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[POPULAR INC.LOGO]                                                  EXHIBIT 10.2

July 16, 2004

PERSONAL AND CONFIDENTIAL

_____________
_____________
_____________

Dear_______:

We are very pleased to have you on the Board of Directors (the "Board") of
Popular, Inc. ("Popular") and Banco Popular the Puerto Rico ("BPPR") and are
writing to set forth the general terms of your compensation as a Director,
pursuant to resolutions adopted by Popular's and BPPR's Boards (without your
participation) on July 14, 2004 and July 15, 2004, respectively. These terms
are, of course, subject to future modification by Popular's and BPPR's Boards.

Your current term as a Director of Popular commenced on ____ and will run
through the ___ annual meeting of shareholders of the Corporation. Your term as
a Director of BPPR commenced on _____ and will end on ________. As compensation
for your services, you will receive:

      - An annual retainer fee (the "Annual Retainer") of $15,000 for the period
      ending on the day the 2005 annual meeting of shareholders of Popular is
      held and $20,000 for each subsequent twelve month period that you are a
      Director of Popular or $25,000 if you are elected Chairman of any of
      Popular's Board committees;

      - $1,000 for each of Popular's or BPPR's Board or Board committee meeting
      that you attend (the "Meeting Fee"); and

      - A grant of $26,250 payable in Restricted Stock of Popular, Inc. (the
      "Restricted Stock") under the Popular, Inc. 2004 Omnibus Incentive Plan
      (the "Omnibus Plan") for the period ending on the day the 2005 annual
      meeting of shareholders of Popular is held, and an annual grant of $35,000
      payable in Restricted Stock under the Omnibus Plan for each subsequent
      twelve month period that you are a Director of Popular and/or BPPR.

The Annual Retainer will be paid annually in advance, within the 30 days
following Popular's annual shareholder meeting, in cash unless you elect to
receive payment in Restricted Stock. The Annual Retainer for the period ending
on the day the 2005 annual meeting of shareholders of Popular is held will be
paid on August 16, 2004. The Meeting

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July 16, 2004

Page 2

Fee may be paid in cash on a per meeting basis or quarterly in arrears in
Restricted Stock. The number of shares of Restricted Stock to be delivered in
payment of an Annual Retainer and/or Meeting Fee shall be determined based on
the per share closing price of Popular's common stock on the date payment is
made and the amount of the Annual Retainer and/or Meeting Fee owed you.

If you elect to receive payment in the form of Restricted Stock, such shares
shall be subject to the terms of the Annual Retainer and/or Meeting Fee
Restricted Stock Agreement (attached hereto). If you elect to receive Restricted
Stock you must return to us the attached Director Compensation Election Form and
the executed Annual Retainer and/or Meeting Fee Restricted Stock Agreement. If
you do not provide us with a completed election form, the Annual Retainer will
be paid to you annually in advance in cash and the Meeting Fee will be paid in
cash on a per meeting basis. Once you have made an election to receive
Restricted Stock, the election will be applicable to all future payments of the
Annual Retainer and/or Meeting Fee, unless you notify us in writing of your
desire to no longer receive Restricted Stock. In such case, your notice will
apply to compensation payable for the year following receipt of the notice.

If you do not currently elect to receive the Annual Retainer and/or the Meeting
Fee in the form of Restricted Stock, you may make such an election for future
payments of either compensation element, by sending us a written notice with
respect to the Annual Retainer, at least 30 days prior to the date of Popular's
annual meeting of shareholders for which the election would be in effect and,
with respect to the Meeting Fees, at least 30 days prior to Popular's or BPPR's
Board or committee meeting for which you want to commence receiving the Meeting
Fee in the form of Restricted Stock.

An election to receive the Annual Retainer and/or Meeting Fee in the form of
Restricted Stock will result in deferral of taxation of those amounts until such
later year as the restrictions lapse.

Dividends paid on your Restricted Stock will be reinvested in your name in the
Popular, Inc. Dividend Reinvestment Plan. The dividend will be subject to Puerto
Rico income taxes in the year paid by Popular and/or BPPR at a special 10% rate.

Your grant of Restricted Stock is covered by a separate agreement attached
hereto. We have enclosed the following documents in connection with the
foregoing:

      1.    Director Compensation Election Form,

      2.    Annual Grant Restricted Stock Agreement,

      3.    Annual Retainer and/or Meeting Fee Restricted Stock Agreement, and

      4.    Omnibus Plan

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July 16, 2004

Page 3

Please complete and sign the Director Compensation Election Form and sign the
Annual Grant Restricted Stock Agreement where indicated. If you elect to receive
payment of the Annual Retainer and/or the Meeting Fee in Restricted Stock,
please sign the Annual Retainer and/or Meeting Fee Restricted Stock Agreement.
Return all of the executed documents to Marie Reyes Rodriguez at the Corporate
Secretary's Office. Please retain a copy of these documents for your records.

