<PAGE>


                                                                    EXHIBIT 4.23


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

                               GUARANTEE AGREEMENT

                                  BY AND AMONG

                          POPULAR NORTH AMERICA, INC.,
                                  AS GUARANTOR

                                 POPULAR, INC.,

                             AS ADDITIONAL GUARANTOR

                                       and

                           THE BANK OF NEW YORK MELLON,
                              AS GUARANTEE TRUSTEE

                                   RELATING TO

                      POPULAR NORTH AMERICA CAPITAL TRUST __

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

                         Dated as of ________ __, 20__

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

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

<PAGE>


                             CROSS-REFERENCE TABLE(1)

<TABLE>
<CAPTION>
     Section of
Trust Indenture Act                                                                            Section of Guarantee
of 1939, as amended                                                                                  Agreement
-------------------                                                                                  ---------
<S>                                                                                            <C>
310(a)....................................................................................     4.1(a)
310(b)....................................................................................     4.1(c), 2.8
310(c)....................................................................................     Inapplicable
311(a)....................................................................................     2.2(b)
311(b)....................................................................................     2.2(b)
311(c)....................................................................................     Inapplicable
312(a)....................................................................................     2.2(a)
312(b)....................................................................................     2.2(b)
313.......................................................................................     2.3
314(a)....................................................................................     2.4
314(b)....................................................................................     Inapplicable
314(c)....................................................................................     2.5
314(d)....................................................................................     Inapplicable
314(e)....................................................................................     1.1, 2.5, 3.2
314(f)....................................................................................     2.1, 3.2
315(a)....................................................................................     3.1(d)
315(b)....................................................................................     2.7
315(c)....................................................................................     3.1
315(d)....................................................................................     3.1(d)
316(a)....................................................................................     1.1, 2.6, 5.4
316(b)....................................................................................     5.3
316(c)....................................................................................     8.2
317(a)....................................................................................     Inapplicable
317(b)....................................................................................     Inapplicable
318(a)....................................................................................     2.1
318(b)....................................................................................     2.1
318(c)....................................................................................     2.1
</TABLE>

--------------
(1)      This Cross-Reference Table does not constitute part of the Guarantee
         Agreement and shall not affect the interpretation of any of its terms
         or provisions.

                                      -i-

<PAGE>


                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                              <C>
                                    ARTICLE I

                                   DEFINITIONS

Section 1.1.   Definitions...................................................................     1

                                   ARTICLE II

                               TRUST INDENTURE ACT

Section 2.1.   Trust Indenture Act; Application..............................................     4
Section 2.2.   List of Holders...............................................................     4
Section 2.3.   Reports by the Guarantee Trustee..............................................     5
Section 2.4.   Periodic Reports to the Guarantee Trustee.....................................     5
Section 2.5.   Evidence of Compliance with Conditions Precedent..............................     5
Section 2.6.   Events of Default; Waiver.....................................................     5
Section 2.7.   Event of Default; Notice......................................................     5
Section 2.8.   Conflicting Interests.........................................................     6

                                   ARTICLE III

               POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

Section 3.1.   Powers and Duties of the Guarantee Trustee....................................     6
Section 3.2.   Certain Rights of Guarantee Trustee...........................................     7
Section 3.3.   Compensation; Indemnity; Fees.................................................     8

                                   ARTICLE IV

                                GUARANTEE TRUSTEE

Section 4.1.   Guarantee Trustee; Eligibility................................................     9
Section 4.2.   Appointment, Removal and Resignation of the Guarantee Trustee.................     9

                                    ARTICLE V

                                    GUARANTEE

Section 5.1.   Guarantee.....................................................................    10
Section 5.2.   Waiver of Notice and Demand...................................................    10
Section 5.3.   Obligations Not Affected......................................................    10
Section 5.4.   Rights of Holders.............................................................    11
Section 5.5.   Guarantee of Payment..........................................................    11
Section 5.6.   Subrogation...................................................................    12
Section 5.7.   Independent Obligations.......................................................    12
Section 5.8.   Guarantee Payments and Additional Guarantee Payments Free of
               Puerto Rico Tax...............................................................    12
</TABLE>

                                      -ii-

<PAGE>


<TABLE>
<S>                                                                                              <C>
                                   ARTICLE VI

                           COVENANTS AND SUBORDINATION

Section 6.1.   Subordination.................................................................    13
Section 6.2.   Pari Passu Guarantees.........................................................    13
Section 6.3.   Common Stock..................................................................    13

                                   ARTICLE VII

                                   TERMINATION

Section 7.1.   Termination...................................................................    13

                                  ARTICLE VIII

                                  MISCELLANEOUS

Section 8.1.   Successors and Assigns........................................................    14
Section 8.2.   Amendments....................................................................    14
Section 8.3.   Notices.......................................................................    14
Section 8.4.   Benefit.......................................................................    15
Section 8.5.   Governing Law.................................................................    15
Section 8.6.   Counterparts..................................................................    15
</TABLE>

