8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of report (date of earliest event reported):
September 25, 2003

POPULAR, INC.

(Exact Name of Registrant as Specified in Charter)

Puerto Rico	0-13818	66-0416582
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

209 Muñoz Rivera Avenue, San Juan, Puerto Rico	00918
(Address of Principal Executive Offices)	(Zip Code)

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

ITEMS 1-4.	Not Applicable.
ITEM 5.	OTHER EVENTS.

     The exhibits listed in Item 7 below are hereby incorporated herein by reference.

ITEM 6.	Not Applicable.
ITEM 7.	EXHIBITS
	(1)(a)	Underwriting Agreement, dated September 25, 2003, between Popular, Inc. and Popular Securities, Inc.
	(4)(a)	Senior Indenture of Popular, Inc., dated as of February 15, 1995, as supplemented by the First Supplemental Indenture thereto, dated as of May 8, 1997, each between Popular, Inc. and Bank One, NA (formerly

	known as The First National Bank of Chicago), as trustee (incorporated by reference from Exhibit 4(d) to the Registration Statement No. 333-26941 of Popular, Inc., Popular International Bank, Inc. and Popular North America, Inc., as filed with the SEC on May 12, 1997).
(4)(b)	Second Supplemental Indenture of Popular, Inc., dated as of August 5, 1999, between Popular, Inc. and Bank One, NA (formerly know as The First National Bank of Chicago), as trustee (incorporated by reference from Exhibit 4(e) to Popular, Inc.’s Current Report on Form 8-K (File No. 002-96018), dated August 5, 1999, as filed with the SEC on August 17, 1999).

2

(4)(e)	Form of Note Linked to the S&P 500® Index due September 30, 2008.
(5)(a)	Opinion of Brunilda Santos de Alvarez, Esq. regarding legality of offered notes.
(5)(b)	Opinion of Pietrantoni Méndez & Alvarez LLP regarding legality of offered notes.
(5)(c)	Opinion of Sullivan & Cromwell LLP regarding legality of offered notes.
(8)(a)	Opinion of Pietrantoni Méndez & Alvarez LLP regarding tax matters.
(23)(a)	Consent of Brunilda Santos de Alvarez, Esq. (included in Exhibit (5)(a)).
(23)(b)	Consent of Pietrantoni Méndez & Alvarez LLP (included in Exhibit (5)(b) and (8)(a)).
(23)(c)	Consent of Sullivan & Cromwell LLP (included in Exhibit (5)(c)).

ITEMS 8-12. Not Applicable.

3

SIGNATURES

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

	POPULAR, INC.
Date: September 30, 2003	By:	/s/ Jorge A. Junquera
	Name:	Jorge A. Junquera
	Title:	Senior Executive Vice President