Once more, thank you for joining the Board of Directors of Popular, Inc and
Banco Popular de Puerto Rico. We look forward to working with you.

Cordially,

Brunilda Santos de Alvarez
Executive Vice President
Chief Legal Officer &
Assistant Secretary of the Board

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                               [POPULAR INC.LOGO]

                       DIRECTOR COMPENSATION ELECTION FORM

I have received Popular, Inc.'s letter dated July 16, 2004 informing me of my
compensation as a member of the Board of Directors of Popular, Inc. and Banco
Popular de Puerto Rico. I am in agreement with the terms set forth therein.

In connection therewith, I hereby make the following elections with respect to
my future compensation as a member of the Board of Directors of Popular, Inc.
and Banco Popular de Puerto Rico:

                                  ANNUAL RETAINER

                                ANNUALLY IN ADVANCE

                                CASH     RESTRICTED
                                           STOCK

                                    MEETING FEE

                                                QUARTERLY
                                MONTHLY         RESTRICTED
                              (CASH ONLY)         STOCK

I understand that an election to defer receipt of any amounts due me will not
change the nature of the compensation to be received. Amounts received will be
taxed as ordinary income when received.

                                          ____________________________

                                    Name: ____________________________

                                    Date: ____________________________

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                              [ POPULAR INC.LOGO]

                                  ANNUAL GRANT
                           RESTRICTED STOCK AGREEMENT

      This Annual Grant Restricted Stock Agreement ("Agreement") by and between
Popular, Inc. (the "Corporation") and __________ ("Director") is entered
pursuant to the meeting of the Board of Directors of the Corporation held the
14th day of July of 2004, whereby the Corporation in consideration of Director's
services as a member of the Board of Directors of the Corporation and/or its
wholly owned subsidiary, Banco Popular de Puerto Rico ("BPPR"), granted to the
Director a number of restricted shares of the Corporation's Common Stock (the
"Restricted Stock") subject to the terms and conditions hereinafter set forth
and the terms and conditions of the Popular, Inc. 2004 Omnibus Incentive Plan
(the "Plan"), a copy of which is attached hereto as Exhibit A. Capitalized terms
not otherwise defined herein shall having the meaning ascribed them in the Plan.

      1. NUMBER OF SHARES. Pursuant to the terms of the Director's Compensation
letter dated July 16, 2004, the Corporation has agreed to grant to the Director
TWENTY-SIX THOUSAND TWO HUNDRED FIFTY DOLLARS ($26,250) worth of Restricted
Stock for the period ending on the day the 2005 annual meeting of the
Corporation's shareholders is held and an annual grant of THIRTY FIVE THOUSAND
DOLLARS ($35,000) for each subsequent year the Director is such of the
Corporation and/or BPPR, based on the per share closing price of the
Corporation's Common Stock on the Grant Date. The Grant Date shall be the day
the Restricted Stock is purchased for the Director which date shall be August
16, 2004 with respect to the period ending the day of the 2005 annual meeting of
shareholders of the Corporation and with respect to subsequent annual grants,
within the 30 days following the annual meeting of the Corporation's
shareholders. For all purposes the Grant Price shall be zero ($0).

      The Restricted Stock shall be subject to all the terms, conditions, and
restrictions set forth in this Agreement and the Plan. In the event any stock
dividend, stock split, recapitalization or other change affecting the
outstanding common stock of the Corporation as a class is effected without
consideration, then any new, substituted or additional securities or other
property (including money paid other than as a regular cash dividend) that is by
reason of any such transaction distributed with respect to shares of Restricted
Stock will be immediately subject to the provisions of this Agreement in the
same manner and to the same extent as the Restricted Stock with respect to which
such change was effected. Cash dividends paid on Restricted Stock shall be
reinvested in Common Stock through the Corporation's Dividend Reinvestment Plan.

      2. FORFEITURE AND TRANSFER RESTRICTIONS. All Restricted Stock granted to
Director shall be issued and delivered on the Grant Date. In the event
Director's relationship with the Corporation or BPPR, as applicable, is
terminated for Cause (as defined in the Plan), or if Director, Director's legal
representative, or other holder of the Restricted Stock attempts to sell,
exchange, transfer, pledge, or otherwise dispose of any Restricted Stock, all
Restricted Stock will be immediately forfeited without any further action by the
Corporation.