                                     -iii-

<PAGE>

         GUARANTEE AGREEMENT, dated as of ________, 20__, by and among
POPULAR NORTH AMERICA, INC., a Delaware corporation (the "Guarantor"), having
its principal office at 209 Munoz Rivera Avenue, San Juan, Puerto Rico 00918,
POPULAR, INC., a Puerto Rico corporation (the "Additional Guarantor", and
together with the Guarantor, the "Guarantors"), having its principal office at
209 Munoz Rivera Avenue, San Juan, Puerto Rico 00918, and THE BANK OF NEW YORK
MELLON, a national banking association, as trustee (the "Guarantee Trustee"),
for the benefit of the Holders (as defined herein) from time to time of the
Capital Securities (as defined herein) of POPULAR NORTH AMERICA CAPITAL TRUST
__, a Delaware statutory trust (the "Issuer Trust").

                           RECITALS OF THE CORPORATION

         WHEREAS, pursuant to an Amended and Restated Trust Agreement, dated as
of ________, 20__ (the "Trust Agreement"), among Popular North America,
Inc., as Depositor, Popular, Inc., as Guarantor, the Property Trustee, the
Delaware Trustee and the Administrative Trustees named therein, the Issuer Trust
is issuing $__________ aggregate Liquidation Amount (as defined in the Trust
Agreement) of its ____% Capital Securities (liquidation amount $1,000 per
Capital Security) (the "Capital Securities"), representing preferred undivided
beneficial interests in the assets of the Issuer Trust and having the terms set
forth in the Trust Agreement;

         WHEREAS, the Capital Securities will be issued by the Issuer Trust and
the proceeds thereof, together with the proceeds from the issuance of the Issuer
Trust's Common Securities (as defined herein), will be used to purchase the
Debentures (as defined in the Trust Agreement) of the Guarantor, which
Debentures will be deposited with The Bank of New York Mellon, as Property
Trustee under the Trust Agreement, as trust assets; and

         WHEREAS, as an incentive for the Holders to purchase Capital
Securities, the Guarantors desire irrevocably and unconditionally to agree, to
the extent set forth herein, to pay to the Holders of the Capital Securities the
Guarantee Payments and Additional Guarantee Payments (as defined herein), as the
case may be, and to make certain other payments on the terms and conditions set
forth herein.

         NOW, THEREFORE, in consideration of the purchase of Capital Securities
by each Holder, which purchase the Guarantors hereby acknowledge shall benefit
the Guarantors, the Guarantors execute and deliver this Guarantee Agreement for
the benefit of the Holders from time to time.

                                   ARTICLE I

                                   DEFINITIONS

         SECTION 1.1. Definitions.

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

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

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

<PAGE>


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

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

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

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

         "Additional Guarantee Payments" means payments by the Additional
Guarantor with respect to the Guarantee Payments owed by the Guarantor.

         "Additional Guarantor" has the meaning specified in the preamble of
this Guarantee Agreement.

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

         "Board of Directors" means, as the context requires, the board of
directors of either of the Guarantors or the Executive Committee of the board of
directors of either of the Guarantors (or any other committee of the board of
directors of either of the Guarantors performing similar functions) or a
committee designated by the board of directors of either of the Guarantors (or
such committee), comprised of two or more members of the board of directors of
either of the Guarantors or officers of either of the Guarantors, or both.

         "Capital Securities" has the meaning specified in the recitals to this
Guarantee Agreement.

         "Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer Trust.

         "Event of Default" means (i) a default by either of the Guarantors in
any of its payment obligations under this Guarantee Agreement or (ii) a default
by either of the Guarantors in any other obligation under this Guarantee
Agreement that remains unremedied for 30 days.

         "Guarantee Agreement" means this Guarantee Agreement, as modified,
amended or supplemented from time to time.

         "Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Capital Securities, to the extent not
paid or made by or on behalf of the Issuer Trust: (i) any accumulated and unpaid
Distributions (as defined in the Trust Agreement) required to be paid on the
Capital Securities, to the extent the Issuer Trust shall have funds on hand
available therefor at such time; (ii) the Redemption Price (as defined in the
Trust Agreement) with respect to any Capital Securities called for redemption or
then subject to mandatory redemption by the Issuer Trust, to the extent the
Issuer Trust shall have funds on hand available therefor at such time; and (iii)
upon a voluntary or involuntary

                                      -2-

<PAGE>


dissolution, winding-up or termination of the Issuer Trust, other than in
connection with the distribution of Debentures to the Holders or the redemption
of all the Capital Securities, the lesser of (a) the Liquidation Distribution
(as defined in the Trust Agreement) with respect to the Capital Securities, to
the extent that the Issuer Trust shall have funds on hand available therefor at
such time, and (b) the amount of assets of the Issuer Trust remaining available
for distribution to Holders on liquidation of the Issuer.