4 EX-1.(A) 3 g85106exv1wxay.txt EX-(1)(A) UNDERWRITING AGREEMENT EXHIBIT (1)(a) $31,152,000 POPULAR, INC. Notes Linked to the S&P 500 Index due September 30, 2008 UNDERWRITING AGREEMENT September 25, 2003 POPULAR SECURITIES, INC. Hato Rey, Puerto Rico 00918 Ladies and Gentlemen: POPULAR, INC., a Puerto Rico corporation (the "Company"), proposes to sell its Notes Linked to the S&P 500 Index due September 30, 2008, Series A and Series B in an aggregate principal amount of $31,152,000 (the "Notes"), which are to be issued and sold by the Company to you (the "Underwriter"). The Notes are to be issued pursuant to resolutions adopted by the Board of Directors of the Company on November 7, 2001 and by the Funding Committee on September 25, 2003 (collectively the "Board Resolutions") and to the provisions of an indenture regarding the Company's senior unsecured debt securities dated as of February 15, 1995, as amended (the "Indenture"), between the Company and Bank One, NA, as successor trustee (the "Trustee"). The Company hereby confirms as follows its agreements with the Underwriter. 1. Agreement to Sell and Purchase. On the basis of the representations, warranties and agreements of the Company herein contained and subject to all the terms and conditions of this Agreement, the Company agrees to sell to the Underwriter, and the Underwriter agrees to purchase the Note from the Company, at an aggregate purchase price of $30,451,080, equal to the aggregate public offering price of the Notes minus an underwriting discount of $700,920. 2. Delivery and Payment. The Notes shall be evidenced in the form of one or more global notes and will be delivered to the Underwriter in book entry form through the facilities of the Depository Trust Company, 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 1 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 Underwriter (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 the Underwriter hereunder. The cost of original issue tax stamps, if any, in connection with the issuance, sale and delivery of Notes by the Company to the Underwriter shall be borne by the Company. The Company will pay and save the Underwriter and any subsequent holder of the Notes 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 the Underwriter of the Notes. 3. Representations and Warranties of the Company. The Company represents, warrants and covenants to the Underwriter that: (a) The Company meets the requirements for use of Form S-3 and a registration statement (Registration No. 333-73242) on Form S-3, as amended, with respect to the Notes, including a prospectus (the "Base Prospectus"), 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. Such registration statement and the Base Prospectus may have been amended or supplemented prior to the date of this Agreement; any such amendment or supplement was so prepared and filed, and any such amendment or supplement filed after the effective date of such registration statement has become effective. No stop order suspending the effectiveness of the registration statement has been issued, and, to the Company's knowledge, no proceeding for that purpose has been instituted or threatened by the Commission. A final prospectus supplement relating to the Notes containing information permitted to be omitted at the time of effectiveness by Rule 430A of the Rules and Regulations has been or will be so 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); and the Rules and Regulations do not require the Company to, and, without the Underwriter's consent, the Company will not, file a post-effective amendment after the time of execution of this Agreement and prior to the filing of such final form of prospectus supplement. The registration statement has been supplemented by one or more forms of preliminary prospectus supplement, as contemplated by Rule 430 or Rule 430A of the Rules and Regulations, used in connection with the offering and sale of the Notes (each a "Preliminary Prospectus"). Copies of such registration statement, any such amendments, the final prospectus supplement (if filed with the commission prior to the date of this Underwriting Agreement) and each 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 Underwriter and its counsel. The term "Registration Statement" means such registration statement as amended at the time it 2 became effective (the "Effective Date"), including financial statements and all exhibits 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 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 Base Prospectus, any Preliminary Prospectus or the 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 Underwriter for use in connection with the offering of the Notes by the Company. (b) Each part of the Registration Statement (excluding any prospectus supplement with respect to an offering of securities other than the offering of the Notes contemplated hereby), 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 and will conform in all material respects with the requirements of the 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 Notes contemplated hereby), when such part became or becomes effective, did not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; each Preliminary Prospectus, 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 and 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 the Underwriter in reliance upon, and in conformity with, written information relating to the Underwriter furnished to the Company by the Underwriter specifically for use in the preparation thereof. The Company has not distributed any offering material in connection with the offering or sale of the Notes 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 3 the Exchange Act, as the case may be, conformed or will conform in all material respects with the requirements of the 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 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 with 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. (e) The description of the securities of the company in the Registration Statement 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. (f) The consolidated financial statements and the related notes of the Company included in the Registration Statement or incorporated therein by reference and 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. (g) 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 4 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. (h) 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 has 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 monthly dividends on its preferred stock in the ordinary course of its business. (i) The Company is not required to be registered under the Investment Company Act of 1940, as amended (the "Investment Company Act"). (j) Except as set forth or incorporated therein 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 the 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. (k) 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 5 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. 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. (l) 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 Notes 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 Underwriter of the Notes to be sold hereby. (m) The Company has 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 Company and constitutes a valid and binding agreement of the Company and is enforceable against the Company 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 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 Certificate of Incorporation or By-laws of the Company, in each case as amended, or (ii) any contract or other agreement to which 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 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 Company 6 or any of the Significant Subsidiaries or their respective businesses or properties, the violation of which 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. (n) No statement, representation, or warranty made by the Company in this Agreement or made in any certificate or document required by this Agreement to be delivered to the Underwriter 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 Underwriter or its counsel shall be deemed to be a representation and warranty by the Company to the Underwriter as to the matters covered thereby. (o) Neither the Company nor any of its 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 Notes or otherwise. (p) 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. (q) Neither the Company nor any of its Significant Subsidiaries nor, to the Company's best knowledge, any employee or agent of the Company or any Significant Subsidiary has made any payment of funds of the Company or any Significant Subsidiary or received or retained any funds of 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. (r) The business, operations and facilities of 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, 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; 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 7 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. (s) 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 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. (t) The Company meets the requirements for use of Form S-3 under the Rules and Regulations and the use of Rule 415 under the Rules and Regulations. (u) 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 of the Federal Reserve Bank of New York and of the Federal Home Loan Bank of New York. (v) None of 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 for any such order, directive or agreement that is not material to the Company and its Subsidiaries considered as a single enterprise. (w) For the three year period ended December 31, 2002, approximately 99% of Popular Inc.'s gross income was attributable to income derived from sources within Puerto Rico and approximately 100% of its gross income was attributable to the conduct of a trade or business in Puerto Rico, both percentages determined in accordance with the applicable sourcing rules of Section 861(c)(1)(B) of the United States Internal Revenue Code of 1986, as amended. (x) 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, or the principal of the Notes. Banco Popular 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 dividends to the Company sufficient to allow the Company to pay interest on the Notes. (y) The Notes will be, upon their issuance and payment therefor in accordance with the terms of this Agreement, duly authorized, executed, and delivered and will constitute legally 8 valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, and entitled to the benefits of the Indenture. The Notes shall be payable and shall have such other terms as provided in the Indenture and the Board Resolutions and as described in the Prospectus. The terms of the Notes and the terms of their issuance and sale have been established in conformity with the Indenture. (z) The Company has full legal right, power and authority (i) to adopt the Board Resolutions, (ii) to enter into this Agreement, and (iii) to carry out and consummate the transactions contemplated by each of the foregoing instruments. (aa) The Company has duly authorized (i) the execution, delivery and performance of this Agreement and the Notes, (ii) the preparation and distribution of the Prospectus and of each Preliminary Prospectus, and (iii) the taking of any and all such actions as may be required on the part of the Company to carry out, give effect to and consummate the transactions contemplated by this Agreement, the Prospectus, the Notes and the Indenture. (bb) The Board Resolutions have been duly adopted, and the Indenture and this Agreement have each been duly authorized, executed and delivered by the Company and each is in full force and effect, and each of the Indenture and this Agreement constitutes a legally valid and binding obligation of the Company enforceable against the Company in accordance with their terms. 4. Agreements of the Company. The Company covenants and agrees with the Underwriter as follows: (a) The Company will cause the Prospectus Supplement to be filed as contemplated by Section 3(a) hereof (but only if the Underwriter has not reasonably objected thereto by notice to the Company after having been furnished a copy within a reasonable time prior to filing) and will notify the Underwriter promptly of such filing. The Company will not, during such period as the Prospectus is required by law to be delivered in connection with sales of the Notes by the Underwriter (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 Underwriter within a reasonable period of time prior to the filing thereof and the Underwriter shall not have objected thereto in good faith. (b) The Company will use its best efforts to cause the Registration Statement to remain effective through the completion of the Underwriter's distribution of the Notes, and will notify the Underwriter promptly, and will confirm such advice in writing, (i) of the preparation and filing (subject to Section 4(a)) of any post-effective amendment and when any such post-effective amendment to the Registration Statement 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 Notes for offering or sale in any jurisdiction, or of the initiation or threat of any proceeding for any such purpose; (v) of the 9 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 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 Notes for sale in any jurisdiction, the Company 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. The Company 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 Underwriter promptly of all such filings. (c) If, at any time when a Prospectus relating to the Notes is required to be delivered under the Act, any event occurs as a result of which, in the judgment of the Company or the Underwriter, 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 Company will promptly notify the Underwriter 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 Underwriter, without charge, copies of the Registration Statement and of any post-effective amendment thereto, including financial statements and schedules, and all exhibits thereto. (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 Underwriter, without charge, as many copies of each Preliminary Prospectus, the Prospectus (containing the Prospectus Supplement) and any amendment or supplement thereto as the Underwriter 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 Underwriter and by all dealers to whom the Notes may be sold, both in connection with the offering or sale of the Notes 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 Underwriter should be set forth in the Prospectus in order to make any statement therein, in the light of the circumstances under which it 10 was made, not misleading, or if, in the reasonable opinion of counsel to the Underwriter, 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 before the termination of the Prospectus Delivery Period if such document would be deemed to be incorporated by reference into the Prospectus to which the Underwriter reasonably objects. (g) Prior to any public offering of the Notes by the Underwriter, the Company will cooperate with the Underwriter and its counsel in connection with the registration or qualification of the Notes for offer and sale under the securities or blue sky laws of such jurisdictions as the Underwriter may reasonably request; provided, that in no event shall the Company be obligated to quality 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 make generally available to the holders of the Notes as soon as practicable, but not later than ninety (90) days after the close of the period covered thereby, an earnings statement (in form complying with the provisions of Section 11(a) of the Act and Rule 158 of the Rules and Regulations) covering a twelve-month period beginning not later than the first day of the Company's fiscal quarter next following the "effective date" (as defined in said Rule 158) of the Registration Statement. (i) The Company will apply the net proceeds from the offering and sale of the Notes in the manner set forth in the Prospectus. (j) 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 any security of the Company to facilitate the sale or resale of any of the Notes. 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 Underwriter, all costs and expenses incidental to the performance of the obligations of the Company 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 (9) 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 Notes, (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 Notes by the Underwriter, (iv) the filing fees and out-of-pocket expenses relating to 11 such filings for any filings required to be made by the Underwriter with the NASD, (v) the registration or qualification of the Notes 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 Notes. (b) If the transactions contemplated by this Agreement are not consummated or if this Agreement is terminated by the Company pursuant to any of the provisions hereof, the Company will reimburse the Underwriter for all of its accountable out-of-pocket fees and expenses (including the fees, disbursements and other charges of its counsel) incurred by it in connection herewith. 6. Conditions of the Obligations of the Underwriter. The obligations of the Underwriter hereunder are subject to the following conditions: (a) All filings required under Rule 424 and 430A of the Rules and Regulations to be made by the Company prior to the Closing shall have been made by the Company. (b) 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 Notes 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 Prospectus shall have been filed unless a copy thereof was first submitted to the Underwriter and the Underwriter did not object thereto in good faith, and the Underwriter 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 Company whether or not arising from transactions in the ordinary course of business, and (ii) the Company 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, which is not set forth in the Registration Statement and the Prospectus. (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 12 against the Company or any of its officers, directors or shareholders in their capacities as such, or any of its assets or properties, before or by any Governmental Body in which litigation or proceeding 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. (e) Each of the representations and warranties of 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 Company and all conditions herein contained to be fulfilled or complied with by the Company at or prior to the Closing Date shall have been fully performed, fulfilled or complied with. (f) The Underwriter 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 under the laws of the Commonwealth of Puerto Rico and is in good standing with the Commonwealth of Puerto Rico; Banco Popular is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Puerto Rico and is in good standing with the Commonwealth of Puerto Rico; (ii) The Company has duly authorized the issuance and sale of the Notes; the Notes have been validly issued, and are legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms and entitled to the benefits of the Indenture; the Notes conform in all material respects to the description thereof contained in the Prospectus, and will not be subject to any preemptive, subscription or other similar rights; the terms of the Notes and their issuance and sale have been duly established in conformity with the Indenture; 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 Registration Statement is effective under the Act; any 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; (iv) The Registration Statement and the Prospectus as of its date, appeared on their face to be appropriately responsive, in all material respects (other than the 13 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; (v) The descriptions contained and summarized in the Registration Statement, or incorporated therein by reference, and the Prospectus 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 the Notes," "Certain Tax Considerations" (including "Puerto Rico Taxation" and "United States Taxation") in the Prospectus Supplement, under the heading "Description of Notes We May Offer" in the Prospectus, and under the headings "Regulation and Supervision" in the Company's Annual report on Form 10-K, incorporated by reference in the Prospectus, 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; (vi) 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; (vii) None of the Company's issuance and sale of the Notes, its 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 in the Prospectus, 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 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 issuance and sale of the Notes, its performance of this 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 Underwriter of the Notes; (viii) The Company is not required to be registered as an investment company under the Investment Company Act; and (ix) 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 14 New York. (x) The Indenture has been duly authorized, executed and delivered by the Company, and is a valid and binding instrument, enforceable against the Company in accordance with its terms. (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 under the laws of the Commonwealth of Puerto Rico and is in good standing with the Commonwealth of Puerto Rico. Each of Banco Popular and each of the other Significant Subsidiaries is a corporation 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 Notes; the Notes have been validly issued, and are legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms and entitled to the benefits of the Indenture; the Notes conform in all material respects to the description thereof contained in the Prospectus, and will conform in all material respects to the description thereof contained in the Prospectus, and will not be subject to any preemptive, subscription or other similar rights; the terms of the Notes and their issuance and sale have been duly established in conformity with the Indenture; 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) 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; (iv) To the knowledge of such counsel, there is not pending or threatened against the Company or any of the 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 Company or any of its Significant Subsidiaries 15 or any of their respective assets or properties. To the knowledge of such counsel, 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 Registration Statement or Prospectus or in the materials incorporated by reference therein, 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; (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) 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 in the Prospectus, 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 Company pursuant to (A) the terms of the Certificate of Incorporation or By-laws of the Company, in each case as amended; (B) the terms of any contract or other agreement to which the Company is a party or by which it is or may be bound or to which any of its 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 Company or any of its activities or properties; or (D) the terms of any judgment, decree or order of any arbitrator or Governmental Body having such jurisdiction and of which such counsel has knowledge; and no consent, approval, authorization or order of any Governmental Body has been or is required for the Company's performance of this 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 Underwriter of the Notes; (vii) To such counsel's knowledge, the conduct of the respective businesses of the Company and its Significant Subsidiaries is not in violation of any federal, state or local statute, administrative regulation or other law, which violation is likely to have a material adverse effect on the Company and its Subsidiaries considered as a single enterprise; and 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; (viii) The Company is not required to be registered as an investment company under the Investment Company Act; (ix) To the knowledge of such counsel, the Company is not in any breach 16 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 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 Company is a party or by which the Company is or may be bound or to which any of its properties or assets is or may be subject, which breach, violation or default 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 Company or any of its activities, assets or properties, which breach, violation or default 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 could have a material adverse effect on the Company and its Subsidiaries considered as a single enterprise; (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 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 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 for any such order, directive or agreement that is not material to the Company and its Subsidiaries considered as a single enterprise. (xii) The Indenture has been duly authorized, executed and delivered by the Company and is a valid and binding instrument, enforceable against the Company in accordance with its terms. 