      Restricted Stock may not be assigned, transferred, pledged or otherwise
disposed of in any way other than by the Last Will and Testament of the Director
or the laws of descent and distribution,

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subject to the bylaws of the Corporation. Any Restricted Stock held by a
beneficiary shall be subject to the restrictions imposed on such Restricted
Stock. Any such attempt at assignment, transfer, pledge or other disposition
shall be without effect.

      3. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary
contained herein, no shares under this Agreement may be granted unless the
shares of Restricted Stock issuable upon such grant are then registered under
the Securities Act of 1933, as amended (the "Securities Act") or, if such shares
of Restricted Stock are not then so registered, the Corporation has determined
that such grant and issuance would be exempt from the registration requirements
of the Securities Act. The grant of shares must also comply with other
applicable laws and regulations governing the grant, and no grant of shares will
be permitted if the Corporation determines that such purchase would not be in
material compliance with such laws and regulations.

      4. STOCK LEGEND. The Corporation and Director agree that all certificates
representing all shares of Restricted Stock that at any time are subject to the
provisions of this Agreement and the Plan will have endorsed upon them in
bold-faced type a legend substantially in the following form:

      THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, ASSIGNED,
      TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE
      WITH THE TERMS OF AN ANNUAL GRANT RESTRICTED STOCK AGREEMENT BETWEEN THE
      CORPORATION AND THE INITIAL HOLDER OF THE SHARES. THE ANNUAL GRANT
      RESTRICTED STOCK AGREEMENT MAY GRANT CERTAIN PURCHASE OPTIONS TO THE
      CORPORATION, PROVIDES FOR FORFEITURE OF THE STOCK IN CERTAIN
      CIRCUMSTANCES, AND IMPOSES RESTRICTIONS ON THE TRANSFER OF THESE SHARES. A
      COPY OF THE ANNUAL GRANT RESTRICTED STOCK AGREEMENT IS ON DEPOSIT AT THE
      PRINCIPAL OFFICE OF THE CORPORATION AND WILL BE FURNISHED BY THE
      CORPORATION TO THE REGISTERED HOLDER HEREOF UPON WRITTEN REQUEST.

      5. AGREEMENT NOT A SERVICE CONTRACT. This Agreement is not an employment
or service contract, and nothing in this Agreement nor the Plan shall be deemed
to create in any way whatsoever any obligation for the Director to continue his
relationship with the Corporation or BPPR, as applicable, or of the Corporation
or BPPR, as applicable, to continue the relationship with the Director.

      6. NOTICES. Any notices provided for in this Agreement or the Plan shall
be given in writing and shall be deemed effectively given upon receipt or, in
the case of notices delivered by mail by the Corporation to the Director, five
(5) days after deposit in the United States mail, postage prepaid, addressed to
the Director at the last address the Director provided to the Corporation and/or
BPPR. Notice to the Corporation and/or BPPR shall be given in writing and shall
be deemed effectively given upon receipt or, in the case of notices delivered by
mail to the Corporation and/or BPPR by the Director, five (5) days after deposit
in the United States mail, postage prepaid, addressed to Chief Legal Officer,
Popular, Inc./Banco Popular de Puerto Rico, Board of Directors (751), PO Box
362708, San Juan, Puerto Rico 00936-2708.

      7. RIGHTS AS A SHAREHOLDER. Except for the restrictions set forth in this
Agreement and the Plan and unless otherwise determined by the Corporation, the
Director shall be entitled to all of

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the rights of a shareholder with respect to the shares of Restricted Stock
awarded pursuant to this Agreement including the right to vote such shares of
Restricted Stock and to receive dividends and other distributions (if any)
payable with respect to such shares. Provided, however, that cash dividends paid
on Restricted Stock shall be reinvested in Common Stock through the
Corporation's Dividend Reinvestment Plan.

      8. TAX WITHHOLDING. The Corporation may withhold or cause to be withheld
from any Restricted Stock grant (or Director's compensation) any Federal, Puerto
Rico, state or local taxes required by law to be withheld with respect to such
Restricted Stock grant. By acceptance of this Agreement, Director agrees to such
deductions.

      9. GOVERNING LAW. All questions arising with respect to this Agreement and
the provisions of the Plan shall be determined by application of the laws of the
Commonwealth of Puerto Rico except to the extent such governing law is preempted
by Federal law. The obligation of the Corporation to grant and deliver
Restricted Stock under this Agreement is subject to applicable laws and to the
approval of any governmental authority required in connection with the
authorization, issuance, sale, or delivery of such Restricted Stock.