         "Guarantee Trustee" means The Bank of New York Mellon, solely in its
capacity as Guarantee Trustee and not in its individual capacity, until a
Successor Guarantee Trustee has been appointed and has accepted such appointment
pursuant to the terms of this Guarantee Agreement, and thereafter means each
such Successor Guarantee Trustee.

         "Guarantor" has the meaning specified in the preamble of this Guarantee
Agreement.

         "Guarantors" has the meaning specified in the preamble of this
Guarantee Agreement.

         "Holder" means any Holder (as defined in the Trust Agreement) of any
Capital Securities; provided, however, that in determining whether the holders
of the requisite percentage of Capital Securities have given any request,
notice, consent or waiver hereunder, "Holder" shall not include the Guarantors,
the Guarantee Trustee, or any Affiliate of the Guarantors or the Guarantee
Trustee.

         "Indenture" means the Junior Subordinated Indenture, dated as of
_______, 20___, among the Guarantor, the Additional Guarantor and The Bank of
New York Mellon, as trustee, as the same may be modified, amended or
supplemented from time to time.

         "Issuer Trust" has the meaning specified in the preamble of this
Guarantee Agreement.

         "List of Holders" has the meaning specified in Section 2.2(a).

         "Majority in Liquidation Amount of the Capital Securities" means,
except as provided by the Trust Indenture Act, Capital Securities representing
more than 50% of the aggregate Liquidation Amount (as defined in the Trust
Agreement) of all Capital Securities then Outstanding (as defined in the Trust
Agreement).

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

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

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

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

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

                                      -3-

<PAGE>


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

         "Responsible Officer" means, with respect to the Guarantee Trustee, any
Senior Vice President, any Vice President, any Assistant Vice President, the
Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, any
Trust Officer or Assistant Trust Officer or any other officer of the Corporate
Trust Department of the Guarantee Trustee and also means, with respect to a
particular matter, any other officer to whom such matter is referred because of
that officer's knowledge of and familiarity with the particular subject.

         "Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.1.

         "Trust Agreement" means the Amended and Restated Trust Agreement of the
Issuer Trust referred to in the recitals to this Guarantee Agreement, as
modified, amended or supplemented from time to time.

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

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

                                   ARTICLE II

                               TRUST INDENTURE ACT

         SECTION 2.1. Trust Indenture Act; Application.

         (a) This Guarantee Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Guarantee Agreement and
shall, to the extent applicable, be governed by such provisions.

         (b) If and to the extent that any provision of this Guarantee Agreement
limits, qualifies or conflicts with another provision hereof which is required
or deemed to be included in this Guarantee Agreement by any of the provisions of
the Trust Indenture Act, such required or deemed provision shall control. If any
provision of this Guarantee Agreement modifies or excludes any provision of the
Trust Indenture Act which may be so modified or excluded, the latter provision
shall be deemed to apply to this Guarantee Agreement as so modified or to be
excluded, as the case may be.

         SECTION 2.2. List of Holders.

         (a) The Guarantors shall furnish or cause to be furnished to the
Guarantee Trustee (a) semi-annually, on or before January 31 and July 31 of each
year, a list, in such form as the Guarantee Trustee may reasonably require, of
the names and addresses of the Holders (a "List of Holders") as of a date not
more than 15 days prior to the delivery thereof and (b) at such other times as
the Guarantee Trustee may

                                      -4-

<PAGE>


request in writing, within 30 days after the receipt by the Guarantors of any
such request, a List of Holders as of a date not more than 15 days prior to the
time such list is furnished, in each case to the extent such information is in
the possession or control of the Guarantors and has not otherwise been received
by the Guarantee Trustee in its capacity as such. The Guarantee Trustee may
destroy any List of Holders previously given to it upon receipt of a new List of
Holders.

         (b) The Guarantee Trustee shall comply with the requirements of Section
311(a), Section 311(b) and Section 312(b) of the Trust Indenture Act.

         SECTION 2.3. Reports by the Guarantee Trustee.

         Not later than February 28 of each year, commencing in 20___, the
Guarantee Trustee shall provide to the Holders such reports as are required by
Section 313 of the Trust Indenture Act, if any, in the form and in the manner
provided by Section 313 of the Trust Indenture Act. The Guarantee Trustee shall
also comply with the requirements of Section 313(d) of the Trust Indenture Act.

         SECTION 2.4. Periodic Reports to the Guarantee Trustee.

         The Guarantors shall provide to the Guarantee Trustee, the Securities
and Exchange Commission and the Holders such documents, reports and information,
if any, as required by Section 314 of the Trust Indenture Act and the compliance
certificate required by Section 314 of the Trust Indenture Act, in the form, in
the manner and at the times required by Section 314 of the Trust Indenture Act.

         SECTION 2.5. Evidence of Compliance with Conditions Precedent.

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

         SECTION 2.6. Events of Default; Waiver.

