delivery of this Agreement, its performance hereof, its consummation of the
transactions contemplated herein or its application of the net proceeds of the
offering in the manner set forth under the caption "Use of Proceeds" conflicts
or will conflict with or results or will result in any breach or violation of
any of the terms or provisions of, or constitutes or will constitute a default
under, or results or will result in the creation or imposition of any
Encumbrance upon, any property or assets of the Company pursuant to (A) the
terms of the Certificate of Incorporation or By-laws of the Company, in each
case as amended; or (B) any statute, rule or regulation of any Governmental
Body having jurisdiction over the Company or any of its activities or
properties; and no consent, approval, authorization or order of any
Governmental Body has been or is required for the Company's performance of this
Agreement, the Guarantee Agreement, the Indenture, the Debentures, or the Trust
Agreement, or the consummation of the transactions contemplated hereby, except
such as have been obtained under the Act or may be required under state or
Commonwealth of Puerto Rico securities or blue sky laws in connection with the
purchase and distribution by the Underwriters of the Trust Preferred
Securities;

                                    (ix)     Neither the Company nor the Trust
are required to be registered as an investment company under the Investment
Company Act; and

                                    (x)      The deposit accounts of Banco
Popular are insured by the BIF of the FDIC to the legal maximum, and to such
counsel's knowledge no proceeding for the termination or revocation of such
insurance is pending or threatened. Banco Popular is a member of the Federal
Reserve Bank of New York and of the Federal Home Loan Bank of New York.

         In addition, such counsel shall state that in the course of the
preparation of the Prospectus, such counsel has participated in conferences
with officers and representatives of the Company and with the Accountants, at
which conferences such counsel made inquiries of such officers, representatives
and Accountants and discussed the contents of the Prospectus and, on the basis
of the foregoing and of the experience such counsel has gained through its
practice under the Act, nothing has come to such counsel's attention that
causes such counsel to believe that the Registration Statement as of the date
it became effective or the Prospectus as of its date and as of the Closing Date
contained any 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 of the date hereof and as of
the Closing Date, contained any untrue statement of a material fact or

                                      18

omitted or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading (it being understood that such
counsel need not express any opinion with respect to the financial statements,
schedules and other financial data included in the Prospectus). Such counsel
may state that they make no representation that they have independently
verified the accuracy or completeness of the statements contained in the
Registration Statement and Prospectus.

                           (B)      in the case of the opinion from Brunilda
Santos de Alvarez:

                                    (i)      The Company has been duly
organized and is validly existing as a corporation and is in good standing
under the laws of the Commonwealth of Puerto Rico. Each of Banco Popular and
each of the other Significant Subsidiaries is a corporation or bank duly
organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation. Each of the Company, Banco Popular,
and each of the other Significant Subsidiaries is duly qualified and in good
standing as a foreign corporation in each jurisdiction in which the character
or location of its properties (owned, leased or licensed) or the nature or
conduct of its business or use of its property and assets makes such
qualification necessary, except where the failure to so qualify would not have
a material adverse effect on the financial condition, or the earnings or
business affairs of the Company and its Subsidiaries considered as a single
enterprise;

                                    (ii)     The Company has an authorized
capitalization as set forth in the Prospectus; the Company has duly authorized
the issuance and sale of the Debentures to be sold by it to the Trust and has
duly authorized the creation of the Trust and the issuance and sale by the
Trust of the Trust Preferred Securities to be sold by it hereunder; such
Debentures and Trust Preferred Securities, when issued by the Company and the
Trust, respectively, will be validly issued, fully paid and nonassessable
legal, valid and binding obligators of the Company and the Trust, respectively,
enforceable in accordance with their terms, subject, as to enforcement of
remedies, to applicable bankruptcy, reorganization, insolvency, moratorium or
other laws affecting creditors' rights generally from time to time in effect
and subject to general equity principles, will conform in all material respects
to the descriptions thereof contained in the Prospectus, and will not be
subject to any preemptive, subscription or other similar rights; and no holders
of securities of the Company are entitled to have such securities registered
under the Registration Statement, except for holders who have waived any such
registration rights;

                                    (iii)    The Guarantee Agreement has been
duly authorized, executed and delivered by the Company, and (assuming the
Guarantee Agreement has been duly authorized, executed and delivered by the
Guarantee Trustee) constitutes a valid and legally binding instrument,
enforceable against the Company in accordance with its terms, subject, as to
enforcement of remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium or other laws affecting creditors' rights generally from time to
time in effect and subject to general equity principles; and the Trust
Agreement has been duly authorized, executed and delivered by the Company and
each of the Administrative Trustees;


                                      19

                                    (iv)     To the knowledge of such counsel,
there are no contracts or documents which are required by the Act to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement which are not filed or incorporated
therein by reference as required by the Act and the Rules and Regulations;

                                    (v)      To the knowledge of such counsel,
there is not pending or threatened against the Trust, the Company or any of its
Significant Subsidiaries, any legal action or proceeding, suit, arbitration,
claim, or governmental or other proceeding (informal or formal) or
investigation before or by any Governmental Body, of a character required to be
disclosed in the Registration Statement or the Prospectus which is not so
disclosed therein or in the materials incorporated by reference therein, and to
the knowledge of such counsel, no such proceedings have been threatened against
the Trust, the Company or any of its Significant Subsidiaries, or any of their
respective assets or properties. To the knowledge of such counsel, neither the
Trust, the Company, nor any Significant Subsidiary is in violation of, or in
default with respect to, any law, rule, or regulation, or any order, judgment
or decree, except as described in the Registration Statement or Prospectus or
in the materials incorporated by reference therein, or, in the case of the
Company and its Significant Subsidiaries, such as in the aggregate do not now
have and can reasonably be expected in the future not to have a material
adverse effect upon the operations, business, properties, or assets of the
Company and its Subsidiaries considered as a single enterprise; nor is the
Trust, the Company, or any Significant Subsidiary presently required under any
order, judgment or decree to take any action in order to avoid any such
violation or default;

                                    (vi)     Each of the Company and the Trust
has full legal right, power, and authority to enter into this Agreement and to
consummate the transactions provided for herein; and this Agreement has been
duly authorized, executed and delivered by the Company and the Trust;

                                    (vii)    None of the Company's or the
Trust's execution or delivery of this Agreement, its performance hereof, its
consummation of the transactions contemplated herein or its application of the
net proceeds of the offering in the manner set forth under the caption "Use of
Proceeds" in the Prospectus and the Prospectus Supplement conflicts or will
conflict with or results or will result in any breach or violation of any of
the terms or provisions of, or constitute a default under, or result in the
creation or imposition of any Encumbrance upon, any property or assets of the
Trust, the Company, or any of its Significant Subsidiaries, pursuant to (A) the
terms of Trust Agreement or the Certificate of Incorporation or By-laws of the
Company or any Significant Subsidiary, in each case as amended; (B) the terms
of any contract or other agreement to which the Trust, the Company or any
Significant Subsidiary is a party or by which any of them is or may be bound or
to which any of their properties is or may be subject and of which such counsel
has knowledge; (C) any statute, rule or regulation of any Governmental Body
having jurisdiction over the Trust, the Company or any Significant Subsidiary
or any of their activities or properties; (D) the Ruling; or (E) the terms of
any judgment, decree or order of any court, arbitrator or Governmental Body
having such jurisdiction and of which such counsel has knowledge, the breach of
which, in the case of the Company and the Significant Subsidiaries, would
result in a material adverse effect on the financial condition of the Company
and its Subsidiaries, considered as a single enterprise; and no


                                      20

consent, approval, authorization or order of any Governmental Body has been or
is required for the Company's or the Trust's performance of this Agreement, the
Guarantee Agreement, the Indenture, the Debentures or the Trust Agreement, or
the consummation of the transactions contemplated thereby, except such as have
been obtained under the Act or may be required under state or Commonwealth of
Puerto Rico securities or blue sky laws in connection with the purchase and
distribution by the Underwriters of the Trust Preferred Securities;

                                    (viii)   To such counsel's knowledge, the
conduct of the respective businesses of the Trust, the Company and its
Significant Subsidiaries are not in violation of any federal, state or local
statute, administrative regulation or other law, which violation, in the case
of the Company and the Significant Subsidiaries, is likely to have a material
adverse effect on the Company and its Subsidiaries considered as a single
enterprise; and the Trust, the Company and its Significant Subsidiaries have
obtained all material licenses as are necessary or required for the conduct of
their businesses as presently conducted;

                                    (ix)     To the knowledge of such counsel,
none of the Trust, the Company or any of the Significant Subsidiaries is in
breach or violation of any of the terms or provisions of, or in default under
(nor has an event occurred which with notice or lapse of time or both would
constitute a default or acceleration under), (A) the terms of the Trust
Agreement or its Certificate of Incorporation or By-laws, in each case as
amended; (B) the terms of any contract or other agreement known to such counsel
to which the Trust, the Company or any Significant Subsidiary is a party or by
which any of them is or may be bound or to which any of their properties or
assets is or may be subject, which breach, violation or default, in the case of
the Company and the Significant Subsidiaries, could have a material adverse
effect on the Company and its Subsidiaries considered as a single enterprise;
(C) any statute, rule or regulation of any Government Body having jurisdiction
over the Trust, the Company or any Significant Subsidiary, or any of their
activities, assets or properties, which breach, violation or default, in the
case of the Company and the Significant Subsidiaries, could have a material
adverse effect on the Company and its Subsidiaries considered as a single
enterprise; or (D) the terms of any judgment, decree or order known to such
counsel, of any arbitrator or Governmental Body having such jurisdiction, which
breach, violation or default, in the case of the Company and the Significant
Subsidiaries, could have a material adverse effect on the Company and its
Subsidiaries considered as a single enterprise; provided such counsel shall not
be required to opine as to matters involving the Federal or state securities
laws, other antifraud provisions, fraudulent transfer laws and the United
States Employee Retirement Income Security Act of 1974;

                                    (x)      The deposit accounts of Banco
Popular and of each other Significant Subsidiary of the Company that is a
depository institution are insured by the BIF of the FDIC to the legal maximum,
and to such counsel's knowledge no proceeding for the termination or revocation
of such insurance is pending or threatened. Banco Popular is a member of the
Federal Reserve Bank of New York and of the Federal Home Loan Bank of New York;
and

                                    (xi)     To the knowledge of such counsel,
none of the Trust, the


                                      21

Company or any of its Significant Subsidiaries, or any of their respective
directors or officers, is subject to any order or directive of, or party to any
agreement with, any regulatory agency having jurisdiction with respect to the
business or operations of the Trust, the Company or any of its Significant
Subsidiaries, except as disclosed in the Registration Statement or the
Prospectus or in the materials incorporated by reference therein, and except,
in the case of the Company and the Significant Subsidiaries, for any such
order, directive or agreement that is not material to the Company and its
Subsidiaries considered as a single enterprise.

         In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and the Trust and public officials and, as to matters
involving the application of laws of any jurisdiction other than the
Commonwealth of Puerto Rico and the United States (to the extent satisfactory
in form and scope to counsel for the Underwriters) such counsel may rely upon
the opinion of local (including in-house) counsel to the Company. The foregoing
opinion shall also state that such counsel has no reason to believe that the
Underwriters are not justified in relying upon such opinion of local counsel,
and copies of such opinion shall be delivered to the Representative and its
counsel.

         In addition, such counsel shall state that in the course of the
preparation of the Prospectus, such counsel has participated in conferences
with officers and representatives of the Company and with the Accountants, at
which conferences such counsel made inquiries of such officers, representatives
and Accountants and discussed the contents of the Prospectus and, on the basis
of the foregoing and of the experience such counsel has gained through its
practice under the Act, nothing has come to such counsel's attention that
causes such counsel to believe that the Registration Statement as of the date
it became effective or the Prospectus as of its date and as of the Closing Date
contained any 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 of the date hereof and as of
the Closing Date, contained any untrue statement of a material fact or omitted
or omits to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading (it being understood that such counsel need not
express any opinion with respect to the financial statements, schedules and
other financial data included in the Prospectus). Such counsel may state that
she makes no representation that she has independently verified the accuracy or
completeness of the statements contained in the Registration Statement and
Prospectus.

         References to the Registration Statement and the Prospectus in this
paragraph (f) shall include any amendment or supplement thereto at the date of
such opinion.

                  (g)      The Representative shall have received the opinion
of counsel to J.P. Morgan, as Property Trustee under the Trust Agreement,
Indenture Trustee under the Indenture, and Guarantee Trustee under the
Guarantee Agreement, dated the Closing Date, to the effect that:

                           (i)      J.P. Morgan is duly incorporated and is
validly existing in good standing as a banking corporation under the law of the
United States.


                                      22

                           (ii)     J.P. Morgan has the power and authority to
execute, deliver and perform its obligations under the Trust Agreement, the
Indenture and the Guarantee Agreement.

                           (iii)    Each of the Trust Agreement, the Indenture
and the Guarantee Agreement has been duly authorized, executed and delivered by
J.P. Morgan and constitutes a legal, valid and binding obligation of J.P.
Morgan, enforceable against J.P. Morgan in accordance with its terms.

                           (iv)     The execution, delivery and performance by
J.P. Morgan of the Trust Agreement, the Indenture and the Guarantee Agreement
do not conflict with or constitute a breach of the charter or by-laws of J.P.
Morgan.

                           (v)      No consent, approval or authorization of,
or registration with or notice to, any governmental authority or agency of the
United States of America governing the banking or trust powers of J.P. Morgan
is required for the execution, delivery or performance by J.P. Morgan of the
Trust Agreement, the Indenture and the Guarantee Agreement.

                  (h)      The Representative shall have received an opinion,
dated the Closing Date, from Richards, Layton & Finger, P.A., special Delaware
counsel to the Trust, to the effect that:

                           (i)      The Trust has been duly created and is
validly existing in good standing as a business trust under the Delaware
Statutory Trust Act (the "Delaware Act"), and all filings required as of the
date hereof under the Delaware Act with respect to the creation and valid
existence of the Trust as a business trust have been made.

                           (ii)     Under the Trust Agreement and the Delaware
Act, the Trust has the trust power and authority to own property and to conduct
its business, all as described in the Prospectus.

                           (iii)    The Trust Agreement constitutes a valid and
legally binding instrument enforceable against the Company and each of the
Administrative Trustees in accordance with its terms (subject, as to
enforcement of remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium or other laws affecting creditors' rights generally from time to
time in effect and subject to general equity principles and except further as
enforcement thereof may be limited by any governmental authority that limits,
delays or prohibits the making of payments outside the United States).

                           (iv)     Under the Trust Agreement and the Delaware
Act, the Trust has the trust power and authority (i) to execute and deliver,
and to perform its obligations under, this Agreement, and (ii) to issue, and to
perform its obligations under, the Trust Preferred Securities and the Trust
Common Securities.


                                      23

                           (v)      Under the Trust Agreement and the Delaware
Act, the execution and delivery by the Trust of this Agreement, and the
performance by the Trust of its obligations under this Agreement, have been
duly authorized by all necessary trust action on the part of the Trust.

                           (vi)     Under the Delaware Act, the certificate
attached to the Trust Agreement as Exhibit A is an appropriate form of
certificate to evidence ownership of the Trust Preferred Securities. The Trust
Preferred Securities have been duly authorized by the Trust pursuant to the
Trust Agreement and, when issued and delivered in accordance with this
Agreement, will be duly and validly issued, and, subject to the qualifications
hereinafter expressed in this paragraph (vi), fully paid and non-assessable
undivided beneficial interests in the assets of the Trust and are entitled to
the benefits of the Trust Agreement. The Trust Common Securities have been duly
authorized by the Trust Agreement and are duly and validly issued undivided
beneficial interests in the assets of the Trust and are entitled to the
benefits of the Trust Agreement. The holders of the Trust Preferred Securities,
as beneficial owners of the Trust, will be entitled to the same limitation of
personal liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware.

                           (vii)    Under the Trust Agreement and the Delaware
Act, the issuance of the Trust Preferred Securities and the Trust Common
Securities is not subject to preemptive or similar rights.

                           (viii)   The issuance and sale by the Trust of the
Trust Preferred Securities and the Trust Common Securities, the purchase by the
Trust of the Debentures, the execution, delivery and performance by the Trust
of this Agreement, the consummation by the Trust of the transactions
contemplated by this Agreement and compliance by the Trust with its obligations
under this Agreement do not violate (a) any of the provisions of the
Certificate of Trust or the Trust Agreement, (b) any applicable Delaware law or
Delaware administrative regulation.

                  (i)      The Representative shall have received an opinion,
dated the Closing Date, from O'Neill & Borges, counsel to the Underwriters,
which opinion shall be satisfactory in all respects to the Representative.

                  (j)      Concurrently with the execution and delivery of this
Agreement, the Accountants shall have furnished to the Representative a letter,
dated the date of its delivery (the "Accountants Letter"), addressed to the
Representative and in form and substance satisfactory to the Representative, to
the effect that:

                           (i)      they are independent accountants within the
meaning of the Act and the applicable published rules and regulations
thereunder;

                           (ii)     in their opinion, the consolidated
financial statements of the Company and its Subsidiaries audited by them and
incorporated by reference in the Prospectus comply as to form in all material
respects with the applicable accounting requirements of the Act, the Exchange


                                      24

Act and the published rules and regulations thereunder with respect to
registration statements on Form S-3;

                           (iii)    on the basis of procedures (but not an
audit in accordance with the Public Company Accounting Oversight Board)
consisting of (a) reading the minutes of meetings of the stockholders and the
Board of Directors of the Company since December 31, 2003, as set forth in the
minute books through a date five business days before the date hereof; (b)
performing the procedures specified by the American Institute of Certified
Public Accountants for a review of interim financial information as described
in SAS No. 71, "Interim Financial Information" on the unaudited consolidated
interim financial statements of the Company and its Subsidiaries included in
the Prospectus and reading the unaudited interim financial data for the period
from the date of the latest audited balance sheet incorporated by reference in
the Prospectus to the date of the latest available interim financial data; and
(c) making inquiries of certain officials of the Company who have
responsibility for financial and accounting matters regarding the specific
items for which representations are requested below, nothing has come to their
attention (as of a date not earlier than five business days before the date
hereof) as a result of the foregoing procedures that caused them to believe
that: (1) the unaudited consolidated interim financial statements incorporated
by reference in the Registration Statement or in the Prospectus, do not comply
as to form in all material respects with the applicable accounting requirements
of the Exchange Act and the published rules and regulations thereunder; (2) any
material modifications should be made to the unaudited consolidated interim
financial statements, if any, incorporated by reference in the Registration
Statement or in the Prospectus, for them to be in conformity with generally
accepted accounting principles; (3)(i) at the date of the latest available
interim financial data and at a specified date not earlier than five business
days before the date hereof, there was any decrease in the total assets or
consolidated stockholders' equity, any increase in long term debt, or any
change in capital stock of the Company and its Subsidiaries as compared with
amounts shown in the most recent balance sheet incorporated by reference in the
Prospectus and (ii) for the period from the date of the most recent balance
sheet incorporated by reference in the Prospectus to the date of the latest
interim financial data available, and to a date not earlier than five business
days before the date hereof, there were any decreases, as compared with the
corresponding period in the preceding year, in consolidated net interest
income, non-interest income, or in the total or per share amounts of net
income, except in all instances for changes or decreases which the Registration
Statement discloses have occurred or may occur, or they shall state any
specific changes or decreases; and

                           (iv)     the information set forth under the heading
"Ratios of Earnings to Fixed Charges and to Fixed Charges and Preferred Stock
Dividends" in the Prospectus, under the heading "Selected Consolidated
Financial and Other Data" in the Prospectus Supplement, and under the headings
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Statistical Summaries-Statements of Condition" and "Statistical
Summaries-Statements of Income" in the Company's Annual Report, incorporated by
reference in the Prospectus, which is expressed in dollars (or percentages
derived from such dollar amounts) and has been obtained from accounting records
which are subject to the internal controls of the Company's accounting system
or which has been derived directly from such accounting records and analysis or


                                      25

computations, is in agreement with such records or computations made therefrom.

         At the Closing Date, the Accountants shall have furnished to the
Representative a letter, dated the date of its delivery, which shall confirm,
on the basis of a review in accordance with the procedures set forth in the
Accountants Letter, that nothing has come to their attention during the period
from the date of the Accountants Letter referred to in the prior sentence to a
date (specified in the letter) not more than five business days prior to the
Closing Date, which would require any change in the original letter if it were
required to be dated and delivered at the Closing Date.

         In the event that the Accountants Letter sets forth any such changes,
decreases or increases, it shall be a further condition to the obligations of
the Underwriters that (A) such letter shall be accompanied by a written
explanation of the Company as to the significance thereof, unless the
Representative deems such explanation unnecessary, and (B) such changes,
decreases or increases do not, in the sole judgment of the Representative, make
it impractical or inadvisable to proceed with the purchase and delivery of the
Trust Preferred Securities as contemplated by the Registration Statement and
the Prospectus, as amended as of the date hereof.

                  (k)      At the Closing Date, there shall be furnished to the
Representative an accurate certificate, dated the date of its delivery, signed
by each of the Chief Executive Officer, or any Senior Executive Vice President
and the Chief Financial Officer, the Treasurer or the Chief Accounting Officer
of the Company and with respect to the Trust, by an Administrative Trustee of
the Trust, in form and substance satisfactory to the Representative, to the
effect that to the best of their knowledge:

                           (i)      Each signer of such certificate has
carefully examined the Registration Statement and the Prospectus and (A) as of
the date of such certificate, (x) the Registration Statement does not contain
any 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 not misleading and (y) the Prospectus does not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading and (B) since
the Effective Date no event has occurred as a result of which it is necessary
to amend or supplement the Prospectus in order to make the statements therein
not untrue or misleading in any material respect;

                           (ii)     Each of the representations and warranties
of the Trust and the Company contained in this Agreement were, when originally
made, and are, at the time such certificate is delivered, true and correct in
all respects; each of the covenants required herein to be performed by any of
them on or prior to the date of such certificate has been duly, timely and
fully performed and each condition herein required to be complied with on or
prior to the delivery of such certificate has been duly, timely and fully
complied with; and

                           (iii)    No stop order suspending the effectiveness
of the Registration Statement or any post-effective amendment thereto and no
order directed at any document


                                      26

incorporated by reference in the Registration Statement or any amendment
thereto or the Prospectus has been issued, and no proceedings for that purpose
have been instituted or threatened by the Commission.

                           (l)      The Trust Preferred Securities shall be
qualified for sale in such states and possessions as the Representative may
reasonably request, and each such qualification shall be in effect and not
subject to any stop order or other proceeding on the Closing Date.

                           (m)      The Company and the Trust shall have
furnished to the Representative such officers' certificates, certificates of
government officials, letters and other documents, in addition to those
specifically mentioned herein, as the Representative may have reasonably
requested as to the accuracy and completeness at the Closing Date of any
statement in the Registration Statement or the Prospectus, as to the accuracy
at the Closing Date of the representations and warranties of the Company, as to
the performance by the Company of its obligations hereunder, and as to the
fulfillment of the conditions concurrent and precedent to the obligations
hereunder of the Underwriters.

                           (n)      The Representative shall have received
copies, duly certified by the Secretary or an Assistant Secretary of the
Company, of the resolutions or other corporate actions adopted or taken by the
Company in connection with the transactions contemplated herein.

                           (o)      The Representative shall have received a
copy of the certificate of incorporation of the Company, as amended, certified
as of a recent date by the appropriate officer of the Commonwealth, together
with certificates dated as of a recent date from the Secretary of the Sate of
the Commonwealth as to the existence and good standing of the Company under the
laws of the Commonwealth and copies of the by-laws of the Company certified by
the Secretary or an Assistant Secretary of the Company. The Representative
shall further have received a copy, certified by the Secretary or an Assistant
Secretary of the Company, of the Trust Agreement, the Indenture and the
Guarantee Agreement.

         All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are satisfactory in form
and substance to you. The Company will furnish you with such conformed copies
of such opinions, certificates, letters and other documents as you shall
reasonably request.

         If (i) any of the conditions specified in this Section 6 shall not
have been fulfilled when and as provided in this Agreement, or (ii) any of the
opinions and certificates mentioned above or elsewhere in this Agreement shall
not be reasonably satisfactory in form and substance to the Representatives and
their counsel, this Agreement and all obligations of the Underwriters hereunder
may be cancelled on, or at any time prior to, the Closing Date by the
Representatives. Notice of such cancellation shall be given to the Trust and
the Company in writing or by telephone or facsimile confirmed in writing.


                                      27

         7.       Indemnification and Contribution.

                  (a)      Each of the Trust and the Company, jointly and
severally, agrees to indemnify and hold harmless each Underwriter, the
directors, officers, employees and agents of each Underwriter and each person,
if any, who controls each Underwriter within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act, from and against any and all losses,
claims, damages or liabilities, joint or several (and actions in respect
thereof), to which they, or any of them, may become subject under the Act or
other Federal, state or Commonwealth of Puerto Rico statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
(i) any untrue statement or alleged untrue statement made by the Company in
Section 3 of this Agreement, (ii) any untrue statement or alleged untrue
statement of any material fact contained in (A) any Preliminary Prospectus, the
Registration Statement or the Prospectus or any amendment or supplement to the
Registration Statement or the Prospectus or (B) any application or other
document, or any amendment or supplement thereto, executed by the Company or
based upon written information furnished by or on behalf of the Company filed
in any jurisdiction in order to qualify the Trust Preferred Securities under
the securities or blue sky laws thereof or filed with the Commission or any
securities association or securities exchange (each, an "Application"), or
(iii) the omission or alleged omission to state in any Preliminary Prospectus,
the Registration Statement or the Prospectus or any amendment or supplement to
the Registration Statement or the Prospectus or any Application a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse, as incurred, each Underwriter and each such
other person for any legal or other expenses reasonably incurred by such
Underwriter or such other person in connection with investigating, defending or
appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action; provided, however, that the Company and the Trust
will not be liable in any such case to the extent that any such loss, claim,
damage or liability is based solely upon an untrue statement or omission or
alleged untrue statement or omission in any of such documents made in reliance
upon and in conformity with information relating to any Underwriter furnished
in writing to the Company by the Representative on behalf of any Underwriter
expressly for inclusion therein; provided, further that such indemnity with
respect to any Preliminary Prospectus shall not inure to the benefit of any
Underwriter (or any such other person) from whom the person asserting any such
loss, claim, damage, liability or action purchased Trust Preferred Securities
which are the subject thereof to the extent that any such loss, claim, damage
or liability (i) results from the fact that such Underwriter failed to send or
give a copy of the Prospectus (as amended or supplemented) to such person at or
prior to the confirmation of the sale of such Trust Preferred Securities to
such person, in any case where such delivery is required by the Act and (ii)
arises out of or is based upon an untrue statement or omission of a material
fact contained in such Preliminary Prospectus that was corrected in the
Prospectus (or any amendment or supplement thereto), unless such failure to
deliver the Prospectus (as amended or supplemented) was the result of
noncompliance by the Company with Section 4(f). This indemnity agreement will
be in addition to any liability that the Company might otherwise have. The
Company will not, without the prior written consent of each Underwriter, settle
or compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not such


                                      28

Underwriter or any person who controls such Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act is a party to each
claim, action, suit or proceeding), unless such settlement, compromise or
consent includes an unconditional release of each Underwriter and each such
other person from all liability arising out of such claim, action, suit or
proceeding.

                  (b)      Each Underwriter will severally and not jointly
indemnify and hold harmless each of the Company and the Trust, its respective
employees, officers and directors and each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, against all losses, claims, damages or liabilities (or actions in
respect thereof) to which any of them may become subject under the Act or other
federal, state or Commonwealth of Puerto Rico statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus or any
amendment or supplement to the Registration Statement or the Prospectus or any
Application, or (ii) the omission or the alleged omission to state in the
Registration Statement, any Preliminary Prospectus or the Prospectus or any
amendment or supplement to the Registration Statement or the Prospectus, or any
Application, a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through the
Representative expressly for use therein; and, subject to the limitation set
forth immediately preceding this clause, will reimburse, as incurred, any legal
or other expenses reasonably incurred by the Company and any such director,
officer or controlling person in connection with investigating or defending any
such loss, claim, damage, liability or any action in respect thereof. The
Company acknowledges that, for all purposes under this Agreement, the
statements relating to the Underwriters set forth under the heading
"Underwriting" (which do not include information on the Company's expenses and
the listing of the Trust Preferred Securities) constitute the only information
furnished in writing to the Company by the Representative on behalf of the
Underwriters expressly for inclusion in the Registration Statement, any
Preliminary Prospectus or the Prospectus. This indemnity agreement will be in
addition to any liability that each Underwriter might otherwise have.

                  (c)      Promptly after receipt by an indemnified party under
this Section 7 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against an indemnifying
party or parties under this Section 7, notify the indemnifying party or parties
of the commencement thereof, but the omission so to notify the indemnifying
party or parties will not relieve it or them from any liability which it or
they may have to any indemnified party under the foregoing provisions of this
Section 7 or otherwise unless, and only to the extent that, such omission
results in the forfeiture of substantive rights or defenses by the indemnifying
party. If any such action is brought against an indemnified party and it
notifies an indemnifying party or parties of its commencement, the indemnifying
party or parties against which a claim is made will be entitled to participate
therein and, to the extent that it or they may wish, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party;
provided, however, that if the defendants


                                      29

in any such action include both the indemnified party and the indemnifying
party and the indemnified party shall have reasonably concluded that there may
be one or more legal defenses available to it or other indemnified parties
which are different from or additional to those available to the indemnifying
party, the indemnifying party shall not have the right to direct the defense of
such action on behalf of such indemnified party or parties and such indemnified
party or parties shall have the right to select separate counsel to defend such
action on behalf of such indemnified party or parties. After notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof and approval by such indemnified party of counsel appointed to
defend such action, the indemnifying party will not be liable to such
indemnified party under this Section 7 for any legal or other expenses other
than reasonable costs of investigation subsequently incurred by such
indemnified party in connection with the defense thereof, unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood that, in connection
with such action, the indemnifying party shall not be liable for the reasonable
fees and expenses of more than one separate counsel (in addition to the fees
and expenses of local counsel necessary in connection with any such
proceedings) in any one action or separate but substantially similar actions in
the same jurisdiction arising out of the same general allegations or
circumstances, designated by the Representative in the case of paragraph (a) of
this Section 7, representing the indemnified parties under paragraph (a) who
are parties to such action or actions), or (ii) the indemnifying party has
authorized in writing the employment of counsel for the indemnified party at
the expense of the indemnifying party. After such notice from the indemnifying
party to such indemnified party, the indemnifying party will not be liable for
the costs and expenses of any settlement of such action effected by such
indemnified party without the written consent of the indemnifying party, unless
such indemnified party waived its right under this Section 7, in which case the
indemnified party may effect such a settlement without such consent.

                  (d)      If the indemnification provided for in the foregoing
paragraphs of this Section 7 is unavailable or insufficient to hold harmless an
indemnified party under paragraph (a) or (b) above in respect of any losses,
claims, damages or liabilities (or actions in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages
or liabilities (or actions in respect thereof) (i) in such proportion as is
appropriate to reflect the relative benefits received by the indemnifying party
or parties, on the one hand, and the indemnified party, on the other, from the
offering of the Trust Preferred Securities or (ii) if, but only if, the
allocation provided by the foregoing 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
indemnifying party or parties on the one hand, and the indemnified party, on
the other, in connection with the statements or omissions or alleged statements
or omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Trust and the Company, on
the one hand, and the Underwriters, on the other, shall be deemed to be in the
same proportion as the total proceeds from the offering of the Trust Preferred
Securities (before deducting expenses) received by the Company bear to the
total underwriting discounts and commissions received by the Underwriters, in
each case as set forth in the table on the cover page of the Prospectus.
Relative fault shall be


                                      30

determined by reference to whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Representative on behalf
of the Underwriters, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Trust and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 7(d) were to be determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take into
account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages,
liabilities (or actions in respect thereof) referred to above in this Section
7(d) shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this Section 7(d), no
Underwriter shall be required to contribute any amount in excess of the total
underwriting discounts and commissions received by it with respect to the Trust
Preferred Securities purchased by such Underwriter under this Agreement, less
the aggregate amount of any damages that such Underwriter has otherwise been
required to pay in respect of the same or any substantially similar claim. No
person found guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) will be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute as provided in this Section 7(d) are several in
proportion to their respective underwriting obligations and not joint. For
purposes of this Section 7(d), each person, if any, who controls an Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
will have the same rights to contribution as such Underwriter, and each
director or officer of the Company and each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, will have the same rights to contribution as the Company, subject
in each case to the provisions of this paragraph (d). The provisions of section
7(c) shall be applicable to any claim for contribution under this Section 7(d).
Any party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made under this Section 7(d), notify any
such party or parties from whom contribution may be sought, but the omission so
to notify will not relieve the party or parties from whom contribution may be
sought from any other obligations it or they may have hereunder or otherwise
than under this paragraph (d) or to the extent that such party or parties were
not adversely affected by such omission. The contribution agreement set forth
above shall be in addition to any liabilities which any indemnifying party may
otherwise have. No party will be liable for contribution with respect to any
action or claim settled without its written consent (which consent will not be
unreasonably withheld).