      10. SEVERABILITY. If any provision of this Agreement is held to be illegal
or invalid for any reason, the illegality or invalidity shall not affect the
remaining provisions of the Agreement, but such provision shall be fully
severable and the Agreement shall be construed and enforced as if the illegal or
invalid provision had never been included in the Agreement.

      11. SUCCESSORS. This Agreement shall be binding upon the Director, his
legal representatives, heirs, legatees, distributes, and shall be binding upon
the Corporation and its successors and assigns.

      IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
this 16th day of July 2004.

                                    POPULAR, INC.

                                    By: _______________________________

                                    Name: _____________________________

                                    Title: ____________________________

                                    DIRECTOR: _________________________

                                    Name: _____________________________

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                               [POPULAR INC.LOGO]

                       ANNUAL RETAINER AND/OR MEETING FEE
                           RESTRICTED STOCK AGREEMENT

This Annual Retainer and/or Meeting Fee Restricted Stock Agreement ("Agreement")
by and between Popular, Inc. (the "Corporation") and ________ ("Director") is
entered pursuant to the meeting of the Board of Directors of the Corporation
held the 14th day of July of 2004, whereby the Corporation in consideration of
Director's services as a member of the Board of Directors of the Corporation
and/or its wholly owned subsidiary, Banco Popular de Puerto Rico ("BPPR"),
granted to the Director certain compensation for his services as such and
Director elected to receive some or all of such compensation in a number of
restricted shares of the Corporation's Common Stock (the "Restricted Stock"),
subject to the terms and conditions hereinafter set forth and the terms and
conditions of the Popular, Inc. 2004 Omnibus Incentive Plan (the "Plan"), a copy
of which is attached hereto as Exhibit A. Capitalized terms not otherwise
defined herein shall having the meaning ascribed them in the Plan.

      1. NUMBER OF SHARES. Pursuant to the terms of the Director's Compensation
letter dated July 16, 2004 (the "Compensation Letter"), the Corporation and/or
BPPR has agreed to pay the Director certain compensation and the Director has
elected to receive such compensation in the form of Restricted Stock. The number
of shares of Restricted Stock shall be based on the per share closing price of
the Corporation's Common Stock on the Grant Date and the total amount of
compensation owed to the Director on the Grant Date. The Grant Date shall be the
day the Restricted Stock is purchased for the Director which date shall be
within the 30 days following the date the compensation is payable to the
Director pursuant to the Compensation Letter. For all purposes the Grant Price
shall be zero ($0).

      The Restricted Stock shall be subject to all the terms, conditions, and
restrictions set forth in this Agreement and the Plan. In the event any stock
dividend, stock split, recapitalization or other change affecting the
outstanding common stock of the Corporation as a class is effected without
consideration, then any new, substituted or additional securities or other
property (including money paid other than as a regular cash dividend) that is by
reason of any such transaction distributed with respect to shares of Restricted
Stock will be immediately subject to the provisions of this Agreement in the
same manner and to the same extent as the Restricted Stock with respect to which
such change was effected. Cash dividends paid on Restricted Stock shall be
reinvested in Common Stock through the Corporation's Dividend Reinvestment Plan.

      2. FORFEITURE AND TRANSFER RESTRICTIONS. All Restricted Stock granted to
Director shall be issued and delivered on the Grant Date. In the event
Director's relationship with the Corporation or BPPR, as applicable, is
terminated for Cause (as defined in the Plan), or if Director, Director's legal
representative, or other holder of the Restricted Stock attempts to sell,
exchange, transfer, pledge, or otherwise dispose of any Restricted Stock, all
Restricted Stock will be immediately forfeited without any further action by the
Corporation.

      Restricted Stock may not be assigned, transferred, pledged or otherwise
disposed of in any way other than by the Last Will and Testament of the Director
or the laws of descent and distribution, subject to the bylaws of the
Corporation. Any Restricted Stock held by a beneficiary shall be subject

<PAGE>

to the restrictions imposed on such Restricted Stock. Any such attempt at
assignment, transfer, pledge or other disposition shall be without effect.

      3. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary
contained herein, no shares under this Agreement may be granted unless the
shares of Restricted Stock issuable upon such grant are then registered under
the Securities Act of 1933, as amended (the "Securities Act") or, if such shares
of Restricted Stock are not then so registered, the Corporation has determined
that such grant and issuance would be exempt from the registration requirements
of the Securities Act. The grant of shares must also comply with other
applicable laws and regulations governing the grant, and no grant of shares will
be permitted if the Corporation determines that such purchase would not be in
material compliance with such laws and regulations.

      4. STOCK LEGEND. The Corporation and Director agree that all certificates
representing all shares of Restricted Stock that at any time are subject to the
provisions of this Agreement and the Plan will have endorsed upon them in
bold-faced type a legend substantially in the following form:

            THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
      ASSIGNED, TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN
      COMPLIANCE WITH THE TERMS OF AN ANNUAL RETAINER AND/OR MEETING FEE
      RESTRICTED STOCK AGREEMENT BETWEEN THE CORPORATION AND THE INITIAL HOLDER
      OF THE SHARES. THE ANNUAL RETAINER AND/OR MEETING FEE RESTRICTED STOCK
      AGREEMENT MAY GRANT CERTAIN PURCHASE OPTIONS TO THE CORPORATION, PROVIDES
      FOR FORFEITURE OF THE STOCK IN CERTAIN CIRCUMSTANCES, AND IMPOSES
      RESTRICTIONS ON THE TRANSFER OF THESE SHARES. A COPY OF THE ANNUAL
      RETAINER AND/OR MEETING FEE RESTRICTED STOCK AGREEMENT IS ON DEPOSIT AT
      THE PRINCIPAL OFFICE OF THE CORPORATION AND WILL BE FURNISHED BY THE
      CORPORATION TO THE REGISTERED HOLDER HEREOF UPON WRITTEN REQUEST.

      5. AGREEMENT NOT A SERVICE CONTRACT. This Agreement is not an employment
or service contract, and nothing in this Agreement nor the Plan shall be deemed
to create in any way whatsoever any obligation for the Director to continue his
relationship with the Corporation or BPPR, as applicable, or of the Corporation
or BPPR, as applicable, to continue the relationship with the Director.

      6. NOTICES. Any notices provided for in this Agreement or the Plan shall
be given in writing and shall be deemed effectively given upon receipt or, in
the case of notices delivered by mail by the Corporation to the Director, five
(5) days after deposit in the United States mail, postage prepaid, addressed to
the Director at the last address the Director provided to the Corporation and/or
BPPR. Notice to the Corporation and/or BPPR shall be given in writing and shall
be deemed effectively given upon receipt or, in the case of notices delivered by
mail to the Corporation and/or BPPR by the Director, five (5) days after deposit
in the United States mail, postage prepaid, addressed to Chief Legal Officer,
Popular, Inc./Banco Popular de Puerto Rico, Board of Directors (751), PO Box
362708, San Juan, Puerto Rico 00936-2708.

      7. RIGHTS AS A SHAREHOLDER. Except for the restrictions set forth in this
Agreement and the Plan and unless otherwise determined by the Corporation, the
Director shall be entitled to all of the

<PAGE>

rights of a shareholder with respect to the shares of Restricted Stock awarded
pursuant to this Agreement including the right to vote such shares of Restricted
Stock and to receive dividends and other distributions (if any) payable with
respect to such shares. Provided, however, that cash dividends paid on
Restricted Stock shall be reinvested in Common Stock through the Corporation's
Dividend Reinvestment Plan.

      8. TAX WITHHOLDING. The Corporation may withhold or cause to be withheld
from any Restricted Stock grant (or Director's compensation) any Federal, Puerto
Rico, state or local taxes required by law to be withheld with respect to such
Restricted Stock grant. By acceptance of this Agreement, Director agrees to such
deductions.

      9. GOVERNING LAW. All questions arising with respect to this Agreement and
the provisions of the Plan shall be determined by application of the laws of the
Commonwealth of Puerto Rico except to the extent such governing law is preempted
by Federal law. The obligation of the Corporation to grant and deliver
Restricted Stock under this Agreement is subject to applicable laws and to the
approval of any governmental authority required in connection with the
authorization, issuance, sale, or delivery of such Restricted Stock.

      10. SEVERABILITY. If any provision of this Agreement is held to be illegal
or invalid for any reason, the illegality or invalidity shall not affect the
remaining provisions of the Agreement, but such provision shall be fully
severable and the Agreement shall be construed and enforced as if the illegal or
invalid provision had never been included in the Agreement.

      11. SUCCESSORS. This Agreement shall be binding upon the Director, his
legal representatives, heirs, legatees, distributees, and shall be binding upon
the Corporation and its successors and assigns.

      IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
this 16th day of July 2004.

                                    POPULAR, INC.

                                    By: _______________________________

                                    Name: _____________________________

                                    Title: ____________________________

                                    DIRECTOR: _________________________

                                    Name: _____________________________