         The Holders of at least a Majority in Liquidation Amount of the Capital
Securities may, by vote, on behalf of the Holders of all the Capital Securities,
waive any past default or Event of Default and its consequences. Upon such
waiver, any such default or Event of Default shall cease to exist, and any
default or Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Guarantee Agreement, but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent thereon.

         SECTION 2.7. Event of Default; Notice.

         (a) The Guarantee Trustee shall, within 90 days after the occurrence of
an Event of Default known to the Guarantee Trustee, transmit by mail, first
class postage prepaid, to the Holders notice of any such Event of Default,
unless such Event of Default has been cured before the giving of such notice,
provided that, except in the case of a default in the payment of a Guarantee
Payment, the Guarantee Trustee shall be protected in withholding such notice if
and so long as the board of directors, the executive committee or a trust
committee of directors and/or Responsible Officers of the Guarantee Trustee in
good faith determines that the withholding of such notice is in the interests of
the Holders.

                                      -5-

<PAGE>


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

         SECTION 2.8. Conflicting Interests.

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

                                  ARTICLE III

               POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE

         SECTION 3.1. Powers and Duties of the Guarantee Trustee.

         (a) This Guarantee Agreement shall be held by the Guarantee Trustee for
the benefit of the Holders, and the Guarantee Trustee shall not transfer this
Guarantee Agreement to any Person except to a Successor Guarantee Trustee on
acceptance by such Successor Guarantee Trustee of its appointment to act as
Guarantee Trustee hereunder. The right, title and interest of the Guarantee
Trustee, as such, hereunder shall automatically vest in any Successor Guarantee
Trustee upon acceptance by such Successor Guarantee Trustee of its appointment
hereunder, and such vesting of title shall be effective whether or not
conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Guarantee Trustee.

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

         (c) The Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Guarantee Agreement, and no implied covenants shall be read into this
Guarantee Agreement against the Guarantee Trustee. The Guarantee Trustee shall
exercise such of the rights and powers vested in it by this Guarantee Agreement,
and use the same degree of care and skill in its exercise thereof, as a prudent
person would exercise or use under the circumstances in the conduct of his or
her own affairs.

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

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

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

                           (B) in the absence of bad faith on the part of the
                  Guarantee Trustee, the Guarantee Trustee may conclusively
                  rely, as to the truth of the statements and the

                                      -6-

<PAGE>


                  correctness of the opinions expressed therein, upon any
                  certificates or opinions furnished to the Guarantee Trustee
                  and conforming to the requirements of this Guarantee
                  Agreement; but in the case of any such certificates or
                  opinions that by any provision hereof or of the Trust
                  Indenture Act are specifically required to be furnished to the
                  Guarantee Trustee, the Guarantee Trustee shall be under a duty
                  to examine the same to determine whether or not they conform
                  to the requirements of this Guarantee Agreement.

                  (ii) The Guarantee Trustee shall not be liable for any error
         of judgment made in good faith by a Responsible Officer of the
         Guarantee Trustee, unless it shall be proved that the Guarantee Trustee
         was negligent in ascertaining the pertinent facts upon which such
         judgment was made.

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

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

         SECTION 3.2. Certain Rights of Guarantee Trustee.

         (a) Subject to the provisions of Section 3.1:

                  (i) The Guarantee Trustee may rely and shall be fully
         protected in acting or refraining from acting upon any resolution,
         certificate, statement, instrument, opinion, report, notice, request,
         direction, consent, order, bond, debenture, note, other evidence of
         indebtedness or other paper or document reasonably believed by it to be
         genuine and to have been signed, sent or presented by the proper party
         or parties.

                  (ii) Any direction or act of either of the Guarantors
         contemplated by this Guarantee Agreement shall be sufficiently
         evidenced by an Officers' Certificate unless otherwise prescribed
         herein.

                  (iii) Whenever, in the administration of this Guarantee
         Agreement, the Guarantee Trustee shall deem it desirable that a matter
         be proved or established before taking, suffering or omitting to take
         any action hereunder, the Guarantee Trustee (unless other evidence is
         herein specifically prescribed) may, in the absence of bad faith on its
         part, request and rely upon an Officers' Certificate which, upon
         receipt of such request from the Guarantee Trustee, shall be promptly
         delivered by either of or both of the Guarantors.

                  (iv) The Guarantee Trustee may consult with legal counsel, and
         the written advice or opinion of such legal counsel with respect to
         legal matters shall be full and complete authorization and protection
         in respect of any action taken, suffered or omitted to be taken by it
         hereunder in good faith and in accordance with such advice or opinion.
         Such legal counsel may

                                      -7-

<PAGE>


         be legal counsel to either of the Guarantors or any of its Affiliates
         and may be one of its employees. The Guarantee Trustee shall have the
         right at any time to seek instructions concerning the administration of
         this Guarantee Agreement from any court of competent jurisdiction.