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 public officials. Notwithstanding the above, and except with respect to opinions regarding the Indenture, such counsel shall not be required to opine as to matters involving the application of laws of any jurisdiction other than the Commonwealth of Puerto Rico and the United States. When opining as to matters involving the application of laws of any jurisdiction other than the Commonwealth of Puerto Rico and the United States, such counsel may rely upon the opinion of local (including in-house) counsel to the Company (to the extent satisfactory in form and scope to counsel for the Underwriter); the foregoing opinion shall also state that such counsel has no reason to believe that the Underwriter is not justified in relying upon such opinion of local counsel, and copies of such opinion shall be 17 delivered to the Underwriter 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 they make no representation that they have 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 option. (g) The Underwriter shall have received an opinion, dated the Closing Date, from O'Neill & Borges, counsel to the Underwriter, which opinion shall be satisfactory in all respects to the Underwriter. (h) Concurrently with the execution and delivery of this Agreement, the Accountants shall have furnished to the Underwriter a letter, dated the date of its delivery (the "Accountants Letter"), addressed to the Underwriter and in form and substance satisfactory to the Underwriter, 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 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 generally accepted auditing standards) consisting of (a) reading the minutes of meetings of the stockholders and the Board of Directors of the Company and its Subsidiaries since December 31, 2002, as set forth in the minute books through a date 18 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 or in SAS No. 100, "Interim Financial Information", as applicable, 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 captions "Consolidated Ratio of Earnings to Fixed Charges," in the Prospectus Supplement, under the caption "Consolidated Ratio of Earnings to Fixed Charges and Ratio of Earnings to Fixed Charges and Preferred Stock Dividends of Popular, Inc." in the Base Prospectus, and under the headings "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Statistical Summaries" 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 computations, is in agreement with such records or computations 19 made therefrom. 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 Underwriter that (A) such letter shall be accompanied by a written explanation of the Company as to the significance thereof, unless the Underwriter deems such explanation unnecessary, and (B) such changes, decreases or increases do not, in the sole judgment of the Underwriter, make it impractical or inadvisable to proceed with the purchase and delivery of the Notes as contemplated by the Registration Statement and the Prospectus, as amended as of the date hereof. (i) 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. (j) At the Closing Date, there shall be furnished to the Underwriter 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, in form and substance satisfactory to the Underwriter, 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 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 the Company 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 by the Company on or prior to the delivery of such certificate has been duly, timely and fully complied with; and 20 (iii) No stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto and no order directed at any document 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. (k) The Notes shall be qualified for sale in such states and possessions as the Underwriter may reasonably request, each such qualification shall be in effect and not subject to any stop order or other proceeding on the Closing Date. (l) The Company shall have furnished to the Underwriter such officers' certificates, certificates of government officials, letters and other documents, in addition to those specifically mentioned herein, as the Underwriter 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 Underwriter. (m) A certificate of the Trustee, dated the Closing Date addressed to the Underwriter substantially to the effect that: (i) the Trustee is a national banking association duly created, validly existing and in good standing pursuant to the laws of the United States and is duly qualified to perform its duties as Trustee; and (ii) the Trustee has been duly authorized to act as successor trustee under the Indenture and to perform all of its obligations thereunder as trustee. 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. 7. Indemnification and Contribution. (a) The Company agrees to indemnify and hold harmless the Underwriter, the directors, officers, employees and agents of the Underwriter and each person, if any, who controls the 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, 21 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 Notes 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, the Underwriter and each such other person for any legal or other expenses reasonably incurred by the 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 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 the Underwriter furnished in writing to the Company by the Underwriter on behalf of the Underwriter expressly for inclusion therein; provided, further that such indemnity with respect to any Preliminary Prospectus shall not inure to the benefit of the Underwriter (or any such other person) from whom the person asserting any such loss, claim, damage, liability or action purchased Notes which are the subject thereof to the extent that any such loss, claim, damage or liability (i) results from the fact that the 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 Notes 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 the 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 the Underwriter or any person who controls the 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 the Underwriter and each such other person from all liability arising out of such claim, action, suit or proceeding. (b) The Underwriter will indemnify and hold harmless the Company, its 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 the Company and any such director, officer or controlling person 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 22 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 the Underwriter 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 Underwriter set forth under the heading "Underwriting" (which does not include information on the Company's expenses and the listing of the Notes) constitute the only information furnished in writing to the Company by the Underwriter expressly for inclusion in the Registration Statement, any Preliminary Prospectus or the Prospectus. This indemnity agreement will be in addition to any liability that the 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 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 23 allegations or circumstances, designated by the Underwriter 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 s 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 Notes 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 Company, on the one hand, and the Underwriter, on the other, shall be deemed to be in the same proportion as the total proceeds from the offering of the Notes (before deducting expenses) received by the Company bear to the total underwriting discounts and commissions received by the Underwriter, in each case as set forth in the table on the cover page of the Prospectus. Relative fault shall be 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 Underwriter, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Underwriter 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 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), the Underwriter shall not be required to contribute any amount in excess of the total underwriting discounts received by it with respect to the Notes purchased by the Underwriter under this Agreement, less the aggregate amount of any damages that the 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. For purposes of this Section 7(d), each person, if any, who controls the Underwriter within the meaning of Section 24 15 of the Act or Section 20 of the Exchange Act will have the same rights to contribution as the 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). 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 Underwriter, (ii) acceptance of any of the Notes and payment therefor or (iii) any termination of this Agreement. 8. Termination. The obligations of the Underwriter under this Agreement may be terminated at any time prior to the Closing Date, by notice to the Company from the Underwriter, without liability on the part of the Underwriter to the Company if, prior to delivery and payment for the Notes in the sole judgment of the Underwriter, (i) trading in securities 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 securities 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 the 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 Underwriter, impracticable or inadvisable to market the Notes 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. Survival. The respective representations, warranties, agreements, covenants, indemnities and other statements of the Company, its officers, and the Underwriter set forth in this Agreement, shall remain in full force and effect, regardless of (i) any investigation made by or on behalf of the Company, any of its officers or directors, the Underwriter or any controlling person referred to in Section 7 hereof and (ii) delivery of and payment for the Notes. 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. 10. 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 25 office of the Company, Banco Popular Center, 268 Munoz Rivera Avenue, Hato Rey, PR 00918, Attention: Treasurer with a copy to the attention of the General Counsel, or (b) if to the Underwriter, to the office of the Underwriter, Banco Popular Center, Suite 1020, 268 Munoz Rivera Avenue, Hato Rey, PR 00918, Attention: Managing Director. 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. 11. Successors. This Agreement shall inure to the benefit of and shall be binding upon the Underwriter, 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 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 Underwriter, 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 Notes from the 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. 12. 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. 13. 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. 26 Please confirm that the foregoing correctly sets forth the agreement among the Company and the Underwriter. Very truly yours, POPULAR, INC. By: /s/ Richard Barrios ------------------------ Name: Richard Barrios Title: Senior Vice President Confirmed as of the date first above mentioned: POPULAR SECURITIES, INC. By: /s/ Kenneth W. McGrath ---------------------- Name: Kenneth W. McGrath Title: President and Chief Executive Officer 27 EX-4.(E) 4 g85106exv4wxey.txt EX-(4)(E) FORM OF NOTE DUE SEPTEMBER 30, 2008 EXHIBIT (4)(e) [FORM OF SERIES A AND SERIES B NOTES] This Security is a Global Security within the meaning of the Indenture hereinafter referred to and is registered in the name of a depositary or a nominee thereof. This Security may not be exchanged in whole or in part for a security registered, and no transfer of this Security in whole or in part may be registered, in the name of any person other than such depositary or a nominee thereof, except in the limited circumstances described in the Indenture. Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the Company or its agent for registration of transfer, exchange or payment, and any 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. CUSIP NO. _____________ PRINCIPAL AMOUNT: $__________ REGISTERED NO. 1 POPULAR, INC. NOTES LINKED TO THE S&P 500 INDEX(R)DUE SEPTEMBER 30, 2008, SERIES [A] [ B] 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 CEDE & Co., or registered assigns, an amount equal to the Payment at Stated Maturity (as defined below), 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, on the Stated Maturity Date (as defined below). This Security shall not bear any interest. Any payments on this Security on the Stated Maturity will be made against presentation of this Security at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, The City of New York. "Standard & Poor's(R)," "S&P(R)," "S&P 500(R)," "Standard & Poor's 500(R)," and "500(R)" are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by the Company. This Security, based on the performance of the S&P 500 Index, is not sponsored, endorsed, sold or promoted by Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P," which term, as used herein, includes its successors), and S&P makes no representation regarding the advisability of investing in this Security. Determination of Payment at Stated Maturity "Payment at Stated Maturity" shall mean, for each $1,000 principal amount of this Security, the sum of (i) $1,000 and (ii) the greater of (x) $140 and (y) the Contingent Additional Amount. Set forth below are certain defined terms used in this Security in connection with the determination of the Payment at Stated Maturity "Contingent Additional Amount" means for each $1,000 principal amount of this Security, an amount equal to the greater of (i) zero and (ii) the product of $1,000 and the sum of the 20 Adjusted Quarterly Index Returns over the term of this Security. "Adjusted Quarterly Index Return" means for each quarterly period, commencing on October 1, 2003 a percentage equal to the lesser of: - 7.25%; and - the actual quarterly percentage change (increase or decrease) in the S&P 500 Index return for such quarterly period. The actual quarterly percentage change in any quarterly period is calculated as follows: Index Level at Index Level at Current Prior Quarterly actual quarterly Quarterly Determination Date - Determination Date percentage change = -------------------------------------------------------- Index Level at Prior Quarterly Determination Date "Index Level at Current Quarterly Determination Date" means, with respect to any Quarterly Determination Date, the Closing Level of the S&P 500 Index at the end of trading on the New York Stock Exchange on such date. "Index Level at Prior Quarterly Determination Date" means (i) with respect to the first Quarterly Determination Date, the Initial Index Level, and (ii) with respect to each subsequent Quarterly Determination Date, the Closing Level of the S&P 500 Index on the immediately preceding Quarterly Determination Date. "Quarterly Determination Date" means the last Calculation Day of each quarter, except for the final Quarterly Determination Date which will be the fifth Calculation Day immediately preceding the Stated Maturity Date. The Adjusted Quarterly Index Returns will be computed on each Quarterly Determination Date. If a Market Disruption Event occurs on any Quarterly Determination Date such that one or more of such days is not a Calculation Day, the determination of the index level will be delayed until the next Trading Day on which there is no Market Disruption Event, unless there is a market disruption event on each of the eight immediately following trading days. If there is a Market Disruption Event on each of such dates, then the eighth Trading Day following the originally scheduled Quarterly Determination Date shall be used to determine the level of the S&P 500 Index notwithstanding the fact that there is a Market Disruption Event on such day. In any such event the Calculation Agent may take into account any quantifiable effect the Market Disruption Event has had on the value of the S&P 500 Index. "Calculation Agency Agreement" shall mean the Calculation Agency Agreement dated as of September 30, 2003 between the Company and the Calculation Agent, as amended from time to time. "Calculation Agent" shall mean the Person that has entered into the Calculation Agency Agreement with the Company providing for, among other things, the determination of the Contingent Additional Amount, if any, and the Payment at Stated Maturity, which term shall, unless the context otherwise requires, include its successors under such Calculation Agency Agreement. The initial Calculation Agent shall be Popular Securities, Inc. Pursuant to the Calculation Agency Agreement, the Company may appoint a different Calculation Agent from time to time after the initial issuance of the Securities of this series without the consent of the Holders of the Securities of this series and without notifying the Holders of the Securities of this series. "Calculation Day" means any Trading Day on the New York Stock Exchange on which a Market Disruption Event has not occurred. "Closing Level" shall mean, on any date, the last reported level of the S&P 500 Index at 4:00 p.m., New York City time, on such date as reported by S&P; provided, however, that in the event that S&P discontinues publication of the S&P 500 Index, the Closing Level will be determined in the manner set forth in this Security under "Discontinuance of The S&P 500 Index; Alteration Of Method Of Calculation." "Initial Index Level" shall mean 1,003.27. A "Market Disruption Event" with respect to the S&P 500 Index will occur on any day if the Calculation Agent determines any of the following: 2 - A material suspension or material limitation of trading in 20% or more of the underlying stocks which then comprise the S&P 500 Index or any successor index has occurred on that day, in each case, during the one hour period preceding the close of trading on the primary organized U.S. exchange or trading system on which those stocks are traded or, if in the case of a common stock not listed or quoted in the United States, on the primary exchange, trading system or market for that security. Limitations on trading during significant market fluctuations imposed pursuant to New York Stock Exchange Rule 80B or any applicable rule or regulation enacted or promulgated by The New York Stock Exchange, any other exchange, trading system or market, any other self regulatory organization or the Securities and Exchange Commission of similar scope or as a replacement for Rule 80B, may be considered material. A "trading system" includes bulletin board services. - A material suspension or material limitation has occurred on that day, in each case, during the one hour period preceding the close of trading in options or futures contracts related to the S&P 500 Index or any successor index, whether by reason of movements in price exceeding levels permitted by an exchange, trading system or market on which those options or futures contracts are traded or otherwise. - Information is unavailable on that date, through a recognized system of public dissemination of transaction information, during the one hour period preceding the close of trading, of accurate price, volume or related information in respect of 20% or more of the underlying stocks which then comprise the S&P 500 Index or any successor index or in respect of options or futures contracts related to the S&P 500 Index or any successor index, in each case traded on any major U.S. exchange or trading system or, in the case of securities of a non-U.S. issuer, traded on the primary non-U.S. exchange, trading system or market for that security. For purposes of determining whether a Market Disruption Event has occurred: - a limitation on the hours or number of days of trading will not constitute a Market Disruption Event if it results from an announced change in the regular business hours of the relevant exchange, trading system or market; and - close of trading means 4:00 p.m., New York City time. "S&P 500 Index" shall mean the S&P 500 Index as calculated by S&P. "Stated Maturity Date" shall mean September 30, 2008, subject to postponement if, as a result of a Market Disruption Event, the level of the S&P 500 Index on the final Quarterly Determination Date cannot be determined. If such a postponement occurs, the Stated Maturity Date will be postponed until five business days after the final Quarterly Determination Date has been determined. "Trading Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday that is a day on which The New York Stock Exchange, The Nasdaq National Market, The American Stock Exchange, the Chicago Mercantile Exchange and the Chicago Board of Options Exchange are open for trading. Discontinuance Of The S&P 500 Index; Alteration Of Method Of Calculation If S&P discontinues publication of the S&P 500 Index and S&P or another entity publishes a successor or substitute index that the Calculation Agent determines, in its sole discretion, to be comparable to the discontinued S&P 500 Index, then any subsequent Closing Level will be determined by reference to the level of such successor or substitute index (in any such case, a "successor index") at 4:00 p.m., New York City time, on the date that any such subsequent Closing Level is to be determined. 3 Upon any selection by the Calculation Agent of a successor index, the Company will promptly give notice to the Holders of the Securities of this series. If S&P discontinues publication of the S&P 500 Index prior to, and such discontinuance is continuing on, the date that any Closing Level is to be determined and the Calculation Agent determines that no successor index is available at such time, then, on such date, the Calculation Agent will determine each subsequent Closing Level to be used in computing the Contingent Additional Amount. Each such Closing Level will be computed by the Calculation Agent in accordance with the formula for and method of calculating the S&P 500 Index last in effect prior to such discontinuance, using the Closing Price (or, if trading in the relevant security has been materially suspended or materially limited, its good faith estimate of the Closing Price that would have prevailed but for such suspension or limitation) at the close of the principal trading session on such date of each security most recently comprising the S&P 500 Index on the primary organized U.S. exchange or trading system. "Closing Price" means, with respect to any security on any date, the last reported sales price regular way on such date or, in case no such reported sale takes place on such date, the average of the reported closing bid and asked prices regular way on such date, in either case on the primary organized U.S. exchange or trading system on which such security is then listed or admitted to trading. If a successor index is selected or the Calculation Agent calculates an Adjusted Quarterly Index Return as a substitute for the S&P 500 Index, such successor index will be used as a substitute for the S&P 500 Index for all purposes, including for purposes of determining whether a Market Disruption Event exists. If at any time the method of calculating the S&P 500 Index or a successor index is changed in a material respect, or if the S&P 500 Index or a successor index is in any other way modified so that such index does not, in the opinion of the Calculation Agent, fairly represent the value of the S&P 500 Index or such successor index had such changes or modifications not been made, then the Calculation Agent will, at the close of business in New York City on the date that any quarterly index return is to be determined, make such calculations and adjustments as, in the good faith judgment of the Calculation Agent, may be necessary in order to arrive at a value of a stock index comparable to the S&P 500 Index or such successor index, as the case may be, as if such changes or modifications had not been made, and calculate the Adjusted Quarterly Index Return and the Contingent Additional Amount with reference to the S&P 500 Index or such successor index, as adjusted. Calculation Agent The Calculation Agent will determine the Contingent Additional Amount, if any, to be paid in connection with this Security. In addition, the Calculation Agent will: - determine if adjustments are required to the Adjusted Quarterly Index Returns under the circumstances described in this Security; - if publication of the S&P 500 Index is discontinued, select a successor index or, if no successor index is available, determine the final index level; and - determine whether a Market Disruption Event has occurred and whether the Stated Maturity Date will be postponed. The Company covenants that, so long as any of the Securities of this series are Outstanding, there shall at all times be a Calculation Agent (which shall be a broker-dealer, bank or other financial institution) with respect to the Securities of this series. All determinations made by the Calculation Agent with respect to the Securities of this series will be at the sole discretion of the Calculation Agent and, in the absence of manifest error, will be conclusive for all purposes and binding on the Company and the Holders of the Securities of this series. All percentages and other amounts resulting from any calculation with respect to the Securities of this series will be rounded at the Calculation Agent's discretion. 4 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 under its corporate seal. DATED: POPULAR, INC. By: ________________________________ Its: _______________________________ [SEAL] Attest: ____________________________ Its: _______________________________ TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Securities of the series designated therein described in the within-mentioned Indenture. BANK ONE, N.A., as Trustee By: ______________________________________ Authorized Signature 5 CERTIFICATE OF AUTHENTICATION This is one of the Securities of the series designated therein described in the within-mentioned Indenture. BANCO POPULAR DE PUERTO RICO, as Authenticating Agent, Paying Agent and Security Registrar By: ______________________________________ Name: Luis R. Cintron, Esq. Title: Senior Vice President and Trust Officer Date: September 30, 2003 5-A 6 [Reverse of Note] POPULAR, INC. NOTES LINKED TO THE S&P 500 INDEX(R)DUE SEPTEMBER 30, 2008, SERIES [A] [B] This Security is one of a duly authorized issue of securities of the Company (herein called the "Securities"), issued and to be issued in one or more series under an indenture dated as of February 15, 1995, as supplemented by a first supplemental indenture dated as of May 8, 1997 and a second supplemental indenture dated as of August 5, 1999, as amended or supplemented from time to time (herein called the "Indenture"), between the Company and Bank One, N.A. (formerly known as The First National Bank of Chicago), 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 $31,152,000, which together with the series designated as Series [A][B] will constitute a single series of securities under the Indenture; provided, however, that the Company may, so long as no Event of Default has occurred and is continuing, without the consent of the Holders of the Securities of this series, issue additional Securities with the same terms as the Securities of this series, and such additional Securities shall be considered part of the same series under the Indenture as the Securities of this series. The Series A securities will be freely exchangeable at any time for the Series B securities in like denominations. The Securities of this series are not subject to repayment at the option of the Holder hereof prior to the Stated Maturity Date. The Securities of this series will not be entitled to any sinking fund. The Securities of this series are not redeemable by the Company at any time. The Company agrees, to the extent permitted by law, not to voluntarily claim the benefits of any laws concerning usurious rates of interest against a Holder of Securities of this series. If an Event of Default with respect to Securities of this series shall occur and be continuing, the amount payable under Securities of this series, upon any acceleration permitted under the Indenture, will be equal to, per $1,000 principal amount of this Security, the sum of $1,000 and the greater of (x) $140.00 and (y) the Contingent Additional Amount, calculated as though the date of acceleration was the Stated Maturity Date. If a bankruptcy proceeding is commenced in respect to the Company, the claims of the beneficial holders of this Security may be limited under Title 11 of the United States Code. Upon payment of the amount so declared due and payable, all of the Company's obligations in respect of payment at Stated Maturity shall terminate. The Securities of this series will not bear a default rate of interest after the occurrence of an Event of Default or an acceleration under the Indenture. The Company agrees, and by acceptance of a beneficial ownership interest in this Security each beneficial owner of this Security will be deemed to have agreed, for United States federal income tax purposes (i) to treat this Security as a single debt instrument subject to the Treasury regulations governing contingent payment debt instruments, (ii) to report all income (or loss) with respect to this Security according to those Treasury regulations, and (iii) to be bound by the Company's determination of the "comparable yield" and the "projected payment schedule" (within the meaning of such Treasury regulations) for this Security, unless such beneficial owner timely discloses and justifies in its federal income tax return the use of a different comparable yield and projected payment schedule. 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 7 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. Solely for the purpose of determining whether any consent, waiver, notice or other action or Act to be taken or given by the Holders of Securities pursuant to the Indenture has been given or taken by the Holders of Outstanding Securities in the requisite aggregate principal amount, the principal amount of this Security will be deemed to be equal to the amount set forth on the face hereof as the "Principal Amount" hereof. 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. Upon due presentment for registration of transfer of this Security at the office or agency of the Company in a new Security or Securities of this series in authorized denominations 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. 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 after the Company receives such notice or becomes aware of such ineligibility, (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, having the same terms and of authorized denominations aggregating a like amount. 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 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. No reference herein to the Indenture and no provision of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the Payment at Stated Maturity at the times and place, and in the coin or currency, herein prescribed, except as otherwise provided in this Security. 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 Maturity Payment Amount, or for any claim based on this Security, 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. 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. This Security shall be governed by and construed in accordance with the laws of the State of New York. 8 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. 9 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. 10 EX-5.(A) 5 g85106exv5wxay.txt EX-(5)(A) BRUNILDA SANTOS DE ALVAREZ LLP EXHIBIT (5)(a) [Opinion of Brunilda Santos de Alvarez] September 30, 2003 Popular, Inc. Popular Center Building 209 MuZoz Rivera Ave Hato Rey, Puerto Rico 00918 Dear Sirs: In connection with the registration under the Securities Act of 1933, as amended (the "Act"), of an aggregate principal amount of $31,152,000 of the Notes Linked to the S&P 500 Index due September 30, 2008, Series A and B (the "Notes") of Popular, Inc., a Puerto Rico corporation (the "Company"), I, as Legal Counsel to the Company have examined copies of the Indenture, dated as of February 15, 1995, as supplemented by a first supplemental indenture dated as of May 8, 1997 and a second supplemental indenture dated as of August 5, 1999 (the "Indenture") and such other documents, corporate records, certificates and other instruments, and such questions of law, as I have considered necessary or appropriate for the purposes of this opinion. Upon the basis of such examination, I advise you that, in my opinion: 1. The Company has been duly incorporated and is existing in good standing under the laws of the Commonwealth of Puerto Rico. 2. The Indenture relating to the Notes has been duly authorized, executed and delivered by the Company. 3. The Notes constitute valid and legally binding obligations of the Company, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. In rendering the foregoing opinion, I am expressing no opinion as to Federal or state laws relating to fraudulent transfers. The foregoing opinion is limited to the Federal laws of the United States, the laws of the Commonwealth of Puerto Rico and the laws of the State of New York and I am expressing no opinion as to the effect of the laws of any other jurisdiction. With respect to all matters of New York law, I have relied upon the opinion, dated the date hereof, of Sullivan & Cromwell LLP, and my opinion is subject to the same assumptions, qualifications and limitations with respect to such matters as are contained in such opinion of Sullivan & Cromwell LLP. I also have relied as to certain matters on information obtained from public officials, officers of the Company and other sources believed by me to be responsible, and I have assumed that the Indenture has been duly authorized, executed and delivered by the Trustee thereunder, that the trustee's certificates of authentication of the Notes have been manually signed by one of the trustee's authorized officers, and that the signatures on all documents examined by me are genuine, assumptions that I have not independently verified. I hereby consent to the filing of this opinion as an exhibit to a Current Report on Form 8-K of the Company relating to the public offering of the Notes and to the reference to me under the heading "Legal Matters" in the Prospectus Supplement, dated September 25, 2003, filed with the Securities and Exchange Commission pursuant to Rule 424(b) under the Act. In giving the foregoing consent, I do not thereby admit that I am in the category of persons whose consent is required under Section 7 of the Act. Very truly yours, /s/ BRUNILDA SANTOS DE ALVAREZ EX-5.(B) 6 g85106exv5wxby.txt EX-(5)(B) OPINION OF PIETRANTONI MENDEZ & ALVAREZ EXHIBIT (5)(b) [PIETRANTONI MENDEZ & ALVAREZ LETTERHEAD] September 30, 2003 Popular, Inc. Popular Center Building 209 Munoz Rivera Ave Hato Rey, Puerto Rico 00918 Dear Sirs: In connection with the registration under the Securities Act of 1933, as amended (the "Act"), of an aggregate principal amount of $31,152,000 of the Notes Linked to the S&P 500 Index due September 30, 2008, Series A and B (the "Notes") of Popular, Inc., a Puerto Rico corporation (the "Company"),we, as your counsel, have examined copies of the Indenture, dated as of February 15, 1995, as supplemented by a first supplemental indenture dated as of May 8, 1997 and a second supplemental indenture dated as of August 5, 1999 (the "Indenture") and such other documents, corporate records, certificates and other instruments, and such questions of law, as we have considered necessary or appropriate for the purposes of this opinion. Upon the basis of such examination, we advise you that, in our opinion: 1. The Company has been duly incorporated and is existing in good standing under the laws of the Commonwealth of Puerto Rico. 2. The Indenture relating to the Notes has been duly authorized, executed and delivered by the Company. 3. The Notes constitute valid and legally binding obligations of the Company, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. In rendering the foregoing opinion, we are expressing no opinion as to Federal or state laws relating to fraudulent transfers. The foregoing opinion is limited to the Federal laws of the United States, the laws of the Commonwealth of Puerto Rico and the laws of the State of New York and we are expressing no opinion as to the effect of the laws of any other jurisdiction. With respect to all matters of New York law, we have relied upon the opinion, dated the date hereof, of Sullivan & Cromwell LLP, and our opinion is subject to the same assumptions, qualifications and limitations with respect to such matters as are contained in such opinion of Sullivan & Cromwell LLP. We hereby consent to the filing of this opinion as an exhibit to the to Registration Statement on Form S-3 (File No. 333-73242) relating to the public offering of the Notes and to the reference to us under the heading "Legal Matters" in the Prospectus Supplement, dated September 25, 2003, filed with the Securities and Exchange Commission pursuant to Rule 424(b) under the Act. 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 EX-5.(C) 7 g85106exv5wxcy.txt EX-(5)(C) OPINION OF SULLIVAN CROMWELL LLP EXHIBIT (5)(c) [SULLIVAN & CROMWELL LLP LETTERHEAD] September 30, 2003 Popular, Inc. Popular Center Building 209 Munoz Rivera Ave Hato Rey, Puerto Rico 00918 Dear Sirs: In connection with the registration under the Securities Act of 1933 (the "Act"), of $31,152,000 principal amount of Notes Linked to the S&P 500 Index due September 30, 2008, Series A and B (the "Securities"), of Popular, Inc., a Puerto Rico corporation (the "Company"), we, as your special New York counsel, have examined copies of the Indenture, dated as of February 15, 1995, as supplemented by a first supplemental indenture dated as of May 8, 1997 and a second supplemental indenture dated as of August 5, 1999 (the "Indenture"), between you and Bank One, NA, as trustee, and such corporate records, certificates and other documents, and such questions of law, as we have considered necessary or appropriate for the purposes of this opinion. Upon the basis of such examination, we advise to you that, in our opinion, the Securities constitute valid and legally binding obligations of the Company, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. In rendering the foregoing opinion, we are expressing no opinion as to Federal or state laws relating to fraudulent transfers. The foregoing opinion is limited to the Federal laws of the United States, the laws of the State of New York and the laws of the Commonwealth of Puerto Rico and we are expressing no opinion as to the effect of the laws of any other jurisdiction. With respect to all matters of Puerto Rico law, we have relied upon the opinion, dated the date hereof, of Brunilda Santos de Alvarez, Esq., Puerto Rico counsel to the company, and our opinion is subject to the same assumptions, qualifications and limitations with respect to such matters as are contained in such opinion of Brunilda Santos de Alvarez, Esq. Also we have relied as to certain matters on the information obtained from public officials, officers of the Company and other sources believed by us to be responsible, and we have assumed that the Indenture has been duly authorized, executed and delivered by the Trustee thereunder, that the Securities conform to the specimen thereof examined by us, that the trustee's certificates of authentication of the Securities have been manually signed by one of the trustee's authorized officers, and that the signatures on all documents examined by us are genuine, assumptions that we have not independently verified. We hereby consent to the filing of this opinion as an exhibit to the Current Report on Form 8-K of the Company relating to the public offering of the Securities and to the reference to us under the heading "Legal Matters" in the Prospectus Supplement related to the Securities. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Act. Very truly yours, /s/ SULLIVAN & CROMWELL LLP EX-8.(A) 8 g85106exv8wxay.txt EX-(8)(A) OPINION OF PIETRANTONI MENDEZ & ALVAREZ EXHIBIT (8)(a) [PIETRANTONI MENDEZ & ALVAREZ LETTERHEAD] September 30, 2003 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 an aggregate principal amount of $ 31,152,000 of the Notes Linked to the S&P 500 Index due September 30, 2008, Series A and B, of the Company (the "Notes"). We have examined the prospectus supplement relating to the Notes (the "Prospectus Supplement"), dated September 25, 2003, 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 Consideration." 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 Notes 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 No. 333-73242) 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 -----END PRIVACY-ENHANCED MESSAGE-----

EX-1.(A)

                                                                  EXHIBIT (1)(a)

                                   $31,152,000

                                  POPULAR, INC.

            Notes Linked to the S&P 500 Index due September 30, 2008

                             UNDERWRITING AGREEMENT

                                                              September 25, 2003

POPULAR SECURITIES, INC.
Hato Rey, Puerto Rico 00918

Ladies and Gentlemen:

         POPULAR, INC., a Puerto Rico corporation (the "Company"), proposes to
sell its Notes Linked to the S&P 500 Index due September 30, 2008, Series A and
Series B in an aggregate principal amount of $31,152,000 (the "Notes"), which
are to be issued and sold by the Company to you (the "Underwriter"). The Notes
are to be issued pursuant to resolutions adopted by the Board of Directors of
the Company on November 7, 2001 and by the Funding Committee on September 25,
2003 (collectively the "Board Resolutions") and to the provisions of an
indenture regarding the Company's senior unsecured debt securities dated as of
February 15, 1995, as amended (the "Indenture"), between the Company and Bank
One, NA, as successor trustee (the "Trustee").

         The Company hereby confirms as follows its agreements with the
Underwriter.

         1.       Agreement to Sell and Purchase.

         On the basis of the representations, warranties and agreements of the
Company herein contained and subject to all the terms and conditions of this
Agreement, the Company agrees to sell to the Underwriter, and the Underwriter
agrees to purchase the Note from the Company, at an aggregate purchase price of
$30,451,080, equal to the aggregate public offering price of the Notes minus an
underwriting discount of $700,920.

         2.       Delivery and Payment. The Notes shall be evidenced in the form
of one or more global notes and will be delivered to the Underwriter in book
entry form through the facilities of the Depository Trust Company, 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

                                       1



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 Underwriter (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
the Underwriter hereunder.

         The cost of original issue tax stamps, if any, in connection with the
issuance, sale and delivery of Notes by the Company to the Underwriter shall be
borne by the Company. The Company will pay and save the Underwriter and any
subsequent holder of the Notes 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 the Underwriter of the Notes.

         3.       Representations and Warranties of the Company. The Company
represents, warrants and covenants to the Underwriter that:

                  (a)      The Company meets the requirements for use of Form
S-3 and a registration statement (Registration No. 333-73242) on Form S-3, as
amended, with respect to the Notes, including a prospectus (the "Base
Prospectus"), 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. Such registration statement and the Base
Prospectus may have been amended or supplemented prior to the date of this
Agreement; any such amendment or supplement was so prepared and filed, and any
such amendment or supplement filed after the effective date of such registration
statement has become effective. No stop order suspending the effectiveness of
the registration statement has been issued, and, to the Company's knowledge, no
proceeding for that purpose has been instituted or threatened by the Commission.
A final prospectus supplement relating to the Notes containing information
permitted to be omitted at the time of effectiveness by Rule 430A of the Rules
and Regulations has been or will be so 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); and the Rules and Regulations do not require the
Company to, and, without the Underwriter's consent, the Company will not, file a
post-effective amendment after the time of execution of this Agreement and prior
to the filing of such final form of prospectus supplement. The registration
statement has been supplemented by one or more forms of preliminary prospectus
supplement, as contemplated by Rule 430 or Rule 430A of the Rules and
Regulations, used in connection with the offering and sale of the Notes (each a
"Preliminary Prospectus"). Copies of such registration statement, any such
amendments, the final prospectus supplement (if filed with the commission prior
to the date of this Underwriting Agreement) and each 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 Underwriter and its counsel. The term "Registration Statement"
means such registration statement as amended at the time it

                                       2



became effective (the "Effective Date"), including financial statements and all
exhibits 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
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 Base Prospectus,
any Preliminary Prospectus or the 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 Underwriter for use in connection with the offering
of the Notes by the Company.

                  (b)      Each part of the Registration Statement (excluding
any prospectus supplement with respect to an offering of securities other than
the offering of the Notes contemplated hereby), 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
and will conform in all material respects with the requirements of the 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 Notes contemplated hereby), when such part became or becomes
effective, did not and will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; each Preliminary Prospectus, 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 and 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 the Underwriter in reliance upon, and in conformity with,
written information relating to the Underwriter furnished to the Company by the
Underwriter specifically for use in the preparation thereof. The Company has not
distributed any offering material in connection with the offering or sale of the
Notes 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

                                       3



the Exchange Act, as the case may be, conformed or will conform in all material
respects with the requirements of the 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 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 with 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.

                  (e)      The description of the securities of the company in
the Registration Statement 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.

                  (f)      The consolidated financial statements and the related
notes of the Company included in the Registration Statement or incorporated
therein by reference and 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.

                  (g)      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

                                       4



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.

                  (h)      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 has
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 monthly dividends on its preferred stock in the ordinary course of
its business.

                  (i)      The Company is not required to be registered under
the Investment Company Act of 1940, as amended (the "Investment Company Act").

                  (j)      Except as set forth or incorporated therein 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 the 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.

                  (k)      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

                                       5



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.
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.

                  (l)      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 Notes 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 Underwriter of the Notes to be sold hereby.

                  (m)      The Company has 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 Company and constitutes a valid and
binding agreement of the Company and is enforceable against the Company 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 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 Certificate of Incorporation or By-laws of the Company, in each case as
amended, or (ii) any contract or other agreement to which 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
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 Company

                                       6



or any of the Significant Subsidiaries or their respective businesses or
properties, the violation of which 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.

                  (n)      No statement, representation, or warranty made by the
Company in this Agreement or made in any certificate or document required by
this Agreement to be delivered to the Underwriter 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 Underwriter or its counsel
shall be deemed to be a representation and warranty by the Company to the
Underwriter as to the matters covered thereby.

                  (o)      Neither the Company nor any of its 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 Notes or otherwise.

                  (p)      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.

                  (q)      Neither the Company nor any of its Significant
Subsidiaries nor, to the Company's best knowledge, any employee or agent of the
Company or any Significant Subsidiary has made any payment of funds of the
Company or any Significant Subsidiary or received or retained any funds of 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.

                  (r)      The business, operations and facilities of 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,
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; 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

                                       7



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.

                  (s)      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 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.

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

                  (u)      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 of the Federal Reserve Bank of New York and of the
Federal Home Loan Bank of New York.

                  (v)      None of 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 for any such order, directive or
agreement that is not material to the Company and its Subsidiaries considered as
a single enterprise.

                  (w)      For the three year period ended December 31, 2002,
approximately 99% of Popular Inc.'s gross income was attributable to income
derived from sources within Puerto Rico and approximately 100% of its gross
income was attributable to the conduct of a trade or business in Puerto Rico,
both percentages determined in accordance with the applicable sourcing rules of
Section 861(c)(1)(B) of the United States Internal Revenue Code of 1986, as
amended.

                  (x)      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, or the principal of the Notes. Banco Popular 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 dividends to the Company
sufficient to allow the Company to pay interest on the Notes.

                  (y)      The Notes will be, upon their issuance and payment
therefor in accordance with the terms of this Agreement, duly authorized,
executed, and delivered and will constitute legally

                                       8



valid and binding obligations of the Company, enforceable against the Company in
accordance with their terms, and entitled to the benefits of the Indenture. The
Notes shall be payable and shall have such other terms as provided in the
Indenture and the Board Resolutions and as described in the Prospectus. The
terms of the Notes and the terms of their issuance and sale have been
established in conformity with the Indenture.

                  (z)      The Company has full legal right, power and authority
(i) to adopt the Board Resolutions, (ii) to enter into this Agreement, and (iii)
to carry out and consummate the transactions contemplated by each of the
foregoing instruments.

                  (aa)     The Company has duly authorized (i) the execution,
delivery and performance of this Agreement and the Notes, (ii) the preparation
and distribution of the Prospectus and of each Preliminary Prospectus, and (iii)
the taking of any and all such actions as may be required on the part of the
Company to carry out, give effect to and consummate the transactions
contemplated by this Agreement, the Prospectus, the Notes and the Indenture.

                  (bb)     The Board Resolutions have been duly adopted, and the
Indenture and this Agreement have each been duly authorized, executed and
delivered by the Company and each is in full force and effect, and each of the
Indenture and this Agreement constitutes a legally valid and binding obligation
of the Company enforceable against the Company in accordance with their terms.

         4.       Agreements of the Company. The Company covenants and agrees
with the Underwriter as follows:

                  (a)      The Company will cause the Prospectus Supplement to
be filed as contemplated by Section 3(a) hereof (but only if the Underwriter has
not reasonably objected thereto by notice to the Company after having been
furnished a copy within a reasonable time prior to filing) and will notify the
Underwriter promptly of such filing. The Company will not, during such period as
the Prospectus is required by law to be delivered in connection with sales of
the Notes by the Underwriter (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 Underwriter within a
reasonable period of time prior to the filing thereof and the Underwriter shall
not have objected thereto in good faith.

                  (b)      The Company will use its best efforts to cause the
Registration Statement to remain effective through the completion of the
Underwriter's distribution of the Notes, and will notify the Underwriter
promptly, and will confirm such advice in writing, (i) of the preparation and
filing (subject to Section 4(a)) of any post-effective amendment and when any
such post-effective amendment to the Registration Statement 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 Notes for offering or sale in any jurisdiction, or of the
initiation or threat of any proceeding for any such purpose; (v) of the

                                       9



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 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 Notes for sale in any
jurisdiction, the Company 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. The Company 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 Underwriter promptly
of all such filings.

                  (c)      If, at any time when a Prospectus relating to the
Notes is required to be delivered under the Act, any event occurs as a result of
which, in the judgment of the Company or the Underwriter, 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 Company will promptly notify the Underwriter 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 Underwriter, without
charge, copies of the Registration Statement and of any post-effective amendment
thereto, including financial statements and schedules, and all exhibits thereto.

                  (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 Underwriter, without charge, as many copies of each
Preliminary Prospectus, the Prospectus (containing the Prospectus Supplement)
and any amendment or supplement thereto as the Underwriter 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 Underwriter and by all dealers
to whom the Notes may be sold, both in connection with the offering or sale of
the Notes 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 Underwriter should be set forth in the Prospectus in order to
make any statement therein, in the light of the circumstances under which it

                                       10



was made, not misleading, or if, in the reasonable opinion of counsel to the
Underwriter, 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 before the termination of the
Prospectus Delivery Period if such document would be deemed to be incorporated
by reference into the Prospectus to which the Underwriter reasonably objects.

                  (g)      Prior to any public offering of the Notes by the
Underwriter, the Company will cooperate with the Underwriter and its counsel in
connection with the registration or qualification of the Notes for offer and
sale under the securities or blue sky laws of such jurisdictions as the
Underwriter may reasonably request; provided, that in no event shall the Company
be obligated to quality 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 make generally available to the
holders of the Notes as soon as practicable, but not later than ninety (90) days
after the close of the period covered thereby, an earnings statement (in form
complying with the provisions of Section 11(a) of the Act and Rule 158 of the
Rules and Regulations) covering a twelve-month period beginning not later than
the first day of the Company's fiscal quarter next following the "effective
date" (as defined in said Rule 158) of the Registration Statement.

                  (i)      The Company will apply the net proceeds from the
offering and sale of the Notes in the manner set forth in the Prospectus.

                  (j)      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 any
security of the Company to facilitate the sale or resale of any of the Notes.

         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 Underwriter, all costs and expenses incidental to
the performance of the obligations of the Company 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 (9)
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 Notes, (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 Notes by the Underwriter, (iv) the filing fees and out-of-pocket expenses
relating to

                                       11



such filings for any filings required to be made by the Underwriter with the
NASD, (v) the registration or qualification of the Notes 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 Notes.

