EXHIBIT 10.1
RESIGNATION AND TRANSITION AGREEMENT
THIS RESIGNATION AND TRANSITION AGREEMENT (“Agreement”) dated as of November 6,
2008, is made by and among Popular, Inc.; Banco Popular de Puerto Rico (“BPPR”);
Banco Popular North America (“BPNA”), and Roberto R. Herencia (“Executive”).
RECITALS

A.   Executive has been and is employed by BPPR acting in the capacity of
President of BPNA;   B.   Executive has also served from time to time as an
officer and as director of Popular, Inc., BPPR, BPNA and various of their
subsidiaries or affiliates (collectively with the subsidiaries, “Popular”)   C.
  The parties desire to enter into this Agreement in order to provide for the
orderly resignation and transition of Executive from Popular.

NOW THEREFORE, in consideration of the premises and the covenants contained in
this Agreement, the sufficiency of which is hereby acknowledged, Executive and
Popular agree as follows:

1.   RESIGNATION

  a)   Resignation: The parties acknowledge and agree that effective on and as
of December 31, 2008 (the “Resignation Date”), Executive shall resign (i) as
Executive Vice President of Popular, Inc.; (ii) employee of BPPR;
(iii) President of BPNA; and (iv) from all other positions Executive currently
holds as an officer, employee or director of Popular.     b)   Transition
Period: For the period commencing on the date hereof and ending on the
Resignation Date (the “Transition Period”), Executive shall continue to be
employed by Popular in his current capacity. Executive’s duties shall be
performed during normal business hours from Rosemont, Illinois and such other
locations as are mutually acceptable to Executive and Popular. During the
Transition Period, Executive shall report directly to Richard L. Carrión.     c)
  Compliance. During the Transition Period, Executive shall comply in full with
(i) all applicable laws, orders and regulations, (ii) Popular’s Code of Ethics,
Policies and Guidelines; and (iii) the employee manual in effect.     d)  
Payment of Salary/Benefits. During the Transition Period, Executive shall
continue to receive Executive’s current base salary paid in the normal course in
accordance with BPNA’s payroll policy, as well as other compensation and
benefits to which Executive is entitled in his current position (but not any
accrued but unpaid bonus or other incentive compensation) with BPNA. During the
Transition Period, Executive shall be entitled to

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      any Christmas Bonus awarded but will not participate in any other bonus or
incentive compensation program which may be in effect at BPNA or Popular.     e)
  Resignation. On and as of the Resignation Date, (i) Executive’s employment
shall be terminated and Executive shall no longer be employed from and after
such date and (ii) Executive shall be deemed to have resigned as a director
and/or officer of any Popular entity and from any managing committee and
supervisory boards on which Executive serves as a nominee of any Popular entity.
Executive hereby agrees to execute any documentation requested by Popular to
effect any of the foregoing resignations.     f)   Accrued Vacation Pay. On the
Resignation Date, Executive shall be compensated for all accrued but unused
vacation and sick days in accordance with BPNA’s policy.     g)   Effect on
Other Agreements. Upon the full execution of this Agreement, this Agreement
shall constitute the entire agreement with respect to the terms of Executive’s
employment and any compensation or benefits for which Executive may be entitled
either prior to or after the Resignation Date. This Agreement shall supersede
any other or earlier employment or benefits or other agreement.

2.   PAYMENTS AND BENEFITS DUE TO RESIGNATION

  a)   Transition Payment. In exchange for Executive’s covenants and agreements
contained in this Agreement, Executive shall be paid a gross amount equal to
$3,289,432, which amount, after all applicable deductions (the “Transition
Payment”) shall be paid to Executive in two (2) lump sum payments. Subject to
compliance with Section 4 below, the first payment will be for 85% of the
Transition Payment amount and will be payable seven days after the date hereof;
the remainder (less any required adjustments as indicated in this Section 2)
will be payable within seven days after the Resignation Date. Executive
acknowledges that he is not otherwise entitled to the Transition Payment and the
Transition Payment is being provided to Executive solely in consideration of the
covenants and agreements made by Executive under this Agreement.     b)  
Medical Benefits. For a period of twelve (12) months following the Resignation
Date, Executive shall continue to be covered under BPNA’s group health care
plans (medical, dental and/or vision) under which Executive was covered as of
the Resignation Date, at no cost to Executive. This twelve (12) month period of
coverage shall not count as COBRA continuation coverage (i.e., shall not reduce
the 18 months of COBRA coverage to which Executive is otherwise entitled). The
payment of any COBRA premiums may be subject to applicable tax withholdings.
Following the end of the 12-month coverage period, Executive shall be entitled
to elect COBRA continuation coverage subject Executive’s timely payment of the
full COBRA premium.     c)   Equity Grants. At various times during Executive’s
employment, Executive was awarded Stock Options, Restricted Stock and/or
Performance Shares ( the “Equity Grants”) under the Popular, Inc. 2001 Stock
Option Plan and/or the Popular, Inc. 2004 Omnibus Incentive Plan, as amended
(the “Plans”). In consideration of Executive’s

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      resignation and other agreements and covenants of Executive made in this
Agreement, Popular will take all action to implement the following:

     (i) with regard to Restricted Stock: subject to the approval of the
Popular, Inc. Board of Directors Compensation Committee, Popular will accelerate
the vesting of any unvested portion of the Restricted Stock as of the
Resignation Date;
     (ii) with regard to Performance Shares: Popular, Inc. will issue a payment
in Popular, Inc. common stock based on the target award pro-rated according to
the number of months worked during the performance cycle as a percentage of the
total number of months in the performance cycle;
     (iii) with regard to Stock Options awarded pursuant to the Popular, Inc.
2001 Stock Option Plan: all options exercisable as of the date of Executive’s
Resignation Date may be exercised at any time prior to the expiration date of
the option or six months following the termination, whichever period is shorter.
     (iv) with regard to Stock Options awarded pursuant to the Popular, Inc.
2004 Omnibus Incentive Plan: all options exercisable at the date of Executive’s
termination of employment may be exercised at any time prior to the expiration
date of the option or the 90th day following the termination, whichever period
is shorter.

      The certificates evidencing any Equity Grants payable to Executive will be
delivered to Executive as soon as administratively practicable after Executive’s
Resignation Date. Popular shall deduct from the final installment of the
Transition Payment an amount sufficient to cover the requisite tax withholding
due upon vesting and delivery of the Equity Grants. Upon delivery of such Equity
Grants, Executive shall have no further rights nor shall Executive be entitled
to any further distribution under the Plans. All other terms and provisions of
the Equity Grants as set forth in the applicable agreements shall remain in full
force and effect.     d)   Retirement Benefits. Executive and Popular
acknowledge and agree that Executive has accrued benefits under the Popular,
Inc. USA 401(k) Savings and Investment Plan, the Banco Popular de Puerto Rico
Retirement Plan and the Banco Popular de Puerto Rico Benefit Restoration Plan
(collectively the “Retirement Plans”) and that Executive’s benefits under the
Retirement Plans shall be determined in accordance with the provisions thereof
and any election related thereto. The Transition Payment shall be excluded from
eligible compensation for purposes of determining Retirement Plan deferral
amounts or benefit values.     e)   Preferred Mortgage Loan Interest Rate.
Popular acknowledges and agrees that from and after the Resignation Date,
Executive shall continue to be entitled to participate in the BPNA employee
preferred interest rate program (the “Program”) solely with respect to any
existing residential mortgage loan that is outstanding as of the Resignation
Date (the “Mortgage Loan”), until such Mortgage Loan is repaid by refinancing or
otherwise. Upon such repayment of the Mortgage Loan, Executive shall have no
further right to participate in the Program.

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  f)   No Further Benefits, Payments, Etc. Executive acknowledges and agrees
that except as expressly provided herein, Executive’s coverage under any benefit
plan, program, policy or arrangement sponsored or maintained by Popular shall
cease and be terminated as of the Resignation Date. Executive further
acknowledges and agrees that no payment made by Popular pursuant to this
Agreement is subject to any employer matching obligation or any other employer
contribution under any benefit or deferred compensation plan, whether or not any
such payment is characterized as wages or other compensation.        
Notwithstanding the terms of this Section 2, at no time may the aggregate
payments or benefits in the nature of compensation due to resignation, whether
provided under this Agreement or otherwise, be considered an “excess parachute
payment” under Section 280G of the Internal Revenue Code of 1986, as amended
(the “Code”), a golden parachute payment under Section 111(b) of the Emergency
Economic Stabilization Act of 2008, or a “golden parachute payment” under
Section 18(k) of the Federal Deposit Insurance Act or any other federal law or
any regulation implementing any federal law. If the value of payments or
benefits under this Agreement or otherwise would otherwise be deemed an excess
parachute payment or a golden parachute payment, as applicable, under any such
statutes or regulation, then the total payments and benefits will be reduced to
the greatest amount that could be made to Executive without there being a
parachute payment. To the extent possible, Popular shall give the Executive the
opportunity to select the order in which payments or benefits are reduced.

3.   DEATH OR DISABILITY

     In the event that Executive dies or becomes disabled prior to the
Resignation Date, Executive’s heirs, representatives or Executive’s estate shall
be entitled to the compensation and benefits described in Section 2 of this
Agreement.

4.   RELEASE AND WAIVER

     As a condition to receive the Transition Payment, Executive shall execute
and deliver, to the extent applicable, (a) the release attached hereto as Annex
A (the “Release”) and (b) the waiver attached hereto as Annex D (the “Waiver”).
In addition, Executive agrees to execute any additional documentation as Popular
deems necessary and appropriate and at such time or times as requested by
Popular consistent with documents being signed by other Senior Executive
Officers in connection with any participation in the US Treasury Troubled Asset
Relief Program (“TARP”) or any similar program, including but not limited to the
TARP Capital Purchase Program executive compensation letter attached hereto as
Annex E (the “SEO Letter”).

5.   ON-GOING RESTRICTIONS ON EXECUTIVE’S ACTIVITIES; COOPERATION

  a)   General Effect. The parties agree that the provisions of this Section 5
shall apply while Executive is employed by Popular and for some periods after
Executive shall cease being employed by Popular. This Section uses the following
defined terms:

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     “Competitive Enterprise” means any business enterprise that either
(1) engages in commercial or consumer financial services, retail banking,
internet banking or other financial services to either commercial or consumer
customers in the municipality, town or metropolitan area in which Executive may
seek employment, or (2) holds a 5% or greater equity, voting or profit
participation interest in any enterprise that engages in such a competitive
activity.
     “Solicit” means any direct or indirect communication, initiation, advice,
encouragement or request of any person to take or refrain from taking any action
(regardless of who initiated the communication in which the preceding occurs).

  b)   Executive’s Importance to Popular and the Effect of this Section 5.
Executive acknowledges that:

  i.   In the course of Executive’s involvement in Popular’s activities,
Executive has and has had access to Proprietary Information and Popular’s client
base and will profit from the goodwill associated with Popular. On the other
hand, in view of Executive’s access to Proprietary Information and Executive’s
importance to Popular, if Executive competes with Popular for some time after
Executive’s employment, Popular will likely suffer significant harm (but the
amount of the loss to Popular would be uncertain and not readily ascertainable).
This Agreement provides Executive with substantial additional benefits over
Executive’s prior arrangements with Popular, including the substantial
additional compensation referred to in Section 2 hereof. In return for the
benefits Executive will receive from Popular and to induce Popular to enter into
this Agreement, and in light of the potential harm Executive could cause
Popular, Executive agrees to the provisions of this Section 5. Popular would not
have entered into this Agreement if Executive did not agree to this Section 5.  
  ii.   This Section 5 limits Executive’s ability to earn a livelihood in a
Competitive Enterprise. Executive acknowledges, however, that complying with
this Section 5 will not result in economic hardship for Executive or Executive’s
family.

  c)   Non-Solicitation of Popular Employees. During Executive’s employment and
for one (1) year after the Resignation Date, Executive agrees that he will not
directly or indirectly attempt to Solicit anyone who is then an employee of BPNA
(or who was an employee of BPNA within the prior six months) to resign from BPNA
or accept employment with any Competitive Enterprise. The term “Solicit” when
used in this subsection shall not be deemed to include solicitation of
employment of individuals who respond to public advertisement media of general
distribution (i.e., not targeted to present BPNA employees) without specific
instruction or direction by Executive.     d)   Non-Solicitation of Popular
Customers. During Executive’s employment and for one (1) year after the
Resignation Date, Executive agrees that he will not directly or indirectly
attempt to Solicit anyone who is then a customer of BPNA to transact business
with a Competitive Enterprise or to cease or refrain from conducting business
with BPNA. The term “Solicit” when used in this subsection shall not be deemed
to include solicitation by

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      public advertisement media of general distribution (i.e., not targeted to
existing BPNA customers) without specific instruction or direction by Executive.
        In the event BPNA is sold, or a BPNA region is sold, or a BPNA business
is eliminated, the non-solicitation under c) and d) above shall not apply to the
portion of BPNA that is sold or eliminated.     e)   Executive’s Payment
Obligations/Off-sets. If Executive fails to comply with this Section 5, other
than any isolated, insubstantial and inadvertent failure that is not in bad
faith, Executive will pay Popular any Transition Payment that Executive shall
have received in connection with this Agreement. Popular will have the right to
offset Executive’s obligations under this Section against any amounts otherwise
owed to Executive by any member of Popular, including under this Agreement. This
payment obligation is in addition to any rights Popular may have under this
Section 5. In no event shall Executive’s liability under this section 5(e)
exceed the amount of the Transition Payment.     f)   Notice to New Employers.
Before Executive shall accept employment with any other person or entity while
any of Section 5(c) or Section 5(d) is in effect, Executive will provide the
prospective employer with written notice of the provisions of this Section 5 and
will deliver a copy of the notice to Popular.     g)   Cooperation. During the
transition period and thereafter, Executive hereby agrees to make himself
reasonably available and to cooperate with reasonable requests from Popular with
respect to legal and regulatory matters as arise from time to time with respect
to Executive’s duties for Popular, including any investigation, litigation,
government or regulatory proceeding, examination or other proceeding or dispute.
Such cooperation shall include, but not be limited to, preparing for and giving
testimony if and when required by Popular. Popular shall reimburse Executive for
all reasonable expenses incurred with respect to such cooperation, including
legal fees and disbursements.     h)   D&O Policy. For events or acts occurred
prior to the Resignation Date, Executive will be indemnified under the D&O
Policy applicable to directors and officers to the extent provided in the
By-Laws and policies of Popular that are in effect as of the Executive’s
Resignation Date or, if greater, under applicable law.

6.   PROPRIETARY INFORMATION

     Executive agrees to the proprietary information provisions set forth on
Annex B, which is a part of this Agreement.

7.   DISPUTES

     Executive agrees to the dispute resolution provisions, including mandatory
arbitration, set forth on Annex C, which is a part of this Agreement.

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8.   GENERAL PROVISIONS

  a)   Consideration. This Agreement is entered into as a material inducement to
Popular in consideration of the mutual covenants contained in this Agreement.
Executive and Popular acknowledge the receipt and sufficiency of the
consideration to this Agreement and intend this Agreement to be legally binding.
    b)   Amendments and Waivers. Any provision of this Agreement may be amended
or waived but only if the amendment or waiver is in writing and signed, in the
case of an amendment, by all of the parties, in the case of a waiver, by the
party that would have benefited from the provision waived.     c)  
Severability. If any provision of this Agreement is found by any court of
competent jurisdiction (or legally empowered agency) to be illegal, invalid or
unenforceable for any reason, then (1) the provision will be amended
automatically to the minimum extent necessary to cure the illegality or
invalidity and permit enforcement and (2) the remainder of this Agreement will
not be affected. In particular, if any provision of Section 5 is so found to
violate law or be unenforceable because it applies for longer than a maximum
permitted period or to greater than a maximum permitted area, or otherwise, it
will be automatically amended to apply for the maximum permitted period and
maximum permitted area, or otherwise.     d)   Mutual Non-Disparagement. Popular
agrees, except as may be required by law, to refrain from making or publishing
any statements, claims, allegations or assertions which they believe have or may
reasonably be expected to have the effect of demeaning the name or business
reputation of Executive and shall cause their employees, officers, directors,
agents or advisors to be similarly bound when serving in such capacity.
Executive agrees to refrain from performing any act, engaging in any conduct or
course of action or making or publishing any statements, claims, allegations or
assertions which have or may reasonably have the effect of demeaning the name or
business reputation of Popular or any of its respective employees, officers,
directors, agents or advisors in their capacities as such or which adversely
affects (or may reasonably be expected to adversely affect) the best interests
(economic or otherwise) of any of them. The parties agree that nothing in this
Section 8(d) shall preclude either party or any other person referenced in this
Section 8(d) from fulfilling any duty or obligation that he, she or it may have
at law, from responding to any subpoena or official inquiry from any court or
government agency, including providing truthful testimony, documents subpoenaed
or requested or otherwise cooperating in good faith with any proceeding or
investigation, or from taking any reasonable actions to enforce such party’s
rights under this Agreement in accordance with the dispute resolution provisions
specified in Annex C annexed hereto.     e)   Entire Agreement. This Agreement,
together with the Annexes attached thereto, sets forth the entire agreement
between the parties, and, except as otherwise provided herein, fully supersedes
any and all prior agreements, understandings, or representations between the
parties pertaining to the subject matter of this Agreement.

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  f)   Governing Law. This Agreement shall in all respects be governed by and
construed under the internal laws of the State of New York applicable to
agreements made and wholly to be performed in such state.     g)   Jurisdiction
and Venue. Subject to the provisions of Section 7 above, this Agreement shall be
deemed performable by all parties in, and venue shall exclusively be in the
state or federal courts located in New York, New York. The parties hereby
consent to the personal jurisdiction of these courts and waive any objection
that such venue is objectionable or improper.     h)   Counterparts. This
Agreement may be executed as counterparts, each of which will constitute an
original and all of which, when taken together, will constitute one agreement.

Please confirm your acceptance of the terms of this Agreement by signing where
indicated below.

                 
DATED:
                Executive   Popular, Inc.  
 
                    /s/ Richard L. Carrión           /s/ Roberto R. Herencia  
Printed Name   Richard L. Carrión    
 
                Roberto R. Herencia   Title:   Chairman, President and Chief
Executive Officer              
 
                    Banco Popular de Puerto Rico
 
                    /s/ Richard L. Carrión               Printed Name   Richard
L. Carrión    
 
                    Title:   Chief Executive Officer              
 
                    Banco Popular North America
 
                    /s/ Richard L. Carrión               Printed Name   Richard
L. Carrión    
 
                    Title:   Chief Executive Officer              

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Annex A
GENERAL RELEASE
     GENERAL RELEASE (this “Release”), by Roberto R. Herencia (the “Executive”)
in favor of Popular, Inc., Banco Popular de Puerto Rico and Banco Popular North
America and any of their respective subsidiaries and affiliates (collectively
“Popular”) and any of their respective past or present shareholders, principals,
directors, officers, employees, managers, agents, attorneys, trustees,
fiduciaries, representatives, insurers, assigns or benefit plan administrators
(collectively the “Released Parties”).
RECITALS

A.   Executive has been employed by Banco Popular de Puerto Rico in the capacity
of President of Banco Popular North America, and from time to time has served as
an officer and/or as director of Popular, Inc. and various of its subsidiaries
or affiliates.   B.   Executive is seeking payments under the Resignation and
Transition Agreement dated as of November 6, 2008 (the “Agreement”) that are
conditioned on the execution and effectiveness of this Release.

     NOW, THEREFORE, in consideration of the covenants and agreements
hereinafter set forth, the parties agree as follows:

  1.   General Release. Executive knowingly and voluntarily waives, terminates,
cancels, releases and discharges forever the Released Parties from any and all
actions, causes of action, claims, allegations, rights, obligations,
liabilities, or charges (collectively the “Claims”) that he has or may have,
whether known or unknown, by reason of any matter, cause or thing occurring at
any time before and including the date of this Release, including, without
limitation, claims for compensation or bonuses (including, without limitation,
any claim for an award under any compensation plan or arrangement); breach of
contract; tort; wrongful, abusive, unfair, constructive, or unlawful discharge
or dismissal; impairment of economic opportunity; defamation; age and national
origin discrimination; sexual harassment or discrimination; discrimination based
on marital status; back pay; front pay; benefits; attorney’s fees; whistleblower
claims; emotional distress; intentional infliction of emotional distress;
assault; battery, pain and suffering; punitive or exemplary damages; all claims
under Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1866,
42 U.S.C. 1981, the Civil Rights Act of 1991, the Americans with Disabilities
Act of 1991, the Age Discrimination in Employment Act of 1967, as amended by the
Older Workers’ Benefit Protection Act, the Employee Retirement Income Security
Act of 1974, as amended (except as otherwise expressly provided in paragraph
2(iv) below), the Family and Medical Leave Act of 1993, or any other state,
country or city law or ordinance regarding employment discrimination, harassment
or retaliation, any claim under the Workers Adjustment Retraining and
Notification Act, 29 U.S.C. 2101 et seq., and any claims for unpaid
compensation, wages

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      and bonuses under the federal Fair Labor Standards Act, 29 U.S.C. 201, et
seq., or any state, county or city law ordinance regarding wages or
compensation, retaliation, negligence, loss of consortium, intentional
infliction of emotional distress, negligent infliction of emotional distress, or
any other claim and any alleged injuries he may have suffered up to and
including the Resignation Date as defined in the Agreement. In addition, in
consideration of the provisions of this Release, the Executive further agrees to
waive any and all rights under the laws of any jurisdiction in the United
States, or any other country, that limit a general release to those claims that
are known or suspected to exist in Executive’s favor as of the Effective Date
(as defined below).     2.   Surviving Claims. Notwithstanding anything herein
to the contrary, this Release shall not:

  i.   release any Claims relating to the payments and benefits set forth in
Section 2 of the Agreement;     ii.   release any Claims arising after the date
of this Release;     iii.   limit or prohibit in any way Executive’s (or his
beneficiaries’ or legal representatives’) ability to bring an action to enforce
the terms of this Release;     iv.   release any claim for Executive benefits
under plans covered by the Employee Retirement Income Security Act of 1974, as
amended, to the extent that such claims may not lawfully be waived or for any
payments or benefits under any plans of Popular that have vested according to
the terms of those plans;     v.   release any claims for indemnification in
accordance with applicable laws and the corporate governance documents of
Popular, including any right to contribution, in accordance with their terms as
in effect from time to time or pursuant to any applicable directors and officers
insurance policy with respect to any liability incurred by Executive as an
officer or director of Popular or any member of Popular or any right Executive
may have to obtain contribution as permitted by law in the event of entry of
judgment; or     vi.   release any obligations from any individual who is a
Released Party arising from any personal business relationship with Executive
outside of the employment relationship, including, without limitation, any
mortgages or loans.

  3.   Additional Representations. Executive further represents and warrants
that he has not filed any civil action, suit, arbitration, administrative
charge, or legal proceeding against any Released Party nor has he assigned,
pledged, or hypothecated as of the Effective Date his claim to any person and no
other person has an interest in the claims that he is releasing.     4.  
Acknowledgements by Executive. Executive acknowledges and agrees that he has
read this Release in its entirety and that this Release is a general release of
all known and unknown claims, including, without limitation, to rights and
claims arising under the Age

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      Discrimination in Employment Act (ADEA). Executive further acknowledges
and agrees that:

  i.   This Release does not release, waive or discharge any rights or claims
that may arise for actions or omissions after the date of this Release;     ii.
  Executive is entering into this Release and releasing, waiving and discharging
rights or claims only in exchange for consideration which he is not already
entitled to receive;     iii.   Executive has been advised, and is being advised
by the Release, to consult with an attorney before executing this Release;
Executive acknowledges that he has consulted with counsel of his choice
concerning the terms and conditions of this Release;     iv.   Executive has
been advised, and is being advised by this Release, that he has twenty-one
(21) days within which to consider the Release; and     v.   Executive is aware
that this Release shall become null and void if he revokes his agreement to this
Release within seven (7) days following the date of execution of this Release.
Executive may revoke this Release at any time during such seven-day period by
delivering (or causing to be delivered) to Popular, Inc., 209 Muñoz Rivera
Avenue, Hato Rey, PR 00918, Attention: Eduardo J. Negrón, Executive Vice
President; Corporate People and Communication, written notice of his revocation
of this Release no later than 5:00 p.m. eastern time on the seventh (7th) full
day following the date of execution of this Release (the “Effective Date”). The
Executive agrees and acknowledges that a letter of revocation that is not
received by such date and time will be invalid and will not revoke this Release.

  5.   Additional Agreements. Executive agrees that should any person or entity
file or cause to be filed any civil action, suit, arbitration, or other legal
proceeding seeking equitable or monetary relief concerning any claim released by
Executive herein, Executive shall not seek or accept any personal relief from or
as the result of such civil action, suit, arbitration, or other legal
proceeding.

     IN WITNESS WHEREOF, Executive has signed this Release on the date set forth
on the first page hereof.
/s/ Roberto R. Herencia
Roberto R. Herencia

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Annex B
Proprietary information
     (a) Definition. “Proprietary Information” means confidential or proprietary
information, knowledge or data concerning (1) Popular’s businesses, strategies,
operations, financial affairs, organizational matters, personnel matters,
budgets, business plans, marketing plans, studies, policies, procedures,
products, ideas, processes, software systems, trade secrets and technical
know-how, (2) any other matter relating to Popular, and (3) any matter relating
to clients of Popular or other third parties having relationships with Popular.
Proprietary Information includes (1) information regarding any aspect of your
tenure as an Executive of Popular or the termination of your employment, (2) the
names, addresses, and phone numbers and other information concerning clients and
prospective clients of Popular, (3) investment techniques and trading strategies
used in, and the performance records of, client accounts or other investment
products, and (4) information and materials concerning the personal affairs of
employees of Popular. In addition, Proprietary Information may include
information furnished to you orally or in writing (whatever the form or storage
medium) or gathered by inspection, in each case before or after the date of this
Agreement. However, Proprietary Information does not include information
(1) that was or becomes generally available to you on a non-confidential basis,
if the source of this information was not reasonably known to you to be bound by
a duty of confidentiality, (2) that was or becomes generally available to the
public, other than as a result of a disclosure by you, directly or indirectly,
or (3) that you can establish was independently developed by you without
reference to any Proprietary Information.
     (b) Use and Disclosure. You will obtain or create Proprietary Information
in the course of your involvement in Popular’s activities and may already have
Proprietary Information. You agree that the Proprietary Information is the
exclusive property of Popular, and that, while you are employed by a member of
Popular, you will use and disclose Proprietary Information only for Popular’s
benefit and in accordance with any restrictions placed on its use or disclosure
by Popular. After you cease being employed by a member of Popular, you will not
use or disclose any Proprietary Information. In addition, nothing in this
Agreement will operate to weaken or waive any rights Popular may have under
statutory or common law, or any other agreement, to the protection of trade
secrets, confidential business information and other confidential information.
     (c) Disputes. The existence of, and any information concerning, a dispute
between you and Popular will be Proprietary Information. However, you may
disclose information concerning the dispute to the arbitrator or court that is
considering the dispute and to your legal counsel (so long as your counsel
agrees not to disclose any such information other than as necessary to the
prosecution or defense of the dispute).
     (a) Return of Proprietary Information. When your employment terminates, you
agree to return to the Company all Proprietary Information, including all notes,
mailing lists, rolodexes and computer files that contain any Proprietary
Information. You agree to do anything reasonably requested by the Company in
furtherance of perfecting Popular’s possession of, and title to, any Proprietary
information that was at any time in your possession.
     (b) Limitations. Nothing in this Agreement prohibits you from providing
truthful testimony concerning Popular to governmental, regulatory or
self-regulatory authorities.

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Annex C
DISPUTE RESOLUTION AGREEMENT
In exchange for the consideration set forth in the Amended Agreement, Roberto R.
Herencia (“Executive”), Popular, Inc. (“PI”), Banco Popular de Puerto Rico
(“BPPR”) and Banco Popular North America (“BPNA”; PI , BPPR and BPNA,
collectively, the “Company”) agree that in the event employment disputes arise
between them, they will be bound by the dispute resolution procedures set forth
below. Further, if there is any conflict or ambiguity between this Dispute
Resolution Agreement (“DR Agreement”) and any other Company policy, procedure or
rule, the terms and conditions of this DR Agreement shall govern.
In order to establish and gain the benefits of a timely, impartial and
cost-effective dispute resolution procedure, the Company and Executive desire to
enter into this DR Agreement.
     A. Complaints Covered by the Agreement.
     Except for those disputes identified in paragraph B of this DR Agreement,
the Company and Executive shall settle by arbitration all statutory, contractual
and/or common law complaints or controversies (“Complaints”) that the Company
may have against the Executive or that the Executive may have against the
Company or any of its officers, directors, employees, or its agents, that arise
out of, or are related to, the employment relationship between the Company and
the Executive. Complaints subject to arbitration include but are not limited to
(1) complaints of illegal discrimination (including, but not limited to, age,
disability, marital status, medical conditions, national origin, race, religion,
retaliation, sex, sexual harassment or sexual orientation); (2) complaints for
breach of any contract (express or implied) or breach of the covenant of good
faith and fair dealing; (3) complaints for violation of any federal, state, or
other governmental law, statute, regulation or ordinance; and (4) tort
complaints (including but not limited to negligent or intentional injury,
defamation and termination of employment in violation of public policy.)
B. Complaints Not Covered by this Agreement/Violations of Sections 5 and 6 of
the Resignation and Transition Agreement (the “Agreement”).
     This DR Agreement does not cover the following types of disputes:
(1) complaints by the Executive for workers’ compensation or unemployment
insurance; (2) complaints which in the absence of this DR Agreement could not
have been litigated in court or before any administrative proceeding under
applicable federal, state, or local law; (3) claims for equitable or legal
relief that arise from Executive’s improper disclosure of any trade secret or
confidential information, or that arise from Executive’s improper or unfair
competition against the Company or solicitation of customers or employees of the
Company, including but not limited to claims for violations of Sections 5 and 6
of the Agreement; (4) claims for wages due; and (5) alleged criminal violations.
     Executive further agrees that (1) Executive’s violating any part of
Sections 5 and 6 of the Agreement would cause damage to the Company that cannot
be measured or repaired, (2) the Company therefore is entitled to an injunction,
restraining order or other equitable relief restraining any actual or threatened
violation of those Sections, (3) no bond will need to be

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posted for the Company to receive such an injunction, order or other relief and
(4) no proof will be required that monetary damages for violations of those
Sections would be difficult to calculate and that remedies at law would be
inadequate.
     C. Required Notice of Complaint and Statute of Limitations.
     Arbitration must be initiated by serving or mailing a written notice to the
other party. Written notice must be provided to the other party within one year
(365 days) after the day the complaining party first knew or should have known
of the events giving rise to the complaint. If the complaint is not properly
submitted within the appropriate time frame, all rights and claims that the
complaining party has or may have against the other party shall be waived and
void. Any notice sent to the Company shall be delivered to: Popular, Inc., 209
Muñoz Rivera Avenue, Hato Rey, PR 00918, Attention: Executive Vice President for
Corporate People and Communication. The notice must identify and describe the
nature of all complaints asserted and the facts upon which such complaints are
based. Notice will be deemed given according to the date of any postmark or the
date or time of any personal delivery.
     D. Exhaustion of Internal Employee Complaint Resolution Procedure.
     Before proceeding to arbitration on a complaint, the Executive must
initiate and participate in any complaint resolution procedure identified in the
Company’s Handbook or policies and procedures, if any. If the Executive has not
initiated the complaint resolution procedure with regard to that complaint
before initiating arbitration on a complaint, the initiation of the arbitration
shall be deemed to begin the complaint resolution procedure. No arbitration
hearing shall be held on a complaint until the complaint resolution procedure
has been completed.
     E. Arbitration Procedures and Authority of Arbitrator.
     All arbitrations will be conducted by a single arbitrator according to the
Employment Dispute Arbitration Rules of the American Arbitration Association
(“AAA”). The arbitrator will have authority to award any remedy or relief that a
court of competent jurisdiction could order or grant including, without
limitation, specific performance of any obligation created under policy, the
awarding of punitive damages, the issuance of any injunction, costs and
attorney’s fees to the extent permitted by law, or the imposition of sanctions
for abuse of the arbitration process. The arbitrator’s award must be rendered in
a writing that sets forth the essential findings and conclusions upon which the
arbitrator’s award is based.
     F. Representation and Arbitrator Fees and Costs.
     Each party may be represented in the arbitration by an attorney or other
representative selected by the party. The Company shall be responsible for its
own costs, the AAA filing fee and all other fees, costs and expenses of the
arbitrator and AAA for administering the arbitration. The Executive shall be
responsible for his/her attorney’s or representative’s fees, if any. However, if
any party prevails on a statutory claim which allows the prevailing party costs
and/or attorneys’ fees, the arbitrator may award costs and reasonable attorneys’
fees as provided by applicable statute.

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     H. Location of the Arbitration.
     Arbitrations will be held at a location selected by the Company.
     I. Evidence.
     AAA rules notwithstanding, the admissibility of evidence offered at the
arbitration shall be determined by the arbitrator who shall be the judge of its
materiality and relevance. Legal rules of evidence will not be controlling, and
the standard for admissibility of evidence will generally be whether it is the
type of information that responsible people rely upon in making important
decisions.
     J. Confidentiality.
     The existence, content or results of any arbitration may not be disclosed
by a party or arbitrator without the prior written consent of both parties.
Witnesses who are not a party to the arbitration shall be excluded from the
hearing except to testify.
     K. Knowing Waiver of Trial by Jury or Judge.
     The Company and Executive understand that this Agreement will result in the
waiver of their respective rights to a trial by a judge or jury. In
consideration of the benefits of this Agreement, and after the opportunity to
consider it fully, Executive and the Company freely waive that right in favor of
the dispute mechanism set forth in the Agreement.
     L. Modification.
     This DR Agreement may only be modified by a written agreement signed by the
Company’s Chief Executive Officer and Executive.
     M. Construction.
     The provisions of this DR Agreement are severable. If any one or more
provisions are determined to be legally unenforceable, in whole or part, the
remaining provisions are binding and enforceable.
     N. Entire Agreement.
     Both parties acknowledge that they have carefully read this Agreement and
understand its terms. This Agreement constitutes the entire agreement between
the parties on the subject of arbitration of any and all disputes between the
Executive and the Company specified in section A of this Agreement. This
Agreement supersedes any prior or contemporaneous oral or written
understandings, agreements, negotiations or representations on these subjects.
Both parties acknowledge that no other party or agent or attorney of any other
party has made any promises, representations or warranties whatsoever, express
or implied, which are not expressly contained in this Agreement. Each party
further acknowledges that they have not executed this

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Agreement in reliance upon a collateral promise, representation or warranty, or
in reliance upon any belief as to any fact not expressly stated in this
Agreement.
     Both parties acknowledge that they have carefully read this DR Agreement
and understand its terms. Both parties acknowledge that they have had an
opportunity to negotiate the terms of this DR Agreement. Both parties have
voluntarily entered into this agreement without reliance on any provision or
representation by the other party except those contained in this Agreement. BOTH
PARTIES UNDERSTAND THAT BY SIGNING THIS AGREEMENT, THEY ARE WAIVING THEIR RIGHT
TO A TRIAL BY JURY WITH REGARD TO ANY OF THE MATTERS ADDRESSED IN SECTION A OF
THIS DR AGREEMENT. Both parties understand that they have the opportunity to
consult with legal counsel, to the extent desired, before executing the
Agreement.

                 
DATED:
                Executive   Popular, Inc.  
 
                    /s/ Richard L. Carrión           /s/ Roberto R. Herencia  
Printed Name   Richard L. Carrión    
 
                Roberto R. Herencia   Title:   Chairman, President and Chief
Executive Officer              
 
                    Banco Popular de Puerto Rico
 
                    /s/ Richard L. Carrión               Printed Name   Richard
L. Carrión    
 
                    Title:   Chief Executive Officer              
 
                    Banco Popular North America
 
                    /s/ Richard L. Carrión               Printed Name   Richard
L. Carrión    
 
                    Title:   Chief Executive Officer              

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Annex D
WAIVER
In consideration for the benefits I will receive as a result of my employer’s
participation in the United States Department of the Treasury’s TARP Capital
Purchase Program, I hereby voluntarily waive any claim against the United States
or my employer for any changes to my compensation or benefits that are required
to comply with the regulation issued by the Department of the Treasury as
published in the Federal Register on October 20, 2008.
I acknowledge that this regulation may require modification of the compensation,
bonus, incentive and other benefit plans, arrangements, policies and agreements
(including so-called “golden parachute” agreements) that I have with my employer
or in which I participate as they relate to the period the United States holds
any equity or debt securities of my employer acquired through the TARP Capital
Purchase Program.
This waiver includes all claims I may have under the laws of the United States
or any state related to the requirements imposed by the aforementioned
regulation, including without limitation a claim for any compensation or other
payments I would otherwise receive, any challenge to the process by which this
regulation was adopted and any tort or constitutional claim about the effect of
these regulations on my employment relationship.

     
   /s/ Roberto R. Herencia
         
Roberto R. Herencia
   

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Annex E
Roberto R. Herencia,
     [Street Address],
          [City], [St] [Zip].
Dear Mr. Herencia,
     [Company] (the “Company”) has entered into a Securities Purchase Agreement,
dated [DATE] (the “Participation Agreement”), with the United States Department
of Treasury (“Treasury”) that provides for the Company’s participation in the
Treasury’s TARP Capital Purchase Program (the “CPP”).
     For the Company to participate in the CPP and as a condition to the closing
of the investment contemplated by the Participation Agreement, the Company is
required to establish specified standards for incentive compensation to its
senior executive officers and to make changes to its compensation arrangements.
To comply with these requirements, and in consideration of the benefits that you
will receive as a result of the Company’s participation in the CPP, you agree as
follows:

  (1)   No Golden Parachute Payments. The Company is prohibiting any golden
parachute payment to you during any “CPP Covered Period”. A “CPP Covered Period”
is any period during which (A) you are a senior executive officer and
(B) Treasury holds an equity or debt position acquired from the Company in the
CPP.     (2)   Recovery of Bonus and Incentive Compensation. Any bonus and
incentive compensation paid to you during a CPP Covered Period is subject to
recovery or “clawback” by the Company if the payments were based on materially
inaccurate financial statements or any other materially inaccurate performance
metric criteria.     (3)   Compensation Program Amendments. Each of the
Company’s compensation, bonus, incentive and other benefit plans, arrangements
and agreements (including golden parachute, severance and employment agreements)
(collectively, “Benefit Plans”) with respect to you is hereby amended to the
extent necessary to give effect to provisions (1) and (2). [These Benefit Plans
are set forth in Appendix A to this letter.]         In addition, the Company is
required to review its Benefit Plans to ensure that they do not encourage senior
executive officers to take unnecessary and excessive risks that threaten the
value of the Company. To the extent any such review requires revisions to any
Benefit Plan with respect to you, you and the Company agree to [negotiate such
changes promptly and in good faith] [or] [agree to execute such additional
documents as the Company deems necessary to effect such revisions].     (4)  
Definitions and Interpretation. This letter shall be interpreted as follows:

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  •   “Senior executive officer” means the Company’s “senior executive officers”
as defined in subsection 111(b)(3) of EESA.     •   “Golden parachute payment”
is used with the same meaning as in subsection 111(b)(2)(C) of EESA.     •  
“EESA” means the Emergency Economic Stabilization Act of 2008 as implemented by
guidance or regulation that has been issued and is in effect as of the “Closing
Date” as defined in the Participation Agreement.     •   The term “Company”
includes any entities treated as a single employer with the Company under 31
C.F.R. § 30.1(b) (as in effect on the Closing Date). You are also delivering a
waiver pursuant to the Participation Agreement, and, as between the Company and
you, the term “employer” in that waiver will be deemed to mean the Company as
used in this letter.     •   The term “CPP Covered Period” shall be limited by,
and interpreted in a manner consistent with, 31 C.F.R. § 30.11 (as in effect on
the Closing Date).     •   Provisions (1) and (2) of this letter are intended
to, and will be interpreted, administered and construed to, comply with
Section 111 of EESA (and, to the maximum extent consistent with the preceding,
to permit operation of the Benefit Plans in accordance with their terms before
giving effect to this letter).     •   This letter shall in all respects be
governed by and construed under the internal laws of the State of New York
without regard to its conflict of laws principles.     •   This letter shall be
deemed performable by all parties in, and venue shall exclusively be in the
state or federal courts located in New York, New York. The parties hereby
consent to the personal jurisdiction of these courts and waive any objection
that such venue is objectionable or improper.     •   This letter shall be
subject to the dispute resolution provisions, including mandatory arbitration,
set forth on Annex C.

*                    *                    *

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     The Board appreciates the concessions you are making and looks forward to
your continued leadership during these financially turbulent times.

            Very truly yours,

[Financial Institution].
      By:           Name:           Title:        

Intending to be legally bound, I agree
with and accept the foregoing terms.

     
 
         
Roberto R. Herencia
   

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