                  (v) The Guarantee Trustee shall be under no obligation to
         exercise any of the rights or powers vested in it by this Guarantee
         Agreement at the request or direction of any Holder unless such Holder
         shall have provided to the Guarantee Trustee such adequate security and
         indemnity as would satisfy a reasonable person in the position of the
         Guarantee Trustee against the costs, expenses (including attorneys'
         fees and expenses) and liabilities that might be incurred by it in
         complying with such request or direction, including such reasonable
         advances as may be requested by the Guarantee Trustee; provided that
         nothing contained in this Section 3.2(a)(v) shall be taken to relieve
         the Guarantee Trustee, upon the occurrence of an Event of Default, of
         its obligation to exercise the rights and powers vested in it by this
         Guarantee Agreement.

                  (vi) The Guarantee Trustee shall not be bound to make any
         investigation into the facts or matters stated in any resolution,
         certificate, statement, instrument, opinion, report, notice, request,
         direction, consent, order, bond, debenture, note, other evidence of
         indebtedness or other paper or document, but the Guarantee Trustee, in
         its discretion, may make such further inquiry or investigation into
         such facts or matters as it may see fit.

                  (vii) The Guarantee Trustee may execute any of the trusts or
         powers hereunder or perform any duties hereunder either directly or by
         or through its agents or attorneys, and the Guarantee Trustee shall not
         be responsible for any misconduct or negligence on the part of any such
         agent or attorney appointed by it with due care hereunder.

                  (viii) Whenever in the administration of this Guarantee
         Agreement the Guarantee Trustee shall deem it desirable to receive
         instructions with respect to enforcing any remedy or right or taking
         any other action hereunder, the Guarantee Trustee (A) may request
         instructions from the Holders, (B) may refrain from enforcing such
         remedy or right or taking such other action until such instructions are
         received, and (C) shall be protected in acting in accordance with such
         instructions.

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

         SECTION 3.3. Compensation; Indemnity; Fees.

         Each of the Guarantors agrees:

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

                  (b) except as otherwise expressly provided herein, to
         reimburse the Guarantee Trustee upon request for all reasonable
         expenses, disbursements and advances incurred or made

                                      -8-

<PAGE>


         by the Guarantee Trustee in accordance with any provision of this
         Guarantee Agreement (including the reasonable compensation and the
         expenses and disbursements of its agents and counsel), except any such
         expense, disbursement or advance as may be attributable to its
         negligence or bad faith; and

                  (c) to indemnify the Guarantee Trustee for, and to hold it
         harmless against, any loss, liability or expense incurred without
         negligence, wilful misconduct or bad faith on the part of the Guarantee
         Trustee, arising out of or in connection with the acceptance or
         administration of this Guarantee Agreement, including the costs and
         expenses of defending itself against any claim or liability in
         connection with the exercise or performance of any of its powers or
         duties hereunder.

The Guarantee Trustee will not claim or exact any lien or charge on any
Guarantee Payments as a result of any amount due to it under this Guarantee
Agreement. The provisions of this Section 3.3 shall survive the termination of
this Guarantee Agreement or the resignation or removal of the Guarantee Trustee.

                                   ARTICLE IV

                                GUARANTEE TRUSTEE

         SECTION 4.1. Guarantee Trustee; Eligibility.

         (a) There shall at all times be a Guarantee Trustee which shall:

                  (i) not be an Affiliate of either of the Guarantors; and

                  (ii) be a Person that is eligible pursuant to the Trust
         Indenture Act to act as such and has a combined capital and surplus of
         at least $50,000,000, and shall be a corporation meeting the
         requirements of Section 310(a) of the Trust Indenture Act. If such
         corporation publishes reports of condition at least annually, pursuant
         to law or to the requirements of its supervising or examining
         authority, then, for the purposes of this Section 4.1 and to the extent
         permitted by the Trust Indenture Act, the combined capital and surplus
         of such corporation shall be deemed to be its combined capital and
         surplus as set forth in its most recent report of condition so
         published.

         (b) If at any time the Guarantee Trustee shall cease to be eligible to
so act under Section 4.1(a), the Guarantee Trustee shall immediately resign in
the manner and with the effect set out in Section 4.2.

         (c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Guarantee Trustee and Guarantors shall in all respects comply with the
provisions of Section 310(b) of the Trust Indenture Act.

         SECTION 4.2. Appointment, Removal and Resignation of the Guarantee
Trustee.

         (a) Subject to Section 4.2(b), the Guarantee Trustee may be appointed
or removed without cause at any time by either of the Guarantors.

         (b) The Guarantee Trustee shall not be removed until a Successor
Guarantee Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Guarantee Trustee and delivered to
the Guarantors.

                                      -9-

<PAGE>


         (c) The Guarantee Trustee appointed hereunder shall hold office until a
Successor Guarantee Trustee shall have been appointed or until its removal or
resignation. The Guarantee Trustee may resign from office (without need for
prior or subsequent accounting) by an instrument in writing executed by the
Guarantee Trustee and delivered to the Guarantors, which resignation shall not
take effect until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by instrument in writing executed by such Successor
Guarantee Trustee and delivered to the Guarantors and the resigning Guarantee
Trustee.