                  (e)      The indemnity and contribution agreements contained
in this Section 7 and the representations and warranties of the Company
contained in this Agreement shall remain operative and in full force and effect
regardless of (i) any investigation made by or on behalf of the Underwriters,
(ii) acceptance of any of the Trust Preferred Securities and payment therefor
or (iii) any termination of this Agreement.


                                      31

         8.       Termination. The obligations of the several Underwriters
under this Agreement may be terminated at any time prior to the Closing Date by
notice to the Company and the Trust from the Representative, without liability
on the part of any Underwriter to the Company and the Trust if, prior to
delivery and payment for the Securities, in the sole judgment of the
Representative, (i) trading in the Common Stock, the Preferred Stock or any
trust preferred securities of the Company or any affiliate of the Company or in
securities generally shall have been suspended by the Commission or by the
Nasdaq, (ii) minimum or maximum prices shall have been established for the
Common Stock, the Preferred Stock or any trust preferred securities of the
Company or any affiliate of the Company or for securities generally on either
the Nasdaq or the NYSE, or additional material governmental restrictions, not
in force on the date of this Agreement, shall have been imposed upon trading in
securities generally by any of such market or exchange or by order of the
Commission or any court or other Governmental Authority, (iii) a general
banking moratorium shall have been declared by United States, New York State,
or Commonwealth of Puerto Rico authorities, or (iv) any material adverse change
in the financial or securities markets in the United States or any outbreak or
material escalation of hostilities or declaration by the United States of war
or other calamity or crisis shall have occurred, the effect of any of which is
such as to make it, in the sole judgment of the Representative, impracticable
or inadvisable to market the Trust Preferred Securities on the terms and in the
manner contemplated by the Prospectus. Any termination pursuant to Section 8
shall be without liability of any party to any other party except as provided
in Sections 5(a) and 7.

         9.       Default of Underwriters. If one or more Underwriters default
in their obligations to purchase Trust Preferred Securities hereunder and the
aggregate number of such Trust Preferred Securities that such defaulting
Underwriter or Underwriters agreed but failed to purchase is ten percent or
less of the aggregate number of Trust Preferred Securities to be purchased by
all of the Underwriters at such time hereunder, the other Underwriters may make
arrangements satisfactory to the Representative for the purchase of such Trust
Preferred Securities by other persons (who may include one or more of the
nondefaulting Underwriters, including the Representative), but if no such
arrangements are made by the Closing Date, the other Underwriters shall be
obligated severally in proportion to their respective commitments hereunder to
purchase the Trust Preferred Securities that such defaulting Underwriter or
Underwriters agreed but failed to purchase. If one or more Underwriters so
default with respect to an aggregate number of Trust Preferred Securities that
is more than ten percent of the aggregate number of Trust Preferred Securities,
as the case may be, to be purchased by all of the Underwriters at such time
hereunder, and if arrangements satisfactory to the Representative are not made
within 36 hours after such default for the purchase by other persons (who may
include one or more of the nondefaulting Underwriters, including the
Representative) of the Trust Preferred Securities with respect to which such
default occurs, this Agreement will terminate without liability on the part of
any nondefaulting Underwriter, the Trust and the Company other than as provided
in Section 10 hereof. In the event of any default by one or more Underwriters
as described in this Section 9, the Representative shall have the right to
postpone the Closing Date, established as provided in Section 9 hereof for not
more than seven business days in order that any necessary changes may be made
in the arrangements or documents for the purchase and delivery of the Trust
Preferred Securities. As used in this Agreement, the term "Underwriter"
includes any person substituted for an Underwriter under this Section 9.
Nothing herein shall relieve any


                                      32

defaulting Underwriter from liability for its default.

         10.      Survival. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Trust, the
Company, its officers, and the several Underwriters set forth in this Agreement
or made by or on behalf of them, respectively, pursuant to this Agreement shall
remain in full force and effect, regardless of (i) any investigation made by or
on behalf of the Trust, the Company, any of its officers or directors, any
Underwriter or any controlling person referred to in Section 7 hereof and (ii)
delivery of and payment for the Trust Preferred Securities. The respective
agreements, covenants, indemnities and other statements set forth in Sections 5
and 7 hereof shall remain in full force and effect, regardless of any
termination or cancellation of this Agreement.

         11.      Notices. Notice given pursuant to any of the provisions of
this Agreement shall be in writing and, unless otherwise specified, shall be
mailed or delivered (a) if to the Company, at the office of the Company, Banco
Popular Center, 268 Munoz Rivera Avenue, Hato Rey, PR 00918, Attention: Jorge
Junquera, (b) if to the Trust, to the office of the Company, Banco Popular
Center, 268 Munoz Rivera Avenue, Hato Rey, PR 00918, Attention: Richard
Barrios, or (c) if to the Underwriters, to the office of the Representative,
Banco Popular Center, Suite 1020, 268 Munoz Rivera Avenue, Hato Rey, PR 00918,
Attention: Kenneth McGrath, President. Any such notice shall be effective only
upon receipt. Any notice under Section 7 or 8 may be made by telex or
telephone, but if so made shall be subsequently confirmed in writing.

         12.      Successors. This Agreement shall inure to the benefit of and
shall be binding upon the several Underwriters, the Trust, the Company, and
their respective successors and legal representatives, and nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person any legal or equitable right, remedy or claim under or in respect of
this Agreement, or any provisions herein contained, this Agreement and all
conditions and provisions hereof being intended to be and being for the sole
and exclusive benefit of such persons and for the benefit of no other person
except that (i) the indemnities of the Trust and the Company contained in
Section 7 of this Agreement shall also be for the benefit of any person or
persons who control any Underwriter within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act and (ii) the indemnities of the Underwriters,
contained in Section 7 of this Agreement shall also be for the benefit of the
directors , employees and officers of the Company and any person or persons who
control the Company within the meaning of Section 15 of the Act or Section 20
of the Exchange Act. No purchaser of Trust Preferred Securities from any
Underwriter shall be deemed a successor because of such purchase. This
Agreement shall not be assignable by any party hereto without the prior written
consent of the other party.

         13.      APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF PUERTO RICO,
WITHOUT GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS.


                                      33

         14.      Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.


                                      34

         Please confirm that the foregoing correctly sets forth the agreement
among the Company and the several Underwriters.


                                        Very truly yours,

                                        POPULAR CAPITAL TRUST II

                                        By: /s/ Jorge A. Junquera
                                           ------------------------------------
                                        Name:  Jorge A. Junquera
                                        Title:   Administrative Trustee

                                        POPULAR, INC.

                                        By: /s/ Jorge A. Junquera
                                           ------------------------------------
                                        Name: Jorge A. Junquera
                                        Title: Senior Executive Vice-President


Confirmed as of the date first
above mentioned:

POPULAR SECURITIES, INC.
Acting on its behalf and as
representative of the several
Underwriters named in
Schedule 1 hereof


By: /s/ Patricia Pumarada
   -----------------------------
Name:  Patricia Pumarada
Title: Vice President


                                      35

                                                                     SCHEDULE 1


                                  UNDERWRITERS

                                                      Aggregate Number of Trust
                                                      Preferred Securities to
                                                      be Purchased



Popular Securities, Inc.                                          5,198,960
Banc of America Securities LLC                                          520
Keefe, Bruyette & Woods, Inc.                                           520

Total:                                                            5,200,000
                                                                  =========


                                      36

EX-4.1

                                                                     EXHIBIT 4.1

                    AMENDED AND RESTATED DECLARATION OF TRUST
                               AND TRUST AGREEMENT

                                      AMONG

                                 POPULAR, INC.,
                                  AS DEPOSITOR

                J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION,
                               AS PROPERTY TRUSTEE

                 CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION,
                               AS DELAWARE TRUSTEE

                 AND THE SEVERAL HOLDERS OF THE TRUST SECURITIES

                          DATED AS OF NOVEMBER 30, 2004

                            POPULAR CAPITAL TRUST II



                            POPULAR CAPITAL TRUST II

              CERTAIN SECTIONS OF THIS TRUST AGREEMENT RELATING TO
                        SECTIONS 3.10 THROUGH 3.18 OF THE
                          TRUST INDENTURE ACT OF 1939:



TRUST INDENTURE                                                                           TRUST AGREEMENT
ACT SECTION                                                                                   SECTION
- --------------                                                                            ---------------
                                                                                       
(ss.) 310(a)(1)..........................................................................       8.7
          (a)(2).........................................................................       8.7
          (a)(3).........................................................................       8.7
          (a)(4).........................................................................       2.7(a)(ii)
          (b)............................................................................       8.8
(ss.) 311(a).............................................................................       8.13
          (b)............................................................................       8.13
(ss.) 312(a).............................................................................       5.7
          (b)............................................................................       5.7
(ss.) 313(a).............................................................................       5.7
          (b)............................................................................       8.15(a)
          (a)(4).........................................................................       8.15(b)
          (b)............................................................................       8.15(b)
          (c)............................................................................       10.8
          (d)............................................................................       8.15(c)
(ss.) 314(a).............................................................................       8.16
          (b)............................................................................       Not Applicable
          (c)(1).........................................................................       8.17
          (c)(2).........................................................................       8.17
          (c)(3).........................................................................       Not Applicable
          (d)............................................................................       Not Applicable
          (e)............................................................................       1.1, 8.17
(ss.) 315(a).............................................................................       8.1(a), 8.3(a)
          (b)............................................................................       8.2, 10.8
          (c)............................................................................       8.1(a)
          (d)............................................................................       8.1, 8.3
          (e)............................................................................       Not Applicable
(ss.) 316(a).............................................................................       Not Applicable
          (a)(1)(A)......................................................................       Not Applicable
          (a)(1)(B)......................................................................       Not Applicable
          (a)(2).........................................................................       Not Applicable
          (b)............................................................................       5.14
          (c)............................................................................       6.7
(ss.) 317(a)(2)..........................................................................       Not Applicable
          (a)(2).........................................................................       Not Applicable
          (b)............................................................................       5.9
(ss.) 318(a).............................................................................       10.10



                                       i



                                TABLE OF CONTENTS



                                                                                                                PAGE
                                                                                                                ----
                                                                                                       
ARTICLE I - DEFINED TERMS...............................................................................         1
         Section 1.1.               Definitions.........................................................         1

ARTICLE II - CONTINUATION OF THE ISSUER TRUST...........................................................         9
         Section 2.1.               Name................................................................         9
         Section 2.2.               Office of the Delaware Trustee; Principal Place of Business.........         9
         Section 2.3.               Initial Contribution of Trust Property; Organizational Expenses.....         9
         Section 2.4.               Issuance of the Capital Securities..................................         9
         Section 2.5.               Issuance of the Common Securities; Subscription and
                                     Purchase of Debentures.............................................        10
         Section 2.6.               Declaration of Trust................................................        10
         Section 2.7.               Authorization to Enter into Certain Transactions....................        10
         Section 2.8.               Assets of Trust.....................................................        14
         Section 2.9.               Title to Trust Property.............................................        14

ARTICLE III - - PAYMENT ACCOUNT.........................................................................        14
         Section 3.1.               Payment Account.....................................................        14

ARTICLE IV - DISTRIBUTIONS; REDEMPTION..................................................................        14
         Section 4.1.               Distributions.......................................................        14
         Section 4.2.               Redemption..........................................................        15
         Section 4.3.               Ranking of Trust Securities.........................................        17
         Section 4.4.               Payment Procedures..................................................        17
         Section 4.5.               Tax Returns and Reports.............................................        18
         Section 4.6.               Payment of Expenses of the Issuer Trust.............................        18
         Section 4.7.               Payment of Taxes, Duties, Etc. of the Trust.........................        18
         Section 4.8.               Payments under Indenture or Pursuant to Direct Actions..............        18

ARTICLE V - TRUST SECURITIES CERTIFICATES...............................................................        18
         Section 5.1.               Initial Ownership...................................................        18
         Section 5.2.               The Trust Securities Certificates...................................        19
         Section 5.3.               Execution and Delivery of Trust Securities Certificates.............        19
         Section 5.4.               Registration of Transfer and Exchange of Capital
                                      Securities Certificates...........................................        19
         Section 5.5.               Mutilated, Destroyed, Lost or Stolen Trust
                                      Securities Certificates...........................................        20
         Section 5.6.               Persons Deemed Holders..............................................        20
         Section 5.7.               Access to List of Holders' Names and Addresses......................        21
         Section 5.8.               Maintenance of Office or Agency.....................................        21
         Section 5.9.               Appointment of Paying Agent.........................................        21
         Section 5.10.              Ownership of Common Securities by Depositor.........................        21
         Section 5.11.              Book Entry Capital Securities Certificates;
                                     Common Securities Certificate......................................        22
         Section 5.12.              Notices to Clearing Agency..........................................        22
         Section 5.13.              Definitive Capital Securities Certificates..........................        22
         Section 5.14.              Rights of Holders; Waivers of Past Defaults.........................        23
         Section 5.15.              CUSIP Numbers.......................................................        25



                                       i




                                                                                                                PAGE
                                                                                                                ----
                                                                                                       
ARTICLE VI - ACTS OF HOLDERS; MEETINGS; VOTING..........................................................        25
         Section 6.1.               Limitations on Voting Rights........................................        25
         Section 6.2.               Notice of Meetings..................................................        26
         Section 6.3.               Meetings of Holders of the Capital Securities.......................        26
         Section 6.4.               Voting Rights.......................................................        27
         Section 6.5.               Proxies, etc........................................................        27
         Section 6.6.               Holder Action by Written Consent....................................        27
         Section 6.7.               Record Date for Voting and Other Purposes...........................        27
         Section 6.8.               Acts of Holders.....................................................        27
         Section 6.9.               Inspection of Records...............................................        28

ARTICLE VII - REPRESENTATIONS AND WARRANTIES............................................................        29
         Section 7.1.               Representations and Warranties of the Property
                                     Trustee and the Delaware Trustee...................................        29
         Section 7.2.               Representations and Warranties of Depositor.........................        30

ARTICLE VIII - THE ISSUER TRUSTEES......................................................................        30
         Section 8.1.               Certain Duties and Responsibilities.................................        30
         Section 8.2.               Certain Notices.....................................................        32
         Section 8.3.               Certain Rights of Property Trustee..................................        33
         Section 8.4.               Issuer Trustees Not Responsible for Recitals or
                                     Issuance of Securities.............................................        34
         Section 8.5.               Issuer Trustees May Hold Securities.................................        34
         Section 8.6.               Compensation; Indemnity; Fees.......................................        35
         Section 8.7.               Corporate Property Trustee Required; Eligibility
                                     of Issuer Trustees.................................................        36
         Section 8.8.               Conflicting Interests...............................................        36
         Section 8.9.               Co Trustees and Separate Trustee....................................        36
         Section 8.10.              Resignation and Removal; Appointment of Successor...................        38
         Section 8.11.              Acceptance of Appointment by Successor..............................        39
         Section 8.12.              Merger, Conversion, Consolidation or Succession
                                      to Business.......................................................        39
         Section 8.13.              Preferential Collection of Claims Against
                                      Depositor or Issuer Trust.........................................        39
         Section 8.14.              Trustee May File Proofs of Claim....................................        40
         Section 8.15.              Reports by Property Trustee.........................................        40
         Section 8.16.              Reports to the Property Trustee.....................................        41
         Section 8.17.              Evidence of Compliance with Conditions Precedent....................        41
         Section 8.18.              Number of Issuer Trustees...........................................        41
         Section 8.19.              Delegation of Power.................................................        41

ARTICLE IX - DISSOLUTION, LIQUIDATION AND MERGER........................................................        42
         Section 9.1.               Dissolution Upon Expiration Date....................................        42
         Section 9.2.               Early Dissolution...................................................        42
         Section 9.3.               Dissolution.........................................................        42
         Section 9.4.               Liquidation.........................................................        42
         Section 9.5.               Mergers, Consolidations, Amalgamations or
                                      Replacements of Issuer Trust......................................        44

ARTICLE X - MISCELLANEOUS PROVISIONS....................................................................        45
         Section 10.1.              Limitation of Rights of Holders.....................................        45
         Section 10.2.              Amendment...........................................................        45
         Section 10.3.              Separability........................................................        46
         Section 10.4.              Governing Law.......................................................        46
         Section 10.5.              Payments Due on Non Business Day....................................        46
         Section 10.6.              Successors..........................................................        46
         Section 10.7.              Headings............................................................        47
         Section 10.8.              Reports, Notices and Demands........................................        47
         Section 10.9.              Agreement Not to Petition...........................................        47



                                       ii





                                                                                                                PAGE
                                                                                                                ----
                                                                                                       
         Section 10.10.             Trust Indenture Act; Conflict with Trust
                                      Indenture Act.....................................................        48
         Section 10.11.             Acceptance of Terms of Trust Agreement,
                                      Guarantee Agreement and Indenture.................................        48
         Section 10.12.             Counterparts........................................................        48

EXHIBIT A - CERTIFICATE OF TRUST.........................................................................        1
EXHIBIT B - FORM OF COMMON SECURITIES CERTIFICATE........................................................        1
EXHIBIT C - FORM OF GLOBAL CAPITAL SECURITIES CERTIFICATE................................................        1



                                      iii



         AMENDED AND RESTATED DECLARATION OF TRUST AND TRUST AGREEMENT, dated as
of November 30, 2004 among (i) Popular, Inc., a Commonwealth of Puerto Rico
corporation (including any successors or assigns, the "Depositor"), (ii) J.P.
Morgan Trust Company, National Association (formerly known as Bank One Trust
Company, N.A.), a national banking association, as property trustee (in such
capacity, the "Property Trustee"), (iii) Chase Manhattan Bank USA, National
Association (as successor to Bank One Delaware, Inc.), a national banking
association, as Delaware trustee (in such capacity, the "Delaware Trustee"),
(iv) Jorge A. Junquera, an individual, and Richard Barrios, an individual, each
of whose address is c/o Popular, Inc., Popular Center Building, 209 Munoz Rivera
Avenue, Hato Rey, Puerto Rico 00926 (each, an "Administrative Trustee," and
collectively, the "Administrative Trustees") (the Property Trustee, the Delaware
Trustee, and the Administrative Trustees being referred to collectively as the
"Issuer Trustees"), and (v) the several Holders, as hereinafter defined.

                                   WITNESSETH

         WHEREAS, the Depositor and certain of the Issuer Trustees have
heretofore duly declared and established a statutory trust (the "Issuer Trust")
pursuant to the Delaware Statutory Trust Act (as hereinafter defined) by
entering into that certain Declaration of Trust and Trust Agreement, dated as of
September 3, 2003 (the "Original Trust Agreement"), and by the execution and
filing with the Secretary of State of the State of Delaware the Certificate of
Trust, filed on September 5, 2003, attached as Exhibit A (the "Certificate of
Trust"); and

         WHEREAS, the Depositor and the Issuer Trustees desire to amend and
restate the Original Trust Agreement in its entirety as set forth herein to
provide for, among other things, (i) the issuance of the Common Securities by
the Issuer Trust to the Depositor, (ii) the issuance and sale of the Capital
Securities by the Issuer Trust pursuant to the Underwriting Agreement, and (iii)
the acquisition by the Issuer Trust from the Depositor of all of the right,
title and interest in the Debentures;

         NOW THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each party, for the benefit of the
other parties and for the benefit of the Holders, hereby amends and restates the
Original Trust Agreement in its entirety and agrees as follows:

                                   ARTICLE I
                                  DEFINED TERMS

Section 1.1.    Definitions.

         For all purposes of this Trust Agreement, except as otherwise expressly
provided or unless the context otherwise requires:

         The terms defined in this Article have the meanings assigned to them in
this Article, and include the plural as well as the singular;

         All other terms used herein that are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein;

         The words "include," "includes" and "including" shall be deemed to be
followed by the phrase "without limitation";




         All accounting terms used but not defined herein have the meanings
assigned to them in accordance with United States generally accepted accounting
principles;

         Unless the context otherwise requires, any reference to an "Article," a
"Section" or an "Exhibit" refers to an Article, a Section or an Exhibit, as the
case may be, of or to this Trust Agreement; and

         The words "hereby," "herein," "hereof" and "hereunder" and other words
of similar import refer to this Trust Agreement as a whole and not to any
particular Article, Section or other subdivision.

         "Act" has the meaning specified in Section 6.8.

         "Additional Amount" means, with respect to Trust Securities of a given
Liquidation Amount and/or a given period, the amount of Additional Interest (as
defined in the Indenture) paid by the Depositor on a Like Amount of Debentures
for such period.

         "Additional Sums" has the meaning specified in Section 1007 of the
Indenture.

         "Administrative Trustee" means each of the individuals identified as an
"Administrative Trustee" in the preamble to this Trust Agreement solely in such
individual's capacity as Administrative Trustee of the Trust formed and
continued hereunder and not in such individual's individual capacity, or such
Administrative Trustee's successor in interest in such capacity, or any
successor trustee appointed as herein provided.

         "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.

         "Bankruptcy Event" means, with respect to any Person:

                  (a)      the entry of a decree or order by a court having
         jurisdiction in the premises judging such Person bankrupt or insolvent,
         or approving as properly filed a petition seeking reorganization,
         arrangement, adjudication or composition of or in respect of such
         Person under any applicable federal, State or Puerto Rico bankruptcy,
         insolvency, reorganization or other similar law, or appointing a
         receiver, liquidator, assignee, trustee, sequestrator (or other similar
         official) of such Person or of any substantial part of its property or
         ordering the winding up or liquidation of its affairs, and the
         continuance of any such decree or order unstayed and in effect for a
         period of 60 consecutive days; or

                  (b)      the institution by such Person of proceedings to be
         adjudicated bankrupt or insolvent, or the consent by it to the
         institution of bankruptcy or insolvency proceedings against it, or the
         filing by it of a petition or answer or consent seeking reorganization
         or relief under any applicable federal, State or Puerto Rico
         bankruptcy, insolvency, reorganization or other similar law, or the
         consent by it to the filing of any such petition or to the appointment
         of a receiver, liquidator, assignee, trustee, sequestrator (or similar
         official) of such Person or of any


                                       2


         substantial part of its property, or the making by it of an assignment
         for the benefit of creditors, or the admission by it in writing of its
         inability to pay its debts generally as they become due and its
         willingness to be adjudicated bankrupt, or the taking of corporate
         action by such Person in furtherance of any such action.

         "Bankruptcy Laws" has the meaning specified in Section 10.9.

         "Board of Directors" means the board of directors of the Depositor or a
committee designated by the board of directors of the Depositor (or any such
committee), comprised of one or more members of the board of directors of the
Depositor or officers of the Depositor, or both.

         "Book-Entry Capital Securities Certificate" means a Capital Securities
Certificate evidencing ownership of Book-Entry Capital Securities.

         "Book-Entry Capital Security" means a Capital Security, the ownership
and transfers of which shall be made through book entries by a Clearing Agency
as described in Section 5.11.

         "Business Day" means a day other than a Saturday, a Sunday, or any
other day on which banking institutions in New York, New York, San Juan, Puerto
Rico, or Wilmington, Delaware are authorized or required by law, regulation or
executive order to remain closed or are customarily closed.

         "Capital Securities Certificate" means a certificate evidencing
ownership of Capital Securities, substantially in the form attached hereto as
Exhibit C.

         "Capital Security" means an undivided beneficial interest in the assets
of the Issuer Trust, having a Liquidation Amount of $25 and having the rights
provided therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution as provided herein.

         "Certificate Depository Agreement" means the agreement among the Issuer
Trust, the Paying Agent and DTC, as the initial Clearing Agency, dated as of the
Closing Date.

         "Certificate of Trust" has the meaning specified in the recitals
hereof, as amended from time to time.

         "Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act. DTC will be the initial
Clearing Agency.

         "Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.

         "Closing Date" means the Time of Delivery, which date is also the date
of execution and delivery of this Trust Agreement.

         "Code" means the U.S. Internal Revenue Code of 1986, as amended.

         "Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Exchange Act or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.


                                       3


         "Common Securities Certificate" means a certificate evidencing
ownership of Common Securities, substantially in the form attached as Exhibit B.

         "Common Security" means an undivided beneficial interest in the assets
of the Issuer Trust, having a Liquidation Amount of $25 and having the rights
provided therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution as provided herein.

         "Corporate Trust Office" means (i) when used with respect to the
Property Trustee, the principal office of the Property Trustee located at
__________________________________________________________, Attention: _______
________________________________, and (ii) when used with respect to the
Debenture Trustee, the principal office of the Debenture Trustee located at
____________________________________________________, Attention: ______________.

         "Debenture Event of Default" means any "Event of Default" specified in
Section 501 of the Indenture.

         "Debenture Redemption Date" means, with respect to any Debentures to be
redeemed under the Indenture, the date fixed for redemption of such Debentures
under the Indenture.

         "Debenture Trustee" means J.P. Morgan Trust Company, National
Association, a national banking association, solely in its capacity as trustee
pursuant to the Indenture and not in its individual capacity, or its successor
in interest in such capacity, or any successor trustee appointed as provided in
the Indenture.

         "Debentures" means the Depositor's 6.125%Junior Subordinated
Debentures, Series A due December 1, 2034, issued pursuant to the Indenture.

         "Definitive Capital Securities Certificates" means either or both (as
the context requires) of (i) Capital Securities Certificates issued as
Book-Entry Capital Securities Certificates as provided in Section 5.11, and (ii)
Capital Securities Certificates issued in certificated, fully registered form as
provided in Section 5.13.

         "Delaware Statutory Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. C. Section 3801 et seq., as it may be amended from time
to time.

         "Delaware Trustee" means the Person identified as the "Delaware
Trustee" in the preamble to this Trust Agreement, solely in its capacity as
Delaware Trustee of the trust heretofore formed and continued hereunder and not
in its individual capacity, or its successor in interest in such capacity, or
any successor Delaware trustee appointed as herein provided.

         "Depositor" has the meaning specified in the preamble to this Trust
Agreement.

         "Depositor Bankruptcy Event" means (i) the entry of a decree or order
for relief in respect of the Depositor by a court having jurisdiction in the
premises in an involuntary case under the federal bankruptcy laws, as now or
hereafter constituted, and the continuance of any such decree or order unstayed
and in effect for a period of 60 consecutive days or (ii) the commencement by
the Depositor of a voluntary case under the federal bankruptcy laws, as now or
hereafter constituted, or the consent by the Depositor to the entry of a decree
or order for relief in an involuntary case under any such law.

         "Distribution Date" has the meaning specified in Section 4.1(a)(i).


                                       4


         "Distribution Period" means the period of time beginning on any
Distribution Date and ending on the day immediately preceding the next
succeeding Distribution Date.

         "Distributions" means amounts payable in respect of the Trust
Securities as provided in Section 4.1.

         "DTC" means The Depository Trust Company.

         "Early Dissolution Event" has the meaning specified in Section 9.2.

         "Event of Default" means any one of the following events (whatever the
reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):

         (1)      the occurrence of a Debenture Event of Default; or

         (2)      default by the Issuer Trust in the payment of any Distribution
when it becomes due and payable, and continuation of such default for a period
of 30 days; or

         (3)      default by the Issuer Trust in the payment of any Redemption
Price of any Trust Security when it becomes due and payable; or

         (4)      default in the performance, or breach, in any material
respect, of any covenant or warranty of the Issuer Trustees in this Trust
Agreement (other than those specified in clause (b) or (c) above) and
continuation of such default or breach for a period of 90 days after there has
been given, by registered or certified mail, to the Issuer Trustees and to the
Depositor by the Holders of at least 25% in aggregate Liquidation Amount of the
Outstanding Capital Securities a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder; or

         (5)      the occurrence of a Bankruptcy Event with respect to the
Property Trustee if a successor Property Trustee has not been appointed within
90 days thereof.

         "Exchange Act" means the Securities Exchange Act of 1934, and any
successor statute thereto, in each case as amended from time to time.

         "Expiration Date" has the meaning specified in Section 9.1.

         "Federal Reserve" means the Federal Reserve or its district reserve
banks, as from time to time constituted, or if at any time after the execution
of this Trust Agreement the Federal Reserve is not existing and performing the
duties now assigned to it, then the body performing such duties at such time.

         "Guarantee" means the Guarantee Agreement executed and delivered by the
Depositor and J.P. Morgan Trust Company, National Association, as trustee,
contemporaneously with the execution and delivery of this Trust Agreement, for
the benefit of the holders of the Capital Securities, as amended from time to
time.

         "Holder" means a Person in whose name a Trust Security or Trust
Securities are registered in the Securities Register; any such Person shall be
deemed to be a beneficial owner within the meaning of the Delaware Statutory
Trust Act.


                                       5


         "Indenture" means the Junior Subordinated Indenture, dated as of
October 31, 2003, between the Depositor and the Debenture Trustee, as trustee,
as amended or supplemented from time to time.

         "Investment Company Act" means the Investment Company Act of 1940, or
any successor statute thereto, in each case as amended from time to time.

         "Issuer Trust" means the Delaware statutory trust known as "Popular
Capital Trust II" which was created on September 3, 2003 under the Delaware
Statutory Trust Act pursuant to the Original Trust Agreement and the filing of
the Certificate of Trust, and continued pursuant to this Trust Agreement.

         "Issuer Trustees" means, collectively, the Property Trustee, the
Delaware Trustee, and the Administrative Trustees.

         "Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of
trust, adverse ownership interest, hypothecation, assignment, security interest
or preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever.

         "Like Amount" means (a) with respect to a redemption of any Trust
Securities, Trust Securities having a Liquidation Amount equal to the principal
amount of Debentures to be contemporaneously redeemed in accordance with the
Indenture, the proceeds of which will be used to pay the Redemption Price of
such Trust Securities, (b) with respect to a distribution of Debentures to
Holders of Trust Securities in connection with a dissolution or liquidation of
the Issuer Trust, Debentures having a principal amount equal to the Liquidation
Amount of the Trust Securities of the Holder to whom such Debentures are
distributed, and (c) with respect to any distribution of Additional Amounts to
Holders of Trust Securities, Debentures having a principal amount equal to the
Liquidation Amount of the Trust Securities in respect of which such distribution
is made.

         "Liquidation Amount" means the stated amount of $25 per Trust Security.

         "Liquidation Date" means the date of the dissolution, winding-up or
dissolution of the Issuer Trust pursuant to Section 9.4.

         "Liquidation Distribution" has the meaning specified in Section 9.4(d).

         "Majority in Liquidation Amount of the Capital Securities" or "Majority
in Liquidation Amount of the Common Securities" means, except as provided by the
Trust Indenture Act, Capital Securities or Common Securities, as the case may
be, representing more than 50% of the aggregate Liquidation Amount of all then
Outstanding Capital Securities or Common Securities, as the case may be.

         "Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chairman of the Board of Directors of such Person, a
Vice Chairman of the Board of Directors of such Person, the President or a Vice
President, and by the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary, of such Person. Any Officers' Certificate delivered with
respect to compliance with a condition or covenant provided for in this Trust
Agreement shall include:

                  (a)      a statement by each officer signing the Officers'
         Certificate that such officer has read the covenant or condition and
         the definitions relating thereto;


                                       6


                  (b)      a brief statement of the nature and scope of the
         examination or investigation undertaken by such officer in rendering
         the Officers' Certificate;

                  (c)      a statement that such officer has made such
         examination or investigation as, in such officer's opinion, is
         necessary to enable such officer to express an informed opinion as to
         whether or not such covenant or condition has been complied with; and

                  (d)      a statement as to whether, in the opinion of such
         officer, such condition or covenant has been complied with.

         "Opinion of Counsel" means a written opinion of counsel, who may be
counsel for or an employee of the Depositor or any Affiliate of the Depositor.

         "Original Trust Agreement" has the meaning specified in the recitals to
this Trust Agreement.

         "Outstanding," when used with respect to Trust Securities, means, as of
the date of determination, all Trust Securities theretofore executed and
delivered under this Trust Agreement, except:

                  (a)      Trust Securities theretofore canceled by the Property
         Trustee or delivered to the Property Trustee for cancellation;

                  (b)      Trust Securities for whose payment or redemption
         money in the necessary amount has been theretofore deposited with the
         Property Trustee or any Paying Agent; provided that, if such Trust
         Securities are to be redeemed, notice of such redemption has been duly
         given pursuant to this Trust Agreement; and

                  (c)      Trust Securities that have been paid or in exchange
         for or in lieu of which other Capital Securities have been executed and
         delivered pursuant to Section 5.4, Section 5.5 and Section 5.11;
         provided, however, that in determining whether the Holders of the
         requisite Liquidation Amount of the Outstanding Capital Securities have
         given any request, demand, authorization, direction, notice, consent or
         waiver hereunder, Capital Securities owned by the Depositor, any Issuer
         Trustee, or any Affiliate of the Depositor or any Issuer Trustee shall
         be disregarded and deemed not to be Outstanding, except that (a) in
         determining whether any Issuer Trustee shall be protected in relying
         upon any such request, demand, authorization, direction, notice,
         consent or waiver, only Capital Securities that such Issuer Trustee
         knows to be so owned shall be so disregarded, and (b) the foregoing
         shall not apply at any time when all of the outstanding Capital
         Securities are owned by the Depositor, one or more of the Issuer
         Trustees, and/or any such Affiliate. Capital Securities so owned that
         have been pledged in good faith may be regarded as Outstanding if the
         pledgee establishes to the satisfaction of the Administrative Trustees
         the pledgee's right so to act with respect to such Capital Securities
         and that the pledgee is not the Depositor or any Affiliate of the
         Depositor. "Owner" means each Person who is the beneficial owner of
         Book-Entry Capital Securities as reflected in the records of the
         Clearing Agency or, if a Clearing Agency Participant is not the Owner,
         then as reflected in the records of a Person maintaining an account
         with such Clearing Agency (directly or indirectly, in accordance with
         the rules of such Clearing Agency).

         "Paying Agent" means any paying agent or co-paying agent appointed
pursuant to Section 5.9 and shall initially be Banco Popular de Puerto Rico.


                                       7


         "Payment Account" means a segregated non-interest-bearing corporate
trust account maintained by the Property Trustee with Banco Popular de Puerto
Rico in its trust department for the benefit of the Holders in which all amounts
paid in respect of the Debentures will be held and from which the Property
Trustee, through the Paying Agent, shall make payments to the Holders in
accordance with Section 4.1 and Section 4.2.

         "Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, company,
limited liability company, trust, unincorporated association, or government or
any agency or political subdivision thereof, or any other entity of whatever
nature.

         "Property Trustee" means the Person identified as the "Property
Trustee" in the preamble to this Trust Agreement, solely in its capacity as
Property Trustee of the trust heretofore formed and continued hereunder and not
in its individual capacity, or its successor in interest in such capacity, or
any successor property trustee appointed as herein provided.

         "Redemption Date" means, with respect to any Trust Security to be
redeemed, the date fixed for such redemption by or pursuant to this Trust
Agreement; provided that each Debenture Redemption Date and the stated maturity
of the Debentures shall be a Redemption Date for a Like Amount of Trust
Securities.

         "Redemption Price" means, with respect to any Trust Security, the
Liquidation Amount of such Trust Security, plus accumulated and unpaid
Distributions to the Redemption Date, plus the related amount of the premium, if
any, paid by the Depositor upon the concurrent redemption of a Like Amount of
Debentures.

         "Relevant Trustee" shall have the meaning specified in Section 8.10.

         "Responsible Officer" means, with respect to any Issuer Trustee, the
President, any Senior Vice President, any Vice President, any Assistant Vice
President, the Secretary, any Assistant Secretary, the Treasurer, any Assistant
Treasurer, any Trust Officer or Assistant Trust Officer of such Issuer Trustee.

         "Securities Act" means the Securities Act of 1933, and any successor
statute thereto, in each case as amended from time to time.

         "Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 5.4.

         "Time of Delivery" means November 30, 2004.

         "Trust Agreement" means this Amended and Restated Trust Agreement, as
the same may be modified, amended or supplemented in accordance with the
applicable provisions hereof, including (i) all exhibits, and (ii) for all
purposes of this Trust Agreement and any such modification, amendment or
supplement, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this Trust Agreement and any such modification, amendment or
supplement, respectively.

         "Trust Indenture Act" means the Trust Indenture Act of 1939 as in force
at the date as of which this instrument was executed; provided, however, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.


                                       8


         "Trust Property" means (a) the Debentures, (b) any cash on deposit in,
or owing to, the Payment Account, and (c) all proceeds and rights in respect of
the foregoing and any other property and assets for the time being held or
deemed to be held by the Property Trustee pursuant to this Trust Agreement.

         "Trust Security" means any one of the Common Securities or the Capital
Securities.

         "Trust Securities Certificate" means any one of the Common Securities
Certificates or the Capital Securities Certificates.

         "Underwriting Agreement" means the Underwriting Agreement, dated as of
November 24, 2004, among the Trust, the Depositor and Popular Securities, Inc.,
as representative of the underwriters named therein.

         "Vice President," when used with respect to the Depositor, means any
duly appointed vice president, whether or not designated by a number or a word
or words added before or after the title "vice president."

                                   ARTICLE II
                        CONTINUATION OF THE ISSUER TRUST

Section 2.1.    Name.

         The trust continued hereby shall be known as "Popular Capital Trust
II," as such name may be modified from time to time by the Administrative
Trustees following written notice to the Holders and the other Issuer Trustees,
in which name the Administrative Trustees and the other Issuer Trustees may
conduct the business of the Issuer Trust, make and execute contracts and other
instruments on behalf of the Issuer Trust and sue and be sued on behalf of the
Trust.

Section 2.2.    Office of the Delaware Trustee; Principal Place of Business.

         The address of the Delaware Trustee in the State of Delaware is c/o
Chase Manhattan Bank USA, National Association, _____________________________
__________________, Wilmington, Delaware _____, or such other address in the
State of Delaware as the Delaware Trustee may designate by written notice to the
Depositor, the Property Trustee and the Administrative Trustees. The principal
executive office of the Issuer Trust is c/o Popular, Inc., Popular Center
Building, 209 Munoz Rivera Avenue, Hato Rey, Puerto Rico 00918, Attention:
Popular Capital Trust II.

Section 2.3.    Initial Contribution of Trust Property; Organizational Expenses.

         The Issuer Trustees acknowledge receipt from the Depositor in
connection with the Original Trust Agreement of the sum of $10, which
constituted the initial Trust Property. The Depositor shall pay organizational
expenses of the Issuer Trust as they arise or shall, upon request of any Issuer
Trustee, promptly reimburse such Issuer Trustee for any such expenses paid by
such Issuer Trustee. The Depositor shall make no claim upon the Trust Property
for the payment of such expenses.

Section 2.4.    Issuance of the Capital Securities.

         On November 24, 2004, the Depositor, both on its own behalf and on
behalf of the Issuer Trust pursuant to the Original Trust Agreement, executed
and delivered the Underwriting Agreement. Contemporaneously with the execution
and delivery of this Trust Agreement, an Administrative Trustee, on behalf of
the Trust, shall execute in accordance with Section 5.3 and deliver to the


                                       9


Underwriters named in the Underwriting Agreement a Capital Securities
Certificate, registered in the name of the nominee of the initial Clearing
Agency, in an aggregate amount of 5,200,000 Capital Securities having an
aggregate Liquidation Amount of $130,000,000.00, against payment of the purchase
price therefor in immediately available funds, which funds such Administrative
Trustee shall promptly deliver to the Property Trustee.

Section 2.5.    Issuance of the Common Securities; Subscription and Purchase of
                Debentures.

         Contemporaneously with the execution and delivery of this Trust
Agreement, an Administrative Trustee, on behalf of the Issuer Trust, shall
execute in accordance with Section 5.3 and deliver to the Depositor Common
Securities Certificates, registered in the name of the Depositor, in an
aggregate amount Common Securities having an aggregate Liquidation Amount of
$4,021,000 against payment by the Depositor of the purchase price therefor in
immediately available funds, which amount such Administrative Trustee shall
promptly deliver to the Property Trustee. Contemporaneously therewith, an
Administrative Trustee, on behalf the Issuer Trust, shall subscribe to and
purchase from the Depositor Debentures registered in the name of the Issuer
Trust and having an aggregate principal amount equal to $134,021,000.00 and
shall deliver to the Depositor the purchase price therefor (being the sum of the
amounts delivered to the Property Trustee pursuant to (i) the second sentence of
Section 2.4 and (ii) the first sentence of this Section 2.5).

Section 2.6.    Declaration of Trust.

         The exclusive purposes and functions of the Issuer Trust are (a) to
issue and sell Trust Securities, (b) to use the proceeds from such sale to
acquire the Debentures, and (c) to engage in those activities necessary,
convenient or incidental thereto. The Depositor hereby appoints the Issuer
Trustees as trustees of the Issuer Trust, to have all the rights, powers and
duties to the extent set forth herein, and the Issuer Trustees hereby accept
such appointment. The Property Trustee hereby declares that it will hold the
Trust Property upon and subject to the conditions set forth herein for the
benefit of the Issuer Trust and the Holders. The Administrative Trustees shall
have all rights, powers and duties set forth herein and in accordance with
applicable law with respect to accomplishing the purposes of the Issuer Trust.
The Delaware Trustee shall not be entitled to exercise any powers, nor shall the
Delaware Trustee have any of the duties and responsibilities of the Property
Trustee or the Administrative Trustees, or any of the duties and
responsibilities of the Issuer Trustees generally, set forth herein. The
Delaware Trustee shall be one of the trustees of the Issuer Trust for the sole
and limited purpose of fulfilling the requirements of Section 3807(a) of the
Delaware Statutory Trust Act and for taking such actions as are required to be
taken by a Delaware trustee under the Delaware Statutory Trust Act.

         The duties and responsibilities of the Delaware Trustee shall be
limited solely to (a) accepting legal process served on the trust in the State
of Delaware, (b) the execution and delivery of all documents, and the
maintenance of all records, necessary to form and maintain the existence of the
Trust under the Statutory Trust Act and (c) monitoring the Trust's compliance
with the Statutory Trust Act and advising the Administrative Trustees when
action is necessary to comply with the Statutory Trust Act. Except for the
purpose of t he foregoing sentence, the Delaware Trustee shall not be deemed a
trustee and shall have no management responsibilities or owe any fiduciary
duties to the Trust or the Holders.


                                       10


Section 2.7.    Authorization to Enter into Certain Transactions.

         (a)      The Issuer Trustees shall conduct the affairs of the Issuer
Trust in accordance with the terms of this Trust Agreement. Subject to the
limitations set forth in paragraph (b) of this Section, and in accordance with
the following provisions (i) and (ii), the Issuer Trustees shall have the
authority to enter into all transactions and agreements determined by the Issuer
Trustees to be appropriate in exercising the authority, express or implied,
otherwise granted to the Issuer Trustees under this Trust Agreement, and to
perform all acts in furtherance thereof, including the following:

                  (i)      As among the Issuer Trustees, the Administrative
         Trustees, and each of them, shall have the power and authority to act
         on behalf of the Issuer Trust with respect to the following matters:

                           (A)      the issuance and sale of the Trust
                  Securities;

                           (B)      to cause the Issuer Trust to perform on
                  behalf of the Issuer Trust the Underwriting Agreement and to
                  cause the Issuer Trust to enter into, and to execute, deliver
                  and perform on behalf of the Issuer Trust the Certificate
                  Depository Agreement and such other agreements as may be
                  necessary or desirable in connection with the purposes and
                  function of the Issuer Trust;

                           (C)      assisting in the registration of the Capital
                  Securities under the Securities Act and under state securities
                  or blue sky laws, and the qualification of this Trust
                  Agreement under the Trust Indenture Act;

                           (D)      assisting in the listing of the Capital
                  Securities upon such securities exchange or exchanges as shall
                  be determined by the Depositor, with the registration of the
                  Capital Securities under the Exchange Act, if required, and
                  with the preparation and filing of all periodic and other
                  reports and other documents pursuant to the foregoing;

                           (E)      assisting in the sending of notices (other
                  than notices of default) and other information regarding the
                  Trust Securities and the Debentures to the Holders in
                  accordance with this Trust Agreement;

                           (F)      the appointment of a Paying Agent and
                  Securities Registrar in accordance with this Trust Agreement;

                           (G)      to the extent provided in this Trust
                  Agreement, the winding up of the affairs of and liquidation of
                  the Issuer Trust and the execution and filing of the
                  certificate of cancellation with the Secretary of State of the
                  State of Delaware;

                           (H)      execution of the Trust Securities on behalf
                  of the Trust in accordance with this Trust Agreement;

                           (I)      execution and delivery of closing
                  certificates, if any, pursuant to the Underwriting Agreement
                  and application for a taxpayer identification number for the
                  Issuer Trust;

                           (J)      unless otherwise determined by the
                  Depositor, the Property Trustee, or the Administrative
                  Trustees or as otherwise required by the Delaware Statutory
                  Trust Act or the Trust Indenture Act, to execute on behalf of
                  the Issuer Trust (either acting alone or together with any or
                  all of the Administrative Trustees) any


                                       11


                  documents that the Administrative Trustees have the power to
                  execute pursuant to this Trust Agreement; and

                           (K)      the taking of any action incidental to the
                  foregoing as the Issuer Trustees may from time to time
                  determine is necessary or advisable to give effect to the
                  terms of this Trust Agreement.

                  (ii)     As among the Issuer Trustees, the Property Trustee
         shall have the power, duty and authority to act on behalf of the Issuer
         Trust with respect to the following matters:

                           (A)      the establishment of the Payment Account;

                           (B)      the receipt of the Debentures;

                           (C)      the collection of interest, principal and
                  any other payments made in respect of the Debentures and the
                  holding of such amounts in the Payment Account;

                           (D)      the distribution through the Paying Agent of
                  amounts distributable to the Holders in respect of the Trust
                  Securities;

                           (E)      the exercise of all of the rights, powers
                  and privileges of a holder of the Debentures;

                           (F)      the sending of notices of default and other
                  information regarding the Trust Securities and the Debentures
                  to the Holders in accordance with this Trust Agreement;

                           (G)      the distribution of the Trust Property in
                  accordance with the terms of this Trust Agreement;

                           (H)      to the extent provided in this Trust
                  Agreement, the winding up of the affairs of and liquidation of
                  the Issuer Trust and the preparation, execution and filing of
                  the certificate of cancellation with the Secretary of State of
                  the State of Delaware;

                           (I)      after an Event of Default (other than under
                  paragraph (b),(c), (d) or (e) of the definition of such term
                  if such Event of Default is by or with respect to the Property
                  Trustee) the taking of any action incidental to the foregoing
                  as the Property Trustee may from time to time determine is
                  necessary or advisable to give effect to the terms of this
                  Trust Agreement and protect and conserve the Trust Property
                  for the benefit of the Holders (without consideration of the
                  effect of any such action on any particular Holder); and

                           (J)      except as otherwise provided in this Section
                  2.7(a)(ii), the Property Trustee shall have none of the
                  duties, liabilities, powers or the authority of the
                  Administrative Trustees set forth in Section 2.7(a)(i).

         (b)      So long as this Trust Agreement remains in effect,
the Issuer Trust (or the Issuer Trustees acting on behalf of the Issuer Trust)
shall not undertake any business, activities or transactions except as expressly
provided herein or contemplated hereby. In particular, the Issuer Trustees
(acting on behalf of the Issuer Trust) shall not cause the Trust to (i) acquire
any investments or engage in any activities not authorized by this Trust
Agreement, (ii) sell, assign, transfer, exchange, mortgage, pledge, set-off or
otherwise


                                       12


dispose of any of the Trust Property or interests therein, including to Holders,
except as expressly provided herein, (iii) take any action that would reasonably
be expected to cause the Issuer Trust to become taxable as a corporation or
classified as other than a grantor trust for United States federal or Puerto
Rico income tax purposes, (iv) incur any indebtedness for borrowed money or
issue any other debt, (v) take or consent to any action that would result in the
placement of a Lien on any of the Trust Property, (vi) invest any proceeds
received by the Issuer Trust from holding the Debentures, but shall distribute
all such proceeds to Holders of Trust Securities pursuant to the terms of this
Trust Agreement and of the Trust Securities, (vii) acquire any assets other than
the Trust Property, (viii) possess any power or otherwise act in such a way as
to vary the Trust Property, (ix) possess any power or otherwise act in such a
way as to vary the terms of the Trust Securities in any way whatsoever (except
to the extent expressly authorized in this Trust Agreement or by the terms of
the Trust Securities) or (x) issue any securities or other evidences of
beneficial ownership of, or beneficial interest in, the Issuer Trust other than
the Trust Securities. The Property Trustee shall defend all claims and demands
of all Persons at any time claiming any Lien on any of the Trust Property
adverse to the interest of the Issuer Trust or the Holders in their capacity as
Holders.

         (c)      In connection with the issuance and sale of the Capital
Securities, the Depositor shall have the right and responsibility to assist the
Issuer Trust with respect to, or effect on behalf of the Issuer Trust, the
following (and any actions taken by the Depositor in furtherance of the
following prior to the date of this Trust Agreement are hereby ratified and
confirmed in all respects):

                  (i)      the preparation and filing by the Issuer Trust with
         the Commission of and the execution on behalf of the Issuer Trust of a
         registration statement on the appropriate form in relation to the
         Capital Securities, including any amendments thereto;

                  (ii)     the determination of the states in which to take
         appropriate action to qualify or register for sale all or part of the
         Capital Securities and the determination of any and all such acts,
         other than actions that must be taken by or on behalf of the Issuer
         Trust, and the advice to the Issuer Trust of actions they must take on
         behalf of the Issuer Trust, and the preparation for execution and
         filing of any documents to be executed and filed by the Issuer Trust or
         on behalf of the Issuer Trust, as the Depositor deems necessary or
         advisable in order to comply with the applicable laws of any such
         states;

                  (iii)    the preparation for filing by the Issuer Trust and
         execution on behalf of the Issuer Trust of an application to the New
         York Stock Exchange or any other national stock exchange or the Nasdaq
         National Market or any other automated quotation system for listing
         upon notice of issuance of any Capital Securities and filing with such
         exchange or self-regulatory organization such notification and
         documents as may be necessary from time to time to maintain such
         listing;

                  (iv)     the negotiation of the terms of, and the execution
         and delivery of, the Underwriting Agreement providing for the sale of
         the Capital Securities; and

                  (v)      the taking of any other actions necessary or
         desirable to carry out any of the foregoing activities.

         (d)      Notwithstanding anything herein to the contrary, the
Administrative Trustees are authorized and directed to conduct the affairs of
the Issuer Trust and to operate the Issuer Trust so that the Issuer Trust will
not be deemed to be an "investment company" required to be registered under the


                                       13


Investment Company Act, and will not be taxable as a corporation or classified
as other than a grantor trust for United States federal or Puerto Rico income
tax purposes and so that the Debentures will be treated as indebtedness of the
Depositor for Puerto Rico tax purposes. In this connection, the Depositor and
the Administrative Trustees are authorized to take any action, not inconsistent
with applicable law, the Certificate of Trust or this Trust Agreement, that they
determine in their discretion to be necessary or desirable for such purposes, as
long as such action does not adversely affect in any material respect the
interests of the Holders of the Outstanding Capital Securities. In no event
shall the Depositor or the Issuer Trustees be liable to the Issuer Trust or the
Holders for any failure to comply with this section that results from a change
in law or regulation or in the interpretation thereof.

Section 2.8.    Assets of Trust.

         The assets of the Issuer Trust shall consist solely of the Trust
Property.

Section 2.9.    Title to Trust Property.

         Legal title to all Trust Property shall be vested at all times in the
Property Trustee (in its capacity as such) and shall be held and administered by
the Property Trustee in trust for the benefit of the Issuer Trust and the
Holders in accordance with this Trust Agreement.

                                  ARTICLE III
                                 PAYMENT ACCOUNT

Section 3.1.    Payment Account.

         (a)      On or prior to the Closing Date, the Property Trustee shall
establish the Payment Account. The Property Trustee and its agents shall have
exclusive control and sole right of withdrawal with respect to the Payment
Account for the purpose of making deposits in and withdrawals from the Payment
Account in accordance with this Trust Agreement. All monies and other property
deposited or held from time to time in the Payment Account shall be held by the
Property Trustee in the Payment Account for the exclusive benefit of the Holders
and for distribution as herein provided, including (and subject to) any priority
of payments provided for herein.

         (b)      The Property Trustee shall deposit in the Payment Account,
promptly upon receipt, all payments of principal of or interest on, and any
other payments or proceeds with respect to, the Debentures. Amounts held in the
Payment Account shall not be invested by the Property Trustee pending
distribution thereof.

                                   ARTICLE IV
                            DISTRIBUTIONS; REDEMPTION

Section 4.1.    Distributions.

         (a)      The Trust Securities represent undivided beneficial interests
in the Trust Property, and Distributions (including of Additional Amounts) will
be made on the Trust Securities at the rate and on the dates that payments of
interest (including Additional Interest, as defined in the Indenture) are made
on the Debentures. Accordingly:

                  (i)      Distributions on the Trust Securities shall be
         cumulative, and will accumulate whether or not there are funds of the
         Trust available for the payment of Distributions. Distributions shall
         accrue from November 30, 2004 and, except in the event (and to the
         extent)


                                       14


         that the Depositor exercises its right to defer the payment of interest
         on the Debentures pursuant to the Indenture, shall be payable monthly
         in arrears on the first day of each month, commencing on January 1,
         2005. If any date on which a Distribution is otherwise payable on the
         Trust Securities is not a Business Day, then the payment of such
         Distribution shall be made on the next succeeding day that is a
         Business Day (and without any interest or other payment in respect of
         any such delay), with the same force and effect as if made on the date
         on which such payment was originally payable (each date on which
         distributions are payable in accordance with this Section 4.1(a), a
         "Distribution Date").

                  (ii)     In the event (and to the extent) that the Depositor
         exercises its right under the Indenture to defer the payment of
         interest on the Debentures, Distributions on the Trust Securities shall
         be deferred but shall continue to accumulate. Distributions on the
         Trust Securities shall be payable at a rate of 6.125%per annum of the
         Liquidation Amount of the Trust Securities. The amount of Distributions
         payable for any full monthly period shall be computed on the basis of a
         360-day year of twelve 30-day months. The amount of Distributions for
         any partial period shall be computed on the basis of a 360-day year of
         twelve 30-day months and the actual number of days elapsed in a partial
         month in that period. The amount of Distributions payable for any
         period shall include the Additional Amounts, if any.

                  (iii)    Distributions on the Trust Securities shall be made
         by the Property Trustee from the Payment Account and shall be payable
         on each Distribution Date only to the extent that the Issuer Trust has
         funds then on hand and available in the Payment Account for the payment
         of such Distributions.

         (b)      Distributions on the Trust Securities with respect to a
Distribution Date shall be payable to the Holders thereof as they appear on the
Securities Register for the Trust Securities at the close of business on the
relevant record date for such Distribution Date, which shall be the 15th day,
whether or not a Business Day, of the month immediately preceding the
Distribution Date. Distributions payable on any Trust Securities that are not
punctually paid on any Distribution Date will cease to be payable to the Person
in whose name such Trust Securities are registered on the relevant record date,
and such defaulted Distribution will instead be payable to the Person in whose
name such Trust Securities are registered on the special record date or other
specified date for determining Holders entitled to such defaulted interest
established in accordance with the Indenture.

Section 4.2.    Redemption.

         (a)      On each Debenture Redemption Date and on the stated maturity
of the Debentures, the Issuer Trust will be required to redeem a Like Amount of
Trust Securities at the Redemption Price.

         (b)      Notice of redemption shall be given by the Property Trustee by
first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days
prior to the Redemption Date to each Holder of Trust Securities to be redeemed,
at such Holder's address appearing in the Security Register. All notices of
redemption shall state:

                  (i)      the Redemption Date;

                  (ii)     the Redemption Price or if the Redemption Price
         cannot be calculated prior to the time the notice is required to be
         sent, the estimate of the Redemption Price together with a statement
         that it is an estimate and that the actual Redemption Price will be
         calculated on the


                                       15


         third Business Day prior to the Redemption Date (and if an estimate is
         provided, a further notice shall be sent of the actual Redemption Price
         on the date that such Redemption Price is calculated);

                  (iii)    the CUSIP number or CUSIP numbers of the Capital
         Securities affected;

                  (iv)     if less than all the Outstanding Trust Securities are
         to be redeemed, the identification and the aggregate Liquidation Amount
         of the particular Trust Securities to be redeemed;

                  (v)      that on the Redemption Date the Redemption Price will
         become due and payable upon each such Trust Security to be redeemed and
         that Distributions thereon will cease to accrue on and after said date,
         except as provided in Section 4.2(d) below; and

                  (vi)     if the Capital Securities are no longer in
         book-entry-only form, the place or places where the Capital Securities
         Certificates are to be surrendered for the payment of the Redemption
         Price.

         (c)      The Trust Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the proceeds from the contemporaneous
redemption or payment at stated maturity of the Debentures. Redemptions of the
Trust Securities shall be made and the Redemption Price shall be payable on each
Redemption Date only to the extent that the Issuer Trust has funds then on hand
and available in the Payment Account for the payment of such Redemption Price.

         (d)      If the Property Trustee gives a notice of redemption in
respect of any Capital Securities, then, by 12:00 noon, New York City time, on
the Redemption Date, subject to Section 4.2(c), the Property Trustee will, with
respect to Book-Entry Capital Securities, irrevocably deposit with the Clearing
Agency for such Book-Entry Capital Securities, to the extent available therefor,
funds sufficient to pay the applicable Redemption Price and will give such
Clearing Agency irrevocable instructions and authority to pay the Redemption
Price to the Holders of the Capital Securities. With respect to Capital
Securities that are not Book-Entry Capital Securities, the Property Trustee,
subject to Section 4.2(c), will irrevocably deposit with the Paying Agent, to
the extent available therefor, funds sufficient to pay the applicable Redemption
Price and will give the Paying Agent irrevocable instructions and authority to
pay the Redemption Price to the Holders of the Capital Securities upon surrender
of their Capital Securities Certificates. Notwithstanding the foregoing,
Distributions payable on or prior to the Redemption Date for any Trust
Securities called for redemption shall be payable to the Holders of such Trust
Securities as they appear on the Securities Register for the Trust Securities on
the relevant record dates for the related Distribution Dates. If notice of
redemption shall have been given and funds deposited as required, then upon the
date of such deposit, all rights of Holders holding Trust Securities so called
for redemption will cease, except the right of such Holders to receive the
Redemption Price and any Distribution payable in respect of the Trust Securities
on or prior to the Redemption Date, but without interest, and such Trust
Securities will cease to be outstanding. In the event that any date on which any
Redemption Price is payable is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
that is a Business Day (without any interest or other payment in respect of any
such delay), with the same force and effect as if made on such date. In the
event that payment of the Redemption Price in respect of any Trust Securities
called for redemption is improperly withheld or refused and not paid either by
the Issuer Trust or by the Depositor pursuant to the Guarantee, Distributions on
such Trust Securities will continue to accumulate, as set forth in Section 4.1,
from the Redemption Date originally established by the Issuer Trust for such
Trust Securities to the date such


                                       16


Redemption Price is actually paid, in which case the actual payment date will be
the date fixed for redemption for purposes of calculating the Redemption Price.

         (e)      Subject to Section 4.3(a), if less than all the Outstanding
Trust Securities are to be redeemed on a Redemption Date, then the aggregate
Liquidation Amount of Trust Securities to be redeemed shall be allocated pro
rata to the Common Securities and the Capital Securities based upon the relative
Liquidation Amounts of such classes. The particular Capital Securities to be
redeemed shall be selected on a pro rata basis based upon their respective
Liquidation Amounts not more than 60 days prior to the Redemption Date by the
Property Trustee from the Outstanding Capital Securities not previously called
for redemption by any method the Property Trustee deems fair and appropriate,
provided that so long as the Capital Securities are in book-entry-only form,
such selection shall be made in accordance with the customary procedures for the
Clearing Agency for the Capital Securities. The Property Trustee shall promptly
notify the Securities Registrar in writing of the Capital Securities selected
for redemption and, in the case of any Capital Securities selected for partial
redemption, the Liquidation Amount thereof to be redeemed. For all purposes of
this Trust Agreement, unless the context otherwise requires, all provisions
relating to the redemption of Capital Securities shall relate, in the case of
any Capital Securities redeemed or to be redeemed only in part, to the portion
of the aggregate Liquidation Amount of Capital Securities that has been or is to
be redeemed.

Section 4.3.    Ranking of Trust Securities.

         (a)      Payment of Distributions (including any Additional Amounts)
on, the Redemption Price of, and the Liquidation Distribution in respect of, the
Trust Securities, as applicable, shall be made, subject to Section 4.2(e), pro
rata among the Common Securities and the Capital Securities based on the
Liquidation Amount; provided, however, that if on any Distribution Date,
Redemption Date or Liquidation Date any Event of Default resulting from a
Debenture Event of Default specified in Section 501(1) or 501(2) of the
Indenture shall have occurred and be continuing, no payment of any Distribution
(including any Additional Amounts) on, Redemption Price of, or Liquidation
Distribution in respect of, any Common Security, and no other payment on account
of the redemption, liquidation or other acquisition of Common Securities, shall
be made unless payment in full in cash of all accumulated and unpaid
Distributions (including any Additional Amounts) on all Outstanding Capital
Securities for all Distribution Periods terminating on or prior thereto, or in
the case of payment of the Redemption Price the full amount of such Redemption
Price on all Outstanding Capital Securities then called for redemption, or in
the case of payment of the Liquidation Distribution the full amount of such
Liquidation Distribution on all Outstanding Capital Securities, shall have been
made or provided for, and all funds immediately available to the Property
Trustee shall first be applied to the payment in full in cash of all
Distributions (including any Additional Amounts) on, or the Redemption Price of,
the Capital Securities then due and payable.

         (b)      In the case of the occurrence of any Event of Default
resulting from any Debenture Event of Default, the Holders of the Common
Securities shall have no right to act with respect to any such Event of Default
under this Trust Agreement until the effect of all such Events of Default with
respect to the Capital Securities have been cured, waived or otherwise
eliminated. Until all such Events of Default under this Trust Agreement with
respect to the Capital Securities have been so cured, waived or otherwise
eliminated, the Property Trustee shall act solely on behalf of the Holders of
the Capital Securities and not on behalf of the Holders of the Common
Securities, and only the Holders of the Capital Securities will have the right
to direct the Property Trustee to act on their behalf.


                                       17


Section 4.4.    Payment Procedures.

         Payments of Distributions (including any Additional Amounts) in respect
of the Capital Securities shall, subject to the next succeeding sentence, be
made by check mailed to the address of the Person entitled thereto as such
address shall appear on the Securities Register or, if the Capital Securities
are held by a Clearing Agency, such Distributions shall be made to the Clearing
Agency in immediately available funds. A Holder of $1,000,000 or more in
aggregate Liquidation Amount of Capital Securities may receive payments of
Distributions (including any Additional Amounts) by wire transfer of immediately
available funds upon written request to the Property Trustee not later than the
15th day, whether or not a Business Day, of the month immediately preceding the
relevant Distribution Date. Payments in respect of the Common Securities shall
be made in such manner as shall be mutually agreed between the Property Trustee
and the Holders of the Common Securities.

Section 4.5.    Tax Returns and Reports.

         The Administrative Trustees shall prepare (or cause to be prepared), at
the Depositor's expense, and file all United States federal, Puerto Rico and any
other state and local tax and information returns and reports required to be
filed by or in respect of the Issuer Trust. In this regard, the Administrative
Trustees shall (a) prepare and file (or cause to be prepared and filed) all
Internal Revenue Service and Puerto Rico Treasury Department forms required to
be filed in respect of the Issuer Trust in each taxable year of the Issuer
Trust, and (b) prepare and furnish (or cause to be prepared and furnished) to
each Holder all Internal Revenue Service or Puerto Rico Treasury Department
forms required to be provided by the Issuer Trust. The Administrative Trustees
shall provide the Depositor and the Property Trustee with a copy of all such
returns and reports promptly after such filing or furnishing. The Issuer
Trustees shall comply with United States federal and Puerto Rico withholding and
backup withholding tax laws and information reporting requirements with respect
to any payments to Holders under the Trust Securities.

Section 4.6.    Payment of Expenses of the Issuer Trust.

         The Depositor shall pay to the Issuer Trust, and reimburse the Issuer
Trust for, the full amount of any costs, expenses or liabilities of the Issuer
Trust (other than obligations of the Issuer Trust to pay the Holders of any
Capital Securities or other similar interests in the Issuer Trust the amounts
due such Holders pursuant to the terms of the Capital Securities or such other
similar interests, as the case may be), including, without limitation, any
taxes, duties or other governmental charges of whatever nature (other than
withholding taxes) imposed on the Issuer Trust by the United States or any other
taxing authority. Such payment obligation includes any such costs, expenses or
liabilities of the Issuer Trust that are required by applicable law to be
satisfied in connection with a dissolution of the Issuer Trust.

Section 4.7.    Payment of Taxes, Duties, Etc. of the Trust.

         Upon receipt under the Debentures of Additional Sums, the Property
Trustee shall promptly pay any taxes, duties or governmental charges of
whatsoever nature (other than withholding taxes) imposed on the Trust; provided,
however, that under no circumstances shall the Property Trustee have any
liability for such sums, including non-receipt of any Additional Sums under the
Debentures.

Section 4.8.    Payments under Indenture or Pursuant to Direct Actions.

         Any amount payable hereunder to any Holder of Capital Securities (or
any Owner with respect thereto) shall be reduced by the amount of any


                                       18


corresponding payment such Holder (or Owner) has directly received pursuant to
Section 508 of the Indenture or Section 5.14 of this Trust Agreement.

                                   ARTICLE V
                          TRUST SECURITIES CERTIFICATES

Section 5.1.    Initial Ownership.

         Upon the formation of the Issuer Trust and the contribution by the
Depositor pursuant to Section 2.3 and until the issuance of the Trust
Securities, and at any time during which no Trust Securities are outstanding,
the Depositor shall be the sole beneficial owner of the Issuer Trust.

Section 5.2.    The Trust Securities Certificates.

         The Capital Securities Certificates shall be issued in minimum
denominations of $25 Liquidation Amount and integral multiples thereof, and the
Common Securities Certificates shall be issued in denominations of $25
Liquidation Amount and integral multiples thereof. The Trust Securities
Certificates shall be (i) executed on behalf of the Issuer Trust by manual or
facsimile signature of at least one Administrative Trustee and, if executed on
behalf of the Issuer Trust by facsimile, countersigned by the Securities
Registrar or its agent and (ii) authenticated by the Property Trustee by manual
or facsimile signature of an authorized signatory thereof and, if executed by
such authorized signatory of the Property Trustee by facsimile, countersigned by
the Securities Registrar or its agent. Trust Securities Certificates bearing the
manual signatures of individuals who were, at the time when such signatures
shall have been affixed, authorized to sign on behalf of the Issuer Trust or the
Property Trustee or, if executed on behalf of the Issuer Trust or the Property
Trustee by facsimile, countersigned by the Securities Registrar or its agent,
shall be validly issued and entitled to the benefits of this Trust Agreement,
notwithstanding that such individuals or any of them shall have ceased to be so
authorized prior to the delivery of such Trust Securities Certificates or did
not hold such offices at the date of delivery of such Trust Securities
Certificates. A transferee of a Trust Securities Certificate shall become a
Holder, and shall be entitled to the rights and subject to the obligations of a
Holder hereunder, upon due registration of such Trust Securities Certificate in
such transferee's name pursuant to Section 5.4, Section 5.11 and Section 5.13.

Section 5.3.    Execution and Delivery of Trust Securities Certificates.

         At the Time of Delivery, the Administrative Trustees shall cause Trust
Securities Certificates, in an aggregate Liquidation Amount as provided in
Section 2.4 and Section 2.5, to be executed on behalf of the Issuer Trust and
delivered to or upon the written order of the Depositor, such written order
executed by one authorized officer thereof, without further corporate action by
the Depositor, in authorized denominations.

Section 5.4.    Registration of Transfer and Exchange of Capital Securities
                 Certificates.

         The Depositor shall keep or cause to be kept, at the office or agency
maintained pursuant to Section 5.8, a register or registers for the purpose of
registering Trust Securities Certificates and transfers and exchanges of Capital
Securities Certificates (the "Securities Register") in which the transfer agent
and registrar designated by the Depositor (the "Securities Registrar"), subject
to such reasonable regulations as it may prescribe, shall provide for the
registration of Capital Securities Certificates and Common Securities
Certificates (subject to Section 5.10 in the case of the Common Securities
Certificates) and registration of transfers and exchanges of Capital Securities
Certificates as herein provided. Banco Popular de Puerto Rico shall be the


                                       19


initial Securities Registrar. The provisions of Section 8.1, Section 8.3 and
Section 8.6 herein shall apply to Banco Popular de Puerto Rico in its role as
Securities Registrar, for so long as Banco Popular de Puerto Rico shall act as
Securities Registrar.

         Upon surrender for registration of transfer of any Capital Securities
Certificate at the office or agency maintained pursuant to Section 5.8, the
Administrative Trustees or any one of them shall execute on behalf of the Issuer
Trust (and if executed on behalf of the Issuer Trust by a facsimile signature,
such certificate shall be countersigned by the Securities Registrar or its
agent) and deliver, in the name of the designated transferee or transferees, one
or more new Capital Securities Certificates in authorized denominations of a
like aggregate Liquidation Amount dated the date of execution by such
Administrative Trustee or Trustees. The Securities Registrar shall not be
required to register the transfer of any Capital Securities that have been
called for redemption during a period beginning at the opening of business 15
days before the day of selection for such redemption.

         At the option of a Holder, Capital Securities Certificates may be
exchanged for other Capital Securities Certificates in authorized denominations
of the same class and of a like aggregate Liquidation Amount upon surrender of
the Capital Securities Certificates to be exchanged at the office or agency
maintained pursuant to Section 5.8.

         Every Capital Securities Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to an Administrative Trustee and the
Securities Registrar duly executed by the Holder or his attorney duly authorized
in writing. Each Capital Securities Certificate surrendered for registration of
transfer or exchange shall be canceled and subsequently disposed of by an
Administrative Trustee or the Securities Registrar in accordance with such
Person's customary practice.

         No service charge shall be made for any registration of transfer or
exchange of Capital Securities Certificates, but the Securities Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Capital Securities
Certificates.

Section 5.5.    Mutilated, Destroyed, Lost or Stolen Trust Securities
                Certificates.

         If (a) any mutilated Trust Securities Certificate shall be surrendered
to the Securities Registrar, or if the Securities Registrar shall receive
evidence to its satisfaction of the destruction, loss or theft of any Trust
Securities Certificate, and (b) there shall be delivered to the Securities
Registrar and the Administrative Trustees such security or indemnity as may be
required by them to save each of them harmless, then in the absence of notice
that such Trust Securities Certificate shall have been acquired by a bona fide
purchaser, the Administrative Trustees, or any one of them, on behalf of the
Issuer Trust shall execute and make available for delivery, in exchange for or
in lieu of any such mutilated, destroyed, lost or stolen Trust Securities
Certificate, a new Trust Securities Certificate of like class, tenor and
denomination. In connection with the issuance of any new Trust Securities
Certificate under this Section 5.5, the Administrative Trustees or the
Securities Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith.
Any duplicate Trust Securities Certificate issued pursuant to this Section shall
constitute conclusive evidence of an undivided beneficial interest in the assets
of the Issuer Trust corresponding to that evidenced by the lost, stolen or
destroyed


                                       20


Trust Securities Certificate, as if originally issued, whether or not the lost,
stolen or destroyed Trust Securities Certificate shall be found at any time.

Section 5.6.    Persons Deemed Holders.

         The Issuer Trustees and the Securities Registrar shall each treat the
Person in whose name any Trust Securities Certificate shall be registered in the
Securities Register as the owner of such Trust Securities Certificate for the
purpose of receiving Distributions and for all other purposes whatsoever, and
none of the Issuer Trustees, the Administrative Trustees and the Securities
Registrar shall be bound by any notice to the contrary.

Section 5.7.    Access to List of Holders' Names and Addresses.

         Each Holder and each Owner shall be deemed to have agreed not to hold
the Depositor, the Property Trustee, the Delaware Trustee or the Administrative
Trustees accountable by reason of the disclosure of its name and address,
regardless of the source from which such information was derived.

Section 5.8.    Maintenance of Office or Agency.

         The Administrative Trustees shall designate an office or offices or
agency or agencies where Capital Securities Certificates may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Issuer Trustees in respect of the Trust Securities Certificates may be
served. The Administrative Trustees initially designate the Corporate Trust
Office of the Property Trustee, as its office and agency for such purposes. The
Administrative Trustee shall give prompt written notice to the Depositor, the
Property Trustees and to the Holders of any change in the location of the
Securities Register or any such office or agency.

Section 5.9.    Appointment of Paying Agent.

         The Paying Agent shall make Distributions to Holders from the Payment
Account and shall report the amounts of such Distributions to the Property
Trustee and the Administrative Trustees. Any Paying Agent shall have the
revocable power to withdraw funds from the Payment Account solely for the
purpose of making the Distributions referred to above. The Property Trustee may
revoke such power and remove the Paying Agent in its sole discretion. The Paying
Agent shall initially be Banco Popular de Puerto Rico. Any Person acting as
Paying Agent shall be permitted to resign as Paying Agent upon 30 days' written
notice to the Administrative Trustees and the Property Trustee. If Banco Popular
de Puerto Rico shall no longer be the Paying Agent or a successor Paying Agent
shall resign or its authority to act be revoked, the Administrative Trustees
shall appoint a successor (which shall be a bank or trust company) that is
reasonably acceptable to the Property Trustee and the Depositor to act as Paying
Agent. Such successor Paying Agent or any additional Paying Agent shall execute
and deliver to the Issuer Trustees an instrument in which such successor Paying
Agent or additional Paying Agent shall agree with the Issuer Trustees that as
Paying Agent, such successor Paying Agent or additional Paying Agent will hold
all sums, if any, held by it for payment to the Holders in trust for the benefit
of the Holders entitled thereto until such sums shall be paid to such Holders.
The Paying Agent shall return all unclaimed funds to the Property Trustee and
upon removal of a Paying Agent such Paying Agent shall also return all funds in
its possession to the Property Trustee. The provisions of Section 8.1, Section
8.3 and Section 8.6 herein shall apply to Banco Popular de Puerto Rico in its
role as Paying Agent, for so long as Banco Popular de Puerto Rico shall act as
Paying Agent and, to the extent applicable, to any other paying agent appointed
hereunder. Any reference in this Agreement to the Paying Agent shall include any
co-paying agent unless the context requires otherwise.


                                       21


Section 5.10.   Ownership of Common Securities by Depositor.

         At the Time of Delivery, the Depositor shall acquire, and thereafter
shall retain, beneficial and record ownership of the Common Securities. To the
fullest extent permitted by law, other than a transfer in connection with a
consolidation or merger of the Depositor into another Person, or any conveyance,
transfer or lease by the Depositor of its properties and assets substantially as
an entirety to any Person, pursuant to Section 801 of the Indenture, any
attempted transfer of the Common Securities shall be void. The Administrative
Trustees shall cause each Common Securities Certificate issued to the Depositor
to contain a legend consistent with this Section 5.10.

Section 5.11.   Book-Entry Capital Securities Certificates; Common Securities
                Certificate.

         (a)      The Capital Securities Certificates, upon original issuance,
will be issued in the form of a typewritten Capital Securities Certificate or
Certificates representing Book-Entry Capital Securities Certificates, to be
delivered to, or on behalf of, DTC, the initial Clearing Agency, by, or on
behalf of, the Issuer Trust. Such Capital Securities Certificate or Certificates
shall initially be registered on the Securities Register in the name of Cede &
Co., the nominee of the initial Clearing Agency, and no Owner will receive a
Definitive Capital Securities Certificate representing such Owner's interest in
such Capital Securities, except as provided in Section 5.13. Unless and until
Definitive Capital Securities Certificates have been issued to Owners pursuant
to Section 5.13:

                  (i)      the provisions of this Section 5.11(a) shall be in
         full force and effect;

                  (ii)     the Securities Registrar and the Trustees shall be
         entitled to deal with the Clearing Agency for all purposes of this
         Trust Agreement relating to the Book-Entry Capital Securities
         Certificates (including the payment of the Liquidation Amount of and
         Distributions on the Capital Securities evidenced by Book-Entry Capital
         Securities Certificates and the giving of instructions or directions to
         Owners of Capital Securities evidenced by Book-Entry Capital Securities
         Certificates) as the sole Holder of Capital Securities evidenced by
         Book-Entry Capital Securities Certificates and shall have no
         obligations to the Owners thereof;

                  (iii)    to the extent that the provisions of this Section
         5.11 conflict with any other provisions of this Trust Agreement, the
         provisions of this Section 5.11 shall control; and

                  (iv)     the rights of the Owners of the Book-Entry Capital
         Securities Certificate shall be exercised only through the Clearing
         Agency and shall be limited to those established by law and agreements
         between such Owners and the Clearing Agency and/or the Clearing Agency
         Participants. Pursuant to the Certificate Depository Agreement, unless
         and until Definitive Capital Securities Certificates are issued
         pursuant to Section 5.13, the initial Clearing Agency will make
         book-entry transfers among the Clearing Agency Participants and receive
         and transmit payments on the Capital Securities to such Clearing Agency
         Participants.

         (b)      A single Common Securities Certificate representing the Common
Securities shall be issued to the Depositor in the form of a definitive Common
Securities Certificate.


                                       22


Section 5.12.   Notices to Clearing Agency.

         To the extent that a notice or other communication to the Holders is
required under this Trust Agreement, for so long as Capital Securities are
represented by a Book-Entry Capital Securities Certificates, the Administrative
Trustees and the Issuer Trustee shall give all such notices and communications
specified herein to be given to the Clearing Agency, and shall have no
obligations to the Owners.

Section 5.13.   Definitive Capital Securities Certificates.

         If (a) the Depositor advises the Issuer Trustees in writing that the
Clearing Agency is no longer willing or able to properly discharge its
responsibilities with respect to the Capital Securities Certificates, and the
Depositor is unable to locate a qualified successor, (b) the Depositor at its
option advises the Issuer Trustees in writing that it elects to terminate the
book-entry system through the Clearing Agency or (c) after the occurrence of a
Debenture Event of Default, Owners of Capital Securities Certificates
representing beneficial interests aggregating at least a majority of the
Liquidation Amount advise the Administrative Trustees in writing that the
continuation of a book-entry system through the Clearing Agency is no longer in
the best interest of the Owners of Capital Securities Certificates, then the
Administrative Trustees shall notify the other Issuer Trustees and the Clearing
Agency, and the Clearing Agency, in accordance with its customary rules and
procedures, shall notify all Clearing Agency Participants for whom it holds
Capital Securities of the occurrence of any such event and of the availability
of the Definitive Capital Securities Certificates to Owners of such class or
classes, as applicable, requesting the same. Upon surrender to the
Administrative Trustees of the typewritten Capital Securities Certificate or
Certificates representing the Book-Entry Capital Securities Certificates by the
Clearing Agency, accompanied by registration instructions, the Administrative
Trustees, or any one of them, shall execute the Definitive Capital Securities
Certificates in accordance with the instructions of the Clearing Agency, if
executed on behalf of the Issuer Trust by facsimile, countersigned by the
Securities Registrar or its agent. Neither the Securities Registrar nor the
Trustees shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Capital Securities Certificates, the Issuer
Trustees shall recognize the Holders of the Definitive Capital Securities
Certificates as holders of Trust Securities. The Definitive Capital Securities
Certificates shall be typewritten, printed, lithographed or engraved or may be
produced in any other manner as is reasonably acceptable to the Administrative
Trustees that meets the requirements of any stock exchange or automated
quotation system on which the Capital Securities are then listed or approved for
trading, as evidenced by the execution thereof by the Administrative Trustees or
any one of them.

Section 5.14.   Rights of Holders; Waivers of Past Defaults.

         (a)      The legal title to the Trust Property is vested exclusively in
the Property Trustee (in its capacity as such) in accordance with Section 2.9,
and the Holders shall not have any right or title therein other than the
undivided beneficial interest in the assets of the Issuer Trust conferred by
their Trust Securities and they shall have no right to call for any partition or
division of property, profits or rights of the Issuer Trust except as described
below. The Trust Securities shall be personal property giving only the rights
specifically set forth therein and in this Trust Agreement. The Trust Securities
shall have no preemptive or similar rights and when issued and delivered to
Holders against payment of the purchase price therefor will be fully paid and,
to the fullest extent permitted by applicable law, nonassessable by the Issuer
Trust. The Holders of the Trust Securities, in their capacities as such, shall
be entitled to the same limitation of personal liability extended to
stockholders of


                                       23


private corporations for profit organized under the General Corporation Law of
the State of Delaware.

         (b)      For so long as any Capital Securities remain Outstanding, if,
upon a Debenture Event of Default, the Debenture Trustee fails or the holders of
not less than 25% in principal amount of the outstanding Debentures fail to
declare the principal of all of the Debentures to be immediately due and payable
as set forth in the Indenture, the Property Trustee or the Holders of at least
25% in Liquidation Amount of the Capital Securities then Outstanding shall have
the right to make such declaration by a notice in writing to the Depositor, the
Debenture Trustee and the Property Trustee, in the case of notice by the Holders
of the Capital Securities, or to the Depositor, the Debenture Trustee and the
Holders of the Capital Securities, in the case of notice by the Property
Trustee; and upon any such declaration such principal amount and the accrued
interest on all of the Debentures shall become immediately due and payable,
provided that the payment of principal, interest and premium, if any, on such
Debentures shall remain subordinated to the extent provided in the Indenture.

         At any time after a declaration of acceleration with respect to the
Debentures has been made and before a judgment or decree for payment of the
money due has been obtained by the Debenture Trustee as in the Indenture
provided, the Holders of at least a Majority in Liquidation Amount of the
Capital Securities, by written notice to the Property Trustee, the Depositor and
the Debenture Trustee, may rescind and annul such declaration and its
consequences if:

                  (i)      the Depositor has paid or deposited with the
         Debenture Trustee a sum sufficient to pay

                           (A)      all overdue installments of interest on all
                  of the Debentures,

                           (B)      any accrued Additional Interest (as defined
                  in the Indenture) on all of the Debentures,

                           (C)      the principal of (and premium, if any, on)
                  any Debentures that have become due otherwise than by such
                  declaration of acceleration and interest and Additional
                  Interest (as defined in the Indenture) thereon at the rate
                  borne by the Debentures, and

                           (D)      all sums paid or advanced by the Debenture
                  Trustee under the Indenture and the reasonable compensation,
                  expenses, disbursements and advances of the Debenture Trustee
                  and the Property Trustee, their agents and counsel; and

                  (ii)     all Events of Default with respect to the Debentures,
         other than the non-payment of the principal of the Debentures that has
         become due solely by such acceleration, have been cured or waived as
         provided in Section 513 of the Indenture.

         The Holders of at least a Majority in Liquidation Amount of the Capital
Securities may, on behalf of the Holders of all the Capital Securities, waive
any past default under the Indenture, except a default in the payment of
principal or interest (unless such default has been cured and a sum sufficient
to pay all matured installments of interest and principal due otherwise than by
acceleration has been deposited with the Debenture Trustee) or a default in
respect of a covenant or provision that under the Indenture cannot be modified
or amended without the consent of the holder of each outstanding Debenture. No
such rescission shall affect any subsequent default or impair any right
consequent thereon.


                                       24


         Upon receipt by the Property Trustee of written notice declaring such
an acceleration, or rescission and annulment thereof, by Holders of any part of
the Capital Securities a record date shall be established for determining
Holders of Outstanding Capital Securities entitled to join in such notice, which
record date shall be at the close of business on the day the Property Trustee
receives such notice. The Holders on such record date, or their duly designated
proxies, and only such Persons, shall be entitled to join in such notice,
whether or not such Holders remain Holders after such record date; provided
that, unless such declaration of acceleration, or rescission and annulment, as
the case may be, shall have become effective by virtue of the requisite
percentage having joined in such notice prior to the day that is 90 days after
such record date, such notice of declaration of acceleration, or rescission and
annulment, as the case may be, shall automatically and without further action by
any Holder be canceled and of no further effect. Nothing in this paragraph shall
prevent a Holder, or a proxy of a Holder, from giving, after expiration of such
90-day period, a new written notice of declaration of acceleration, or
rescission and annulment thereof, as the case may be, that is identical to a
written notice that has been canceled pursuant to the proviso to the preceding
sentence, in which event a new record date shall be established pursuant to the
provisions of this Section 5.14(b).

         (c)      For so long as any Capital Securities remain Outstanding, to
the fullest extent permitted by law and subject to the terms of this Trust
Agreement and the Indenture, upon a Debenture Event of Default specified in
Section 501(1) or 501(2) of the Indenture, any Holder of Capital Securities
shall have the right to institute a proceeding directly against the Depositor,
pursuant to Section 508 of the Indenture, for enforcement of payment to such
Holder of any amounts payable in respect of Debentures having an aggregate
principal amount equal to the aggregate Liquidation Amount of the Capital
Securities of such Holder (a "Direct Action"). Except as set forth in Section
5.14(b) and this Section 5.14(c), the Holders of Capital Securities shall have
no right to exercise directly any right or remedy available to the holders of,
or in respect of, the Debentures.

         (d)      Except as otherwise provided in paragraphs (a), (b) and (c) of
this Section 5.14(b), the Holders of at least a Majority in Liquidation Amount
of the Capital Securities may, on behalf of the Holders of all the Capital
Securities, waive any past default or Event of Default and its consequences.
Upon such waiver, any such default or Event of Default shall cease to exist,
and any default or Event of Default arising therefrom shall be deemed to have
been cured, for every purpose of this Trust Agreement, but no such waiver
shall extend to any subsequent or other default or Event of Default or impair
any right consequent thereon.

Section 5.15.   CUSIP Numbers.

         The Administrative Trustees in issuing the Capital Securities may use
"CUSIP" numbers (if then generally in use), and, if so, the Property Trustee
shall use "CUSIP" numbers in notices of redemption as a convenience to Holders;
provided that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Capital Securities or as
contained in any notice of a redemption and that reliance may be placed only on
the other identification numbers printed on the Capital Securities, and any such
redemption shall not be affected by any defect in or omission of such numbers.
The Administrative Trustees will promptly notify the Property Trustee of any
change in the CUSIP numbers.


                                       25


                                   ARTICLE VI
                        ACTS OF HOLDERS; MEETINGS; VOTING

Section 6.1.    Limitations on Voting Rights.

         (a)      Except as expressly provided in this Trust Agreement and in
the Indenture and as otherwise required by law, no Holder of Capital Securities
shall have any right to vote or in any manner otherwise control the
administration, operation and management of the Issuer Trust or the obligations
of the parties hereto, nor shall anything herein set forth, or contained in the
terms of the Trust Securities Certificates, be construed so as to constitute the
Holders from time to time as partners or members of an association.

         (b)      So long as any Debentures are held by the Property Trustee on
behalf of the Issuer Trust, the Issuer Trustees shall not (i) direct the time,
method and place of conducting any proceeding for any remedy available to the
Debenture Trustee, or execute any trust or power conferred on the Debenture
Trustee with respect to the Debentures, (ii) waive any past default that may be
waived under Section 513 of the Indenture, (iii) exercise any right to rescind
or annul a declaration that the principal of all the Debentures shall be due and
payable, or (iv) consent to any amendment, modification or termination of the
Indenture or the Debentures, where such consent shall be required, without, in
each case, obtaining the prior approval of the Holders of at least a Majority in
Liquidation Amount of the Capital Securities, provided, however, that where a
consent under the Indenture would require the consent of each holder of
Debentures affected thereby, no such consent shall be given by the Property
Trustee without the prior written consent of each Holder of Capital Securities.
The Property Trustee shall not revoke any action previously authorized or
approved by a vote of the Holders of the Capital Securities, except by a
subsequent vote of the Holders of the Capital Securities. The Property Trustee
shall notify all Holders of the Capital Securities of any notice of default
received with respect to the Debentures. In addition to obtaining the foregoing
approvals of the Holders of the Capital Securities, prior to taking any of the
foregoing actions, the Issuer Trustees shall, at the expense of the Depositor,
obtain an Opinion of Counsel experienced in such matters to the effect that such
action shall not cause the Issuer Trust to be taxable as a corporation or
classified as other than a grantor trust for United States federal or Puerto
Rico income tax purposes.

         (c)      If any proposed amendment to the Trust Agreement provides for,
or the Issuer Trustees otherwise propose to effect, (i) any action that would
adversely affect in any material respect the powers, preferences or special
rights of the Capital Securities, whether by way of amendment to the Trust
Agreement or otherwise, or (ii) the dissolution and winding-up of the Issuer
Trust, other than pursuant to the terms of this Trust Agreement, then the
Holders of Outstanding Capital Securities as a class will be entitled to vote on
such amendment or proposal and such amendment or proposal shall not be effective
except with the approval of the Holders of at least a Majority in Liquidation
Amount of the Capital Securities. Notwithstanding any other provision of this
Trust Agreement, no amendment to this Trust Agreement may be made if, as a
result of such amendment, it would cause the Issuer Trust to be taxable as a
corporation or classified as other than a grantor trust for United States
federal or Puerto Rico income tax purposes.

Section 6.2.    Notice of Meetings.

         Notice of all meetings of the Holders of the Capital Securities,
stating the time, place and purpose of the meeting, shall be given by the
Property Trustee pursuant to Section 10.8 to each Holder of Capital Securities,
at such Holder's registered address, at least 15 days and not more than 90 days
before the meeting. At any such meeting, any business properly before the
meeting


                                       26


may be so considered whether or not stated in the notice of the meeting. Any
adjourned meeting may be held as adjourned without further notice.

Section 6.3.    Meetings of Holders of the Capital Securities.

         No annual meeting of Holders is required to be held. The Property
Trustee, however, shall call a meeting of the Holders of the Capital Securities
to vote on any matter upon the written request of the Holders of at least 25% in
aggregate Liquidation Amount of the Outstanding Capital Securities and the
Administrative Trustees or the Property Trustee may, at any time in their
discretion, call a meeting of the Holders of the Capital Securities to vote on
any matters as to which such Holders are entitled to vote.

         The Holders of at least a Majority in Liquidation Amount of the Capital
Securities, present in person or by proxy, shall constitute a quorum at any
meeting of the Holders of the Capital Securities.

         If a quorum is present at a meeting, an affirmative vote by the Holders
present, in person or by proxy, holding Capital Securities representing at least
a Majority in Liquidation Amount of the Capital Securities held by the Holders
present, either in person or by proxy, at such meeting shall constitute the
action of the Holders of the Capital Securities, unless this Trust Agreement
requires a greater number of affirmative votes.

Section 6.4.    Voting Rights.

         Holders shall be entitled to one vote for each $25 of Liquidation
Amount represented by their Outstanding Trust Securities in respect of any
matter as to which such Holders are entitled to vote.

Section 6.5.    Proxies, etc.

         At any meeting of Holders, any Holder entitled to vote thereat may vote
by proxy, provided that no proxy shall be voted at any meeting unless it shall
have been placed on file with the Property Trustee, or with such other officer
or agent of the Issuer Trust as the Property Trustee may direct, for
verification prior to the time at which such vote shall be taken. Pursuant to a
resolution of the Property Trustee, proxies may be solicited in the name of the
Property Trustee or one or more officers of the Property Trustee. Only Holders
of record shall be entitled to vote. When Trust Securities are held jointly by
several persons, any one of them may vote at any meeting in person or by proxy
in respect of such Trust Securities, but if more than one of them shall be
present at such meeting in person or by proxy, and such joint owners or their
proxies so present disagree as to any vote to be cast, such vote shall not be
received in respect of such Trust Securities. A proxy purporting to be executed
by or on behalf of a Holder shall be deemed valid unless challenged at or prior
to its exercise, and the burden of proving invalidity shall rest on the
challenger. No proxy shall be valid more than three years after its date of
execution.

Section 6.6.    Holder Action by Written Consent.

         Any action that may be taken by Holders at a meeting may be taken
without a meeting if Holders holding at least a Majority in Liquidation Amount
of all Capital Securities entitled to vote in respect of such action (or such
larger proportion thereof as shall be required by any other provision of this
Trust Agreement) shall consent to the action in writing.

Section 6.7.    Record Date for Voting and Other Purposes.

         For the purposes of determining the Holders who are entitled to notice
of and to vote at any meeting or by written consent, or to participate in


                                       27


any distribution on the Trust Securities in respect of which a record date is
not otherwise provided for in this Trust Agreement, or for the purpose of any
other action, the Administrative Trustees may from time to time fix a date, not
more than 90 days prior to the date of any meeting of Holders or the payment of
a Distribution or other action, as the case may be, as a record date for the
determination of the identity of the Holders of record for such purposes.

Section 6.8.    Acts of Holders.

         Any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Trust Agreement to be given, made
or taken by Holders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Holders in person or by an agent
duly appointed in writing; and, except as otherwise expressly provided herein,
such action shall become effective when such instrument or instruments are
delivered to the Property Trustee. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Trust Agreement and (subject to Section
8.1) conclusive in favor of the Issuer Trustees, if made in the manner provided
in this Section.

         The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in any
other manner that any Issuer Trustee receiving the same deems sufficient.

         The ownership of Trust Securities shall be proved by the Securities
Register.

         Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Trust Security shall bind every future Holder
of the same Trust Security and the Holder of every Trust Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Issuer
Trustees, or the Issuer Trust in reliance thereon, whether or not notation of
such action is made upon such Trust Security.

         Without limiting the foregoing, a Holder entitled hereunder to take any
action hereunder with regard to any particular Trust Security may do so with
regard to all or any part of the Liquidation Amount of such Trust Security or by
one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such Liquidation Amount.

         If any dispute shall arise between the Holders and the Issuer Trustees
or among the Holders or the Issuer Trustees with respect to the authenticity,
validity or binding nature of any request, demand, authorization, direction,
consent, waiver or other Act of such Holder or Issuer Trustee under this ARTICLE
VI, then the determination of such matter by the Property Trustee shall be
conclusive with respect to such matter.

         A Holder may institute a legal proceeding directly against the
Depositor under the Guarantee to enforce its rights under the Guarantee without


                                       28


first instituting a legal proceeding against the Guarantee Trustee (as defined
in the Guarantee), the Issuer Trust, any Issuer Trustee, or any person or
entity.

Section 6.9.    Inspection of Records.

         Upon reasonable notice to the Administrative Trustees and the Property
Trustee, the records of the Issuer Trust shall be open to inspection by Holders
during normal business hours for any purpose reasonably related to such Holder's
interest as a Holder.

                                  ARTICLE VII
                         REPRESENTATIONS AND WARRANTIES

Section 7.1.    Representations and Warranties of the Property Trustee and the
                Delaware Trustee.

         The Property Trustee and the Delaware Trustee, each severally on behalf
of and as to itself, hereby represents and warrants for the benefit of the
Depositor and the Holders that:

         (a)      the Property Trustee is a national banking association, duly
organized, validly existing and in good standing under the laws of the United
States;

         (b)      the Property Trustee has full corporate power, authority and
legal right to execute, deliver and perform its obligations under this Trust
Agreement and has taken all necessary action to authorize the execution,
delivery and performance by it of this Trust Agreement;

         (c)      the Delaware Trustee is a national banking association with
its principal place of business in the State of Delaware;

         (d)      the Delaware Trustee has full corporate power, authority and
legal right to execute, deliver and perform its obligations under this Trust
Agreement and has taken all necessary action to authorize the execution,
delivery and performance by it of this Trust Agreement;

         (e)      this Trust Agreement has been duly authorized, executed and
delivered by the Property Trustee and the Delaware Trustee and constitutes the
valid and legally binding agreement of each of the Property Trustee and the
Delaware Trustee enforceable against each of them 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;

         (f)      the execution, delivery and performance of this Trust
Agreement have been duly authorized by all necessary corporate or other action
on the part of the Property Trustee and the Delaware Trustee and do not require
any approval of stockholders of the Property Trustee and the Delaware Trustee
and such execution, delivery and performance will not (i) violate the charter or
by-laws of the Property Trustee or the Delaware Trustee, (ii) violate any
provision of, or constitute, with or without notice or lapse of time, a default
under, or result in the creation or imposition of, any Lien on any properties
included in the Trust Property pursuant to the provisions of, any indenture,
mortgage, credit agreement, license or other agreement or instrument to which
the Property Trustee or the Delaware Trustee is a party or by which it is bound,
or (iii) violate any law, governmental rule or regulation of the United States
or the State of Delaware, as the case may be, governing the banking, trust or
general powers of the Property Trustee or the Delaware Trustee (as appropriate
in context) or any order, judgment or decree applicable to the Property Trustee
or the Delaware Trustee;


                                       29


         (g)      neither the authorization, execution or delivery by the
Property Trustee or the Delaware Trustee of this Trust Agreement nor the
consummation of any of the transactions by the Property Trustee or the Delaware
Trustee (as the case may be) contemplated herein requires the consent or
approval of, the giving of notice to, the registration with or the taking of any
other action with respect to any governmental authority or agency under any
existing law of the United States or the State of Delaware governing the
banking, trust or general powers of the Property Trustee or the Delaware Trustee
(as appropriate in context), other than the filing of the Certificate of Trust
with the Delaware Secretary of State; and

         (h)      there are no proceedings pending or, to the best of each of
the Property Trustee's and the Delaware Trustee's knowledge, threatened against
or affecting the Property Trustee or the Delaware Trustee in any court or before
any governmental authority, agency or arbitration board or tribunal that,
individually or in the aggregate, would materially and adversely affect the
Issuer Trust or would question the right, power and authority of the Property
Trustee or the Delaware Trustee, as the case may be, to enter into or perform
its obligations as one of the Trustees under this Trust Agreement.

Section 7.2.    Representations and Warranties of Depositor.

         The Depositor hereby represents and warrants for the benefit of the
Holders that:

         (a)      the Trust Securities Certificates issued at the Time of
Delivery on behalf of the Issuer Trust have been duly authorized and will have
been duly and validly executed, issued and delivered by the Issuer Trustees
pursuant to the terms and provisions of, and in accordance with the requirements
of, this Trust Agreement, and the Holders will be, as of such date, entitled to
the benefits of this Trust Agreement; and

         (b)      there are no taxes, fees or other governmental charges payable
by the Issuer Trust (or the Issuer Trustees on behalf of the Issuer Trust) under
the laws of the State of Delaware or any political subdivision thereof in
connection with the execution, delivery and performance by any Issuer Trustee of
this Trust Agreement.

                                  ARTICLE VIII
                               THE ISSUER TRUSTEES

Section 8.1.    Certain Duties and Responsibilities.

         (a)      The duties and responsibilities of the Issuer Trustees shall
be as provided by this Trust Agreement, subject to Section 10.10 hereof.
Notwithstanding the foregoing, but subject to Section 8.1(c) , no provision of
this Trust Agreement shall require any of the Issuer Trustees to expend or risk
its or their own funds or otherwise incur any financial liability in the
performance of any of its or their duties hereunder, or in the exercise of any
of its or their rights or powers, if it or they shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it. Whether or not therein
expressly so provided, every provision of this Trust Agreement relating to the
conduct or affecting the liability of or affording protection to the Issuer
Trustees shall be subject to the provisions of this Section 8.1. To the extent
that, at law or in equity, an Administrative Trustee has duties and liabilities
relating to the Issuer Trust or to the Holders, such Administrative Trustee
shall not be liable to the Issuer Trust or to any Holder for such Administrative
Trustee's good faith reliance on the provisions of this Trust Agreement. The
provisions of this Trust Agreement, to the extent that they restrict the duties
and liabilities of the


                                       30


Administrative Trustees otherwise existing at law or in equity, are agreed by
the Depositor and the Holders to replace such other duties and liabilities of
the Administrative Trustees.

         (b)      All payments made by the Property Trustee or a Paying Agent in
respect of the Trust Securities shall be made only from the revenue and proceeds
from the Trust Property and only to the extent that there shall be sufficient
revenue or proceeds from the Trust Property to enable the Property Trustee or a
Paying Agent to make payments in accordance with the terms hereof. Each Holder,
by its acceptance of a Trust Security, agrees that it will look solely to the
revenue and proceeds from the Trust Property to the extent legally available for
distribution to it as herein provided and that the Issuer Trustees are not
personally liable to such Holder for any amount distributable in respect of any
Trust Security or for any other liability in respect of any Trust Security. This
Section 8.1(b) does not limit the liability of the Issuer Trustees expressly set
forth elsewhere in this Trust Agreement or, in the case of the Property Trustee,
in the Trust Indenture Act.

         (c)      If an Event of Default has occurred and is continuing, the
Property Trustee shall enforce this Trust Agreement for the benefit of the
Holders.

         (d)      The Property Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Trust Agreement (including pursuant to Section 10.10), and no implied
covenants shall be read into this Trust Agreement against the Property Trustee.
If an Event of Default has occurred (that has not been cured or waived pursuant
to Section 5.14), the Property Trustee shall exercise such of the rights and
powers vested in it by this Trust Agreement, and use the same degree of care and
skill in its exercise thereof, as a prudent person would exercise or use under
the circumstances in the conduct of his or her own affairs.

         (e)      No provision of this Trust Agreement shall be construed to
relieve the Property Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except that:

                  (i)      prior to the occurrence of any Event of Default and
         after the curing or waiving of all such Events of Default that may have
         occurred:

                           (A)      the duties and obligations of the Property
                  Trustee shall be determined solely by the express provisions
                  of this Trust Agreement (including pursuant to Section 10.10),
                  and the Property Trustee shall not be liable except for the
                  performance of such duties and obligations as are specifically
                  set forth in this Trust Agreement (including pursuant to
                  Section 10.10); and

                           (B)      in the absence of bad faith on the part of
                  the Property Trustee, the Property Trustee may conclusively
                  rely, as to the truth of the statements and the correctness of
                  the opinions expressed therein, upon any certificates or
                  opinions furnished to the Property Trustee and conforming to
                  the requirements of this Trust Agreement; but in the case of
                  any such certificates or opinions that by any provision hereof
                  or of the Trust Indenture Act are specifically required to be
                  furnished to the Property Trustee, the Property Trustee shall
                  be under a duty to examine the same to determine whether or
                  not they conform to the requirements of this Trust Agreement;


                                       31


                  (ii)     the Property Trustee shall not be liable for any
         error of judgment made in good faith by an authorized officer of the
         Property Trustee, unless it shall be proved that the Property Trustee
         was negligent in ascertaining the pertinent facts;

                  (iii)    the Property Trustee shall not be liable with respect
         to any action taken or omitted to be taken by it in good faith in
         accordance with the direction of the Holders of at least a Majority in
         Liquidation Amount of the Capital Securities relating to the time,
         method and place of conducting any proceeding for any remedy available
         to the Property Trustee, or exercising any trust or power conferred
         upon the Property Trustee under this Trust Agreement;

                  (iv)     the Property Trustee's sole duty with respect to the
         custody, safe keeping and physical preservation of the Debentures and
         the Payment Account shall be to deal with such property in a similar
         manner as the Property Trustee deals with similar property for its own
         account, subject to the protections and limitations on liability
         afforded to the Property Trustee under this Trust Agreement and the
         Trust Indenture Act;

                  (v)      the Property Trustee shall not be liable for any
         interest on any money received by it except as it may otherwise agree
         with the Depositor; and money held by the Property Trustee need not be
         segregated from other funds held by it except in relation to the
         Payment Account maintained by the Property Trustee pursuant to Section
         3.1 and except to the extent otherwise required by law;

                  (vi)     the Property Trustee shall not be responsible for
         monitoring the compliance by the Administrative Trustees or the
         Depositor with their respective duties under this Trust Agreement, nor
         shall the Property Trustee be liable for the default or misconduct of
         any other Issuer Trustee, the Administrative Trustees or the Depositor;
         and

                  (vii)    subject to Section 8.1(c), no provision of this Trust
         Agreement shall require the Property Trustee to expend or risk its own
         funds or otherwise incur personal financial liability in the
         performance of any of its duties or in the exercise of any of its
         rights or powers, if the Property Trustee shall have reasonable grounds
         for believing that the repayment of such funds or liability is not
         reasonably assured to it under the terms of this Trust Agreement or
         adequate indemnity against such risk or liability is not reasonably
         assured to it.

         (f)      The Administrative Trustees shall not be responsible for
monitoring the compliance by the other Issuer Trustees or the Depositor with
their respective duties under this Trust Agreement, nor shall either
Administrative Trustee be liable for the default or misconduct of any other
Issuer Trustee or the Depositor.

Section 8.2.    Certain Notices.

         (a)      Within ten days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit, in
the manner and to the extent provided in Section 10.8, notice of such Event of
Default to the Holders and the Administrative Trustees, unless such Event of
Default shall have been cured or waived.

         (b)      Within five Business Days after the receipt of notice of the
Depositor's exercise of its right to defer the payment of interest on the
Debentures pursuant to the Indenture, the Property Trustee shall transmit, in
the manner and to the extent provided in Section 10.8, notice of such exercise
to the


                                       32


Holders and the Administrative Trustees, unless such exercise shall have been
revoked.

         (c)      The Property Trustee shall not be deemed to have knowledge of
any Event of Default unless the Property Trustee shall have received written
notice or a Responsible Officer of the Property Trustee charged with the
administration of this Trust Agreement shall have obtained actual knowledge of
such Event of Default.

Section 8.3.    Certain Rights of Property Trustee.

         Subject to the provisions of Section 8.1:

         (a)      the Property Trustee may rely and shall be protected in acting
or refraining from acting in good faith upon any resolution, Opinion of Counsel,
certificate, written representation of a Holder or transferee, certificate of
auditors or any other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;

         (b)      if (i) in performing its duties under this Trust Agreement the
Property Trustee is required to decide between alternative courses of action,
(ii) in construing any of the provisions of this Trust Agreement the Property
Trustee finds the same ambiguous or inconsistent with any other provisions
contained herein, or (iii) the Property Trustee is unsure of the application of
any provision of this Trust Agreement, then, except as to any matter as to which
the Holders of the Capital Securities are entitled to vote under the terms of
this Trust Agreement, the Property Trustee shall deliver a notice to the
Depositor requesting the Depositor's opinion as to the course of action to be
taken and the Property Trustee shall take such action, or refrain from taking
such action, as the Property Trustee shall be instructed to take, or refrain
from taking, by the Depositor; provided, however, that if the Depositor fails to
deliver such opinion within ten Business Days after the Property Trustee has
delivered such notice, or such reasonably shorter period of time set forth in
such notice (which to the extent practicable shall not be less than two Business
Days), the Property Trustee shall take such action, or refrain from taking such
action, not inconsistent with this Trust Agreement, as the Property Trustee
shall deem advisable and in the best interests of the Holders, in which event
the Property Trustee shall have no liability except for its own bad faith,
negligence or willful misconduct;

         (c)      any direction or act of the Depositor contemplated by this
Trust Agreement shall be sufficiently evidenced by an Officers' Certificate;

         (d)      any direction or act of an Administrative Trustee contemplated
by this Trust Agreement shall be sufficiently evidenced by a certificate
executed by such Administrative Trustee and setting forth such direction or act;

         (e)      the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any financing or
continuation statement or any filing under tax or securities laws) or any
rerecording, refiling or re-registration thereof;

         (f)      the Property Trustee may consult with counsel (which counsel
may be counsel to the Depositor or any of its Affiliates, and may include any of
its employees) and the advice of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon and in accordance with
such advice; the Property Trustee shall have the right at any time to seek


                                       33


instructions concerning the administration of this Trust Agreement from any
court of competent jurisdiction;

         (g)      the Property Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Trust Agreement at the request
or direction of any of the Holders pursuant to this Trust Agreement, unless such
Holders shall have offered to the Property Trustee reasonable security or
indemnity against the costs, expenses and liabilities that might be incurred by
it in compliance with such request or direction; provided that nothing contained
in this Section 8.3(g) shall be taken to relieve the Property Trustee, upon the
occurrence of an Event of Default, of its obligation to exercise the rights and
powers vested in it by this Trust Agreement;

         (h)      the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond, debenture, note or other evidence of indebtedness or other paper
or document, unless requested in writing to do so by one or more Holders, but
the Property Trustee may make such further inquiry or investigation into such
facts or matters as it may see fit;

         (i)      the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through its
agents or attorneys, provided that the Property Trustee shall be responsible for
its own negligence or misconduct with respect to selection of any agent or
attorney appointed by it hereunder;

         (j)      whenever in the administration of this Trust Agreement the
Property Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder, the Property
Trustee (i) may request instructions from the Holders (which instructions may
only be given by the Holders of the same proportion in Liquidation Amount of the
Trust Securities as would be entitled to direct the Property Trustee under the
terms of the Trust Securities in respect of such remedy, right or action), (ii)
may refrain from enforcing such remedy or right or taking such other action
until such instructions are received, and (iii) shall be protected in acting in
accordance with such instructions; and

         (k)      except as otherwise expressly provided by this Trust
Agreement, the Property Trustee shall not be under any obligation to take any
action that is discretionary under the provisions of this Trust Agreement.

         (l)      No provision of this Trust Agreement shall be deemed to impose
any duty or obligation on any Issuer Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which such Person shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts, or to exercise any such right, power, duty or obligation. No
permissive power or authority available to any Issuer Trustee shall be construed
to be a duty.

Section 8.4.    Issuer Trustees Not Responsible for Recitals or Issuance of
                Securities.

         The recitals contained herein and in the Trust Securities Certificates
shall be taken as the statements of the Issuer Trust and the Depositor, and the
Issuer Trustees do not assume any responsibility for their correctness. The
Issuer Trustees shall not be accountable for the use or application by the
Depositor of the proceeds of the Debentures.


                                       34


Section 8.5.    Issuer Trustees May Hold Securities.

         Any Issuer Trustee or any other agent of any Issuer Trustee or the
Issuer Trust, in its individual or any other capacity, may become the owner or
pledgee of Trust Securities and, subject to Section 8.8 and Section 8.13, and
except as provided in the definition of the term "Outstanding" in ARTICLE I, may
otherwise deal with the Issuer Trust with the same rights it would have if it
were not Issuer Trustee or such other agent.

Section 8.6.    Compensation; Indemnity; Fees.

         The Depositor agrees:

         (a)      to pay to the Issuer Trustees from time to time such
reasonable compensation for all services rendered by them hereunder as may be
separately agreed by the Depositor and the Issuer Trustees from time to time
(which compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);

         (b)      except as otherwise expressly provided herein, to reimburse
the Issuer Trustees upon request for all reasonable expenses, disbursements and
advances incurred or made by the Issuer Trustees in accordance with any
provision of this Trust Agreement (including the reasonable compensation and the
expenses and disbursements of their agents and counsel), except any such
expense, disbursement or advance as may be attributable to their negligence, bad
faith or willful misconduct; and

         (c)      to the fullest extent permitted by applicable law, to
indemnify and hold harmless (i) each Issuer Trustee, (ii) any Affiliate of any
Issuer Trustee, (iii) any officer, director, shareholder, employee,
representative or agent of any Issuer Trustee, and (iv) any employee or agent of
the Issuer Trust (referred to herein as an "Indemnified Person") from and
against any loss, damage, liability, tax, penalty, expense or claim of any kind
or nature whatsoever incurred by such Indemnified Person by reason of the
creation, operation or dissolution of the Issuer Trust or any act or omission
performed or omitted by such Indemnified Person in good faith on behalf of the
Issuer Trust and in a manner such Indemnified Person reasonably believed to be
within the scope of authority conferred on such Indemnified Person by this Trust
Agreement, except that no Indemnified Person shall be entitled to be indemnified
in respect of any loss, damage or claim incurred by such Indemnified Person by
reason of negligence, bad faith or willful misconduct with respect to such acts
or omissions.

         The provisions of this Section 8.6 shall survive the termination of
this Trust Agreement and the removal or resignation of any Issuer Trustee.

         No Issuer Trustee may claim any Lien on any Trust Property as a result
of any amount due pursuant to this Section 8.6.

         The Depositor and any Issuer Trustee may engage in or possess an
interest in other business ventures of any nature or description, independently
or with others, similar or dissimilar to the business of the Issuer Trust, and
the Issuer Trust and the Holders of Trust Securities shall have no rights by
virtue of this Trust Agreement in and to such independent ventures or the income
or profits derived therefrom, and the pursuit of any such venture, even if
competitive with the business of the Issuer Trust, shall not be deemed wrongful
or improper. Neither the Depositor nor any Issuer Trustee shall be obligated to
present any particular investment or other opportunity to the Issuer Trust even
if such opportunity is of a character that, if presented to the Issuer Trust,
could be taken by the Issuer Trust, and the Depositor and any Issuer Trustee
shall have the right to take for its own account (individually or as a partner
or




                                       35


fiduciary) or to recommend to others any such particular investment or other
opportunity. Any Issuer Trustee may engage or be interested in any financial or
other transaction with the Depositor or any Affiliate of the Depositor, or may
act as depository for, trustee or agent for, or act on any committee or body of
holders of, securities or other obligations of the Depositor or its Affiliates.

Section 8.7.    Corporate Property Trustee Required; Eligibility of Issuer
                Trustees.

         (a)      There shall at all times be a Property Trustee hereunder with
respect to the Trust Securities. The Property Trustee shall be a Person that is
a national, Puerto Rico or state chartered bank and eligible pursuant to the
Trust Indenture Act to act as such and that has a combined capital and surplus
of at least $50,000,000. If any such Person publishes reports of condition at
least annually, pursuant to law or to the requirements of its supervising or
examining authority, then for the purposes of this Section 8.7 and to the extent
permitted by the Trust Indenture Act, the combined capital and surplus of such
Person shall be deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published. If at any time the Property
Trustee with respect to the Trust Securities shall cease to be eligible in
accordance with the provisions of this Section 8.7, it shall resign immediately
in the manner and with the effect hereinafter specified in this ARTICLE VIII. At
the time of appointment, the Property Trustee must have securities rated in one
of the three highest rating categories by a nationally recognized statistical
rating organization.

         (b)      There shall at all times be one or more Administrative
Trustees hereunder with respect to the Trust Securities. Each Administrative
Trustee shall be either a natural person who is at least 21 years of age or a
legal entity that shall act through one or more persons authorized to bind that
entity.

         (c)      There shall at all times be a Delaware Trustee with respect to
the Trust Securities. The Delaware Trustee shall either be (i) a natural person
who is at least 21 years of age and a resident of the State of Delaware, or (ii)
a legal entity with its principal place of business in the State of Delaware and
that otherwise meets the requirements of applicable Delaware law and that shall
act through one or more persons authorized to bind such entity.

Section 8.8.    Conflicting Interests.

         (a)      If the Property Trustee has or shall acquire a conflicting
interest within the meaning of the Trust Indenture Act, the Property Trustee
shall either eliminate such interest or resign, to the extent and in the manner
provided by, and subject to the provisions of, the Trust Indenture Act and this
Trust Agreement.

         (b)      The Guarantee Agreement and the Indenture shall be deemed to
be specifically described in this Trust Agreement for the purposes of clause (i)
of the first proviso contained in Section 310(b) of the Trust Indenture Act.

Section 8.9.    Co-Trustees and Separate Trustee.

         Unless and until a Debenture Event of Default shall have occurred and
be continuing, at any time or times, for the purpose of meeting the legal
requirements of the Trust Indenture Act or of any jurisdiction in which any part
of the Trust Property may at the time be located, the Holder of Common
Securities and the Administrative Trustees shall have the power to appoint one
or more Persons either to act as co-trustee, jointly with the Property Trustee,
of all or any part of such Trust Property, or to the extent required by law to
act as separate trustee of any such property, in either case with such powers as
may be provided in the instrument of appointment, and to vest in such Person or
Persons


                                       36


in the capacity aforesaid, any property, title, right or power deemed necessary
or desirable, subject to the other provisions of this Section. If a Debenture
Event of Default shall have occurred and be continuing, the Property Trustee
shall have the sole power to so appoint such a co-trustee or separate trustee,
and upon the written request of the Property Trustee, the Depositor and the
Administrative Trustees shall for such purpose join with the Property Trustee in
the execution, delivery, and performance of all instruments and agreements
necessary or proper to appoint, such co-trustee or separate trustee. Any
co-trustee or separate trustee appointed pursuant to this Section shall either
be (i) a natural person who is at least 21 years of age and a resident of the
United States or Puerto Rico, or (ii) a legal entity with its principal place of
business in the United States or Puerto Rico that shall act through one or more
persons authorized to bind such entity.

         Should any written instrument from the Depositor be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right, or power, any and
all such instruments shall, on request, be executed, acknowledged and delivered
by the Depositor.

         Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms,
namely:

         (a)      The Trust Securities shall be executed by one or more
Administrative Trustees, and the Trust Securities shall be delivered by the
Property Trustee, and all rights, powers, duties, and obligations hereunder in
respect of the custody of securities, cash and other personal property held by,
or required to be deposited or pledged with, the Property Trustee specified
hereunder shall be exercised solely by the Property Trustee and not by such
co-trustee or separate trustee.

         (b)      The rights, powers, duties, and obligations hereby conferred
or imposed upon the Property Trustee in respect of any property covered by such
appointment shall be conferred or imposed upon and exercised or performed by the
Property Trustee or by the Property Trustee and such co-trustee or separate
trustee jointly, as shall be provided in the instrument appointing such
co-trustee or separate trustee, except to the extent that under any law of any
jurisdiction in which any particular act is to be performed, the Property
Trustee shall be incompetent or unqualified to perform such act, in which event
such rights, powers, duties and obligations shall be exercised and performed by
such co-trustee or separate trustee.

         (c)      The Property Trustee at any time, by an instrument in writing
executed by it, with the written concurrence of the Depositor, may accept the
resignation of or remove any co-trustee or separate trustee appointed under this
Section 8.9, and, in case a Debenture Event of Default has occurred and is
continuing, the Property Trustee shall have power to accept the resignation of,
or remove, any such co-trustee or separate trustee without the concurrence of
the Depositor. Upon the written request of the Property Trustee, the Depositor
shall join with the Property Trustee in the execution, delivery and performance
of all instruments and agreements necessary or proper to effectuate such
resignation or removal. A successor to any co-trustee or separate trustee so
resigning or removed may be appointed in the manner provided in this Section
8.9.

         (d)      No co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the Property Trustee or
any other trustee hereunder.

         (e)      The Property Trustee shall not be liable by reason of any act
of a co-trustee or separate trustee.


                                       37


         (f)      Any Act of Holders delivered to the Property Trustee shall be
deemed to have been delivered to each such co-trustee and separate trustee.

Section 8.10.   Resignation and Removal; Appointment of Successor.

         No resignation or removal of any Issuer Trustee (the "Relevant
Trustee") and no appointment of a successor Issuer Trustee pursuant to this
ARTICLE VIII shall become effective until the acceptance of appointment by the
successor Issuer Trustee in accordance with the applicable requirements of
Section 8.11.

         Subject to the immediately preceding paragraph, the Relevant Trustee
may resign at any time by giving written notice thereof to the Holders. If the
instrument of acceptance by the successor Issuer Trustee required by Section
8.11 shall not have been delivered to the Relevant Trustee within 60 days after
the giving of such notice of resignation, the Relevant Trustee may petition, at
the expense of the Depositor, in the case of the Property Trustee, any court of
competent jurisdiction for the appointment of a successor Relevant Trustee.

         The Administrative Trustees, or any of them, may be removed at any time
by Act of the Holders of Common Securities delivered to the Relevant Trustee.

         The Property Trustee or the Delaware Trustee, or both of them, may be
removed by Act of the Holders of at least a Majority in Liquidation Amount of
the Capital Securities, delivered to the Relevant Trustee (in its individual
capacity and, in the case of the Property Trustee, on behalf of the Issuer
Trust) (i) for cause (including upon the occurrence of an Event of Default
described in subparagraph (d) of the definition thereof with respect to the
Relevant Trustee), or (ii) at any time if a Debenture Event of Default shall
have occurred and be continuing. Unless and until a Debenture Event of Default
shall have occurred and be continuing, the Property Trustee or the Delaware
Trustee, or both of them, may be removed at any time by Act of the Holders of
the Common Securities.

         If any Issuer Trustee shall resign, be removed or become incapable of
acting as an Issuer Trustee, or if a vacancy shall occur in the office of any
Issuer Trustee for any cause, at any time when no Debenture Event of Default
shall have occurred and be continuing, the Holders of the Common Securities, by
Act of such Holders delivered to the Relevant Trustee, shall promptly appoint
such successor Issuer Trustee or Trustees, and the Relevant Trustee shall comply
with the applicable requirements of Section 8.11. If the Property Trustee or
Delaware Trustee shall resign, be removed or become incapable of acting as
Issuer Trustee, as the case may be and a Debenture Event of Default shall have
occurred and be continuing, the Holders of the Capital Securities, by Act of the
Holders of not less than 25% in aggregate Liquidation Amount of the Capital
Securities then Outstanding delivered to such Relevant Trustee, may appoint a
successor Relevant Trustee or Trustees, and such successor Issuer Trustee shall
comply with the applicable requirements of Section 8.11. If no successor
Relevant Trustee shall have been so appointed by the Holders of the Common
Securities or Capital Securities, as the case may be, and accepted appointment
in the manner required by Section 8.11, any Holder, on behalf of such Holder and
all others similarly situated, or any other Issuer Trustee, may petition any
court of competent jurisdiction for the appointment of a successor Relevant
Trustee.

         The Property Trustee shall give notice of each resignation and each
removal of an Issuer Trustee and each appointment of a successor Issuer Trustee
to all Holders in the manner provided in Section 10.8 and shall give notice to
the Depositor and to the Administrative Trustees. Each notice shall include the
name of the successor Relevant Trustee and the address of its Corporate Trust
Office if it is the Property Trustee.


                                       38


         Notwithstanding the foregoing or any other provision of this Trust
Agreement, if any Delaware Trustee who is a natural person dies or becomes, in
the opinion of the Holders of the Common Securities, incompetent or
incapacitated, the vacancy created by such death, incompetence or incapacity may
be filled by the Property Trustee following the procedures regarding expenses
and charges set forth above (with the successor being a Person who satisfies the
eligibility requirement for the Delaware Trustee set forth in Section 8.7).

Section 8.11.   Acceptance of Appointment by Successor.

         In case of the appointment hereunder of a successor Relevant Trustee,
the retiring Relevant Trustee and each successor Relevant Trustee with respect
to the Trust Securities shall execute and deliver an amendment hereto wherein
each successor Relevant Trustee shall accept such appointment and which (a)
shall contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Relevant Trustee all the rights,
powers, trusts and duties of the retiring Relevant Trustee with respect to the
Trust Securities and the Issuer Trust, and (b) shall add to or change any of the
provisions of this Trust Agreement as shall be necessary to provide for or
facilitate the administration of the Issuer Trust by more than one Relevant
Trustee, it being understood that nothing herein or in such amendment shall
constitute such Relevant Trustees co-trustees and upon the execution and
delivery of such amendment the resignation or removal of the retiring Relevant
Trustee shall become effective to the extent provided therein and each such
successor Relevant Trustee, without any further act, deed or conveyance, other
than the filing of an amendment to the Certificate of Trust to the extent
required under the Delaware Statutory Trust Act, shall become vested with all
the rights, powers, trusts and duties of the retiring Relevant Trustee; but, on
request of the Issuer Trust or any successor Relevant Trustee such retiring
Relevant Trustee shall duly assign, transfer and deliver to such successor
Relevant Trustee all Trust Property, all proceeds thereof and money held by such
retiring Relevant Trustee hereunder with respect to the Trust Securities and the
Issuer Trust.

         Upon request of any such successor Relevant Trustee, the Issuer Trust
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Relevant Trustee all such rights, powers and
trusts referred to in the preceding paragraph.

         No successor Relevant Trustee shall accept its appointment unless at
the time of such acceptance such successor Relevant Trustee shall be qualified
and eligible under this ARTICLE VIII.

Section 8.12.   Merger, Conversion, Consolidation or Succession to Business.

         Any Person into which the Property Trustee or the Delaware Trustee may
be merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which such Relevant
Trustee shall be a party, or any Person, succeeding to all or substantially all
the corporate trust business of such Relevant Trustee, shall be the successor of
such Relevant Trustee hereunder, provided that such Person shall be otherwise
qualified and eligible under this ARTICLE VIII, without the execution or filing
of any paper or any further act on the part of any of the parties hereto, other
than the filing of an amendment to the Certificate of Trust to the extent
required under the Delaware Statutory Trust Act.

Section 8.13.   Preferential Collection of Claims Against Depositor or Issuer
                Trust.

         If and when the Property Trustee shall be or become a creditor of the
Depositor or the Issuer Trust (or any other obligor upon the Capital
Securities),


                                       39


the Property Trustee shall be subject to the provisions of the Trust Indenture
Act regarding the collection of claims against the Depositor or the Issuer Trust
(or any such other obligor).

Section 8.14.   Trustee May File Proofs of Claim.

         In case of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other similar judicial
proceeding relative to the Issuer Trust or any other obligor upon the Trust
Securities or the property of the Issuer Trust or of such other obligor or their
creditors, the Property Trustee (irrespective of whether any Distributions on
the Trust Securities shall then be due and payable and irrespective of whether
the Property Trustee shall have made any demand on the Issuer Trust for the
payment of any past due Distributions) shall be entitled and empowered, to the
fullest extent permitted by law, by intervention in such proceeding or
otherwise:

         (a)      to file and prove a claim for the whole amount of any
Distributions owing and unpaid in respect of the Trust Securities and to file
such other papers or documents as may be necessary or advisable in order to have
the claims of the Property Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee, its
agents and counsel) and of the Holders allowed in such judicial proceeding, and

         (b)      to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Holder to make such
payments to the Property Trustee and, in the event the Property Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Property Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Property Trustee, its agents and counsel, and
any other amounts due the Property Trustee.

         (c)      Nothing herein contained shall be deemed to authorize the
Property Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement adjustment or compensation
affecting the Trust Securities or the rights of any Holder thereof or to
authorize the Property Trustee to vote in respect of the claim of any Holder in
any such proceeding.

Section 8.15.   Reports by Property Trustee.

         (a)      Not later than February 28 of each year commencing with 2005,
the Property Trustee shall transmit to all Holders in accordance with Section
10.8, and to the Depositor, a brief report dated as of the immediately preceding
December 31 with respect to:

                  (i)      its eligibility under Section 8.7 or, in lieu
         thereof, if to the best of its knowledge it has continued to be
         eligible under said Section, a written statement to such effect;

                  (ii)     a statement that the Property Trustee has complied
         with all of its obligations under this Trust Agreement during the
         twelve-month period (or, in the case of the initial report, the period
         since the Closing Date) ending with such December 31 or, if the
         Property Trustee has not complied in any material respect with such
         obligations, a description of such noncompliance; and

                  (iii)    any change in the property and funds in its
         possession as Property Trustee since the date of its last report and
         any action taken by the Property Trustee in the performance of its
         duties hereunder which


                                       40


         it has not previously reported and which in its opinion materially
         affects the Trust Securities.

         (b)      In addition, the Property Trustee shall transmit to Holders
such reports concerning the Property Trustee and its actions under this Trust
Agreement as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant thereto.

         (c)      A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Property Trustee with each national
stock exchange, the Nasdaq National Market or such other exchange, interdealer
quotation system or self-regulatory organization upon which the Trust Securities
are listed or traded, with the Commission and with the Depositor.

Section 8.16.   Reports to the Property Trustee.

         Each of the Depositor and the Administrative Trustees shall provide to
the Property Trustee such documents, reports and information as required by
Section 314 of the Trust Indenture Act (if any) and the compliance certificate
required by Section 314(a) of the Trust Indenture Act in the form, in the manner
and at the times required by Section 314 of the Trust Indenture Act. The
Depositor and the Administrative Trustees shall annually file with the Property
Trustee a certificate specifying whether such Person is in compliance with all
of the terms and covenants applicable to such Person hereunder.

Section 8.17.   Evidence of Compliance with Conditions Precedent.

         Each of the Depositor and the Administrative Trustees shall provide to
the Property Trustee such evidence of compliance with any conditions precedent,
if any, provided for in this Trust Agreement that relate to any of the matters
set forth in Section 314(c) of the Trust Indenture Act. Any certificate or
opinion required to be given by an officer pursuant to Section 314(c)(1) of the
Trust Indenture Act shall be given in the form of an Officers' Certificate.

Section 8.18.   Number of Issuer Trustees.

         (a)      The number of Issuer Trustees shall be four, unless the
Property Trustee also acts as the Delaware Trustee, in which case the number of
Issuer Trustees may be three.

         (b)      If an Issuer Trustee ceases to hold office for any reason, a
vacancy shall occur. The vacancy shall be filled with an Issuer Trustee
appointed in accordance with Section 8.10.

         (c)      The death, resignation, retirement, removal, bankruptcy,
incompetence or incapacity to perform the duties of an Issuer Trustee shall not
operate to annul or dissolve the Issuer Trust.

Section 8.19.   Delegation of Power.

         (a)      Any Administrative Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the purpose of executing any documents
contemplated in Section 2.7(a) or making any governmental filing; and

         (b)      The Administrative Trustees shall have power to delegate from
time to time to such of their number the doing of such things and the execution
of such instruments either in the name of the Issuer Trust or the names of the
Administrative Trustees or otherwise as the Administrative Trustees may deem
expedient, to the extent such delegation is not prohibited by applicable law or
contrary to the provisions of this Trust Agreement.


                                       41


                                   ARTICLE IX
                       DISSOLUTION, LIQUIDATION AND MERGER

Section 9.1.    Dissolution Upon Expiration Date.

         Unless earlier dissolved, the Issuer Trust shall automatically
dissolve, and its affairs be wound up, on December 1, 2035 (the "Expiration
Date"), following the distribution of the Trust Property in accordance with
Section 9.4.

Section 9.2.    Early Dissolution.

         The first to occur of any of the following events is an "Early
Dissolution Event":

         (a)      the occurrence of a Depositor Bankruptcy Event in respect of,
or the dissolution or liquidation of, the Depositor, in its capacity as the
Holder of the Common Securities, unless the Depositor shall transfer the Common
Securities as provided by Section 5.10, in which case this provision shall refer
instead to any such successor Holder of the Common Securities;

         (b)      the written direction to the Property Trustee from all of the
Holders of the Common Securities at any time to dissolve the Issuer Trust and to
distribute the Debentures to Holders in exchange for the Capital Securities
(which direction is optional and wholly within the discretion of the Holders of
the Common Securities);

         (c)      the redemption of all of the Capital Securities in connection
with the redemption or repayment of all the Debentures; and

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

Section 9.3.    Dissolution.

         (a)      The respective obligations and responsibilities of the Issuer
Trustees and the Issuer Trust created and continued hereby shall terminate upon
the latest to occur of the following: (a) the distribution by the Property
Trustee to Holders of all amounts required to be distributed hereunder upon the
liquidation of the Issuer Trust pursuant to Section 9.4, or upon the redemption
of all of the Trust Securities pursuant to Section 4.2; (b) the payment of any
expenses owed by the Issuer Trust; and (c) the discharge of all administrative
duties of the Administrative Trustees, including the performance of any tax
reporting obligations with respect to the Issuer Trust or the Holders.

         (b)      As soon as practicable after the occurrence of an event
referred to in clause (a) above, and after satisfaction of liabilities to
creditors of the trust as required by applicable law, including Section 3808 of
the Statutory Trust Act, the Delaware Trustee, when notified in writing of the
completion of the winding up of the Trust in accordance with the Statutory Trust
Act, shall terminate the Trust by filing, at the expense of the Depositor, a
certificate of cancellation with the Secretary of State of the State of
Delaware.

Section 9.4.    Liquidation.

         (a)      If an Early Dissolution Event specified in clause (a), (b) or
(d) of Section 9.2 occurs or upon the Expiration Date, the Issuer Trust shall be
liquidated by the Issuer Trustees as expeditiously as the Issuer Trustees
determine to be possible by distributing, after satisfaction of liabilities to
creditors of the Issuer Trust as provided by applicable law, to each Holder a


                                       42


Like Amount of Debentures, subject to Section 9.4(d). Notice of liquidation
shall be given by the Property Trustee by first-class mail, postage prepaid,
mailed not less than 30 nor more than 60 days prior to the Liquidation Date to
each Holder of Trust Securities at such Holder's address appearing in the
Securities Register. All such notices of liquidation shall:

                  (i)      state the CUSIP Number of the Trust
         Securities;

                  (ii)     state the Liquidation Date;

                  (iii)    state that from and after the Liquidation Date, the
         Trust Securities will no longer be deemed to be Outstanding and any
         Trust Securities Certificates not surrendered for exchange will be
         deemed to represent a Like Amount of Debentures, or if Section 9.4(d)
         applies, a right to receive a Liquidating Distribution; and

                  (iv)     provide such information with respect to the
         mechanics by which Holders may exchange Trust Securities Certificates
         for Debentures, or if Section 9.4(d) applies, receive a Liquidation
         Distribution, as the Property Trustee (after consultation with the
         Administrative Trustees) shall deem appropriate.

         (b)      Except where Section 9.2(c) or Section 9.4(d) applies, in
order to effect the liquidation of the Issuer Trust and distribution of the
Debentures to Holders, the Property Trustee, either itself acting as exchange
agent or through the appointment of a separate exchange agent, shall establish a
record date for such distribution (which shall be not more than 30 days prior to
the Liquidation Date) and, establish such procedures as it shall deem
appropriate to effect the distribution of Debentures in exchange for the
Outstanding Trust Securities Certificates.

         (c)      Except where Section 9.2(c) or Section 9.4(d) applies, after
the Liquidation Date, (i) the Trust Securities will no longer be deemed to be
Outstanding, (ii) certificates representing a Like Amount of Debentures will be
issued to Holders of Trust Securities Certificates, upon surrender of such
Certificates to the exchange agent for exchange, (iii) the Depositor shall use
its best efforts to have the Debentures listed on a national stock exchange, the
Nasdaq National Market or such other exchange, interdealer quotation system or
self-regulatory organization as the Capital Securities are then listed, (iv) any
Trust Securities Certificates not so surrendered for exchange will be deemed to
represent a Like Amount of Debentures bearing accrued and unpaid interest in an
amount equal to the accumulated and unpaid Distributions on such Trust
Securities Certificates until such certificates are so surrendered (and until
such certificates are so surrendered, no payments of interest or principal will
be made to Holders of Trust Securities Certificates with respect to such
Debentures) and (v) all rights of Holders holding Trust Securities will cease,
except the right of such Holders to receive Debentures upon surrender of Trust
Securities Certificates.

         (d)      If, notwithstanding the other provisions of this Section 9.4,
whether because of an order for dissolution entered by a court of competent
jurisdiction or otherwise, distribution of the Debentures in the manner provided
herein is determined by the Property Trustee not to be practical, or if an Early
Dissolution Event specified in Section 9.2(c) occurs, the Trust Property shall
be liquidated, and the Issuer Trust shall be dissolved and its affairs wound-up,
by the Property Trustee in such manner as the Property Trustee determines. In
such event, on the date of the dissolution, winding-up or other termination of
the Issuer Trust, Holders will be entitled to receive out of the assets of the
Issuer Trust available for distribution to Holders, after satisfaction of
liabilities to creditors of the Issuer Trust as provided by applicable law, an
amount equal to the Liquidation Amount per Trust Security plus accumulated and
unpaid


                                       43


Distributions thereon to the date of payment (such amount being the "Liquidation
Distribution"). If, upon any such dissolution, winding up or termination, the
Liquidation Distribution can be paid only in part because the Issuer Trust has
insufficient assets available to pay in full the aggregate Liquidation
Distribution, then, subject to the next succeeding sentence, the amounts payable
by the Issuer Trust on the Trust Securities shall be paid on a pro rata basis
(based upon Liquidation Amounts). The Holders of the Common Securities will be
entitled to receive Liquidation Distributions upon any such dissolution,
winding-up or termination pro rata (determined as aforesaid) with Holders of
Capital Securities, except that, if a Debenture Event of Default specified in
Section 501(1) or 501(2) of the Indenture has occurred and is continuing, the
Capital Securities shall have a priority over the Common Securities as provided
in Section 4.3.

Section 9.5.    Mergers, Consolidations, Amalgamations or Replacements of Issuer
                Trust.

         The Issuer Trust may not merge with or into, consolidate, amalgamate,
or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except pursuant
to this Section 9.5. At the request of the Holders of the Common Securities,
with the consent of the Administrative Trustees, but without the consent of the
Holders of the Capital Securities, the Property Trustee or the Delaware Trustee,
the Issuer Trust may merge with or into, consolidate, amalgamate, or be replaced
by or convey, transfer or lease its properties and assets substantially as an
entirety to a trust organized as such under the laws of any state or Puerto
Rico; provided, that (i) such successor entity either (a) expressly assumes all
of the obligations of the Issuer Trust with respect to the Capital Securities,
or (b) substitutes for the Capital Securities other securities having
substantially the same terms as the Capital Securities (the "Successor
Securities") so long as the Successor Securities have the same priority as the
Capital Securities with respect to distributions and payments upon liquidation,
redemption and otherwise, (ii) a trustee of such successor entity possessing the
same powers and duties as the Property Trustee is appointed to hold the
Debentures, (iii) the Successor Securities are listed, or any Successor
Securities will be listed upon notice of issuance, on a national securities
exchange, the Nasdaq National Market or such other exchange, interdealer
quotation system of self-regulatory organization as the Capital Securities are
then listed, if any, (iv) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not cause the Capital Securities (including
any Successor Securities) to be downgraded by any nationally recognized
statistical rating organization, (v) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the Capital Securities (including
any Successor Securities) in any material respect, (vi) such successor entity
has a purpose substantially identical to that of the Issuer Trust, (vii) prior
to such merger, consolidation, amalgamation, replacement, conveyance, transfer
or lease, the Depositor has received an Opinion of Counsel to the effect that
(a) such merger, consolidation, amalgamation, replacement, conveyance, transfer
or lease does not adversely affect the rights, preferences and privileges of the
Holders of the Capital Securities (including any Successor Securities) in any
material respect, and (b) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Issuer Trust nor such
successor entity will be required to register as an "investment company" under
the Investment Company Act, and (viii) the Depositor or its permitted transferee
owns all of the Common Securities of such successor entity and guarantees the
obligations of such successor entity under the Successor Securities at least to
the extent provided by the Guarantee Agreement. Notwithstanding the foregoing,
the Issuer Trust shall not, except with the consent of Holders of all of the
Capital Securities, consolidate, amalgamate, merge with or into, or be replaced
by or convey, transfer or lease its properties and assets substantially as an
entirety to any other entity or permit any other


                                       44


entity to consolidate, amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger, replacement, conveyance, transfer or lease
would cause the Issuer Trust or the successor entity to be taxable as a
corporation or classified as other than a grantor trust for United States
federal or Puerto Rico income tax purposes.

                                   ARTICLE X
                            MISCELLANEOUS PROVISIONS

Section 10.1.   Limitation of Rights of Holders.

         Except as set forth in Section 9.2, the death or incapacity of any
person having an interest, beneficial or otherwise, in Trust Securities shall
not operate to terminate this Trust Agreement, nor entitle the legal
representatives or heirs of such person or any Holder for such person, to claim
an accounting, take any action or bring any proceeding in any court for a
partition or winding up of the arrangements contemplated hereby, nor otherwise
affect the rights, obligations and liabilities of the parties hereto or any of
them.

Section 10.2.   Amendment.

         (a)      This Trust Agreement may be amended from time to time by the
Administrative Trustees and the Holders of all of the Common Securities, without
the consent of any Holder of the Capital Securities, (i) to cure any ambiguity,
correct or supplement any provision herein that may be inconsistent with any
other provision herein, or to make any other provisions with respect to matters
or questions arising under this Trust Agreement, which shall not be inconsistent
with the other provisions of this Trust Agreement, or (ii) to modify, eliminate
or add to any provisions of this Trust Agreement to such extent as shall be
necessary to ensure that the Issuer Trust will not be taxable as a corporation
or classified as other than a grantor trust for United States federal or Puerto
Rico income tax purposes at all times that any Trust Securities are outstanding
or to ensure that the Issuer Trust will not be required to register as an
"investment company" under the Investment Company Act; provided, however, that
in the case of either clause (i) or (ii), such action shall not adversely affect
in any material respect the interests of any Holder.

         (b)      Except as provided in Section 10.2(c), any provision of this
Trust Agreement may be amended by the Administrative Trustees, the Property
Trustee, and the Holders of all of the Common Securities and with (i) the
consent of Holders of at least a Majority in Liquidation Amount of the Capital
Securities, and (ii) receipt by the Issuer Trustees of an Opinion of Counsel to
the effect that such amendment or the exercise of any power granted to the
Issuer Trustees in accordance with such amendment will not affect the Trust's
status as a grantor trust or cause the Issuer Trust to be taxable as a
corporation or as other than a grantor trust for United States Federal or Puerto
Rico income tax purposes or affect the Issuer Trust's exemption from status as
an "investment company" under the Investment Company Act.

         (c)      In addition to and notwithstanding any other provision in this
Trust Agreement, without the consent of each affected Holder (such consent being
obtained in accordance with Section 6.3 or Section 6.6 hereof), this Trust
Agreement may not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely affect the amount of
any Distribution required to be made in respect of the Trust Securities as of a
specified date, or (ii) restrict the right of a Holder to institute suit for the
enforcement of any such payment on or after such date; and notwithstanding any
other provision herein, without the unanimous consent of the Holders (such
consent being obtained in accordance with Section 6.3 or Section 6.6 hereof),
this Section 10.2(c) may not be amended.


                                       45


         (d)      Notwithstanding any other provisions of this Trust Agreement,
no Issuer Trustee shall enter into or consent to any amendment to this Trust
Agreement that would cause the Issuer Trust to fail or cease to qualify for the
exemption from status as an "investment company" under the Investment Company
Act or to be taxable as a corporation or to be classified as other than a
grantor trust for United States federal or Puerto Rico income tax purposes.

         (e)      Notwithstanding anything in this Trust Agreement to the
contrary, without the consent of the Depositor and the Administrative Trustees,
this Trust Agreement may not be amended in a manner that imposes any additional
obligation on the Depositor or the Administrative Trustees.

         (f)      Notwithstanding anything in this Trust Agreement to the
contrary, without the consent of the Property Trustee, this Trust Agreement may
not be amended in a manner that imposes any additional obligation on the
Property Trustee.

         (g)      Notwithstanding anything in this Trust Agreement to the
contrary, without the consent of the Delaware Trustee, this Trust Agreement may
not be amended in a manner that imposes any additional obligation on the
Delaware Trustee.

         (h)      In the event that any amendment to this Trust Agreement is
made, the Administrative Trustees or the Property Trustee shall promptly provide
to the Depositor a copy of such amendment.

         (i)      Neither the Property Trustee nor the Delaware Trustee shall be
required to enter into any amendment to this Trust Agreement that affects its
own rights, duties or immunities under this Trust Agreement. The Property
Trustee shall be entitled to receive an Opinion of Counsel and an Officers'
Certificate stating that any amendment to this Trust Agreement is in compliance
with this Trust Agreement.

Section 10.3.   Separability.

         In case any provision in this Trust Agreement or in the Trust
Securities Certificates shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

Section 10.4.   Governing Law.

         THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE
HOLDERS, THE ISSUER TRUST, THE DEPOSITOR, AND THE ISSUER TRUSTEES WITH RESPECT
TO THIS TRUST AGREEMENT AND THE TRUST SECURITIES SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE WITHOUT
REFERENCE TO ITS CONFLICTS OF LAWS PROVISIONS.

Section 10.5.   Payments Due on Non-Business Day.

         If the date fixed for any payment on any Trust Security shall be a day
that is not a Business Day, then such payment need not be made on such date but
may be made on the next succeeding day that is a Business Day, with the same
force and effect as though made on the date fixed for such payment, and no
Distributions shall accumulate on such unpaid amount for the period after such
date.

Section 10.6.   Successors.

         This Trust Agreement shall be binding upon and shall inure to the
benefit of any successor to the Depositor, the Issuer Trust, and any Issuer


                                       46


Trustee, including any successor by operation of law. Except in connection with
a consolidation, merger or sale involving the Depositor that is permitted under
Article Eight of the Indenture and pursuant to which the assignee agrees in
writing to perform the Depositor's obligations hereunder, the Depositor shall
not assign its obligations hereunder.

Section 10.7.   Headings.

         The Article and Section headings are for convenience only and shall not
affect the construction of this Trust Agreement.

Section 10.8.   Reports, Notices and Demands.

         Any report, notice, demand or other communication that by any provision
of this Trust Agreement is required or permitted to be given or served to or
upon any Holder or the Depositor may be given or served in writing by deposit
thereof, first-class postage prepaid, in the United States mail, hand delivery
or facsimile transmission, in each case, addressed, (a) in the case of a Holder
of Capital Securities, to such Holder as such Holder's name and address may
appear on the Securities Register; and (b) in the case of the Holder of the
Common Securities or the Depositor, to Popular, Inc., 209 Munoz Rivera Avenue,
San Juan, Puerto Rico 00918, Attention: Principal Financial Officer, or to such
other address as may be specified in a written notice by the Holder of the
Common Securities or the Depositor, as the case may be, to the Property Trustee.
Such notice, demand or other communication to or upon a Holder shall be deemed
to have been sufficiently given or made, for all purposes, upon hand delivery,
mailing or transmission. Such notice, demand or other communication to or upon
the Depositor shall be deemed to have been sufficiently given or made only upon
actual receipt of the writing by the Depositor.

         Any notice, demand or other communication that by any provision of this
Trust Agreement is required or permitted to be given or served to or upon the
Issuer Trust, the Property Trustee, the Delaware Trustee, the Administrative
Trustees or the Issuer Trust shall be given in writing addressed to such Person
as follows: (a) with respect to the Property Trustee, to J.P. Morgan Trust
Company, National Association, _______________________________________________
___________________, Attention: ________________________________________; (b)
with respect to the Delaware Trustee, to Chase Manhattan Bank USA, National
Association, _________________________________________________________________;
(c) with respect to the Administrative Trustees, to them at c/o Popular, Inc.,
Popular Center Building, 209 Munoz Rivera Avenue, Hato Rey, Puerto Rico 00918,
marked "Attention: Administrative Trustees of Popular Capital Trust II"; and (d)
with respect to the Issuer Trust, to its principal office specified in Section
2.2, with a copy to the Property Trustee. Such notice, demand or other
communication to or upon the Issuer Trust, the Property Trustee or the
Administrative Trustees shall be deemed to have been sufficiently given or made
only upon actual receipt of the writing by the Issuer Trust, the Property
Trustee or such Administrative Trustee.

Section 10.9.   Agreement Not to Petition.

         Each of the Issuer Trustees and the Depositor agree for the benefit of
the Holders that, until at least one year and one day after the Issuer Trust has
been dissolved in accordance with ARTICLE IX, they shall not file, or join in
the filing of, a petition against the Issuer Trust under any bankruptcy,
insolvency, reorganization or other similar law (including the United States
Bankruptcy Code) (collectively, "Bankruptcy Laws") or otherwise join in the
commencement of any proceeding against the Issuer Trust under any Bankruptcy
Law. If the Depositor takes action in violation of this Section 10.9, the
Property Trustee agrees, for the benefit of Holders, that at the expense of the
Depositor, it shall file an answer with the bankruptcy court or otherwise
properly contest


                                       47


the filing of such petition by the Depositor against the Issuer Trust or the
commencement of such action and raise the defense that the Depositor has agreed
in writing not to take such action and should be stopped and precluded therefrom
and such other defenses, if any, as counsel for the Issuer Trustee or the Issuer
Trust may assert.

Section 10.10.  Trust Indenture Act; Conflict with Trust Indenture Act.

         (a)      This Trust Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Trust Agreement and shall, to
the extent applicable, be governed by such provisions. Except as otherwise
expressly provided herein, if and to the extent that any provision of this Trust
Agreement limits, qualifies or conflicts with the duties imposed by Sections 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.

         (b)      The Property Trustee shall be the only Issuer Trustee that is
a trustee for the purposes of the Trust Indenture Act.

         (c)      The application of the Trust Indenture Act to this Trust
Agreement shall not affect the nature of the Trust Securities as equity
securities representing undivided beneficial interests in the assets of the
Issuer Trust.

Section 10.11.  Acceptance of Terms of Trust Agreement, Guarantee Agreement and
                Indenture.

         THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN
BY OR ON BEHALF OF A HOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE OR
FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL ACCEPTANCE
BY THE HOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN SUCH TRUST SECURITY
OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT, THE GUARANTEE AGREEMENT
AND THE INDENTURE, AND AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER TERMS
OF THE GUARANTEE AGREEMENT AND THE INDENTURE, AND SHALL CONSTITUTE THE AGREEMENT
OF THE ISSUER TRUST, SUCH HOLDER AND SUCH OTHERS THAT THE TERMS AND PROVISIONS
OF THIS TRUST AGREEMENT SHALL BE BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE
ISSUER TRUST AND SUCH HOLDER AND SUCH OTHERS.

Section 10.12.  Counterparts.

         This Trust Agreement may contain more than one counterpart of the
signature page and this Trust Agreement may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.

                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]


                                       48


         IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Trust Agreement.

                                   POPULAR, INC.



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


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



                                   By: /s/ George Reaves
                                      --------------------------------
                                             Authorized Signature


                                   CHASE MANHATTAN BANK USA,
                                      NATIONAL ASSOCIATION,
                                   as Delaware Trustee


                                   By: /s/ John Cashin
                                      --------------------------------
                                             Authorized Signature


                                   POPULAR CAPITAL TRUST II



                                   By: /s/ Richard Barrios
                                      --------------------------------
                                   Name:     Richard Barrios
                                   Title:    Administrative Trustee


                                       49





                                                                       EXHIBIT A

                              CERTIFICATE OF TRUST


                                    Exh. A-1


                                                                       EXHIBIT B

                      FORM OF COMMON SECURITIES CERTIFICATE

THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT TO THE DEPOSITOR OR AN AFFILIATE OF
THE DEPOSITOR IN COMPLIANCE WITH APPLICABLE LAW AND SECTION 5.10 OF THE TRUST
AGREEMENT

Certificate Number _______                   Number of Common Securities _______

                    Certificate Evidencing Common Securities

                           of Popular Capital Trust II

                            6.125% Common Securities

                  (liquidation amount $25 per Common Security)

         Popular Capital Trust II, a statutory trust created under the laws of
the State of Delaware (the "Issuer Trust"), hereby certifies that Popular, Inc.
(the "Holder") is the registered owner of _______________________ (___________)
Common Securities of the Issuer Trust representing undivided common beneficial
interests in the assets of the Issuer Trust and designated the _____% Common
Securities (liquidation amount $25 per Common Security) (the "Common
Securities"). Except in accordance with the Trust Agreement (as defined below),
the Common Securities are not transferable and any attempted transfer hereof
other than in accordance therewith shall be void. The designations, rights,
privileges, restrictions, preferences and other terms and provisions of the
Common Securities are set forth in, and this certificate and the Common
Securities represented hereby are issued and shall in all respects be subject to
the terms and provisions of, the Amended and Restated Declaration of Trust and
Trust Agreement of the Issuer Trust, dated as of November 30, 2004, as the same
may be amended from time to time (the "Trust Agreement"), among Popular, Inc.,
as Depositor, J.P. Morgan Trust Company, National Association, as Property
Trustee, Chase Manhattan Bank USA, National Association, as Delaware Trustee,
and the Holders of Trust Securities, including the designation of the terms of
the Common Securities as set forth therein. The Issuer Trust will furnish a copy
of the Trust Agreement to the Holder without charge upon written request to the
Issuer Trust at its principal place of business or registered office. Upon
receipt of this certificate, the Holder is bound by the Trust Agreement and is
entitled to the benefits thereunder.

         Terms used but not defined herein have the meanings set forth in the
Trust Agreement.

         IN WITNESS WHEREOF, one of the Administrative Trustees of the Issuer
Trust has executed this certificate this 30th day of November, 2004.

                                               POPULAR CAPITAL TRUST II



                                               By:
                                                    ------------------------
                                               Name:
                                               Title: Administrative Trustee


                                    Exh. B-1


                PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION

         This is one of the Common Securities referred to in the above mentioned
Trust Agreement.

Dated: November 30, 2004                       J.P. MORGAN TRUST COMPANY,
                                                  NATIONAL ASSOCIATION,
                                               as Property Trustee


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


                                    Exh. B-2


                                                                       EXHIBIT C

                  FORM OF GLOBAL CAPITAL SECURITIES CERTIFICATE

         This Capital Securities Certificate is a Book-Entry Capital Securities
Certificate within the meaning of the Trust Agreement hereinafter referred to
and is registered in the name of a Clearing Agency or a nominee of a Clearing
Agency. This Capital Securities Certificate is exchangeable for Capital
Securities Certificates registered in the name of a person other than the
Clearing Agency or its nominee only in the limited circumstances described in
the Trust Agreement and may not be transferred except as a whole by the Clearing
Agency to a nominee of the Clearing Agency or by a nominee of the Clearing
Agency to the Clearing Agency or another nominee of the Clearing Agency, except
in the limited circumstances described in the Trust Agreement.

         Unless this Capital Security Certificate is presented by an authorized
representative of The Depository Trust Company, a New York Corporation ("DTC"),
to Popular Capital Trust II or its agent for registration of transfer, exchange
or payment, and any Capital Security Certificate issued is registered in the
name of Cede & Co. or 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 A PERSON IS WRONGFUL
inasmuch as the registered owner hereof, Cede & Co., has an interest herein.

         NO EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH, A "PLAN"), NO
ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY PLAN'S
INVESTMENT IN THE ENTITY (A "PLAN ASSET ENTITY"), AND NO PERSON INVESTING "PLAN
ASSETS" OF ANY PLAN, MAY ACQUIRE OR HOLD THIS CAPITAL SECURITIES CERTIFICATE OR
ANY INTEREST HEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE
EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION
CLASS EXEMPTION ("PTCE") 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER
APPLICABLE EXEMPTION WITH RESPECT TO SUCH PURCHASE OR HOLDING OR THE
REQUIREMENTS OF U.S. DEPARTMENT OF LABOR REGULATION SECTION 2550.401c-1 ARE
SATISFIED SUCH THAT THE CAPITAL SECURITIES CERTIFICATE HELD BY THE PURCHASER OR
HOLDER DOES NOT CONSTITUTE "PLAN ASSETS" AND, IN THE CASE OF ANY PURCHASER OR
HOLDER RELYING ON ANY EXEMPTION OTHER THAN PTCE 96-23, 95-60, 91-38, 90-1 OR
84-14 OR U.S. DEPARTMENT OF LABOR REGULATION SECTION 2550.401c-1, HAS COMPLIED
WITH ANY REQUEST BY THE DEPOSITOR OR THE ISSUER TRUST FOR AN OPINION OF COUNSEL
OR OTHER EVIDENCE WITH RESPECT TO THE AVAILABILITY OF SUCH EXEMPTION. ANY
PURCHASER OR HOLDER OF THIS CAPITAL SECURITIES CERTIFICATE OR ANY INTEREST
HEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING HEREOF
THAT IT EITHER (A) IS NOT A PLAN OR A PLAN ASSET ENTITY AND IS NOT PURCHASING
SUCH SECURITIES ON BEHALF OF OR WITH "PLAN ASSETS" OF ANY PLAN, OR (B) IS
ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER PTCE 96-23, 95-60, 91-38, 90-1
OR 84-14 OR ANOTHER APPLICABLE EXEMPTION WITH RESPECT TO SUCH PURCHASE OR
HOLDING OR U.S. DEPARTMENT OF LABOR REGULATION SECTION 2550.401c-1.


                                    Exh. C-1


Certificate Number _____                     Number of Capital Securities _____

CUSIP NO.

                    Certificate Evidencing Capital Securities
                           of Popular Capital Trust II
                        6.125% Trust Preferred Securities
                  (liquidation amount $25 per Capital Security)

         Popular Capital Trust II, a statutory trust created under the laws of
the State of Delaware (the "Issuer Trust"), hereby certifies that Cede & Co.
(the "Holder") is the registered owner of _________________________________
(____________) Capital Securities of the Trust representing an undivided
preferred beneficial interest in the assets of the Trust and designated the
Popular Capital Trust II 6.125% Trust Preferred Securities (liquidation amount
$25 per Capital Security) (the "Capital Securities"). The Capital Securities are
transferable on the books and records of the Issuer Trust, in person or by a
duly authorized attorney, upon surrender of this certificate duly endorsed and
in proper form for transfer as provided in the Trust Agreement (as defined
below). The designations, rights, privileges, restrictions, preferences and
other terms and provisions of the Capital Securities are set forth in, and this
certificate and the Capital Securities represented hereby are issued and shall
in all respects be subject to the terms and provisions of, the Amended and
Restated Declaration of Trust and Trust Agreement of the Issuer Trust, dated as
of November 30, 2004, as the same may be amended from time to time (the "Trust
Agreement"), among Popular, Inc., as Depositor, J.P. Morgan Trust Company,
National Association, as Property Trustee, Chase Manhattan Bank USA, National
Association, as Delaware Trustee, and the Holders of Trust Securities, including
the designation of the terms of the Capital Securities as set forth therein. The
Holder is entitled to the benefits of the Guarantee Agreement, dated as of
November 30, 2004, (the "Guarantee Agreement"), by and between Popular, Inc., as
Guarantor, and J.P. Morgan Trust Company, National Association, as Guarantee
Trustee, to the extent provided therein. The Issuer Trust will furnish a copy of
the Issuer Trust Agreement and the Guarantee Agreement to the Holder without
charge upon written request to the Issuer Trust at its principal place of
business or registered office.

         Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.

         IN WITNESS WHEREOF, one of the Administrative Trustees of the Issuer
Trust has executed this certificate this 30th day of November, 2004.

                                                  POPULAR CAPITAL TRUST II



                                                  By:
                                                     --------------------------
                                                  Name:
                                                  Title: Administrative Trustee


                                    Exh. C-2


                PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION

         This is one of the Capital Securities referred to in the above
mentioned Trust Agreement.

Dated: November 30, 2004                          J.P. MORGAN TRUST COMPANY,
                                                    NATIONAL ASSOCIATION,
                                                  as Property Trustee



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


                                   ASSIGNMENT

         FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital
Security to: _____________________________________________ (Insert assignee's
social security or tax identification number) ___________________ (Insert
address and zip code of assignee) and irrevocably appoints
____________________________________________ agent to transfer this Capital
Security Certificate on the books of the Issuer Trust. The agent may substitute
another to act for him or her.

Dated:________________         Signature:___________________________________

                                    (Sign exactly as your name appears on the
                                    other side of this Capital Security
                                    Certificate) The signature(s) should be
                                    guaranteed by an eligible guarantor
                                    institution (banks, stockbrokers, savings
                                    and loan associations and credit unions with
                                    membership in an approved signature
                                    guarantee medallion program), pursuant to
                                    S.E.C. Rule 17Ad-15.


                                    Exh. C-3

EX-4.3

                                                                     EXHIBIT 4.3

                          SECOND SUPPLEMENTAL INDENTURE



                                     between




                                  POPULAR, INC.



                                       and




                           J.P. MORGAN TRUST COMPANY,
                              NATIONAL ASSOCIATION




           =========================================================

                          Dated as of November 30, 2004

           =========================================================




                                TABLE OF CONTENTS



                                                                                                                 Page
                                                                                                                 ----
                                                                                                              

                                                          ARTICLE 1
                                                         DEFINITIONS

         SECTION 1.1 Definition of Terms..........................................................................2

                                                          ARTICLE 2
                                        GENERAL TERMS AND CONDITIONS OF THE DEBENTURES

         SECTION 2.1 Designation and Principal Amount.............................................................3
         SECTION 2.2 Maturity.....................................................................................3
         SECTION 2.3 Form and Payment.............................................................................3
         SECTION 2.4 Global Debenture.............................................................................4
         SECTION 2.5 Interest.....................................................................................5
         SECTION 2.6 Denomination.................................................................................6

                                                          ARTICLE 3
                                                 REDEMPTION OF THE DEBENTURES

         SECTION 3.1 Optional Redemption..........................................................................6
         SECTION 3.2 Redemption Procedures........................................................................6
         SECTION 3.3 No Sinking Fund..............................................................................6

                                                          ARTICLE 4
                                             EXTENSION OF INTEREST PAYMENT PERIOD

         SECTION 4.1 Extension of Interest Payment Period.........................................................6
         SECTION 4.2 Notice of Extension..........................................................................7
         SECTION 4.3 Limitation of Transactions...................................................................7

                                                          ARTICLE 5
                                                           EXPENSES

         SECTION 5.1 Payment of Expenses..........................................................................8
         SECTION 5.2 Payment Upon Resignation or Removal..........................................................9

                                                          ARTICLE 6
                                                 COVENANT TO LIST ON EXCHANGE

         SECTION 6.1 Listing on an Exchange.......................................................................9

                                                          ARTICLE 7
                                                      FORM OF DEBENTURE

         SECTION 7.1 Form of Debenture............................................................................9


                                       i






                                                                                                              
                                                          ARTICLE 8
                                                 ORIGINAL ISSUE OF DEBENTURES

         SECTION 8.1 Original Issue of Debentures.................................................................9

                                                          ARTICLE 9
                                                        MISCELLANEOUS

         SECTION 9.1 Ratification of Indenture...................................................................10
         SECTION 9.2 Trustee Not Responsible for Recitals........................................................10
         SECTION 9.3 Governing Law...............................................................................10
         SECTION 9.4 Separability................................................................................10
         SECTION 9.5 Counterparts................................................................................10


                                       ii




         SECOND SUPPLEMENTAL INDENTURE, dated as of November 30, 2004 (the
"Second Supplemental Indenture"), between Popular, Inc., a Puerto Rico
corporation (hereinafter sometimes called the "Company"), and J.P. Morgan Trust
Company, National Association (formerly known as Bank One Trust Company, N.A.),
a national banking association, as trustee (hereinafter sometimes called the
"Trustee") under the Indenture dated as of October 31, 2003, as supplemented by
a First Supplemental Indenture, dated as of October 31, 2004, between the
Company and the Trustee (the "Indenture").

         WHEREAS, the Company executed and delivered the Indenture to the
Trustee to provide for the future issuance of the Company's unsecured junior
subordinated debt securities to be issued from time to time in one or more
series as might be determined by the Company under the Indenture, in an
unlimited aggregate principal amount which may be authenticated and delivered as
provided in the Indenture;

         WHEREAS, pursuant to the terms of the Indenture, the Company desires to
provide for the establishment of a new series of such securities to be known as
its 6.125% Junior Subordinated Debentures, Series A due December 1, 2034 (the
"Debentures"), the form and substance of such Debentures and the terms,
provisions and conditions thereof to be set forth as provided in the Indenture
and this Second Supplemental Indenture;

         WHEREAS, the Company and Popular Capital Trust II a Delaware statutory
trust (the "Trust"), propose to offer to the public $130,000,000 aggregate
liquidation amount of the Trust's 6.125% Cumulative Monthly Income Trust
Preferred Securities (the "Preferred Securities"), representing preferred
undivided beneficial interests in the assets of the Trust, and the Trust
proposes to invest the proceeds from such offering, together with the proceeds
of the issuance and sale by the Trust to the Company of $4,021,000 aggregate
liquidation amount of its 6.125% Common Securities (the "Common Securities"), in
$134,021,000 aggregate principal amount of the Debentures; and

         WHEREAS, the Company has requested that the Trustee execute and deliver
this Second Supplemental Indenture and all requirements necessary to make this
Second Supplemental Indenture a valid instrument in accordance with its terms,
and to make the Debentures, when executed by the Company, and authenticated and
delivered by the Trustee, the valid obligations of the Company, have been
performed, and the execution and delivery of this Second Supplemental Indenture
has been duly authorized in all respects.

         NOW THEREFORE, in consideration of the purchase and acceptance of the
Debentures by the Holders thereof, and for the purpose of setting forth, as
provided in the Indenture, the form and substance of the Debentures and the
terms, provisions and conditions thereof, the Company covenants and agrees with
the Trustee as follows:




                                    ARTICLE 1
                                   DEFINITIONS

         SECTION 1.1 Definition of Terms.

         Unless the context otherwise requires:

         (a)      a term defined in the Indenture has the same meaning when used
in this Second Supplemental Indenture;

         (b)      a term defined anywhere in this Second Supplemental Indenture
has the same meaning throughout;

         (c)      the singular includes the plural and vice versa;

         (d)      a reference to a Section or Article is to a Section or Article
of this Second Supplemental Indenture;

         (e)      headings are for convenience of reference only and do not
affect interpretation;

         (f)      the following terms have the meanings given to them in the
Declaration: (i) Capital Securities Certificate; (ii) Capital Security; (iii)
Delaware Trustee; (iv) Distributions; (v) Property Trustee; and (vi)
Underwriting Agreement;

         (g)      the following terms have the meanings given to them in this
Section 1.1(g):

         "Compound Interest" shall have the meaning set forth in Section 4.1.

         "Coupon Rate" shall have the meaning set forth in Section 2.5(a).

         "Creditor" shall have the meaning set forth in Section 5.1.

         "Declaration" means the Amended and Restated Declaration of Trust and
Trust Agreement of Popular Capital Trust II, a Delaware statutory trust, dated
as of November 30, 2004.

         "Deferred Interest" shall have the meaning set forth in Section 4.1.

         "Dissolution Event" means the dissolution of the Trust and distribution
of the Debentures held by the Property Trustee pro rata to the holders of the
Trust Securities in liquidation of such holders' interests in the Trust in
accordance with the Declaration, such event to occur at the option of the
Company at any time upon the terms and conditions set forth in the Declaration.

         "Extended Interest Payment Period" shall have the meaning set forth in
Section 4.1.

         "Global Debenture" shall have the meaning set forth in Section 2.4(a).


                                       2


         "Holder" means any person in whose name at the time a Debenture is
registered on the Security Register.

         "Interest Payment Date" shall have the meaning set forth in Section
2.5(a).

         "Interest Period" means the period beginning on (and including) the
date of issue and ending on (but excluding) the first Interest Payment Date and
each successive period beginning on (and including) the Interest Payment Date
and ending on (but excluding) the next succeeding Interest Payment Date.

         "Non Book-Entry Preferred Securities" shall have the meaning set forth
in Section 2.4(a).

         "Prepayment Price" shall have the meaning set forth in Section 3.1.

         "Special Redemption Event" means a Tax Event, Investment Company Event
or a Capital Treatment Event, as the case may be.

                                   ARTICLE 2
                 GENERAL TERMS AND CONDITIONS OF THE DEBENTURES

         SECTION 2.1 Designation and Principal Amount.

         There is hereby authorized (a) a series of Securities designated as the
"6.125% Junior Subordinated Debentures, Series A due December 1, 2034", in
aggregate principal amount of $134,021,000.

         SECTION 2.2 Maturity.

         The Debentures shall mature on December 1, 2034.

         SECTION 2.3 Form and Payment.

         Except as provided in Section 2.4, the Debentures shall be issued in
fully registered certificated form without interest coupons. Principal and
interest on the Debentures issued in certificated form will be payable, the
transfer of such Debentures will be registrable and such Debentures will be
exchangeable for Debentures bearing identical terms and provisions at the office
or agency of the Trustee in New York, New York; provided, however, that payment
of interest may be made at the option of the Company by check mailed to the
Holder entitled thereto at such address as shall appear in the Security Register
or by wire transfer to an account appropriately designated by the Holder
entitled thereto. Notwithstanding the foregoing, so long as the Holder of any
Debentures is the Property Trustee, the payment of the principal of and interest
(including Compound Interest and Additional Interest, if any) on such Debentures
held by the Property Trustee will be made at such place and to such account as
may be designated by the Property Trustee.


                                       3


         SECTION 2.4 Global Debenture.

         (a)      In connection with a Dissolution Event,

                  (i)      the Debentures in certificated form may be presented
         to the Trustee by the Property Trustee in exchange for a global
         Debenture in an aggregate principal amount equal to the aggregate
         principal amount of all outstanding Debentures (a "Global Debenture"),
         to be registered in the name of the Depositary, or its nominee, and
         delivered by the Trustee to the Depositary for crediting to the
         accounts of its participants pursuant to the instructions of the
         Administrative Trustees. The Company upon any such presentation shall
         execute a Global Debenture in such aggregate principal amount and
         deliver the same to the Trustee for authentication and delivery in
         accordance with the Indenture and this Second Supplemental Indenture.
         Payments on the Debentures issued as a Global Debenture will be made to
         the Depositary; and

                  (ii)     if any Capital Securities are held in non book-entry
         certificated form ("Non Book-Entry Capital Securities"), the Debentures
         in certificated form may be presented to the Trustee by the Property
         Trustee and any Capital Security Certificate which represents Non
         Book-Entry Capital Securities will be deemed to represent beneficial
         interests in Debentures presented to the Trustee by the Property
         Trustee having an aggregate principal amount equal to the aggregate
         liquidation amount of the Non Book-Entry Capital Securities until such
         Capital Security Certificates are presented to the Security registrar
         for transfer or reissuance, at which time such Non Book-Entry Capital
         Security Certificates will be canceled and a Debenture, registered in
         the name of the holder of the Capital Security Certificate or the
         transferee of the holder of such Capital Security Certificate, as the
         case may be, with an aggregate principal amount equal to the aggregate
         liquidation amount of the Capital Security Certificate canceled, will
         be executed by the Company and delivered to the Trustee for
         authentication and delivery in accordance with the Indenture and this
         Second Supplemental Indenture. On issue of such Debentures, Debentures
         with an equivalent aggregate principal amount that were presented by
         the Property Trustee to the Trustee will be deemed to have been
         canceled.

         (b)      A Global Debenture may be transferred, in whole but not in
part, only by the Depositary to another nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the
Depositary, or to a successor Depositary selected or approved by the Company or
to a nominee of such successor Depositary. The Depositary shall initially be The
Depository Trust Company, New York, New York.

         (c)      Except as otherwise provided in or pursuant to this Second
Supplemental Indenture, a Global Debenture shall be exchangeable for Debentures
in definitive registered form only if (i) the Depositary notifies the Company
that it is unwilling or unable to continue as Depositary and a successor
Depositary is not appointed by the Company within 90 days of the date the
Company is so informed in writing or becomes aware of such condition, (ii) the
Depository ceases to be registered as a "clearing agency" under the Securities
Exchange Act of 1934, as amended, (iii) an Event of Default, as defined in the
Indenture, has occurred and is continuing with respect to the Debentures, or
(iv) the Company, in its sole discretion determines that such Global Debenture
shall be exchangeable into definitive registered form. Upon the


                                       4


occurrence of any of (i) through (iv) above, the Company shall execute, and,
subject to Article II of the Indenture, the Trustee, upon written notice from
the Company, shall authenticate and deliver the Debentures in definitive
registered form without coupons, in authorized denominations, and in an
aggregate principal amount equal to the principal amount of the Global Debenture
in exchange for such Global Debenture. In the event the Company determines that
the Debentures shall no longer be represented by a Global Debenture pursuant to
clause (iv) above, the Company shall execute, and, subject to Section 305 of the
Indenture, the Trustee, upon receipt of an Officers' Certificate evidencing such
determination by the Company, shall authenticate and deliver the Debentures in
definitive registered form without coupons, in authorized denominations, and in
an aggregate principal amount equal to the principal amount of the Global
Debenture in exchange for such Global Debenture. Upon the exchange of the Global
Debenture for such Debentures in definitive registered form without coupons, in
authorized denominations, the Global Debenture shall be canceled by the Trustee.
Such Debentures in definitive registered form issued in exchange for the Global
Debenture shall be registered in such names and in such authorized denominations
as the Depositary, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee shall deliver
such Debt Securities to the Depositary for delivery to the Persons in whose
names such Debt Securities are so registered.

         SECTION 2.5 Interest.

         (a)      Each Debenture will bear interest at the rate of 6.125% per
annum (the "Coupon Rate") from November 30, 2004 until the principal thereof
becomes due and payable, and on any overdue principal and, to the extent that
payment of such interest is enforceable under applicable law, on any overdue
installment of interest at the Coupon Rate, compounded monthly, payable monthly
in arrears on the first day of each month of each year (each, an "Interest
Payment Date"), commencing on January 1, 2005, to the Person in whose name such
Debenture or any predecessor Debenture is registered at the close of business on
the relevant record date, which will be, as long as the Capital Securities
remain in book-entry form (or if no Capital Securities remain outstanding, as
long as the Debentures remain in book-entry form), one Business Day prior to the
relevant Interest Payment Date and, in the event the Capital Securities are not
in book-entry form (or if no Capital Securities remain outstanding, in the event
the Debentures are not in book-entry form), the 15th day of the month next
preceding each Interest Payment Date, except as otherwise provided pursuant to
the provisions of Article IV hereof.

         (b)      The amount of interest payable for any Interest Period will be
computed on the basis of a 360-day year of twelve 30-day months. Except as
provided in the following sentence, the amount of interest payable for any
Interest Period shorter than a full monthly period for which interest is
computed, will be computed on the basis of the actual number of days elapsed per
30-day month. In the event that any date on which interest is payable on the
Debentures is not a Business Day, then payment of interest payable on such date
will be made on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay), except that, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on the date that such interest otherwise would have been
payable.


                                       5


         SECTION 2.6 Denomination.

         The Debentures shall be issued in denominations of $25 and integral
multiples thereof.

                                   ARTICLE 3
                          REDEMPTION OF THE DEBENTURES

         SECTION 3.1 Optional Redemption.

         Subject to any required prior approval of the Primary Federal
Regulator, the Debentures are prepayable prior to the Stated Maturity at the
option of the Company (i) in whole or in part, from time to time, on or after
December 1, 2009 or (ii) at any time prior to December 1, 2009, in whole but not
in part, at any time within 90 days following the occurrence and continuation of
a Special Redemption Event, in either case at a prepayment price (the
"Prepayment Price") equal to 100% of the principal amount thereof, plus accrued
and unpaid interest thereon (including Compound Interest, if any) to the date of
prepayment.

         SECTION 3.2 Redemption Procedures.

         Notice of any redemption will be mailed at least 30 days but not more
than 60 days before the redemption date to each Holder of Debentures to be
prepaid at its registered address. Unless the Company defaults in payment of the
prepayment price, on and after the redemption date interest shall cease to
accrue on such Debentures called for redemption. If the Debentures are only
partially redeemed pursuant to Section 3.1, the Debentures will be redeemed pro
rata or by lot or by any other method utilized by the Trustee; provided, that if
at the time of redemption the Debentures are registered as a Global Debenture,
the Depositary shall determine, in accordance with its procedures, the principal
amount of such Debentures held by each Depositary participant to be redeemed.
The Prepayment Price shall be paid prior to 12:00 noon, New York time, on the
date of such prepayment or at such earlier time as the Company determines;
provided that the Company shall deposit with the Trustee an amount sufficient to
pay the Prepayment Price by 10:00 a.m., New York time, on the date such
prepayment price is to be paid.

         SECTION 3.3 No Sinking Fund.

         The Debentures are not entitled to the benefit of any sinking fund.

                                   ARTICLE 4
                      EXTENSION OF INTEREST PAYMENT PERIOD

         SECTION 4.1 Extension of Interest Payment Period.

         Provided that no Event of Default has occurred and is continuing, the
Company shall have the right, at any time and from time to time during the term
of the Debentures, to defer payments of interest by extending the interest
payment period of such Debentures for a period not exceeding 60 consecutive
months (the "Extended Interest Payment Period"), during which


                                       6


Extended Interest Payment Period no interest shall be due and payable; provided
that no Extended Interest Payment Period may extend beyond the Stated Maturity
of the principal of the Debentures. To the extent permitted by applicable law,
interest, the payment of which has been deferred because of the extension of the
interest payment period pursuant to this Section 4.1, will bear interest thereon
at the Coupon Rate compounded monthly for each month of the Extended Interest
Payment Period ("Compound Interest"). At the end of the Extended Interest
Payment Period, the Company shall pay all interest accrued and unpaid on the
Debentures, including any Compound Interest (together, "Deferred Interest") that
shall be payable to the Holders in whose names the Debentures are registered in
the Security Register on the record date for the first Interest Payment Date
after the end of the Extended Interest Payment Period. Before the termination of
any Extended Interest Payment Period, the Company may further extend such
period, provided that such period together with all such previous or further
extensions thereof shall not exceed 60 consecutive months, or extend beyond the
Stated Maturity of the Debentures. Upon the termination of any Extended Interest
Payment Period and upon the payment of all Deferred Interest then due, the
Company may commence a new Extended Interest Payment Period, subject to the
foregoing requirements. No interest shall be due and payable during an Extended
Interest Payment Period, except at the end thereof, but the Company may prepay
at any time all or any portion of the interest accrued during an Extended
Interest Payment Period.

         SECTION 4.2 Notice of Extension.

         (a)      If the Property Trustee is the only registered Holder at the
time the Company selects an Extended Interest Payment Period, the Company shall
give written notice to the Property Trustee and the Trustee of its selection of
such Extended Interest Payment Period one Business Day before the earlier of (i)
the next succeeding date on which Distributions on the Trust Securities issued
by the Trust are payable, or (ii) if the Debentures are then listed on the
Nasdaq National Market or other similar self-regulatory organization, the date
the Company is required to give notice of the record date, or the date such
Distributions are payable to such organization or to holders of the Capital
Securities issued by the Trust.

         (b)      If the Property Trustee is not the only Holder at the time the
Company selects an Extended Interest Payment Period, the Company shall give the
Holders of the Debentures notice of its election of such Extended Interest
Payment Period at least ten Business Days before the earlier of (i) the next
succeeding Interest Payment Date, or (ii) if the Debentures are then listed on
the Nasdaq National Market or other similar self-regulatory organization, the
date the Company is required to give notice of the record date or the Interest
Payment Date to such organization or to Holders of the Debentures.

         (c)      The month in which any notice is given pursuant to paragraphs
(a) or (b) of this Section 4.2 shall be counted as one of the 60 months
permitted in the maximum Extended Interest Payment Period permitted under
Section 4.1.

         SECTION 4.3 Limitation of Transactions.

         If the Company shall exercise its right to defer payment of interest as
provided in Section 4.1 and the Extended Interest Payment Period is continuing,
the Company shall be subject to the limitations set forth in Section 1008 of the
Indenture.


                                       7


                                   ARTICLE 5
                                    EXPENSES

         SECTION 5.1 Payment of Expenses.

         In connection with the offering, sale and issuance of the Debentures to
the Property Trustee and in connection with the sale of the Trust Securities by
the Trust, the Company, in its capacity as borrower with respect to the
Debentures, shall:

         (a)      pay all costs and expenses relating to the offering, sale and
issuance of the Trust Securities and the Debentures, including commissions to
the underwriter payable pursuant to the Underwriting Agreement and compensation
of the Trustee under the Indenture in accordance with the provisions of Section
607 of the Indenture;

         (b)      be responsible for and shall pay all debts and obligations
(other than with respect to the Trust Securities) and all costs and expenses of
the Trust (including, but not limited to, costs and expenses relating to the
organization, maintenance and dissolution of the Trust, the fees and expenses
(including reasonable counsel fees and expenses) of the Property Trustee, the
Delaware Trustee and the Administrative Trustees (including any amounts payable
under Article VIII of the Declaration), the costs and expenses relating to the
operation of the Trust, including without limitation, costs and expenses of
accountants, attorneys, statistical or bookkeeping services, expenses for
printing and engraving and computing or accounting equipment, paying agent(s),
exchange rate agent(s), registrar(s), transfer agent(s), duplicating, travel and
telephone and other telecommunications expenses and costs and expenses incurred
in connection with the acquisition, financing, and disposition of Trust assets
and the enforcement by the Property Trustee of the rights of the holders of the
Capital Securities issued by the Trust);

         (c)      be liable for any indemnification obligations arising with
respect to the Declaration; and

         (d)      pay any and all taxes (other than United States and Puerto
Rico withholding taxes attributable to the Trust or its assets) and all
liabilities, costs and expenses with respect to such taxes of the Trust.

         The Company's obligations under this Section 5.1 shall be for the
benefit of, and shall be enforceable by, any Person to whom such debts,
obligations, costs, expenses and taxes are owed (a "Creditor") whether or not
such Creditor has received notice hereof. Any such Creditor may enforce the
Company's obligations under this Section 5.1 directly against the Company and
the Company irrevocably waives any right of remedy to require that any such
Creditor take any action against the Trust or any other Person before proceeding
against the Company. The Company agrees to execute such additional agreements as
may be necessary or desirable in order to give full effect to the provisions of
this Section 5.1.

         The provisions of this Section shall survive the resignation or removal
of the Trustee and the satisfaction and discharge of this Second Supplemental
Indenture.


                                       8


         SECTION 5.2 Payment Upon Resignation or Removal.

         Upon termination of this Second Supplemental Indenture or the Indenture
or the removal or resignation of the Trustee, unless otherwise stated, the
Company shall pay to the Trustee all amounts accrued to the date of such
termination, removal or resignation that are payable pursuant to Section 607 of
the Indenture. Upon termination of the Declaration or the removal or resignation
of the Delaware Trustee or the Property Trustee, as the case may be, pursuant to
Section 8.10 of the Declaration, the Company shall pay to the Delaware Trustee
or the Property Trustee, as the case may be, all amounts accrued to the date of
such termination, removal or resignation.

                                   ARTICLE 6
                          COVENANT TO LIST ON EXCHANGE

         SECTION 6.1 Listing on an Exchange.

         If the Debentures are distributed to the holders of the Securities
issued by the Trust, and the Preferred Securities are then so listed, the
Company will use its commercially reasonable efforts to list such Debentures on
the Nasdaq National Market or with another organization on which the Capital
Securities of the Trust are then listed.

                                   ARTICLE 7
                                FORM OF DEBENTURE

         SECTION 7.1 Form of Debenture.

         The Debentures, and the Trustee's Certificate of Authentication to be
endorsed thereon, are to be substantially in the forms attached hereto as
Exhibit A.

                                   ARTICLE 8
                          ORIGINAL ISSUE OF DEBENTURES

         SECTION 8.1 Original Issue of Debentures.

         Debentures in the aggregate principal amount of $134,021,000, may, upon
execution of this Second Supplemental Indenture or upon any written order of the
Company setting forth the amount therefor, be executed by the Company and
delivered to the Trustee for authentication, and the Trustee shall thereupon
authenticate and deliver said Debentures to or upon the written order of the
Company, signed by its Chairman of the Board, its President, any Senior
Executive Vice President, any Executive Vice President or any Senior Vice
President and its Secretary or any Assistant Secretary, without any further
action by the Company.


                                       9


                                   ARTICLE 9
                                  MISCELLANEOUS

         SECTION 9.1 Ratification of Indenture.

         The Indenture, as supplemented by this Second Supplemental Indenture,
is in all respects ratified and confirmed, and this Second Supplemental
Indenture shall be deemed part of the Indenture in the manner and to the extent
herein and therein provided.

         SECTION 9.2 Trustee Not Responsible for Recitals.

         The recitals herein contained are made by the Company and not by the
Trustee, and the Trustee assumes no responsibility for the correctness thereof.
The Trustee makes no representation as to the validity or sufficiency of this
Second Supplemental Indenture.

         SECTION 9.3 Governing Law.

         This Second Supplemental Indenture and each Debenture shall be deemed
to be a contract made under the internal laws of the Commonwealth of Puerto
Rico, and for all purposes shall be construed in accordance with the laws of
such jurisdiction without regard to conflicts of laws principles.

         SECTION 9.4 Separability.

         In case any one or more of the provisions contained in this Second
Supplemental Indenture or in the Debentures shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Second
Supplemental Indenture or of the Debentures, but this Second Supplemental
Indenture and the Debentures shall be construed as if such invalid or illegal or
unenforceable provision had never been contained herein or therein.

         SECTION 9.5 Counterparts.

         This Second Supplemental Indenture may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute but one and the same instrument.

                [REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]


                                       10


         IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed by their respective officers
thereunto duly authorized as of the day and year first above written.


                                 POPULAR, INC.



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


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



                                 By  /s/ George Reaves
                                    -------------------------------------------
                                 Name: George Reaves
                                 Title: Vice President


                                       11


                                                                       EXHIBIT A

                           (FORM OF FACE OF DEBENTURE)

         The following legend applies if this Security is a Global Security:
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, New York, New York ("DTC"), to the Issuer 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 requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or such
other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.

         This Security is not a deposit or other obligation of a depository
institution and is not insured by the Federal Deposit Insurance Corporation, the
Bank Insurance Fund or any other governmental agency.

CUSIP NO. __________                            PRINCIPAL AMOUNT: $134,021,000
REGISTERED NO. 1

                                  POPULAR, INC.

                 6.125% Junior Subordinated Debentures, Series A
                              due December 1, 2034

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 corporation under the Indenture hereinafter referred to),
for value received, hereby promises to pay to J.P. Morgan Trust Company,
National Association (formerly known as Bank One Trust Company, N.A.), as
Property Trustee of Popular Capital Trust II, or registered assigns, the
principal sum of One Hundred Three Million Ninety-Two Thousand Eight Hundred
Dollars ($134,021,000) on December 1, 2034. The Company further promises to pay
interest on the principal sum from November 30, 2004 or from the most recent
Interest Payment Date to which interest has been paid or duly provided for
monthly (subject to deferral as set forth herein) on the first day of each month
of each year commencing January 1, 2005 at the rate of 6.125% per annum,
together with Additional Sums, if any, as provided in Section 1007 of the
Indenture, until the principal hereof is paid or made available for payment;
provided, however, that any overdue installment of interest (after giving effect
to any Extension Period permitted by this Security) shall bear Additional
Interest at the rate of 6.125% per annum (to the extent that the payment of such
interest shall be legally enforceable), compounded monthly, from the date such
installment was due until it is paid or made available for payment. The amount
of interest payable for any period less than a full monthly interest period
shall be computed on the basis of a 360-day year of twelve 30-day months and the
actual days elapsed in a partial month in such period. The amount of interest
payable for any full monthly interest period shall be computed by dividing the


                                      A-1


applicable rate per annum by twelve. 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 Regular
Record Date for such interest, which shall be the 15th calendar day (whether or
not a Business Day, as defined below) next preceding such Interest Payment Date.
If an Interest Payment Date is not a Business Day, interest on this Security
shall be payable on the next day that is a Business Day, with the same force and
effect as if made on such Interest Payment Date, and without any interest or
other payment with respect to the delay. "Business Day" as used hereinabove is a
day other than a Saturday, a Sunday or any other day on which banking
institutions in San Juan, Puerto Rico, Wilmington, Delaware or New York, New
York are authorized or required by law, regulation or executive order to remain
closed or are customarily closed.

         Any interest not punctually paid or duly provided for will forthwith
cease to be payable to the Holder on such Regular Record Date and may either be
paid to the Person in whose name this 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 Holders of Securities of this series not less than 10
days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities of this series may be listed, and upon such notice as
may be required by such exchange, all as more fully provided in the Indenture.

         So long as no Event of Default has occurred and is continuing, the
Company shall have the right, at any time during the term of this Security, from
time to time to defer the payment of interest on this Security for up to 60
consecutive monthly interest payment periods with respect to each deferral
period (each an "Extension Period"), during which Extension Period the Company
shall have the right to make a partial payment of interest on any Interest
Payment Date, at the end of which the Company shall pay all interest then
accrued and unpaid including any Additional Interest, as provided below;
provided, however, that no Extension Period shall extend beyond the Maturity of
the principal of this Security and no such Extension Period may end other than
at the end of a full monthly interest period; and provided, further, however,
that during any such Extension Period, the Company shall not (i) make any
payment of principal of or interest or premium, if any, on or repay, repurchase
or redeem any debt securities of the Company that rank pari passu in all
respects with or junior in interest to this Security (except for any partial
payments of interest with respect to and permitted under the Securities of this
series), or (ii) declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of the
Company's capital stock (other than (a) repurchases, redemptions or other
acquisitions of shares of capital stock of the Company in connection with any
employment contract, benefit plan or other similar arrangement with or for the
benefit of any one or more employees, officers, directors, consultants or
independent contractors, in connection with a dividend reinvestment or
stockholder stock purchase plan or in connection with the issuance of capital
stock of the Company (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into prior
to the applicable Extension Period, (b) as a result of an exchange, redemption
or conversion of any class or series of the Company's capital stock (or any
capital stock of a subsidiary of the


                                      A-2


Company) for any other class or series of the Company's capital stock or of any
class or series of the Company's indebtedness for any class or series of the
Company's capital stock, (c) the purchase of fractional interests in shares of
the Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (d) any
declaration of a dividend in connection with any Rights Plan, or the issuance of
rights, stock or other property under any Rights Plan, or the redemption or
repurchase of rights pursuant thereto, (e) payments by the Company under the
Guarantee Agreement, or (f) any dividend in the form of stock, warrants, options
or other rights where the dividend stock or the stock issuable upon exercise of
such warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks pari passu with or junior to such stock). Prior
to the termination of any such Extension Period, the Company may extend such
Extension Period and further defer the payment of interest, provided that no
Extension Period shall exceed 60 consecutive monthly interest payment periods,
extend beyond the Maturity of the principal of this Security or end other than
at the end of a full monthly interest period. Upon the termination of any such
Extension Period and upon the payment of all accrued and unpaid interest and any
Additional Interest then due on any Interest Payment Date, the Company may elect
to begin a new Extension Period, subject to the above conditions. No interest or
Additional Interest shall be due and payable during an Extension Period, except
at the end thereof, but each installment of interest that would otherwise have
been due and payable during such Extension Period shall bear Additional Interest
(to the extent that the payment of such interest shall be legally enforceable)
at the rate of 6.125% per annum, compounded monthly and calculated as set forth
in the first paragraph of this Security, from the dates on which amounts would
otherwise have been due and payable until paid or made available for payment.
The Company shall give the Holder of this Security and the Trustee notice of its
election to begin any Extension Period at least one Business Day prior to the
next succeeding Interest Payment Date on which interest on this Security would
be payable but for such deferral or, so long as such Securities are held by or
on behalf of Popular Capital Trust II, at least one Business Day prior to the
earlier of (i) the next succeeding date on which Distributions on the Capital
Trust Securities of such Issuer Trust would be payable but for such deferral,
and (ii) the date on which the Property Trustee of such Issuer Trust is required
to give notice to holders of such Capital Trust Securities of the record date or
the date such Distributions are payable.

         Payment of interest, including Additional Interest, on this Security
will be made in immediately available funds at the office or agency of the
Company maintained for that purpose in the City of San Juan, Puerto Rico, in
such coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts; provided, however,
that, at the option of the Company, payment of interest may be paid by check
mailed to the Person entitled thereto at such Person's last address as it
appears in the Security Register or, upon written request of a Holder of
$1,000,000 or more in aggregate principal amount of Securities of this series
not less than 15 calendar days prior to the applicable Interest Payment Date, by
wire transfer to such account as may have been designated by such Person.
Payment of principal of and interest, including Additional Interest, on this
Security at Maturity will be made against presentation of this Security at the
office or agency of the Company maintained for that purpose in the City of San
Juan, Puerto Rico.


                                      A-3


         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 referred to on the reverse hereof by manual signature or its duly
authorized agent under the Indenture referred to on the reverse hereof by manual
signature, this Security shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.

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


DATED:

                                  POPULAR, INC.



                                  By:
                                     ----------------------------------


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

                                                   Secretary


TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This is one of the Securities
of the series designated
therein referred to in the
within-mentioned Indenture.


J.P. Morgan Trust Company,
National Association,
   as Trustee



By:
   --------------------------------
          Authorized Signature



OR



- --------------------------------, as
Authenticating Agent for the Trustee



By:
   --------------------------------
          Authorized Signature


                                      A-4


                             [Reverse of Debenture]

                                  POPULAR, INC.

                 6.125% Junior Subordinated Debentures, Series A
                              due December 1, 2034

         This Security is one of a duly authorized issue of junior subordinated
securities of the Company (herein called the "Securities"), issued and to be
issued in one or more series under an indenture dated as of October 31, 2003, as
amended or supplemented from time to time (herein called the "Indenture"),
between the Company and J.P. Morgan Trust Company, National Association
(formerly known as Bank One Trust Company, N.A.), as Trustee (herein called the
"Trustee," which term includes any successor trustee under the Indenture), to
which Indenture and all indentures supplemental thereto reference is hereby made
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. This Security is one of the series designated on
the face hereof, limited in aggregate principal amount to $134,021,000. All
terms used in this Security which are defined in the Indenture shall have the
meanings assigned to them in the Indenture unless otherwise defined in this
Security.

         Subject to any required prior approval of the Primary Federal
Regulator, the Company may at any time, at its option, on or after December 1,
2009, and subject to the terms and conditions of Article Eleven of the
Indenture, redeem the Securities of this series in whole at any time or in part
from time to time, at a Redemption Price equal to 100% of the principal amount
thereof, together, in the case of any such redemption, with accrued but unpaid
interest, including any Additional Interest, to but excluding the Redemption
Date.

         In addition, upon the occurrence and during the continuation of a Tax
Event, an Investment Company Event or a Capital Treatment Event in respect of
Popular Capital Trust II, the Company may, at its option, at any time within 90
days of the occurrence and during the continuation of such Tax Event, Investment
Company Event or Capital Treatment Event, as the case may be, subject to any
required prior approval of the Primary Federal Regulator, redeem the Securities
of this series, in whole but not in part, subject to the terms and conditions of
Article Eleven of the Indenture, at a Redemption Price equal to 100% of the
principal amount thereof, together, in the case of any such redemption, with
accrued but unpaid interest, including any Additional Interest, to but excluding
the Redemption Date.

         The Securities of this series are not subject to repayment at the
option of the Holder hereof. The Securities of this series will not be entitled
to any sinking fund.

         The indebtedness evidenced by the Securities of this series is, to the
extent and in the manner set forth in the Indenture, subordinate and subject in
right of payment to the prior payment in full of the principal of and premium,
if any, and interest on all Senior Debt of the Company, and each Holder of the
Securities of this series, by accepting the same, agrees to and


                                      A-5


shall be bound by the provisions of the Indenture with respect hereto. The
Securities of this series shall rank on a parity with all Trust Related
Securities, including without limitation, the Guarantee Agreement related to the
6.125% Capital Securities of Popular Capital Trust II.

         If an Event of Default, as defined in the Indenture, 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.

         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, acting together. The
Indenture also contains provisions permitting the Holders of a majority in
principal amount of the Securities of all series at the time Outstanding
affected by certain provisions of the Indenture, acting together, on behalf of
the Holders of all Securities of such series, to waive compliance by the Company
with those provisions of the Indenture. Certain past defaults under the
Indenture and their consequences may be waived under the Indenture by the
Holders of a majority in principal amount of the Securities of each series at
the time Outstanding, on behalf of the Holders of all Securities of such series.
All of the rights of the Holders set forth in this paragraph are subject to the
rights of the holders of Capital Trust Securities as set forth in the Indenture.
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.

         The provisions contained in Section 403 and Article Seventeen of the
Indenture for defeasance of the entire indebtedness on this Security and certain
restrictive covenants and certain Events of Default do not apply to this
Security. The provisions contained in Section 401 of the Indenture for
defeasance of the entire indebtedness on this Security in certain circumstances
shall apply to this Security.

         Upon due presentment for registration of transfer of this Security at
the office or agency of the Company in the City of San Juan, Puerto Rico, a new
Security or Securities of this series in authorized denominations of $25 or
integral multiples thereof for an equal aggregate principal amount will be
issued to the transferee in exchange herefor, as provided in the Indenture and
subject to the limitations provided therein and to the limitations described
below, without charge except for any tax or other governmental charge imposed in
connection therewith.

         If this Security is a Global Security, this Security is exchangeable
for definitive Securities in registered form only if (x) the Depositary notifies
the Company that it is unwilling or unable to continue as Depositary for this
Security or if at any time the Depositary ceases to be a clearing agency
registered under the Securities Exchange Act of 1934, as amended, and a
successor depositary is not appointed within 90 days, (y) the Company in its
sole discretion determines that this Security shall be exchangeable for
definitive Securities in registered form and notifies the Trustee thereof, or
(z) an Event of Default with respect to the Securities represented hereby has


                                      A-6


occurred and is continuing. If this Security is exchangeable pursuant to the
preceding sentence, it shall be exchangeable for definitive Securities in
registered form, bearing interest, including Additional Interest, at the same
rate, having the same date of issuance, redemption provisions, Stated Maturity
and other terms and of authorized denominations aggregating a like amount.

         If this Security is a Global Security, this Security may not be
transferred except as a whole by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor of the
Depositary or a nominee of such successor. Except as provided above, owners of
beneficial interests in this global Security will not be entitled to receive
physical delivery of Securities in definitive form and will not be considered
the Holders hereof for any purpose under the Indenture.

         Subject to the rights of holders of Senior Debt of the Company set
forth in this Security and the indenture referred to above, 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 interest, including any Additional
Interest, on this Security at the times, place and rate, and in the coin or
currency, herein prescribed, except as otherwise provided in this Security and
except that in the event the Company deposits money or Eligible Instruments as
provided in Section 401 of the Indenture, such payments will be made only from
proceeds of such money or Eligible Instruments.

         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, the
Trustee nor any such agent shall be affected by notice to the contrary.

         No recourse shall be had for the payment of the principal of or the
interest, including Additional Interest, on this Security, or for any claim
based hereon, or otherwise in respect hereof, or based on or in respect of the
Indenture or any indenture supplemental thereto, against any incorporator,
stockholder, officer or director, as such, past, present or future, of the
Company or any successor corporation, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise, all such liability being, by the acceptance hereof and as part of the
consideration for the issuance hereof, expressly waived and released.

         The Company and, by its acceptance of this Security or a beneficial
interest herein, the Holder of, and any Person that acquires a beneficial
interest in, this Security, agree that for United States Federal or Puerto Rico,
state and local tax purposes it is intended that this Security constitute
indebtedness.


                                      A-7


                                  ABBREVIATIONS

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

TEN COM  --  as tenants in common

TEN ENT  --  as tenants by the entireties

JT TEN   --  as joint tenants with 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.

         FOR VALUE RECEIVED, the undersigned hereby sell(s) and transfer(s) unto

Please Insert Social Security or
Other Identifying Number of Assignee



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



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



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



- ------------------------------------------------------------------------------
(Please print or type name and address including postal zip code of Assignee)


                                      A-8


the within Security of POPULAR, INC. and does hereby irrevocably constitute and
appoint __________________ attorney to transfer the said Security on the books
of the Company, with full power of substitution in the premises.



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


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


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

NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular, without
alteration or enlargement or any change whatever.


                                      A-9

EX-4.5

                                                                     EXHIBIT 4.5

                      GLOBAL CAPITAL SECURITIES CERTIFICATE

         This Capital Securities Certificate is a Book-Entry Capital Securities
Certificate within the meaning of the Trust Agreement hereinafter referred to
and is registered in the name of a Clearing Agency or a nominee of a Clearing
Agency. This Capital Securities Certificate is exchangeable for Capital
Securities Certificates registered in the name of a person other than the
Clearing Agency or its nominee only in the limited circumstances described in
the Trust Agreement and may not be transferred except as a whole by the Clearing
Agency to a nominee of the Clearing Agency or by a nominee of the Clearing
Agency to the Clearing Agency or another nominee of the Clearing Agency, except
in the limited circumstances described in the Trust Agreement.

         Unless this Capital Security Certificate is presented by an authorized
representative of The Depository Trust Company, a New York Corporation ("DTC"),
to Popular Capital Trust II or its agent for registration of transfer, exchange
or payment, and any Capital Security Certificate issued is registered in the
name of Cede & Co. or 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 A PERSON IS WRONGFUL
inasmuch as the registered owner hereof, Cede & Co., has an interest herein.

         NO EMPLOYEE BENEFIT OR OTHER PLAN SUBJECT TO TITLE I OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH, A "PLAN"), NO
ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY PLAN'S
INVESTMENT IN THE ENTITY (A "PLAN ASSET ENTITY"), AND NO PERSON INVESTING "PLAN
ASSETS" OF ANY PLAN, MAY ACQUIRE OR HOLD THIS CAPITAL SECURITIES CERTIFICATE OR
ANY INTEREST HEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE
EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION
CLASS EXEMPTION ("PTCE") 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER
APPLICABLE EXEMPTION WITH RESPECT TO SUCH PURCHASE OR HOLDING OR THE
REQUIREMENTS OF U.S. DEPARTMENT OF LABOR REGULATION SECTION 2550.401c-1 ARE
SATISFIED SUCH THAT THE CAPITAL SECURITIES CERTIFICATE HELD BY THE PURCHASER OR
HOLDER DOES NOT CONSTITUTE "PLAN ASSETS" AND, IN THE CASE OF ANY PURCHASER OR
HOLDER RELYING ON ANY EXEMPTION OTHER THAN PTCE 96-23, 95-60, 91-38, 90-1 OR
84-14 OR U.S. DEPARTMENT OF LABOR REGULATION SECTION 2550.401c-1, HAS COMPLIED
WITH ANY REQUEST BY THE DEPOSITOR OR THE ISSUER TRUST FOR AN OPINION OF COUNSEL
OR OTHER EVIDENCE WITH RESPECT TO THE AVAILABILITY OF SUCH EXEMPTION. ANY
PURCHASER OR HOLDER OF THIS CAPITAL SECURITIES CERTIFICATE OR ANY INTEREST
HEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING HEREOF
THAT IT EITHER (A) IS NOT A PLAN OR A PLAN ASSET ENTITY AND IS NOT PURCHASING
SUCH SECURITIES ON BEHALF OF OR WITH "PLAN ASSETS" OF ANY PLAN, OR (B) IS
ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER PTCE 96-23, 95-60, 91-38, 90-1
OR 84-14 OR ANOTHER APPLICABLE EXEMPTION WITH RESPECT TO SUCH PURCHASE OR
HOLDING OR U.S. DEPARTMENT OF LABOR REGULATION SECTION 2550.401c-1.




Certificate Number 001                   Number of Capital Securities 5,200,000

CUSIP NO. 73317H 20 6

                    Certificate Evidencing Capital Securities
                           of Popular Capital Trust II
                        6.125% Trust Preferred Securities
                  (liquidation amount $25 per Capital Security)

         Popular Capital Trust II, a statutory trust created under the laws of
the State of Delaware (the "Issuer Trust"), hereby certifies that Cede & Co.
(the "Holder") is the registered owner of Five Million Two Hundred Thousand
(5,200,000) Capital Securities of the Issuer Trust representing an undivided
preferred beneficial interest in the assets of the Issuer Trust and designated
the Popular Capital Trust II 6.125% Trust Preferred Securities (liquidation
amount $25 per Capital Security) (the "Capital Securities"). The Capital
Securities are transferable on the books and records of the Issuer Trust, in
person or by a duly authorized attorney, upon surrender of this certificate duly
endorsed and in proper form for transfer as provided in the Trust Agreement (as
defined below). The designations, rights, privileges, restrictions, preferences
and other terms and provisions of the Capital Securities are set forth in, and
this certificate and the Capital Securities represented hereby are issued and
shall in all respects be subject to the terms and provisions of, the Amended and
Restated Declaration of Trust and Trust Agreement of the Issuer Trust, dated as
of November 30, 2004, as the same may be amended from time to time (the "Trust
Agreement"), among Popular, Inc., as Depositor, J.P. Morgan Trust Company,
National Association, as Property Trustee, Chase Manhattan Bank USA, National
Association, as Delaware Trustee, and the Holders of Trust Securities, including
the designation of the terms of the Capital Securities as set forth therein. The
Holder is entitled to the benefits of the Guarantee Agreement, dated as of
November 30, 2004, (the "Guarantee Agreement"), by and between Popular, Inc., as
Guarantor, and J.P. Morgan Trust Company, National Association, as Guarantee
Trustee, to the extent provided therein. The Issuer Trust will furnish a copy of
the Trust Agreement and the Guarantee Agreement to the Holder without charge
upon written request to the Issuer Trust at its principal place of business or
registered office.

         Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.









                            [SIGNATURE PAGE FOLLOWS]




         IN WITNESS WHEREOF, one of the Administrative Trustees of the Issuer
Trust has executed this certificate this 30th day of November, 2004.


                                               POPULAR CAPITAL TRUST II



                                               By: /s/ Richard Barrios
                                                  -----------------------------
                                               Name:  Richard Barrios
                                               Title: Administrative Trustee

                PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION

         This is one of the Capital Securities referred to in the above
mentioned Trust Agreement.

Dated: November 30, 2004                       J.P. MORGAN TRUST COMPANY,
                                                    NATIONAL ASSOCIATION,
                                               as Property Trustee



                                               By: /s/ George Reaves
                                                  -----------------------------
                                                       Authorized Signature




CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities
referred to in the above mentioned
Trust Agreement.



BANCO POPULAR DE PUERTO RICO,
as Authenticating Agent, Paying Agent and
Security Registrar



By: /s/ Luis R. Cintron
   -----------------------------------------------
Name:  Luis R. Cintron, Esq.
Title: Senior Vice President and Trust Officer
Date:  November 30, 2004




                                   ASSIGNMENT

         FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital
Security to: _____________________________________________ (Insert assignee's
social security or tax identification number) ___________________ (Insert
address and zip code of assignee) and irrevocably appoints
____________________________________________ agent to transfer this Capital
Security Certificate on the books of the Issuer Trust. The agent may substitute
another to act for him or her.

Dated:                           Signature:
      ----------------                     -------------------------

                                           (Sign exactly as your name appears on
                                           this Capital Security Certificate)
                                           The signature(s) should be guaranteed
                                           by an eligible guarantor institution
                                           (banks, stockbrokers, savings and
                                           loan associations and credit unions
                                           with membership in an approved
                                           signature guarantee medallion
                                           program), pursuant to S.E.C. Rule
                                           17Ad-15.

EX-4.6

                                                                     EXHIBIT 4.6

         THIS SECURITY IS NOT A DEPOSIT OR OTHER OBLIGATION OF A DEPOSITORY
INSTITUTION AND IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
BANK INSURANCE FUND OR ANY OTHER GOVERNMENTAL AGENCY.

REGISTERED NO. 1                                 PRINCIPAL AMOUNT: $134,021,000

                                  POPULAR, INC.

                 6.125% JUNIOR SUBORDINATED DEBENTURES, SERIES A
                              DUE DECEMBER 1, 2034

         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 corporation under the Indenture hereinafter referred to),
for value received, hereby promises to pay to J.P. Morgan Trust Company,
National Association, as Property Trustee of Popular Capital Trust II, or
registered assigns, the principal sum of One Hundred Thirty Four Million Twenty
One Thousand Dollars ($134,021,000) on December 1, 2034. The Company further
promises to pay interest on the principal sum from November 30, 2004 or from the
most recent Interest Payment Date to which interest has been paid or duly
provided for monthly (subject to deferral as set forth herein) on the first day
of each month of each year commencing January 1, 2005 at the rate of 6.125% per
annum, together with Additional Sums, if any, as provided in Section 1007 of the
Indenture, until the principal hereof is paid or made available for payment;
provided, however, that any overdue installment of interest (after giving effect
to any Extension Period permitted by this Security) shall bear Additional
Interest at the rate of 6.125% per annum (to the extent that the payment of such
interest shall be legally enforceable), compounded monthly, from the date such
installment was due until it is paid or made available for payment. The amount
of interest payable for any period less than a full monthly interest period
shall be computed on the basis of a 360-day year of twelve 30-day months and the
actual days elapsed in a partial month in such period. The amount of interest
payable for any full monthly interest period shall be computed by dividing the
applicable rate per annum by twelve. 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 Regular
Record Date for such interest, which shall be the 15th day (whether or not a
Business Day, as defined below) of the month next preceding such Interest
Payment Date. If an Interest Payment Date is not a Business Day, interest on
this Security shall be payable on the next day that is a Business Day, with the
same force and effect as if made on such Interest Payment Date, and without any
interest or other payment with respect to the delay. "Business Day" as used
hereinabove is a day other than a Saturday, a Sunday or any other day on which
banking institutions in San Juan, Puerto Rico, Wilmington, Delaware or New York,
New York are authorized or required by law, regulation or executive order to
remain closed or are customarily closed.

         Any interest not punctually paid or duly provided for will forthwith
cease to be payable to the Holder on such Regular Record Date and may either be
paid to the Person in whose name this 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 Holders of Securities of this series not less than 10
days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities of this series may be listed, and upon such notice as
may be required by such exchange, all as more fully provided in the Indenture.

         So long as no Event of Default has occurred and is continuing, the
Company shall have the right, at any time during the term of this Security, from
time to time to defer the payment of interest on this Security for up to 60
consecutive monthly interest payment periods with respect to each deferral
period (each an "Extension Period"), during which Extension Period the Company
shall have the right to make a partial payment of interest on any Interest
Payment Date, at the end of which the Company shall pay all interest then
accrued and unpaid including any Additional Interest, as provided below;
provided, however, that no Extension Period shall extend beyond the Maturity of
the principal of this Security and no such Extension Period may end other than
at the end of a full monthly interest period;




and provided, further, however, that during any such Extension Period, the
Company shall not (i) make any payment of principal of or interest or premium,
if any, on or repay, repurchase or redeem any debt securities of the Company
that rank pari passu in all respects with or junior in interest to this Security
(except for any partial payments of interest with respect to and permitted under
the Securities of this series), or (ii) declare or pay any dividends or
distributions on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of the Company's capital stock (other than (a) repurchases,
redemptions or other acquisitions of shares of capital stock of the Company in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of any one or more employees, officers,
directors, consultants or independent contractors, in connection with a dividend
reinvestment or stockholder stock purchase plan or in connection with the
issuance of capital stock of the Company (or securities convertible into or
exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period, (b) as a
result of an exchange, redemption or conversion of any class or series of the
Company's capital stock (or any capital stock of a subsidiary of the Company)
for any other class or series of the Company's capital stock or of any class or
series of the Company's indebtedness for any class or series of the Company's
capital stock, (c) the purchase of fractional interests in shares of the
Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (d) any
declaration of a dividend in connection with any Rights Plan, or the issuance of
rights, stock or other property under any Rights Plan, or the redemption or
repurchase of rights pursuant thereto, (e) payments by the Company under the
Guarantee Agreement, or (f) any dividend in the form of stock, warrants, options
or other rights where the dividend stock or the stock issuable upon exercise of
such warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks pari passu with or junior to such stock). Prior
to the termination of any such Extension Period, the Company may extend such
Extension Period and further defer the payment of interest, provided that no
Extension Period shall exceed 60 consecutive monthly interest payment periods,
extend beyond the Maturity of the principal of this Security or end other than
at the end of a full monthly interest period. Upon the termination of any such
Extension Period and upon the payment of all accrued and unpaid interest and any
Additional Interest then due on any Interest Payment Date, the Company may elect
to begin a new Extension Period, subject to the above conditions. No interest or
Additional Interest shall be due and payable during an Extension Period, except
at the end thereof, but each installment of interest that would otherwise have
been due and payable during such Extension Period shall bear Additional Interest
(to the extent that the payment of such interest shall be legally enforceable)
at the rate of 6.125% per annum, compounded monthly and calculated as set forth
in the first paragraph of this Security, from the dates on which amounts would
otherwise have been due and payable until paid or made available for payment.
The Company shall give the Holder of this Security and the Trustee notice of its
election to begin any Extension Period at least one Business Day prior to the
next succeeding Interest Payment Date on which interest on this Security would
be payable but for such deferral or, so long as such Securities are held by or
on behalf of Popular Capital Trust II, at least one Business Day prior to the
earlier of (i) the next succeeding date on which Distributions on the Capital
Trust Securities of such Issuer Trust would be payable but for such deferral,
and (ii) the date on which the Property Trustee of such Issuer Trust is required
to give notice to holders of such Capital Trust Securities of the record date or
the date such Distributions are payable.

         Payment of interest, including Additional Interest, on this Security
will be made in immediately available funds at the office or agency of the
Company maintained for that purpose in the City of San Juan, Puerto Rico, in
such coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts; provided, however,
that, at the option of the Company, payment of interest may be paid by check
mailed to the Person entitled thereto at such Person's last address as it
appears in the Security Register or, upon written request of a Holder of
$1,000,000 or more in aggregate principal amount of Securities of this series
not less than 15 calendar days prior to the applicable Interest Payment Date, by
wire transfer to such account as may have been designated by such Person.
Payment of principal of and interest, including Additional Interest, on this
Security at Maturity will be made against presentation of this Security at the
office or agency of the Company maintained for that purpose in the City of San
Juan, Puerto Rico.

         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 referred to on the reverse hereof by manual signature or its duly
authorized agent under the Indenture referred to on the reverse hereof by manual
signature, this Security shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.

                            [SIGNATURE PAGE FOLLOWS]

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

DATED: November 30, 2004

                                          POPULAR, INC.



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



                                          Attest: /s/ Brunilda Santos de Alvarez
                                                 -------------------------------
                                          Name:  Brunilda Santos de Alvarez
                                          Title: Assistant Secretary


TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This is one of the Securities
of the series designated
therein referred to in the
within-mentioned Indenture.


J.P. Morgan Trust Company, National Association,
as Trustee



By: /s/ George Reaves
   ----------------------------------
           Authorized Signature



OR



- --------------------------------, as
Authenticating Agent for the Trustee



By:
   ----------------------------------
           Authorized Signature




                             [REVERSE OF DEBENTURE]


                                  POPULAR, INC.

                 6.125% JUNIOR SUBORDINATED DEBENTURES, SERIES A
                              DUE DECEMBER 1, 2034

         This Security is one of a duly authorized issue of junior subordinated
securities of the Company (herein called the "Securities"), issued and to be
issued in one or more series under an indenture dated as of October 31, 2003, as
amended or supplemented from time to time (herein called the "Indenture"),
between the Company and J.P. Morgan Trust Company, National Association
(formerly known as Bank One Trust Company, N.A.), as Trustee (herein called the
"Trustee," which term includes any successor trustee under the Indenture), to
which Indenture and all indentures supplemental thereto reference is hereby made
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. This Security is one of the series designated on
the face hereof, limited in aggregate principal amount to $134,021,000. All
terms used in this Security which are defined in the Indenture shall have the
meanings assigned to them in the Indenture unless otherwise defined in this
Security.

         Subject to any required prior approval of the Primary Federal
Regulator, the Company may at any time, at its option, on or after December 1,
2009, and subject to the terms and conditions of Article Eleven of the
Indenture, redeem the Securities of this series in whole at any time or in part
from time to time, at a Redemption Price equal to 100% of the principal amount
thereof, together, in the case of any such redemption, with accrued but unpaid
interest, including any Additional Interest, to but excluding the Redemption
Date.

         In addition, upon the occurrence and during the continuation of a Tax
Event, an Investment Company Event or a Capital Treatment Event in respect of
Popular Capital Trust II, the Company may, at its option, at any time within 90
days of the occurrence and during the continuation of such Tax Event, Investment
Company Event or Capital Treatment Event, as the case may be, subject to any
required prior approval of the Primary Federal Regulator, redeem the Securities
of this series, in whole but not in part, subject to the terms and conditions of
Article Eleven of the Indenture, at a Redemption Price equal to 100% of the
principal amount thereof, together, in the case of any such redemption, with
accrued but unpaid interest, including any Additional Interest, to but excluding
the Redemption Date.

         The Securities of this series are not subject to repayment at the
option of the Holder hereof. The Securities of this series will not be entitled
to any sinking fund.

         The indebtedness evidenced by the Securities of this series is, to the
extent and in the manner set forth in the Indenture, subordinate and subject in
right of payment to the prior payment in full of the principal of and premium,
if any, and interest on all Senior Debt of the Company, and each Holder of the
Securities of this series, by accepting the same, agrees to and shall be bound
by the provisions of the Indenture with respect hereto. The Securities of this
series shall rank on a parity with all Trust Related Securities, including
without limitation, the Guarantee Agreement related to the 6.125% Capital
Securities of Popular Capital Trust II.

         If an Event of Default, as defined in the Indenture, 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.

         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, acting together. The
Indenture also contains




provisions permitting the Holders of a majority in principal amount of the
Securities of all series at the time Outstanding affected by certain provisions
of the Indenture, acting together, on behalf of the Holders of all Securities of
such series, to waive compliance by the Company with those provisions of the
Indenture. Certain past defaults under the Indenture and their consequences may
be waived under the Indenture by the Holders of a majority in principal amount
of the Securities of each series at the time Outstanding, on behalf of the
Holders of all Securities of such series. All of the rights of the Holders set
forth in this paragraph are subject to the rights of the holders of Capital
Trust Securities as set forth in the Indenture. 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.

         The provisions contained in Section 403 and Article Seventeen of the
Indenture for defeasance of the entire indebtedness on this Security and certain
restrictive covenants and certain Events of Default do not apply to this
Security. The provisions contained in Section 401 of the Indenture for
defeasance of the entire indebtedness on this Security in certain circumstances
shall apply to this Security.

         Upon due presentment for registration of transfer of this Security at
the office or agency of the Company in the City of San Juan, Puerto Rico, a new
Security or Securities of this series in authorized denominations of $25 or
integral multiples thereof for an equal aggregate principal amount will be
issued to the transferee in exchange herefor, as provided in the Indenture and
subject to the limitations provided therein and to the limitations described
below, without charge except for any tax or other governmental charge imposed in
connection therewith.

         If this Security is a Global Security, this Security is exchangeable
for definitive Securities in registered form only if (x) the Depositary notifies
the Company that it is unwilling or unable to continue as Depositary for this
Security or if at any time the Depositary ceases to be a clearing agency
registered under the Securities Exchange Act of 1934, as amended, and a
successor depositary is not appointed within 90 days, (y) the Company in its
sole discretion determines that this Security shall be exchangeable for
definitive Securities in registered form and notifies the Trustee thereof, or
(z) an Event of Default with respect to the Securities represented hereby has
occurred and is continuing. If this Security is exchangeable pursuant to the
preceding sentence, it shall be exchangeable for definitive Securities in
registered form, bearing interest, including Additional Interest, at the same
rate, having the same date of issuance, redemption provisions, Stated Maturity
and other terms and of authorized denominations aggregating a like amount.

         If this Security is a Global Security, this Security may not be
transferred except as a whole by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor of the
Depositary or a nominee of such successor. Except as provided above, owners of
beneficial interests in this global Security will not be entitled to receive
physical delivery of Securities in definitive form and will not be considered
the Holders hereof for any purpose under the Indenture.

         Subject to the rights of holders of Senior Debt of the Company set
forth in this Security and the indenture referred to above, 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 interest, including any Additional
Interest, on this Security at the times, place and rate, and in the coin or
currency, herein prescribed, except as otherwise provided in this Security and
except that in the event the Company deposits money or Eligible Instruments as
provided in Section 401 of the Indenture, such payments will be made only from
proceeds of such money or Eligible Instruments.

         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, the
Trustee nor any such agent shall be affected by notice to the contrary.

         No recourse shall be had for the payment of the principal of or the
interest, including Additional Interest, on this Security, or for any claim
based hereon, or otherwise in respect hereof, or based on or in respect of the
Indenture or any




indenture supplemental thereto, against any incorporator, stockholder, officer
or director, as such, past, present or future, of the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the
issuance hereof, expressly waived and released.

         The Company and, by its acceptance of this Security or a beneficial
interest herein, the Holder of, and any Person that acquires a beneficial
interest in, this Security, agree that for United States federal or Puerto Rico,
state and local tax purposes it is intended that this Security constitute
indebtedness.




                                  ABBREVIATIONS

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

TEN COM  --  as tenants in common

TEN ENT  --  as tenants by the entireties

JT TEN   --  as joint tenants with 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.

         FOR VALUE RECEIVED, the undersigned hereby sell(s) and transfer(s) unto

Please Insert Social Security or
Other Identifying Number of Assignee



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



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



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



- ------------------------------------------------------------------------------
(Please print or type name and address including postal zip code of Assignee)

the within Security of POPULAR, INC. and does hereby irrevocably constitute and
appoint __________________ attorney to transfer the said Security on the books
of the Company, with full power of substitution in the premises.


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

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



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

NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular, without
alteration or enlargement or any change whatever.

EX-8

                                                                       EXHIBIT 8

                    [PIETRANTONI MENDEZ & ALVAREZ LETTERHEAD]

                                                              November 30, 2004

Popular, Inc.
Popular Center Building
209 Munoz Rivera Ave
Hato Rey, Puerto Rico 00918

Dear Sirs:

         We have acted as counsel to Popular, Inc., a Puerto Rico corporation
(the "Company") with respect to the registration under the Securities Act of
1933, as amended (the "Act"), of 5,200,000 of the 6.125% Cumulative Monthly
Income Trust Preferred Securities (the "Capital Securities") of Popular Capital
Trust II, and an aggregate principal amount of $134,021,000 of the 6.125% Junior
Subordinated Debentures, Series A, due December 1, 2034, of the Company (the
"Debentures").

         We have examined the prospectus supplement relating to the Capital
Securities (the "Prospectus Supplement"), dated November 24, 2004, filed with
the Securities and Exchange Commission pursuant to Rule 424(b) under the Act and
have reviewed the summary of the material federal and Puerto Rico income tax
considerations of the proposed offering described in the Prospectus Supplement
(the "Summary") appearing under the caption "Certain Tax Considerations." We
have also reviewed such other documents and instruments and have examined such
questions of law as we have considered necessary for the purpose of this
opinion. In addition, we have relied on certificates of officers of the Company
as to certain factual matters.

         It is our opinion that the statements of law contained in the Summary,
subject to the limitations stated in the Summary and below, while not purporting
to discuss all federal and Puerto Rico income tax ramifications of the offering,
are accurate statements of the material federal and Puerto Rico tax consequences
to the investors who purchase Capital Securities in the offering described in
the Prospectus Supplement.



         Our opinion is based upon the review of the Prospectus Supplement and
of applicable federal and Puerto Rico income tax statutes, regulations, rulings
and decisions, as now in effect. A change in any of the foregoing could
necessitate a change in our opinion. In addition, our opinion pertains only to
the accuracy of the statements of law contained in the Summary. As to the
statements of fact, we are relying upon your representation that such factual
matters are accurate.

         We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement on Form S-3 (File Nos. 333-120340 and 333-120340-03) and
to the reference to us under the heading "Certain Tax Considerations" in the
Prospectus Supplement. In giving the foregoing consent, we do not thereby admit
that we are in the category of persons whose consent is required under Section 7
of the Act.

                                            Very truly yours,

                                            /s/ PIETRANTONI MENDEZ & ALVAREZ LLP