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

         6.       Conditions of the Obligations of the Underwriter. The
obligations of the Underwriter hereunder are subject to the following
conditions:

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

                  (b)      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 Notes 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 Prospectus shall have been filed unless a
copy thereof was first submitted to the Underwriter and the Underwriter did not
object thereto in good faith, and the Underwriter 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 Company whether
or not arising from transactions in the ordinary course of business, and (ii)
the Company 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, which is not set forth in the Registration Statement and the
Prospectus.

                  (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

                                       12



against the Company or any of its officers, directors or shareholders in their
capacities as such, or any of its assets or properties, before or by any
Governmental Body in which litigation or proceeding 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.

                  (e)      Each of the representations and warranties of 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 Company and all conditions herein contained to be
fulfilled or complied with by the Company at or prior to the Closing Date shall
have been fully performed, fulfilled or complied with.

                  (f)      The Underwriter 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 under the laws of the Commonwealth of
         Puerto Rico and is in good standing with the Commonwealth of Puerto
         Rico; Banco Popular is a corporation duly organized, validly existing
         and in good standing under the laws of the Commonwealth of Puerto Rico
         and is in good standing with the Commonwealth of Puerto Rico;

                           (ii)     The Company has duly authorized the issuance
         and sale of the Notes; the Notes have been validly issued, and are
         legal, valid and binding obligations of the Company, enforceable
         against the Company in accordance with their terms and entitled to the
         benefits of the Indenture; the Notes conform in all material respects
         to the description thereof contained in the Prospectus, and will not be
         subject to any preemptive, subscription or other similar rights; the
         terms of the Notes and their issuance and sale have been duly
         established in conformity with the Indenture; 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 Registration Statement is effective
         under the Act; any 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;

                           (iv)     The Registration Statement and the
         Prospectus as of its date, appeared on their face to be appropriately
         responsive, in all material respects (other than the

                                       13



         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;

                           (v)      The descriptions contained and summarized in
         the Registration Statement, or incorporated therein by reference, and
         the Prospectus 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 the Notes,"
         "Certain Tax Considerations" (including "Puerto Rico Taxation" and
         "United States Taxation") in the Prospectus Supplement, under the
         heading "Description of Notes We May Offer" in the Prospectus, and
         under the headings "Regulation and Supervision" in the Company's Annual
         report on Form 10-K, incorporated by reference in the Prospectus,
         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;

                           (vi)     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;

                           (vii)    None of the Company's issuance and sale of
         the Notes, its 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
         in the Prospectus, 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 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 issuance and sale of the Notes, its
         performance of this 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 Underwriter of the Notes;

                           (viii)   The Company is not required to be registered
         as an investment company under the Investment Company Act; and

                           (ix)     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

                                       14



         New York.

                           (x)      The Indenture has been duly authorized,
         executed and delivered by the Company, and is a valid and binding
         instrument, enforceable against the Company in accordance with its
         terms.

                           (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 under the laws of the Commonwealth of
         Puerto Rico and is in good standing with the Commonwealth of Puerto
         Rico. Each of Banco Popular and each of the other Significant
         Subsidiaries is a corporation 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 Notes; the Notes have been validly issued, and
         are legal, valid and binding obligations of the Company, enforceable
         against the Company in accordance with their terms and entitled to the
         benefits of the Indenture; the Notes conform in all material respects
         to the description thereof contained in the Prospectus, and will
         conform in all material respects to the description thereof contained
         in the Prospectus, and will not be subject to any preemptive,
         subscription or other similar rights; the terms of the Notes and their
         issuance and sale have been duly established in conformity with the
         Indenture; 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)    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;

                           (iv)     To the knowledge of such counsel, there is
         not pending or threatened against the Company or any of the 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 Company
         or any of its Significant Subsidiaries

                                       15



         or any of their respective assets or properties. To the knowledge of
         such counsel, 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 Registration Statement or Prospectus or in the materials
         incorporated by reference therein, 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;

                           (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)     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 in the Prospectus, 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 Company pursuant to (A) the terms of the
         Certificate of Incorporation or By-laws of the Company, in each case as
         amended; (B) the terms of any contract or other agreement to which the
         Company is a party or by which it is or may be bound or to which any of
         its 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 Company or any of its activities or
         properties; or (D) the terms of any judgment, decree or order of any
         arbitrator or Governmental Body having such jurisdiction and of which
         such counsel has knowledge; and no consent, approval, authorization or
         order of any Governmental Body has been or is required for the
         Company's performance of this 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 Underwriter of the Notes;

                           (vii)    To such counsel's knowledge, the conduct of
         the respective businesses of the Company and its Significant
         Subsidiaries is not in violation of any federal, state or local
         statute, administrative regulation or other law, which violation is
         likely to have a material adverse effect on the Company and its
         Subsidiaries considered as a single enterprise; and 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;

                           (viii)   The Company is not required to be registered
         as an investment company under the Investment Company Act;

                           (ix)     To the knowledge of such counsel, the
         Company is not in any breach

                                       16


         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 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 Company is a party or by which the Company is or may be bound
         or to which any of its properties or assets is or may be subject, which
         breach, violation or default 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 Company or any of its activities, assets or
         properties, which breach, violation or default 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 could have a
         material adverse effect on the Company and its Subsidiaries considered
         as a single enterprise;

                           (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 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 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 for any such order,
         directive or agreement that is not material to the Company and its
         Subsidiaries considered as a single enterprise.

                           (xii)    The Indenture has been duly authorized,
         executed and delivered by the Company and is a valid and binding
         instrument, enforceable against the Company in accordance with its
         terms.

         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 public officials. Notwithstanding the above, and
except with respect to opinions regarding the Indenture, such counsel shall not
be required to opine as to matters involving the application of laws of any
jurisdiction other than the Commonwealth of Puerto Rico and the United States.
When opining as to matters involving the application of laws of any jurisdiction
other than the Commonwealth of Puerto Rico and the United States, such counsel
may rely upon the opinion of local (including in-house) counsel to the Company
(to the extent satisfactory in form and scope to counsel for the Underwriter);
the foregoing opinion shall also state that such counsel has no reason to
believe that the Underwriter is not justified in relying upon such opinion of
local counsel, and copies of such opinion shall be

                                       17


delivered to the Underwriter 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 they make no
representation that they have 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 option.

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

                  (h)      Concurrently with the execution and delivery of this
Agreement, the Accountants shall have furnished to the Underwriter a letter,
dated the date of its delivery (the "Accountants Letter"), addressed to the
Underwriter and in form and substance satisfactory to the Underwriter, 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 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 generally accepted auditing standards)
                  consisting of (a) reading the minutes of meetings of the
                  stockholders and the Board of Directors of the Company and its
                  Subsidiaries since December 31, 2002, as set forth in the
                  minute books through a date

                                       18


                  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 or in SAS No. 100,
                  "Interim Financial Information", as applicable, 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 captions
                  "Consolidated Ratio of Earnings to Fixed Charges," in the
                  Prospectus Supplement, under the caption "Consolidated Ratio
                  of Earnings to Fixed Charges and Ratio of Earnings to Fixed
                  Charges and Preferred Stock Dividends of Popular, Inc." in the
                  Base Prospectus, and under the headings "Management's
                  Discussion and Analysis of Financial Condition and Results of
                  Operations" and "Statistical Summaries" 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 computations, is
                  in agreement with such records or computations

                                       19


                  made therefrom.

         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 Underwriter that (A) such letter shall be accompanied by a written
explanation of the Company as to the significance thereof, unless the
Underwriter deems such explanation unnecessary, and (B) such changes, decreases
or increases do not, in the sole judgment of the Underwriter, make it
impractical or inadvisable to proceed with the purchase and delivery of the
Notes as contemplated by the Registration Statement and the Prospectus, as
amended as of the date hereof.

                  (i)      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.

                  (j)      At the Closing Date, there shall be furnished to the
Underwriter 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, in form and substance satisfactory to the Underwriter, 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 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 the Company 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 by the Company on or prior to the delivery of
                  such certificate has been duly, timely and fully complied
                  with; and

                                       20


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

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

                  (l)      The Company shall have furnished to the Underwriter
such officers' certificates, certificates of government officials, letters and
other documents, in addition to those specifically mentioned herein, as the
Underwriter 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 Underwriter.

                  (m)      A certificate of the Trustee, dated the Closing Date
addressed to the Underwriter substantially to the effect that: (i) the Trustee
is a national banking association duly created, validly existing and in good
standing pursuant to the laws of the United States and is duly qualified to
perform its duties as Trustee; and (ii) the Trustee has been duly authorized to
act as successor trustee under the Indenture and to perform all of its
obligations thereunder as trustee.

         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.

         7.       Indemnification and Contribution.

                  (a)      The Company agrees to indemnify and hold harmless the
Underwriter, the directors, officers, employees and agents of the Underwriter
and each person, if any, who controls the 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,

                                       21


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 Notes 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, the Underwriter and each such other person for any legal or other
expenses reasonably incurred by the 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 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
the Underwriter furnished in writing to the Company by the Underwriter on behalf
of the Underwriter expressly for inclusion therein; provided, further that such
indemnity with respect to any Preliminary Prospectus shall not inure to the
benefit of the Underwriter (or any such other person) from whom the person
asserting any such loss, claim, damage, liability or action purchased Notes
which are the subject thereof to the extent that any such loss, claim, damage or
liability (i) results from the fact that the 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 Notes 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
the 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 the Underwriter or any
person who controls the 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 the Underwriter and each such other person from all
liability arising out of such claim, action, suit or proceeding.

                  (b)      The Underwriter will indemnify and hold harmless the
Company, its 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 the Company and any such director, officer
or controlling person 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

                                       22


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 the
Underwriter 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 Underwriter set forth under the heading "Underwriting" (which
does not include information on the Company's expenses and the listing of the
Notes) constitute the only information furnished in writing to the Company by
the Underwriter expressly for inclusion in the Registration Statement, any
Preliminary Prospectus or the Prospectus. This indemnity agreement will be in
addition to any liability that the 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 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

                                       23


allegations or circumstances, designated by the Underwriter 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 s 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 Notes 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 Company, on the one hand, and the Underwriter, on the other, shall be
deemed to be in the same proportion as the total proceeds from the offering of
the Notes (before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriter, in each case
as set forth in the table on the cover page of the Prospectus. Relative fault
shall be 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 Underwriter,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
the Underwriter 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 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), the Underwriter shall not
be required to contribute any amount in excess of the total underwriting
discounts received by it with respect to the Notes purchased by the Underwriter
under this Agreement, less the aggregate amount of any damages that the
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. For purposes of this Section 7(d), each person, if any, who
controls the Underwriter within the meaning of Section

                                       24


15 of the Act or Section 20 of the Exchange Act will have the same rights to
contribution as the 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). 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 Underwriter,
(ii) acceptance of any of the Notes and payment therefor or (iii) any
termination of this Agreement.

         8.       Termination. The obligations of the Underwriter under this
Agreement may be terminated at any time prior to the Closing Date, by notice to
the Company from the Underwriter, without liability on the part of the
Underwriter to the Company if, prior to delivery and payment for the Notes in
the sole judgment of the Underwriter, (i) trading in securities 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
securities 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 the 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 Underwriter, impracticable or inadvisable to market the
Notes 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.       Survival. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Company, its
officers, and the Underwriter set forth in this Agreement, shall remain in full
force and effect, regardless of (i) any investigation made by or on behalf of
the Company, any of its officers or directors, the Underwriter or any
controlling person referred to in Section 7 hereof and (ii) delivery of and
payment for the Notes. 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.

         10.      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

                                       25


office of the Company, Banco Popular Center, 268 Munoz Rivera Avenue, Hato Rey,
PR 00918, Attention: Treasurer with a copy to the attention of the General
Counsel, or (b) if to the Underwriter, to the office of the Underwriter, Banco
Popular Center, Suite 1020, 268 Munoz Rivera Avenue, Hato Rey, PR 00918,
Attention: Managing Director. 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.

         11.      Successors. This Agreement shall inure to the benefit of and
shall be binding upon the Underwriter, 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 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 Underwriter, 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 Notes from the 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.

         12.      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.

         13.      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.

                                       26


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

                                                   Very truly yours,

                                                   POPULAR, INC.

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

Confirmed as of the date first above mentioned:

POPULAR SECURITIES, INC.

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

                                       27

EX-4.(E)

                                                                  EXHIBIT (4)(e)

                      [FORM OF SERIES A AND SERIES B NOTES]

         This Security is a Global Security within the meaning of the Indenture
hereinafter referred to and is registered in the name of a depositary or a
nominee thereof. This Security may not be exchanged in whole or in part for a
security registered, and no transfer of this Security in whole or in part may be
registered, in the name of any person other than such depositary or a nominee
thereof, except in the limited circumstances described in the Indenture.

         Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Company or
its agent for registration of transfer, exchange or payment, and any 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.

CUSIP NO. _____________                           PRINCIPAL AMOUNT:  $__________
REGISTERED NO. 1

                                  POPULAR, INC.

   NOTES LINKED TO THE S&P 500 INDEX(R)DUE SEPTEMBER 30, 2008, SERIES [A] [ B]

         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 CEDE & Co., or registered assigns,
an amount equal to the Payment at Stated Maturity (as defined below), 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, on the Stated Maturity
Date (as defined below). This Security shall not bear any interest.

         Any payments on this Security on the Stated Maturity will be made
against presentation of this Security at the office or agency of the Company
maintained for that purpose in the Borough of Manhattan, The City of New York.

         "Standard & Poor's(R)," "S&P(R)," "S&P 500(R)," "Standard & Poor's
500(R)," and "500(R)" are trademarks of The McGraw-Hill Companies, Inc. and have
been licensed for use by the Company. This Security, based on the performance of
the S&P 500 Index, is not sponsored, endorsed, sold or promoted by Standard &
Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P," which term, as
used herein, includes its successors), and S&P makes no representation regarding
the advisability of investing in this Security.

Determination of Payment at Stated Maturity

         "Payment at Stated Maturity" shall mean, for each $1,000 principal
amount of this Security, the sum of (i) $1,000 and (ii) the greater of (x) $140
and (y) the Contingent Additional Amount.

         Set forth below are certain defined terms used in this Security in
connection with the determination of the Payment at Stated Maturity

         "Contingent Additional Amount" means for each $1,000 principal amount
of this Security, an amount equal to the greater of (i) zero and (ii) the
product of $1,000 and the sum of the 20 Adjusted Quarterly Index Returns over
the term of this Security.

         "Adjusted Quarterly Index Return" means for each quarterly period,
commencing on October 1, 2003 a percentage equal to the lesser of:



         -        7.25%; and

         -        the actual quarterly percentage change (increase or decrease)
                  in the S&P 500 Index return for such quarterly period.

         The actual quarterly percentage change in any quarterly period is
calculated as follows:

                                                               Index Level at
                           Index Level at Current              Prior Quarterly
actual quarterly        Quarterly Determination Date   -      Determination Date
percentage change =     --------------------------------------------------------
                                       Index Level at Prior Quarterly
                                            Determination Date

         "Index Level at Current Quarterly Determination Date" means, with
respect to any Quarterly Determination Date, the Closing Level of the S&P 500
Index at the end of trading on the New York Stock Exchange on such date.

         "Index Level at Prior Quarterly Determination Date" means (i) with
respect to the first Quarterly Determination Date, the Initial Index Level, and
(ii) with respect to each subsequent Quarterly Determination Date, the Closing
Level of the S&P 500 Index on the immediately preceding Quarterly Determination
Date.

         "Quarterly Determination Date" means the last Calculation Day of each
quarter, except for the final Quarterly Determination Date which will be the
fifth Calculation Day immediately preceding the Stated Maturity Date. The
Adjusted Quarterly Index Returns will be computed on each Quarterly
Determination Date. If a Market Disruption Event occurs on any Quarterly
Determination Date such that one or more of such days is not a Calculation Day,
the determination of the index level will be delayed until the next Trading Day
on which there is no Market Disruption Event, unless there is a market
disruption event on each of the eight immediately following trading days. If
there is a Market Disruption Event on each of such dates, then the eighth
Trading Day following the originally scheduled Quarterly Determination Date
shall be used to determine the level of the S&P 500 Index notwithstanding the
fact that there is a Market Disruption Event on such day. In any such event the
Calculation Agent may take into account any quantifiable effect the Market
Disruption Event has had on the value of the S&P 500 Index.

         "Calculation Agency Agreement" shall mean the Calculation Agency
Agreement dated as of September 30, 2003 between the Company and the Calculation
Agent, as amended from time to time.

         "Calculation Agent" shall mean the Person that has entered into the
Calculation Agency Agreement with the Company providing for, among other things,
the determination of the Contingent Additional Amount, if any, and the Payment
at Stated Maturity, which term shall, unless the context otherwise requires,
include its successors under such Calculation Agency Agreement. The initial
Calculation Agent shall be Popular Securities, Inc. Pursuant to the Calculation
Agency Agreement, the Company may appoint a different Calculation Agent from
time to time after the initial issuance of the Securities of this series without
the consent of the Holders of the Securities of this series and without
notifying the Holders of the Securities of this series.

         "Calculation Day" means any Trading Day on the New York Stock Exchange
on which a Market Disruption Event has not occurred.

         "Closing Level" shall mean, on any date, the last reported level of the
S&P 500 Index at 4:00 p.m., New York City time, on such date as reported by S&P;
provided, however, that in the event that S&P discontinues publication of the
S&P 500 Index, the Closing Level will be determined in the manner set forth in
this Security under "Discontinuance of The S&P 500 Index; Alteration Of Method
Of Calculation."

         "Initial Index Level" shall mean 1,003.27.

         A "Market Disruption Event" with respect to the S&P 500 Index will
occur on any day if the Calculation Agent determines any of the following:

                                       2



         -        A material suspension or material limitation of trading in 20%
                  or more of the underlying stocks which then comprise the S&P
                  500 Index or any successor index has occurred on that day, in
                  each case, during the one hour period preceding the close of
                  trading on the primary organized U.S. exchange or trading
                  system on which those stocks are traded or, if in the case of
                  a common stock not listed or quoted in the United States, on
                  the primary exchange, trading system or market for that
                  security. Limitations on trading during significant market
                  fluctuations imposed pursuant to New York Stock Exchange Rule
                  80B or any applicable rule or regulation enacted or
                  promulgated by The New York Stock Exchange, any other
                  exchange, trading system or market, any other self regulatory
                  organization or the Securities and Exchange Commission of
                  similar scope or as a replacement for Rule 80B, may be
                  considered material. A "trading system" includes bulletin
                  board services.

         -        A material suspension or material limitation has occurred on
                  that day, in each case, during the one hour period preceding
                  the close of trading in options or futures contracts related
                  to the S&P 500 Index or any successor index, whether by reason
                  of movements in price exceeding levels permitted by an
                  exchange, trading system or market on which those options or
                  futures contracts are traded or otherwise.

         -        Information is unavailable on that date, through a recognized
                  system of public dissemination of transaction information,
                  during the one hour period preceding the close of trading, of
                  accurate price, volume or related information in respect of
                  20% or more of the underlying stocks which then comprise the
                  S&P 500 Index or any successor index or in respect of options
                  or futures contracts related to the S&P 500 Index or any
                  successor index, in each case traded on any major U.S.
                  exchange or trading system or, in the case of securities of a
                  non-U.S. issuer, traded on the primary non-U.S. exchange,
                  trading system or market for that security.

For purposes of determining whether a Market Disruption Event has occurred:

         -        a limitation on the hours or number of days of trading will
                  not constitute a Market Disruption Event if it results from an
                  announced change in the regular business hours of the relevant
                  exchange, trading system or market; and

         -        close of trading means 4:00 p.m., New York City time.

         "S&P 500 Index" shall mean the S&P 500 Index as calculated by S&P.

         "Stated Maturity Date" shall mean September 30, 2008, subject to
postponement if, as a result of a Market Disruption Event, the level of the S&P
500 Index on the final Quarterly Determination Date cannot be determined. If
such a postponement occurs, the Stated Maturity Date will be postponed until
five business days after the final Quarterly Determination Date has been
determined.

         "Trading Day" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday that is a day on which The New York Stock Exchange, The Nasdaq National
Market, The American Stock Exchange, the Chicago Mercantile Exchange and the
Chicago Board of Options Exchange are open for trading.

Discontinuance Of The S&P 500 Index; Alteration Of Method Of Calculation

         If S&P discontinues publication of the S&P 500 Index and S&P or another
entity publishes a successor or substitute index that the Calculation Agent
determines, in its sole discretion, to be comparable to the discontinued S&P 500
Index, then any subsequent Closing Level will be determined by reference to the
level of such successor or substitute index (in any such case, a "successor
index") at 4:00 p.m., New York City time, on the date that any such subsequent
Closing Level is to be determined.

                                       3


         Upon any selection by the Calculation Agent of a successor index, the
Company will promptly give notice to the Holders of the Securities of this
series.

         If S&P discontinues publication of the S&P 500 Index prior to, and such
discontinuance is continuing on, the date that any Closing Level is to be
determined and the Calculation Agent determines that no successor index is
available at such time, then, on such date, the Calculation Agent will determine
each subsequent Closing Level to be used in computing the Contingent Additional
Amount. Each such Closing Level will be computed by the Calculation Agent in
accordance with the formula for and method of calculating the S&P 500 Index last
in effect prior to such discontinuance, using the Closing Price (or, if trading
in the relevant security has been materially suspended or materially limited,
its good faith estimate of the Closing Price that would have prevailed but for
such suspension or limitation) at the close of the principal trading session on
such date of each security most recently comprising the S&P 500 Index on the
primary organized U.S. exchange or trading system. "Closing Price" means, with
respect to any security on any date, the last reported sales price regular way
on such date or, in case no such reported sale takes place on such date, the
average of the reported closing bid and asked prices regular way on such date,
in either case on the primary organized U.S. exchange or trading system on which
such security is then listed or admitted to trading.

         If a successor index is selected or the Calculation Agent calculates an
Adjusted Quarterly Index Return as a substitute for the S&P 500 Index, such
successor index will be used as a substitute for the S&P 500 Index for all
purposes, including for purposes of determining whether a Market Disruption
Event exists.

         If at any time the method of calculating the S&P 500 Index or a
successor index is changed in a material respect, or if the S&P 500 Index or a
successor index is in any other way modified so that such index does not, in the
opinion of the Calculation Agent, fairly represent the value of the S&P 500
Index or such successor index had such changes or modifications not been made,
then the Calculation Agent will, at the close of business in New York City on
the date that any quarterly index return is to be determined, make such
calculations and adjustments as, in the good faith judgment of the Calculation
Agent, may be necessary in order to arrive at a value of a stock index
comparable to the S&P 500 Index or such successor index, as the case may be, as
if such changes or modifications had not been made, and calculate the Adjusted
Quarterly Index Return and the Contingent Additional Amount with reference to
the S&P 500 Index or such successor index, as adjusted.

Calculation Agent

         The Calculation Agent will determine the Contingent Additional Amount,
if any, to be paid in connection with this Security. In addition, the
Calculation Agent will:

         -        determine if adjustments are required to the Adjusted
                  Quarterly Index Returns under the circumstances described in
                  this Security;

         -        if publication of the S&P 500 Index is discontinued, select a
                  successor index or, if no successor index is available,
                  determine the final index level; and

         -        determine whether a Market Disruption Event has occurred and
                  whether the Stated Maturity Date will be postponed.

         The Company covenants that, so long as any of the Securities of this
series are Outstanding, there shall at all times be a Calculation Agent (which
shall be a broker-dealer, bank or other financial institution) with respect to
the Securities of this series.

         All determinations made by the Calculation Agent with respect to the
Securities of this series will be at the sole discretion of the Calculation
Agent and, in the absence of manifest error, will be conclusive for all purposes
and binding on the Company and the Holders of the Securities of this series. All
percentages and other amounts resulting from any calculation with respect to the
Securities of this series will be rounded at the Calculation Agent's discretion.

                                       4


         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 under its corporate seal.

DATED:

                                            POPULAR, INC.

                                            By: ________________________________
                                            Its: _______________________________

[SEAL]

                                            Attest: ____________________________
                                            Its: _______________________________

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

BANK ONE, N.A.,
  as Trustee

By: ______________________________________
          Authorized Signature

                                       5


CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the
series designated therein described
in the within-mentioned Indenture.

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

By: ______________________________________
Name: Luis R. Cintron, Esq.
Title: Senior Vice President and Trust Officer
Date: September 30, 2003

                                      5-A

                                       6


                                [Reverse of Note]

                                  POPULAR, INC.

   NOTES LINKED TO THE S&P 500 INDEX(R)DUE SEPTEMBER 30, 2008, SERIES [A] [B]

This Security is one of a duly authorized issue of securities of the Company
(herein called the "Securities"), issued and to be issued in one or more series
under an indenture dated as of February 15, 1995, as supplemented by a first
supplemental indenture dated as of May 8, 1997 and a second supplemental
indenture dated as of August 5, 1999, as amended or supplemented from time to
time (herein called the "Indenture"), between the Company and Bank One, N.A.
(formerly known as The First National Bank of Chicago), 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 $31,152,000, which
together with the series designated as Series [A][B] will constitute a single
series of securities under the Indenture; provided, however, that the Company
may, so long as no Event of Default has occurred and is continuing, without the
consent of the Holders of the Securities of this series, issue additional
Securities with the same terms as the Securities of this series, and such
additional Securities shall be considered part of the same series under the
Indenture as the Securities of this series. The Series A securities will be
freely exchangeable at any time for the Series B securities in like
denominations.

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

The Securities of this series are not redeemable by the Company at any time.

The Company agrees, to the extent permitted by law, not to voluntarily claim the
benefits of any laws concerning usurious rates of interest against a Holder of
Securities of this series.

If an Event of Default with respect to Securities of this series shall occur and
be continuing, the amount payable under Securities of this series, upon any
acceleration permitted under the Indenture, will be equal to, per $1,000
principal amount of this Security, the sum of $1,000 and the greater of (x)
$140.00 and (y) the Contingent Additional Amount, calculated as though the date
of acceleration was the Stated Maturity Date. If a bankruptcy proceeding is
commenced in respect to the Company, the claims of the beneficial holders of
this Security may be limited under Title 11 of the United States Code. Upon
payment of the amount so declared due and payable, all of the Company's
obligations in respect of payment at Stated Maturity shall terminate. The
Securities of this series will not bear a default rate of interest after the
occurrence of an Event of Default or an acceleration under the Indenture.

The Company agrees, and by acceptance of a beneficial ownership interest in this
Security each beneficial owner of this Security will be deemed to have agreed,
for United States federal income tax purposes (i) to treat this Security as a
single debt instrument subject to the Treasury regulations governing contingent
payment debt instruments, (ii) to report all income (or loss) with respect to
this Security according to those Treasury regulations, and (iii) to be bound by
the Company's determination of the "comparable yield" and the "projected payment
schedule" (within the meaning of such Treasury regulations) for this Security,
unless such beneficial owner timely discloses and justifies in its federal
income tax return the use of a different comparable yield and projected payment
schedule.

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

                                       7


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. Solely for the purpose
of determining whether any consent, waiver, notice or other action or Act to be
taken or given by the Holders of Securities pursuant to the Indenture has been
given or taken by the Holders of Outstanding Securities in the requisite
aggregate principal amount, the principal amount of this Security will be deemed
to be equal to the amount set forth on the face hereof as the "Principal Amount"
hereof. 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.

Upon due presentment for registration of transfer of this Security at the office
or agency of the Company in a new Security or Securities of this series in
authorized denominations 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.

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 after the
Company receives such notice or becomes aware of such ineligibility, (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, having the same terms and of
authorized denominations aggregating a like amount.

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 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.

No reference herein to the Indenture and no provision of the Indenture shall
alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the Payment at Stated Maturity at the times and place, and
in the coin or currency, herein prescribed, except as otherwise provided in this
Security.

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 Maturity Payment Amount, or for
any claim based on this Security, 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.

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.

This Security shall be governed by and construed in accordance with the laws of
the State of New York.

                                       8


                                  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.

                                       9


     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.

                                       10

EX-5.(A)

                                                                  EXHIBIT (5)(a)

                     [Opinion of Brunilda Santos de Alvarez]

                               September 30, 2003

Popular, Inc.
Popular Center Building
209 MuZoz Rivera Ave
Hato Rey, Puerto Rico 00918

Dear Sirs:

         In connection with the registration under the Securities Act of 1933,
as amended (the "Act"), of an aggregate principal amount of $31,152,000 of the
Notes Linked to the S&P 500 Index due September 30, 2008, Series A and B (the
"Notes") of Popular, Inc., a Puerto Rico corporation (the "Company"), I, as
Legal Counsel to the Company have examined copies of the Indenture, dated as of
February 15, 1995, as supplemented by a first supplemental indenture dated as of
May 8, 1997 and a second supplemental indenture dated as of August 5, 1999 (the
"Indenture") and such other documents, corporate records, certificates and other
instruments, and such questions of law, as I have considered necessary or
appropriate for the purposes of this opinion.

         Upon the basis of such examination, I advise you that, in my opinion:

         1.       The Company has been duly incorporated and is existing in good
standing under the laws of the Commonwealth of Puerto Rico.

         2.       The Indenture relating to the Notes has been duly authorized,
executed and delivered by the Company.

         3.       The Notes constitute valid and legally binding obligations of
the Company, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles.

         In rendering the foregoing opinion, I am expressing no opinion as to
Federal or state laws relating to fraudulent transfers.

         The foregoing opinion is limited to the Federal laws of the United
States, the laws of the Commonwealth of Puerto Rico and the laws of the State of
New York and I am expressing no opinion



as to the effect of the laws of any other jurisdiction. With respect to all
matters of New York law, I have relied upon the opinion, dated the date hereof,
of Sullivan & Cromwell LLP, and my opinion is subject to the same assumptions,
qualifications and limitations with respect to such matters as are contained in
such opinion of Sullivan & Cromwell LLP.

         I also have relied as to certain matters on information obtained from
public officials, officers of the Company and other sources believed by me to be
responsible, and I have assumed that the Indenture has been duly authorized,
executed and delivered by the Trustee thereunder, that the trustee's
certificates of authentication of the Notes have been manually signed by one of
the trustee's authorized officers, and that the signatures on all documents
examined by me are genuine, assumptions that I have not independently verified.

         I hereby consent to the filing of this opinion as an exhibit to a
Current Report on Form 8-K of the Company relating to the public offering of the
Notes and to the reference to me under the heading "Legal Matters" in the
Prospectus Supplement, dated September 25, 2003, filed with the Securities and
Exchange Commission pursuant to Rule 424(b) under the Act. In giving the
foregoing consent, I do not thereby admit that I am in the category of persons
whose consent is required under Section 7 of the Act.

                                                 Very truly yours,

                                                 /s/ BRUNILDA SANTOS DE ALVAREZ

EX-5.(B)

                                                                  EXHIBIT (5)(b)

                    [PIETRANTONI MENDEZ & ALVAREZ LETTERHEAD]

                                                   September 30, 2003

Popular, Inc.
Popular Center Building
209 Munoz Rivera Ave
Hato Rey, Puerto Rico 00918

Dear Sirs:

         In connection with the registration under the Securities Act of 1933,
as amended (the "Act"), of an aggregate principal amount of $31,152,000 of the
Notes Linked to the S&P 500 Index due September 30, 2008, Series A and B (the
"Notes") of Popular, Inc., a Puerto Rico corporation (the "Company"),we, as your
counsel, have examined copies of the Indenture, dated as of February 15, 1995,
as supplemented by a first supplemental indenture dated as of May 8, 1997 and a
second supplemental indenture dated as of August 5, 1999 (the "Indenture") and
such other documents, corporate records, certificates and other instruments, and
such questions of law, as we have considered necessary or appropriate for the
purposes of this opinion.

         Upon the basis of such examination, we advise you that, in our opinion:

         1. The Company has been duly incorporated and is existing in good
standing under the laws of the Commonwealth of Puerto Rico.

         2. The Indenture relating to the Notes has been duly authorized,
executed and delivered by the Company.

         3. The Notes constitute valid and legally binding obligations of the
Company, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.

         In rendering the foregoing opinion, we are expressing no



opinion as to Federal or state laws relating to fraudulent transfers.

         The foregoing opinion is limited to the Federal laws of the United
States, the laws of the Commonwealth of Puerto Rico and the laws of the State of
New York and we are expressing no opinion as to the effect of the laws of any
other jurisdiction. With respect to all matters of New York law, we have relied
upon the opinion, dated the date hereof, of Sullivan & Cromwell LLP, and our
opinion is subject to the same assumptions, qualifications and limitations with
respect to such matters as are contained in such opinion of Sullivan & Cromwell
LLP.

         We hereby consent to the filing of this opinion as an exhibit to the to
Registration Statement on Form S-3 (File No. 333-73242) relating to the public
offering of the Notes and to the reference to us under the heading "Legal
Matters" in the Prospectus Supplement, dated September 25, 2003, filed with the
Securities and Exchange Commission pursuant to Rule 424(b) under the Act. 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

EX-5.(C)

                                                                  EXHIBIT (5)(c)

                      [SULLIVAN & CROMWELL LLP LETTERHEAD]

                                                September 30, 2003

Popular, Inc.
Popular Center Building
209 Munoz Rivera Ave
Hato Rey, Puerto Rico 00918

Dear Sirs:

         In connection with the registration under the Securities Act of 1933
(the "Act"), of $31,152,000 principal amount of Notes Linked to the S&P 500
Index due September 30, 2008, Series A and B (the "Securities"), of Popular,
Inc., a Puerto Rico corporation (the "Company"), we, as your special New York
counsel, have examined copies of the Indenture, dated as of February 15, 1995,
as supplemented by a first supplemental indenture dated as of May 8, 1997 and a
second supplemental indenture dated as of August 5, 1999 (the "Indenture"),
between you and Bank One, NA, as trustee, and such corporate records,
certificates and other documents, and such questions of law, as we have
considered necessary or appropriate for the purposes of this opinion.

         Upon the basis of such examination, we advise to you that, in our
opinion, the Securities constitute valid and legally binding obligations of the
Company, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.

         In rendering the foregoing opinion, we are expressing no opinion as to
Federal or state laws relating to fraudulent transfers.

         The foregoing opinion is limited to the Federal laws of the United
States, the laws of the State of New York and the laws of the Commonwealth of
Puerto Rico and we are expressing no opinion as to the effect of the laws of any
other jurisdiction. With respect to all matters of Puerto Rico law, we have
relied upon



the opinion, dated the date hereof, of Brunilda Santos de Alvarez, Esq., Puerto
Rico counsel to the company, and our opinion is subject to the same assumptions,
qualifications and limitations with respect to such matters as are contained in
such opinion of Brunilda Santos de Alvarez, Esq.

         Also we have relied as to certain matters on the information obtained
from public officials, officers of the Company and other sources believed by us
to be responsible, and we have assumed that the Indenture has been duly
authorized, executed and delivered by the Trustee thereunder, that the
Securities conform to the specimen thereof examined by us, that the trustee's
certificates of authentication of the Securities have been manually signed by
one of the trustee's authorized officers, and that the signatures on all
documents examined by us are genuine, assumptions that we have not independently
verified.

         We hereby consent to the filing of this opinion as an exhibit to the
Current Report on Form 8-K of the Company relating to the public offering of the
Securities and to the reference to us under the heading "Legal Matters" in the
Prospectus Supplement related to the Securities. In giving such consent, we do
not thereby admit that we are in the category of persons whose consent is
required under Section 7 of the Act.

                                                     Very truly yours,

                                                     /s/ SULLIVAN & CROMWELL LLP

EX-8.(A)

                                                                  EXHIBIT (8)(a)

                    [PIETRANTONI MENDEZ & ALVAREZ LETTERHEAD]

                                                       September 30, 2003

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 an aggregate principal amount of $ 31,152,000
of the Notes Linked to the S&P 500 Index due September 30, 2008, Series A and B,
of the Company (the "Notes").

         We have examined the prospectus supplement relating to the Notes (the
"Prospectus Supplement"), dated September 25, 2003, 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 Consideration." 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 Notes 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 No. 333-73242) 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