         (d) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.2 within 60 days after
delivery to the Guarantors of an instrument of resignation, the resigning
Guarantee Trustee may petition, at the expense of the Guarantors, any court of
competent jurisdiction for appointment of a Successor Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Guarantee Trustee.

                                   ARTICLE V

                                    GUARANTEE

         SECTION 5.1. Guarantee.

         The Guarantor irrevocably and unconditionally agrees to pay in full to
the Holders the Guarantee Payments (without duplication of amounts theretofore
paid by or on behalf of the Issuer Trust or the Additional Guarantor), as and
when due, regardless of any defense, right of set-off or counterclaim that the
Issuer Trust may have or assert, except the defense of payment. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by either of the Guarantors to the Holders or by causing the
Issuer Trust to pay such amounts to the Holders.

         The Additional Guarantor irrevocably and unconditionally agrees to pay
in full to the Holders the Additional Guarantee Payments (without duplication of
amounts theretofore paid by or on behalf of the Issuer Trust or the Guarantor),
as and when the same are due and payable by the Guarantor, regardless of any
defense, right of set-off or counterclaim that the Issuer Trust or the Guarantor
may have or assert, except the defense of payment. The Additional Guarantor's
obligation to make an Additional Guarantee Payment may be satisfied by direct
payment of the required amounts by either of the Guarantors to the Holders or by
causing the Issuer Trust to pay such amounts to the Holders.

         SECTION 5.2. Waiver of Notice and Demand.

         Each of the Guarantors hereby waives notice of acceptance of this
Guarantee Agreement and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first against
the Guarantee Trustee, the Issuer Trust or any other Person before proceeding
against either of the Guarantors, protest, notice of nonpayment, notice of
dishonor, notice of redemption and all other notices and demands.

         SECTION 5.3. Obligations Not Affected.

         The obligations, covenants, agreements and duties of each of the
Guarantors under this Guarantee Agreement shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:

                                      -10-

<PAGE>


                  (a) the release or waiver, by operation of law or otherwise,
         of the performance or observance by the Issuer Trust of any express or
         implied agreement, covenant, term or condition relating to the Capital
         Securities to be performed or observed by the Issuer Trust;

                  (b) the extension of time for the payment by the Issuer Trust
         of all or any portion of the Distributions (other than an extension of
         time for payment of Distributions that results from the extension of
         any interest payment period on the Debentures as provided in the
         Indenture), Redemption Price, Liquidation Distribution or any other
         sums payable under the terms of the Capital Securities or the extension
         of time for the performance of any other obligation under, arising out
         of, or in connection with, the Capital Securities;

                  (c) any failure, omission, delay or lack of diligence on the
         part of the Holders to enforce, assert or exercise any right,
         privilege, power or remedy conferred on the Holders pursuant to the
         terms of the Capital Securities, or any action on the part of the
         Issuer Trust granting indulgence or extension of any kind;

                  (d) the voluntary or involuntary liquidation, dissolution,
         receivership, insolvency, bankruptcy, assignment for the benefit of
         creditors, reorganization, arrangement, composition or readjustment of
         debt of, or other similar proceedings affecting, the Issuer Trust or
         any of the assets of the Issuer Trust;

                  (e) any invalidity of, or defect or deficiency in, the Capital
         Securities;

                  (f) the settlement or compromise of any obligation guaranteed
         hereby or hereby incurred; or

                  (g) any other circumstance whatsoever that might otherwise
         constitute a legal or equitable discharge or defense of a guarantor
         (other than payment of the underlying obligation), it being the intent
         of this Section 5.3 that the obligations of each of the Guarantors
         hereunder shall be absolute and unconditional under any and all
         circumstances.

There shall be no obligation of the Holders to give notice to, or obtain the
consent of, either of the Guarantors with respect to the happening of any of the
foregoing.

         SECTION 5.4. Rights of Holders.

         Each of the Guarantors expressly acknowledges that: (i) this Guarantee
Agreement will be deposited with the Guarantee Trustee to be held for the
benefit of the Holders; (ii) the Guarantee Trustee has the right to enforce this
Guarantee Agreement on behalf of the Holders; (iii) the Holders of a Majority in
Liquidation Amount of the Capital Securities have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Guarantee Trustee in respect of this Guarantee Agreement or exercising any trust
or power conferred upon the Guarantee Trustee under this Guarantee Agreement;
and (iv) any Holder may institute a legal proceeding directly against either of
the Guarantors to enforce its rights under this Guarantee Agreement without
first instituting a legal proceeding against the Guarantee Trustee, the Issuer
Trust or any other Person.

         SECTION 5.5. Guarantee of Payment.

         This Guarantee Agreement creates a guarantee of payment and not of
collection. This Guarantee Agreement will not be discharged except by payment of
the Guarantee Payments in full (without

                                      -11-

<PAGE>


duplication of amounts theretofore paid by the Issuer Trust) or upon the
distribution of Debentures to Holders as provided in the Trust Agreement.

         SECTION 5.6. Subrogation.

         Each of the Guarantors shall be subrogated to all rights (if any) of
the Holders against the Issuer Trust in respect of any amounts paid to the
Holders by such Guarantors under this Guarantee Agreement; provided, however,
that the Guarantors shall not (except to the extent required by mandatory
provisions of law) be entitled to enforce or exercise any rights which they may
acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Guarantee Agreement,
if, at the time of any such payment, any amounts are due and unpaid under this
Guarantee Agreement. If any amount shall be paid to either of the Guarantors in
violation of the preceding sentence, the Guarantor or the Additional Guarantor,
as the case may be, agrees to hold such amount in trust for the Holders and to
pay over such amount to the Holders.

         SECTION 5.7. Independent Obligations.

         Each of the Guarantors acknowledges that its obligations hereunder are
independent of the obligations of the Issuer Trust with respect to the Capital
Securities and that it shall be liable as principal and as debtor hereunder to
make Guarantee Payments or Additional Guarantee Payments, as the case may be,
pursuant to the terms of this Guarantee Agreement notwithstanding the occurrence
of any event referred to in subsections (a) through (g), inclusive, of Section
5.3 hereof.

         SECTION 5.8. Guarantee Payments and Additional Guarantee Payments Free
of Puerto Rico Tax.

         All Guarantee Payments and Additional Guarantee Payments shall be made
without set-off, counterclaim, fees, liabilities or similar deductions, and free
and clear of, and without deduction or withholding for, taxes, levies, imposts,
duties, charges or fees of whatsoever nature now or hereafter imposed, levied,
collected, deducted, withheld or assessed by or on behalf of the Commonwealth of
Puerto Rico or any district, municipality or political subdivision or taxing
authority thereof or therein ("Taxes"). If the Additional Guarantor or any agent
thereof is required by law or regulation to make any deduction or withholding
for or on account of Taxes, the Additional Guarantor shall pay such additional
amounts (the "Tax Gross-Up Amounts") as shall be necessary in order that the net
amounts received pursuant to the Guarantee Agreement by the Holders of the
Capital Securities or the holders or beneficial owners of any interest therein
or rights in respect thereof after such deduction or withholding shall equal the
amount that would have been receivable thereunder in the absence of such
deduction or withholding, except that no such Tax Gross-Up Amounts shall be
payable:

                  (a) to any Holder of a Capital Security or any interest
         therein or rights in respect thereof where such deduction or
         withholding is required by reason of such Holder having some connection
         with the Commonwealth of Puerto Rico or any political subdivision or
         taxing authority thereof or thereon other than the mere holding of a
         payment in respect of such security;

                  (b) in respect of any deduction or withholding that would not
         have been required but for the presentation by the Holder of a Capital
         Security for payment on a date more than 30 days after the date on
         which payment thereof is duly provided for; or

                  (c) in respect of any deduction or withholding that would not
         have been required but for the failure to comply with any
         certification, identification or other reporting requirements
         concerning the nationality, residence, identity or connection with the
         Commonwealth of Puerto

                                      -12-

<PAGE>


         Rico, or any political subdivision or taxing authority thereof or
         therein, of the Holder of a Capital Security or any interest therein or
         rights in respect thereof, if compliance is required by the
         Commonwealth of Puerto Rico, or any political subdivision or taxing
         authority thereof or therein, as a precondition to exemption from such
         deduction or withholding.

                                   ARTICLE VI

                           COVENANTS AND SUBORDINATION

         SECTION 6.1. Subordination.

         The obligations of each of the Guarantors under this Guarantee
Agreement will constitute unsecured obligations of each of the Guarantors and
will rank subordinate and junior in right of payment to all Senior Debt (as
defined in the Indenture) of each of the Guarantors, respectively, to the extent
and in the manner set forth in the Indenture with respect to the Debentures, and
the provisions of Article XII of the Indenture will apply, mutatis mutandis, to
the obligations of each of the Guarantors hereunder. The obligations of each of
the Guarantors hereunder do not constitute Senior Debt (as defined in the
Indenture) of each of the Guarantors, respectively.

         SECTION 6.2. Pari Passu Guarantees.

         The obligations of each of the Guarantors under this Guarantee
Agreement shall rank pari passu with the obligations of each of the Guarantors,
respectively, under (i) any similar guarantee agreements issued by the Guarantor
or the Additional Guarantor, as the case may be, on behalf of the holders of
preferred or capital securities issued by any Issuer Trust (as defined in the
Indenture), (ii) the Indenture and the Securities (as defined therein) issued
thereunder; (iii) the Expense Agreement (as defined in the Trust Agreement) and
any similar expense agreements entered into by the Guarantor or the Additional
Guarantor, as the case may be, in connection with the offering of Capital
Securities (as defined in the Indenture) by any Issuer Trust (as defined in the
Indenture), and (iv) any other security, guarantee or other agreement or
obligation that is expressly stated to rank pari passu with the obligations of
the Guarantor or the Additional Guarantor, as the case may be, under this
Guarantee Agreement or with any obligation that ranks pari passu with the
obligations of the Guarantor or the Additional Guarantor, as the case may be,
under this Guarantee Agreement.

         SECTION 6.3. Common Stock.

         The obligations of each of the Guarantors under this Guarantee
Agreement shall rank senior in right of payment to the obligations of the
Guarantors on common stock issued by each of the Guarantors, respectively.

                                   ARTICLE VII

                                   TERMINATION

         SECTION 7.1. Termination.

         This Guarantee Agreement shall terminate and be of no further force and
effect upon (i) full payment of the Redemption Price (as defined in the Trust
Agreement) of all Capital Securities, (ii) the distribution of Debentures to the
Holders in exchange for all of the Capital Securities or (iii) full payment of
the amounts payable in accordance with Article IX of the Trust Agreement upon
liquidation of the Issuer Trust. Notwithstanding the foregoing, this Guarantee
Agreement will continue to be effective or

                                      -13-

<PAGE>


will be reinstated, as the case may be, if at any time any Holder is required to
repay any sums paid with respect to Capital Securities or this Guarantee
Agreement.

                                  ARTICLE VIII

                                  MISCELLANEOUS

         SECTION 8.1. Successors and Assigns.

         All guarantees and agreements contained in this Guarantee Agreement
shall bind the successors, assigns, receivers, trustees and representatives of
each of the Guarantors, respectively, and shall inure to the benefit of the
Holders of the Capital Securities then outstanding. Except in connection with a
consolidation, merger or sale involving either of the Guarantors that is
permitted under Article VIII of the Indenture and pursuant to which the
successor or assignee agrees in writing to perform such Guarantor's obligations
hereunder, each of the Guarantors shall not assign its obligations hereunder,
and any purported assignment other than in accordance with this provision shall
be void.

         SECTION 8.2. Amendments.

         Except with respect to any changes that do not adversely affect the
rights of the Holders in any material respect (in which case no consent of the
Holders will be required), this Guarantee Agreement may only be amended with the
prior approval of the Holders of not less than a Majority in Liquidation Amount
of the Capital Securities. The provisions of Article VI of the Trust Agreement
concerning meetings of the Holders shall apply to the giving of such approval.

         SECTION 8.3. Notices.

         Any notice, request or other communication required or permitted to be
given hereunder shall be in writing, duly signed by the party giving such
notice, and delivered, telecopied or mailed by first class mail as follows:

         (a) if given to the Guarantor, to the address or telecopy number set
forth below (with a copy to the Additional Guarantor) or such other address or
telecopy number as the Guarantor may give notice to the Guarantee Trustee and
the Holders:

                           Popular North America, Inc.
                           209 Munoz Rivera Avenue
                           San Juan, Puerto Rico 00918
                           Attention: ___________
                           Telecopy: ____________

         (b) if given to the Additional Guarantor, to the address or telecopy
number set forth below or such other address or telecopy number as the
Additional Guarantor may give notice to the Guarantee Trustee and the Holders:

                           Popular, Inc.
                           209 Munoz Rivera Avenue
                           San Juan, Puerto Rico 00918
                           Attention: ___________
                           Telecopy: ____________

                                      -14-

<PAGE>


         (c) if given to the Guarantee Trustee, at the address or telecopy
number set forth below or such other address or telecopy number as the Guarantee
Trustee may give notice to the Guarantor and Holders:

                           The Bank of New York Mellon
                           [to come]
                           Attention:  ________________
                           Telecopy:  ________________

with a copy to:

                           Popular North America Capital Trust __
                           c/o Popular North America, Inc.
                           209 Munoz Rivera Avenue
                           San Juan, Puerto Rico 00918
                           Attention: ___________
                           Telecopy: ____________

         (d) if given to any Holder, at the address of such Holder set forth on
the books and records of the Issuer Trust.

         All notices hereunder shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.

         SECTION 8.4. Benefit.

         This Guarantee Agreement is solely for the benefit of the Holders and
is not separately transferable from the Capital Securities.

         SECTION 8.5. Governing Law.

         THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND WHOLLY TO BE PERFORMED IN SUCH STATE.

         SECTION 8.6. Counterparts.

         This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.

                                      -15-

<PAGE>


         IN WITNESS WHEREOF, the parties hereto have executed this Guarantee
Agreement as of the day and year first above written.

                                        POPULAR NORTH AMERICA, INC.

                                        By: ___________________________________
                                            Name:
                                            Title:

                                        POPULAR, INC.

                                        By: ___________________________________
                                            Name:
                                            Title:

                                        THE BANK OF NEW YORK MELLON,
                                        as Guarantee Trustee

                                        By: ___________________________________
                                            Name:
                                            Title: