Document:

<PAGE>

                                                                   EXHIBIT 10.48

  CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
        BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION.

                                 RETAIL MAGAZINE
                                SUPPLY AGREEMENT

This Retail Magazine Supply Agreement (the "Agreement") is made and entered into
as of August 6, 2004 by BARNES & NOBLE, INC. ("B&N") and INTERNATIONAL
PERIODICAL DISTRIBUTORS, INC. ("IPD").

                              W I T N E S S E T H:

WHEREAS, B&N is engaged in the business of marketing magazines and other
periodicals to the public through its retail stores ("Stores"); and,

WHEREAS, IPD is engaged in the wholesale distribution of magazines and other
periodicals; and,

WHEREAS, B&N desires to procure the Publications from IPD for resale in the
Stores on the terms and conditions set forth in this Agreement.

NOW THEREFORE, in consideration of the covenants and agreements set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, IT IS HEREBY MUTUALLY AGREED as
follows:

1.    AGREEMENT TO SUPPLY AND PURCHASE.

      B&N hereby designates IPD as an "authorized vendor" and agrees not to
      withdraw such designation unless IPD materially breaches the terms of this
      Agreement, and upon such material breach which is not cured within ten
      (10) days of B&N's written notice to IPD detailing such material breach,
      B&N shall have a right to terminate this Agreement. Subject to the terms
      and conditions of this Agreement, IPD's continued compliance with B&N's
      vendor standards, B&N agrees to purchase, and IPD agrees to sell,
      periodicals in accordance with the terms and conditions set forth on
      EXHIBIT "A", as the same may be amended from time to time by mutual
      agreement of B&N and IPD.

2.    TERM.

      The term of this Agreement (the "Term") shall consist of an initial term
      and any extension terms. The initial term shall commence on August 6, 2004
      and expire on August 10, 2007. The Term shall automatically (and without
      further action by either B&N or IPD) extend on the same terms and
      conditions set forth herein for successive one year terms thereafter (each
      an "extension term"); provided, however, that either party may prevent the
      commencement of any extension term by furnishing written notice to the
      other not less than one hundred eighty (180) calendar days before the
      expiration of the initial term or the then current extension term.
<PAGE>

      may prevent the commencement of any extension term by furnishing written
      notice to the other not less than one hundred eighty (180) calendar days
      before the expiration of the initial term or the then current extension
      term.

<PAGE>

3.    ACCOUNT MANAGEMENT.

      By written notice to B&N, IPD shall designate an account manager to serve
      as a liaison between B&N and IPD. In such capacity, the account manager
      shall:

            - Attend regularly scheduled meetings at B&N's principal executive
      offices, during which the account manager will confer with B&N's
      operations and marketing personnel to develop and implement programs
      designed to enhance the retail sales of the Publications;

            - Coordinate title selection, plan-o-gram development, and inventory
      control programs; and,

            - Assist B&N personnel in the development and implementation of
      marketing initiatives by recommending and facilitating monthly magazine
      promotions based on store themes, seasonal events, and regional and
      demographic parameters;

4.    ELECTRONIC COMMUNICATIONS.

      All rights, duties and obligations which would accrue upon receipt of data
      in the form of paper documentation will also accrue upon receipt of the
      data in electronic form. In addition, to the extent compliance with all
      the provisions of this Agreement has been attained with respect to each
      transaction in question (a) neither party will contest the admissibility
      of paper documentation copies of electronically transmitted data under the
      business records exception to the hearsay rule, or the best evidence rule,
      or the Statute of Frauds, on the basis that the data were not originated
      or maintained in documentary form, or that the data do not constitute a
      signed writing by a party intending to be bound thereby and (b) copies of
      the transmitted and received data, mechanically or electronically stored
      by either party will constitute evidence of the contents of the orders,
      acknowledgements, transactions, and other information covered by this
      Agreement, if they are machine readable and capable of reproduction into
      printed human readable form on paper.

5.    MISCELLANEOUS

5.1   All questions concerning the construction, validity, enforcement and
      interpretation of this Agreement shall be governed by the internal laws of
      the State of New York, without giving effect to any choice of law or
      conflict of law provision or rule (whether of the State of New York or any
      other jurisdictions) that would cause the application of the laws of any
      jurisdictions other than the State of New York. Each party hereby
      irrevocably submits to the non-exclusive jurisdiction of the state and
      federal courts sitting in The City of New York, Borough of Manhattan, for
      the adjudication of any dispute hereunder or in connection herewith or
      with any transaction contemplated hereby or discussed herein, and hereby
      irrevocably waives, and agrees not to assert in any suit, action or
      proceeding, any claim that it is not personally subject to the
      jurisdiction of any such court, that such suit, action or proceeding is
      brought in an inconvenient forum or that the venue of such

<PAGE>

      suit, action or proceeding is improper. Each party hereby irrevocably
      waives personal service of process and consents to process being served in
      any such suit, action or proceeding by mailing a copy thereof to such
      party at the address for such notices to it under this Agreement and
      agrees that such service shall constitute good and sufficient service of
      process and notice thereof. Nothing contained herein shall be deemed to
      limit in any way any right to serve process in any manner permitted by
      law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
      AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
      HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY
      TRANSACTION CONTEMPLATED HEREBY.

5.2   This Agreement may be executed in two or more identical counterparts, all
      of which shall be considered one and the same agreement and shall become
      effective when counterparts have been signed by each party and delivered
      to the other party; provided that a facsimile signature shall be
      considered due execution and shall be binding upon the signatory thereto
      with the same force and effect as if the signature were an original, not a
      facsimile signature.

5.3   The headings of this Agreement are for convenience of reference and shall
      not form part of, or affect the interpretation of, this Agreement.

5.4   If any provision of this Agreement shall be invalid or unenforceable in
      any jurisdiction, such invalidity or unenforceability shall not affect the
      validity or enforceability of the remainder of this Agreement in that
      jurisdiction or the validity or enforceability of any provision of this
      Agreement in any other jurisdiction.

5.5   This Agreement supersedes all other prior oral or written agreements
      between IPD and B&N, their affiliates and persons acting on their behalf
      with respect to the matters discussed herein, and this Agreement and the
      exhibits referenced herein contain the entire understanding of the parties
      with respect to the matters covered herein and therein and, except as
      specifically set forth herein and therein, neither IPD nor B&N makes any
      representation, warranty, covenant or undertaking with respect to such
      matters. No provision of this Agreement may be amended other than by an
      instrument in writing signed by IPD and B&N. No provision hereof may be
      waived other than by an instrument in writing signed by the party against
      whom enforcement is sought.

5.6   Any notices, consents, waivers or other communications required or
      permitted to be given under the terms of this Agreement must be in writing
      and will be deemed to have been delivered: (i) upon receipt, when
      delivered personally; (ii) upon receipt, when sent by facsimile (provided
      confirmation of transmission is mechanically or electronically generated
      and kept on file by the sending party); or (iii) one Business Day after
      deposit with an overnight courier service, in each case properly addressed
      to the party to receive the same. The addresses and facsimile numbers for
      such communication shall be:

If to IPD:

<PAGE>

International Periodical Distributors, Inc.
27500 Riverview Center Blvd., Suite 400
Bonita Springs, Florida 34134
Telephone: (239) 949-4450
Facsimile: (239) 949-7689

If to B&N:

Barnes & Noble, Inc.
122 Fifth Avenue
New York, NY 10011
Telephone: 212-352-3677
Facsimile:
212-353-3777
Attention: Jaime Carey

With a required copy to:

Barnes & Noble, Inc.
122 Fifth Avenue
New York, NY 10011
Telephone: 212-633-3300
Facsimile: 212-463-5683

Attention: Legal Department

      or to such other address and/or facsimile number and/or to the attention
      of such other person as the recipient party has specified by written
      notice given to the other party five (5) days prior to the effectiveness
      of such change. Written confirmation of receipt (A) given by the recipient
      of such notice, consent, waiver or other communication, (B) mechanically
      or electronically generated by the sender's facsimile machine containing
      the time, date, recipient facsimile number and an image of the first page
      of such transmission or (C) provided by an overnight courier service shall
      be rebuttable evidence of personal service, receipt by facsimile or
      receipt from an overnight courier service in accordance with clause (i),
      (ii) or (iii) above, respectively.

5.7   This Agreement shall be binding upon and inure to the benefit of the
      parties and their respective successors and assigns.

5.8   This Agreement is intended for the benefit of the parties hereto and their
      respective permitted successors and assigns, and is not for the benefit
      of, nor may any provision hereof be enforced by, any other person.

5.9   Each party shall do and perform, or cause to be done and performed, all
      such further acts and things, and shall execute and deliver all such other
      agreements, certificates, instruments and documents, as any other party
      may reasonably request in order to carry

<PAGE>

      out the intent and accomplish the purposes of this Agreement and the
      consummation of the transactions contemplated hereby.

5.10  The language used in this Agreement will be deemed to be the language
      chosen by the parties to express their mutual intent, and no rules of
      strict construction will be applied against any party.

5.11  IPD and B&N shall have all rights and remedies set forth in this Agreement
      and all rights and remedies which such persons have been granted at any
      time under any other agreement or contract and all of the rights which
      such persons have under any law. Either party shall be entitled to enforce
      any rights it may have under any provision of this Agreement specifically
      (without posting a bond or other security), to recover damages by reason
      of any breach of any provision of this Agreement and to exercise all other
      rights granted by law. Furthermore, each party hereto recognizes that in
      the event that it fails to perform, observe, or discharge any or all of
      its obligations under this Agreement, any remedy at law may proved to be
      inadequate relief to the other party. Each party therefore agrees that the
      other shall be entitled to seek temporary and permanent injunctive relief
      in any such case without the necessity of proving actual damages and
      without posting a bond or other security.

5.12  Nothing contained herein, nor any action taken by either party hereto,
      shall be deemed to constitute IPD and B&N as a partnership, an
      association, a joint venture or any other kind of entity, or create a
      presumption that the parties hereto are in any way acting in concert or as
      a group with respect to such obligations or the transactions contemplated
      by this Agreement.

5.13  Neither party (the "Excused Party") shall be deemed or construed to be in
      breach of this Agreement or otherwise liable to the other party in
      connection with any delay in performance or any non-performance of its
      obligations under this Agreement (and the time for performance shall be
      extended accordingly) to the extent that the delay or non-performance
      results from the existence of a circumstance beyond the reasonable control
      of the Excused Party including, without limitation, war, riot, labor
      strike or lock out, terrorism or bomb blast, fire, flood, windstorm or
      other act of God, governmental control or regulations, or the application
      to the Excused Party of any statute, regulation or other rule of law that
      materially restricts performance (each such circumstance, a "Force
      Majeure"); provided that (a) the Excused Party could not have avoided the
      effect of the Force Majeure by taking precautions that, after
      consideration of all matters known to it before the occurrence of the
      Force Majeure, the Excused Party should have reasonably been expected to
      take but did not take, and (b) The Excused Party has used commercially
      reasonable efforts to mitigate the effect of the Force Majeure and to
      carry out its obligations under this Agreement in any other reasonable
      manner. Promptly after becoming aware of the existence of a Force Majeure,
      the Excused Party shall notify the other party of the nature and
      anticipated effects of the Force Majeure.

<PAGE>

IN WITNESS WHEREOF:

Agreed to:                              Agreed to:

IPD                                     B&N

By: /s/ Jason S. Flegel                 By: /s/ Jaime Carey
    ------------------------------          -----------------------------------

Name: Jason S. Flegel                   Name: Jaime Carey

Title: Executive Vive President         Title: Director, Newsstand Division

Date: August 3, 2004                    Date: August 3, 2004

<PAGE>

                                   EXHIBIT "A"
                          TERMS AND CONDITIONS OF SALE

A.    TITLE & OBLIGATION

Upon receipt of the periodical, B&N shall take title and be obligated to pay in
accordance with the terms below.

B.    PAYMENT TERMS

      All payments for Publications by B&N shall be made at the earlier of the
date of sale based on its scanned sales data or 120 days after receipt subject
to the subsequent returns and shrink reconciliation. B&N shall cause its sales
systems to record the sale of the periodicals upon the product being scanned at
the point of sale. Sales information by store, day, unit, title and issue shall
be sent on a daily basis to IPD. IPD shall prepare remittance reports based on
the information pertaining to this scanned sales information. IPD will pay the
freight for shipments to B&N.

C.    PURCHASE PRICE

B&N shall pay a purchase price for the Publications recorded as sold by its
Stores equal to (a) [***]% off of the retail price printed on the cover of each
Publication or printed on a label affixed to such cover (the "Cover Price") in
the case of Publications other than weeklies and (b) [***]% off of the Cover
Price for weekly Publications. All payments shall be made in accordance with the
provisions of EXHIBIT "B". Additionally, B&N shall be entitled to take a payment
deduction, as a cash discount, equivalent to [***]% of the calculated net
payment.

D.    RETURNS.

For a period of two years after the date of this Agreement, B&N shall cause the
front covers of such unsold copies to be torn from the Publication and delivered
to ACME Processing in accordance with current practices and rates, including
payment by B&N of the normal and customary expenses currently incurred with
respect to the shipment of the front covers to ACME Processing. B&N hereby
agrees to use its best efforts to cause all returned publications to be
destroyed or otherwise rendered unsaleable.

E.    DEFERRED RETURNS CREDITS.

In the case of non-weekly publications only: Effective with week 3 as displayed
on EXHIBIT "B", B&N agrees to suspend all cash deductions resulting from returns
credited by IPD to B&N for product invoiced on a non-pay on scan basis prior to
the effective date of this agreement from the prior IPD account. The total
amount has been projected to be [***]. Effective with week 1, B&N shall deduct
[***] from each weekly payment, to be concluded in week 104. Further,

[***] INDICATES CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE
COMMISSION.

<PAGE>

effective with week 27, B&N and IPD agree to take the difference between the
projected amount of suspended returns credits and the actual value of the
returns credits, and amortize this difference over weeks 27 through 104. Such
amortized amounts shall either supplement or subtract from the ongoing scheduled
weekly deductions of [***]

F.    TAX COLLECTION AND INDEMNITY

B&N shall collect and promptly pay to the appropriate taxing authorities all
sales, property or other taxes, assessments, or other public or private charges
levied against or payable with respect to the periodicals sold by IPD to B&N.
B&N hereby agrees to indemnify and hold IPD harmless from any and all claims,
demands, costs or liabilities (including reasonable attorney's fees) arising
from any taxes, assessments or charges related to the periodicals being sold to
B&N by IPD.

[***] INDICATES CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE
COMMISSION.

<PAGE>

                                   EXHIBIT "B"
                                PAYMENT SCHEDULE

EXHIBIT B - PAYMENT SCHEDULE                                             $ [***]

<TABLE>
<CAPTION>
WEEK # TIELINE PROCESSING DATE  INVENTORY INVOICE DATE       POS START DATE             POS END DATE
------ ----------------------- ----------------------- -------------------------- ------------------------
<S>    <C>                     <C>                     <C>                        <C>
    1  FRIDAY, AUGUST 13, 2004 Friday, August 20, 2004    Friday, August 13, 2004 Tuesday, August 17, 2004
    2  Friday, August 20, 2004 Friday, August 27, 2004 Wednesday, August 25, 2004 Tuesday, August 24, 2004
    3                27-Aug-04                3-Sep-04                   1-Sep-04                31-Aug-04
    4                 3-Sep-04               10-Sep-04                   8-Sep-04                 7-Sep-04
    5                10-Sep-04               17-Sep-04                  15-Sep-04                14-Sep-04
    6                17-Sep-04               24-Sep-04                  22-Sep-04                21-Sep-04
    7                24-Sep-04                1-Oct-04                  29-Sep-04                28-Sep-04
    8                 1-Oct-04                8-Oct-04                   6-Oct-04                 5-Oct-04
    9                 8-Oct-04               15-Oct-04                  13-Oct-04                12-Oct-04
   10                15-Oct-04               22-Oct-04                  20-Oct-04                19-Oct-04
   11                22-Oct-04               29-Oct-04                  27-Oct-04                26-Oct-04
   12                29-Oct-04                5-Nov-04                   3-Nov-04                 2-Nov-04
   13                 5-Nov-04               12-Nov-04                  10-Nov-04                 9-Nov-04
   14                12-Nov-04               19-Nov-04                  17-Nov-04                16-Nov-04
   15                19-Nov-04               26-Nov-04                  24-Nov-04                23-Nov-04
   16                26-Nov-04                3-Dec-04                   1-Dec-04                30-Nov-04
   17                 3-Dec-04               10-Dec-04                   8-Dec-04                 7-Dec-04
   18                10-Dec-04               17-Dec-04                  15-Dec-04                14-Dec-04
   19                17-Dec-04               24-Dec-04                  22-Dec-04                21-Dec-04
   20                24-Dec-04               31-Dec-04                  29-Dec-04                28-Dec-04
   21                31-Dec-04                7-Jan-05                   5-Jan-05                 4-Jan-05
   22                 7-Jan-05               14-Jan-05                  12-Jan-05                11-Jan-05
   23                14-Jan-05               21-Jan-05                  19-Jan-05                18-Jan-05
   24                21-Jan-05               28-Jan-05                  26-Jan-05                25-Jan-05
   25                28-Jan-05                4-Feb-05                   2-Feb-05                 1-Feb-05
   26                 4-Feb-05               11-Feb-05                   9-Feb-05                 8-Feb-05
   27                11-Feb-05               18-Feb-05                  16-Feb-05                15-Feb-05
   28                18-Feb-05               25-Feb-05                  23-Feb-05                22-Feb-05
   29                25-Feb-05                4-Mar-05                   2-Mar-05                 1-Mar-05
   30                 4-Mar-05               11-Mar-05                   9-Mar-05                 8-Mar-05
   31                11-Mar-05               18-Mar-05                  16-Mar-05                15-Mar-05
   32                18-Mar-05               25-Mar-05                  23-Mar-05                22-Mar-05
   33                25-Mar-05                1-Apr-05                  30-Mar-05                29-Mar-05
   34                 1-Apr-05                8-Apr-05                   6-Apr-05                 5-Apr-05
   35                 8-Apr-05               15-Apr-05                  13-Apr-05                12-Apr-05
   36                15-Apr-05               22-Apr-05                  20-Apr-05                19-Apr-05
   37                22-Apr-05               29-Apr-05                  27-Apr-05                26-Apr-05
   38                29-Apr-05                6-May-05                   4-May-05                 3-May-05
   39                 6-May-05               13-May-05                  11-May-05                10-May-05
   40                13-May-05               20-May-05                  18-May-05                17-May-05
   41                20-May-05               27-May-05                  25-May-05                24-May-05
   42                27-May-05                3-Jun-05                   1-Jun-05                31-May-05
   43                 3-Jun-05               10-Jun-05                   8-Jun-05                 7-Jun-05
   44                10-Jun-05               17-Jun-05                  15-Jun-05                14-Jun-05
   45                17-Jun-05               24-Jun-05                  22-Jun-05                21-Jun-05
   46                24-Jun-05                1-Jul-05                  29-Jun-05                28-Jun-05
   47                 1-Jul-05                8-Jul-05                   6-Jul-05                 5-Jul-05
   48                 8-Jul-05               15-Jul-05                  13-Jul-05                12-Jul-05
   49                15-Jul-05               22-Jul-05                  20-Jul-05                19-Jul-05
   50                22-Jul-05               29-Jul-05                  27-Jul-05                26-Jul-05
   51                29-Jul-05                5-Aug-05                   3-Aug-05                 2-Aug-05
   52                 5-Aug-05               12-Aug-05                  10-Aug-05                 9-Aug-05
   53                12-Aug-05               19-Aug-05                  17-Aug-05                16-Aug-05
   54                19-Aug-05               26-Aug-05                  24-Aug-05                23-Aug-05
   55                26-Aug-05                2-Sep-05                  31-Aug-05                30-Aug-05
   56                 2-Sep-05                9-Sep-05                   7-Sep-05                 6-Sep-05
   57                 9-Sep-05               16-Sep-05                  14-Sep-05                13-Sep-05
   58                16-Sep-05               23-Sep-05                  21-Sep-05                20-Sep-05
   59                23-Sep-05               30-Sep-05                  28-Sep-05                27-Sep-05
   60                30-Sep-05                7-Oct-05                   5-Oct-05                 4-Oct-05
   61                 7-Oct-05               14-Oct-05                  12-Oct-05                11-Oct-05
   62                14-Oct-05               21-Oct-05                  19-Oct-05                18-Oct-05
   63                21-Oct-05               28-Oct-05                  26-Oct-05                25-Oct-05
   64                28-Oct-05                4-Nov-05                   2-Nov-05                 1-Nov-05
   65                 4-Nov-05               11-Nov-05                   9-Nov-05                 8-Nov-05
   66                11-Nov-05               18-Nov-05                  16-Nov-05                15-Nov-05
   67                18-Nov-05               25-Nov-05                  23-Nov-05                22-Nov-05
   68                25-Nov-05                2-Dec-05                  30-Nov-05                29-Nov-05
   69                 2-Dec-05                9-Dec-05                   7-Dec-05                 6-Dec-05
   70                 9-Dec-05               16-Dec-05                  14-Dec-05                13-Dec-05
   71                16-Dec-05               23-Dec-05                  21-Dec-05                20-Dec-05
   72                23-Dec-05               30-Dec-05                  28-Dec-05                27-Dec-05
   73                30-Dec-05                6-Jan-06                   4-Jan-06                 3-Jan-06
   74                 6-Jan-06               13-Jan-06                  11-Jan-06                10-Jan-06
   75                13-Jan-06               20-Jan-06                  18-Jan-06                17-Jan-06
   76                20-Jan-06               27-Jan-06                  25-Jan-06                24-Jan-06
   77                27-Jan-06                3-Feb-06                   1-Feb-06                31-Jan-06
   78                 3-Feb-06               10-Feb-06                   8-Feb-06                 7-Feb-06
   79                10-Feb-06               17-Feb-06                  15-Feb-06                14-Feb-06
   80                17-Feb-06               24-Feb-06                  22-Feb-06                21-Feb-06
   81                24-Feb-06                3-Mar-06                   1-Mar-06                28-Feb-06
   82                 3-Mar-06               10-Mar-06                   8-Mar-06                 7-Mar-06
   83                10-Mar-06               17-Mar-06                  15-Mar-06                14-Mar-06
   84                17-Mar-06               24-Mar-06                  22-Mar-06                21-Mar-06
   85                24-Mar-06               31-Mar-06                  29-Mar-06                28-Mar-06
   86                31-Mar-06                7-Apr-06                   5-Apr-06                 4-Apr-06
   87                 7-Apr-06               14-Apr-06                  12-Apr-06                11-Apr-06
   88                14-Apr-06               21-Apr-06                  19-Apr-06                18-Apr-06
   89                21-Apr-06               28-Apr-06                  26-Apr-06                25-Apr-06
   90                28-Apr-06                5-May-06                   3-May-06                 2-May-06
   91                 5-May-06               12-May-06                  10-May-06                 9-May-06
   92                12-May-06               19-May-06                  17-May-06                16-May-06
   93                19-May-06               26-May-06                  24-May-06                23-May-06
   94                26-May-06                2-Jun-06                  31-May-06                30-May-06
   95                 2-Jun-06                9-Jun-06                   7-Jun-06                 6-Jun-06
   96                 9-Jun-06               16-Jun-06                  14-Jun-06                13-Jun-06
   97                16-Jun-06               23-Jun-06                  21-Jun-06                20-Jun-06
   98                23-Jun-06               30-Jun-06                  28-Jun-06                27-Jun-06
   99                30-Jun-06                7-Jul-06                   5-Jul-06                 4-Jul-06
  100                 7-Jul-06               14-Jul-06                  12-Jul-06                11-Jul-06
</TABLE>

[***] INDICATES CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE
COMMISSION.
<PAGE>
<TABLE>
<CAPTION>
WEEK #          DATE PAID          PAYBACK AMOUNT                         OTHER
------  -------------------------- --------------      ---------------------------------------------
<S>     <C>                        <C>                 <C>
    1      Friday, August 27, 2004    $ [***]
    2   Friday, September 03, 2004    $ [***]
    3                    10-Sep-04    $ [***]
    4                    17-Sep-04    $ [***]
    5                    24-Sep-04    $ [***]
    6                     1-Oct-04    $ [***]
    7                     8-Oct-04    $ [***]
    8                    15-Oct-04    $ [***]
    9                    22-Oct-04    $ [***]
   10                    29-Oct-04    $ [***]
   11                     5-Nov-04    $ [***]
   12                    12-Nov-04    $ [***]
   13                    19-Nov-04    $ [***]
   14                    26-Nov-04    $ [***]
   15                     3-Dec-04    $ [***]
   16                    10-Dec-04    $ [***]
   17                    17-Dec-04    $ [***]
   18                    24-Dec-04    $ [***]
   19                    31-Dec-04    $ [***]
   20                     7-Jan-05    $ [***]
   21                    14-Jan-05    $ [***]
   22                    21-Jan-05    $ [***]
   23                    28-Jan-05    $ [***]
   24                     4-Feb-05    $ [***]
   25                    11-Feb-05    $ [***]
   26                    18-Feb-05    $ [***]
   27                    25-Feb-05    $ [***]          +/- Projected less Actual deferred credits/78
   28                     4-Mar-05    $ [***]          +/- Projected less Actual deferred credits/78
   29                    11-Mar-05    $ [***]          +/- Projected less Actual deferred credits/78
   30                    18-Mar-05    $ [***]          +/- Projected less Actual deferred credits/78
   31                    25-Mar-05    $ [***]          +/- Projected less Actual deferred credits/78
   32                     1-Apr-05    $ [***]          +/- Projected less Actual deferred credits/78
   33                     8-Apr-05    $ [***]          +/- Projected less Actual deferred credits/78
   34                    15-Apr-05    $ [***]          +/- Projected less Actual deferred credits/78
   35                    22-Apr-05    $ [***]          +/- Projected less Actual deferred credits/78
   36                    29-Apr-05    $ [***]          +/- Projected less Actual deferred credits/78
   37                     6-May-05    $ [***]          +/- Projected less Actual deferred credits/78
   38                    13-May-05    $ [***]          +/- Projected less Actual deferred credits/78
   39                    20-May-05    $ [***]          +/- Projected less Actual deferred credits/78
   40                    27-May-05    $ [***]          +/- Projected less Actual deferred credits/78
   41                     3-Jun-05    $ [***]          +/- Projected less Actual deferred credits/78
   42                    10-Jun-05    $ [***]          +/- Projected less Actual deferred credits/78
   43                    17-Jun-05    $ [***]          +/- Projected less Actual deferred credits/78
   44                    24-Jun-05    $ [***]          +/- Projected less Actual deferred credits/78
   45                     1-Jul-05    $ [***]          +/- Projected less Actual deferred credits/78
   46                     8-Jul-05    $ [***]          +/- Projected less Actual deferred credits/78
   47                    15-Jul-05    $ [***]          +/- Projected less Actual deferred credits/78
   48                    22-Jul-05    $ [***]          +/- Projected less Actual deferred credits/78
   49                    29-Jul-05    $ [***]          +/- Projected less Actual deferred credits/78
   50                     5-Aug-05    $ [***]          +/- Projected less Actual deferred credits/78
   51                    12-Aug-05    $ [***]          +/- Projected less Actual deferred credits/78
   52                    19-Aug-05    $ [***]          +/- Projected less Actual deferred credits/78
   53                    26-Aug-05    $ [***]          +/- Projected less Actual deferred credits/78
   54                     2-Sep-05    $ [***]          +/- Projected less Actual deferred credits/78
   55                     9-Sep-05    $ [***]          +/- Projected less Actual deferred credits/78
   56                    16-Sep-05    $ [***]          +/- Projected less Actual deferred credits/78
   57                    23-Sep-05    $ [***]          +/- Projected less Actual deferred credits/78
   58                    30-Sep-05    $ [***]          +/- Projected less Actual deferred credits/78
   59                     7-Oct-05    $ [***]          +/- Projected less Actual deferred credits/78
   60                    14-Oct-05    $ [***]          +/- Projected less Actual deferred credits/78
   61                    21-Oct-05    $ [***]          +/- Projected less Actual deferred credits/78
   62                    28-Oct-05    $ [***]          +/- Projected less Actual deferred credits/78
   63                     4-Nov-05    $ [***]          +/- Projected less Actual deferred credits/78
   64                    11-Nov-05    $ [***]          +/- Projected less Actual deferred credits/78
   65                    18-Nov-05    $ [***]          +/- Projected less Actual deferred credits/78
   66                    25-Nov-05    $ [***]          +/- Projected less Actual deferred credits/78
   67                     2-Dec-05    $ [***]          +/- Projected less Actual deferred credits/78
   68                     9-Dec-05    $ [***]          +/- Projected less Actual deferred credits/78
   69                    16-Dec-05    $ [***]          +/- Projected less Actual deferred credits/78
   70                    23-Dec-05    $ [***]          +/- Projected less Actual deferred credits/78
   71                    30-Dec-05    $ [***]          +/- Projected less Actual deferred credits/78
   72                     6-Jan-06    $ [***]          +/- Projected less Actual deferred credits/78
   73                    13-Jan-06    $ [***]          +/- Projected less Actual deferred credits/78
   74                    20-Jan-06    $ [***]          +/- Projected less Actual deferred credits/78
   75                    27-Jan-06    $ [***]          +/- Projected less Actual deferred credits/78
   76                     3-Feb-06    $ [***]          +/- Projected less Actual deferred credits/78
   77                    10-Feb-06    $ [***]          +/- Projected less Actual deferred credits/78
   78                    17-Feb-06    $ [***]          +/- Projected less Actual deferred credits/78
   79                    24-Feb-06    $ [***]          +/- Projected less Actual deferred credits/78
   80                     3-Mar-06    $ [***]          +/- Projected less Actual deferred credits/78
   81                    10-Mar-06    $ [***]          +/- Projected less Actual deferred credits/78
   82                    17-Mar-06    $ [***]          +/- Projected less Actual deferred credits/78
   83                    24-Mar-06    $ [***]          +/- Projected less Actual deferred credits/78
   84                    31-Mar-06    $ [***]          +/- Projected less Actual deferred credits/78
   85                     7-Apr-06    $ [***]          +/- Projected less Actual deferred credits/78
   86                    14-Apr-06    $ [***]          +/- Projected less Actual deferred credits/78
   87                    21-Apr-06    $ [***]          +/- Projected less Actual deferred credits/78
   88                    28-Apr-06    $ [***]          +/- Projected less Actual deferred credits/78
   89                     5-May-06    $ [***]          +/- Projected less Actual deferred credits/78
   90                    12-May-06    $ [***]          +/- Projected less Actual deferred credits/78
   91                    19-May-06    $ [***]          +/- Projected less Actual deferred credits/78
   92                    26-May-06    $ [***]          +/- Projected less Actual deferred credits/78
   93                     2-Jun-06    $ [***]          +/- Projected less Actual deferred credits/78
   94                     9-Jun-06    $ [***]          +/- Projected less Actual deferred credits/78
   95                    16-Jun-06    $ [***]          +/- Projected less Actual deferred credits/78
   96                    23-Jun-06    $ [***]          +/- Projected less Actual deferred credits/78
   97                    30-Jun-06    $ [***]          +/- Projected less Actual deferred credits/78
   98                     7-Jul-06    $ [***]          +/- Projected less Actual deferred credits/78
   99                    14-Jul-06    $ [***]          +/- Projected less Actual deferred credits/78
  100                    21-Jul-06    $ [***]          +/- Projected less Actual deferred credits/78
</TABLE>

[***] INDICATES CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE
COMMISSION.

<PAGE>
<TABLE>
<S>                  <C>                     <C>                        <C>                      <C>
  101                14-Jul-06               21-Jul-06                  19-Jul-06                18-Jul-06
  102                21-Jul-06               28-Jul-06                  26-Jul-06                25-Jul-06
  103                28-Jul-06                4-Aug-06                   2-Aug-06                 1-Aug-06
  104                 4-Aug-06               11-Aug-06                   9-Aug-06                 8-Aug-06
  105                11-Aug-06               18-Aug-06                  16-Aug-06                15-Aug-06
  106                18-Aug-06               25-Aug-06                  23-Aug-06                22-Aug-06
  107                25-Aug-06                1-Sep-06                  30-Aug-06                29-Aug-06
  108                 1-Sep-06                8-Sep-06                   6-Sep-06                 5-Sep-06
  109                 8-Sep-06               15-Sep-06                  13-Sep-06                12-Sep-06
  110                15-Sep-06               22-Sep-06                  20-Sep-06                19-Sep-06
  111                22-Sep-06               29-Sep-06                  27-Sep-06                26-Sep-06
  112                29-Sep-06                6-Oct-06                   4-Oct-06                 3-Oct-06
  113                 6-Oct-06               13-Oct-06                  11-Oct-06                10-Oct-06
  114                13-Oct-06               20-Oct-06                  18-Oct-06                17-Oct-06
  115                20-Oct-06               27-Oct-06                  25-Oct-06                24-Oct-06
  116                27-Oct-06                3-Nov-06                   1-Nov-06                31-Oct-06
  117                 3-Nov-06               10-Nov-06                   8-Nov-06                 7-Nov-06
  118                10-Nov-06               17-Nov-06                  15-Nov-06                14-Nov-06
  119                17-Nov-06               24-Nov-06                  22-Nov-06                21-Nov-06
  120                24-Nov-06                1-Dec-06                  29-Nov-06                28-Nov-06
  121                 1-Dec-06                8-Dec-06                   6-Dec-06                 5-Dec-06
  122                 8-Dec-06               15-Dec-06                  13-Dec-06                12-Dec-06
  123                15-Dec-06               22-Dec-06                  20-Dec-06                19-Dec-06
  124                22-Dec-06               29-Dec-06                  27-Dec-06                26-Dec-06
  125                29-Dec-06                5-Jan-07                   3-Jan-07                 2-Jan-07
  126                 5-Jan-07               12-Jan-07                  10-Jan-07                 9-Jan-07
  127                12-Jan-07               19-Jan-07                  17-Jan-07                16-Jan-07
  128                19-Jan-07               26-Jan-07                  24-Jan-07                23-Jan-07
  129                26-Jan-07                2-Feb-07                  31-Jan-07                30-Jan-07
  130                 2-Feb-07                9-Feb-07                   7-Feb-07                 6-Feb-07
  131                 9-Feb-07               16-Feb-07                  14-Feb-07                13-Feb-07
  132                16-Feb-07               23-Feb-07                  21-Feb-07                20-Feb-07
  133                23-Feb-07                2-Mar-07                  28-Feb-07                27-Feb-07
  134                 2-Mar-07                9-Mar-07                   7-Mar-07                 6-Mar-07
  135                 9-Mar-07               16-Mar-07                  14-Mar-07                13-Mar-07
  136                16-Mar-07               23-Mar-07                  21-Mar-07                20-Mar-07
  137                23-Mar-07               30-Mar-07                  28-Mar-07                27-Mar-07
  138                30-Mar-07                6-Apr-07                   4-Apr-07                 3-Apr-07
  139                 6-Apr-07               13-Apr-07                  11-Apr-07                10-Apr-07
  140                13-Apr-07               20-Apr-07                  18-Apr-07                17-Apr-07
  141                20-Apr-07               27-Apr-07                  25-Apr-07                24-Apr-07
  142                27-Apr-07                4-May-07                   2-May-07                 1-May-07
  143                 4-May-07               11-May-07                   9-May-07                 8-May-07
  144                11-May-07               18-May-07                  16-May-07                15-May-07
  145                18-May-07               25-May-07                  23-May-07                22-May-07
  146                25-May-07                1-Jun-07                  30-May-07                29-May-07
  147                 1-Jun-07                8-Jun-07                   6-Jun-07                 5-Jun-07
  148                 8-Jun-07               15-Jun-07                  13-Jun-07                12-Jun-07
  149                15-Jun-07               22-Jun-07                  20-Jun-07                19-Jun-07
  150                22-Jun-07               29-Jun-07                  27-Jun-07                26-Jun-07
  151                29-Jun-07                6-Jul-07                   4-Jul-07                 3-Jul-07
  152                 6-Jul-07               13-Jul-07                  11-Jul-07                10-Jul-07
  153                13-Jul-07               20-Jul-07                  18-Jul-07                17-Jul-07
  154                20-Jul-07               27-Jul-07                  25-Jul-07                24-Jul-07
  155                27-Jul-07                3-Aug-07                   1-Aug-07                31-Jul-07
  156                 3-Aug-07               10-Aug-07                   8-Aug-07                 7-Aug-07
  157                10-Aug-07               17-Aug-07                  15-Aug-07                14-Aug-07
</TABLE>
<PAGE>
<TABLE>
<S>                               <C>          <C>              <C>
  101                             28-Jul-06    $ [***]          +/- Projected less Actual deferred credits/78
  102                              4-Aug-06    $ [***]          +/- Projected less Actual deferred credits/78
  103                             11-Aug-06    $ [***]          +/- Projected less Actual deferred credits/78
  104                             18-Aug-06    $ [***]          +/- Projected less Actual deferred credits/78
  105                             25-Aug-06    $ [***]
  106                              1-Sep-06    $ [***]
  107                              8-Sep-06    $ [***]
  108                             15-Sep-06    $ [***]
  109                             22-Sep-06    $ [***]
  110                             29-Sep-06    $ [***]
  111                              6-Oct-06    $ [***]
  112                             13-Oct-06    $ [***]
  113                             20-Oct-06    $ [***]
  114                             27-Oct-06    $ [***]
  115                              3-Nov-06    $ [***]
  116                             10-Nov-06    $ [***]
  117                             17-Nov-06    $ [***]
  118                             24-Nov-06    $ [***]
  119                              1-Dec-06    $ [***]
  120                              8-Dec-06    $ [***]
  121                             15-Dec-06    $ [***]
  122                             22-Dec-06    $ [***]
  123                             29-Dec-06    $ [***]
  124                              5-Jan-07    $ [***]
  125                             12-Jan-07    $ [***]
  126                             19-Jan-07    $ [***]
  127                             26-Jan-07    $ [***]
  128                              2-Feb-07    $ [***]
  129                              9-Feb-07    $ [***]
  130                             16-Feb-07    $ [***]
  131                             23-Feb-07    $ [***]
  132                              2-Mar-07    $ [***]
  133                              9-Mar-07    $ [***]
  134                             16-Mar-07    $ [***]
  135                             23-Mar-07    $ [***]
  136                             30-Mar-07    $ [***]
  137                              6-Apr-07    $ [***]
  138                             13-Apr-07    $ [***]
  139                             20-Apr-07    $ [***]
  140                             27-Apr-07    $ [***]
  141                              4-May-07    $ [***]
  142                             11-May-07    $ [***]
  143                             18-May-07    $ [***]
  144                             25-May-07    $ [***]
  145                              1-Jun-07    $ [***]
  146                              8-Jun-07    $ [***]
  147                             15-Jun-07    $ [***]
  148                             22-Jun-07    $ [***]
  149                             29-Jun-07    $ [***]
  150                              6-Jul-07    $ [***]
  151                             13-Jul-07    $ [***]
  152                             20-Jul-07    $ [***]
  153                             27-Jul-07    $ [***]
  154                              3-Aug-07    $ [***]
  155                             10-Aug-07    $ [***]
  156                             17-Aug-07    $ [***]
  157                             24-Aug-07    $ [***]
</TABLE>

[***] INDICATES CONFIDENTIAL MATERIAL REDACTED AND FILED SEPARATELY WITH THE
COMMISSION.<PAGE>

                                                                     EXHIBIT 4.3

                         1165(e) PLAN ADOPTION AGREEMENT

               POPULAR MASTER DEFINED CONTRIBUTION RETIREMENT PLAN

                     AMENDED EFFECTIVE AS OF OCTOBER 1, 2001

<PAGE>
            By executing this Adoption Agreement the Employer is adopting a
profit sharing plan with optional Section 1165(e) provisions for the benefit of
its Employees. The Employer's Plan is comprised of: (i) [X] the Banco Popular de
Puerto Rico Popular Master Defined Contribution Retirement Plan Document or [ ]
the Employer's Defined Contribution Retirement Plan Document; (ii) [X] the Banco
Popular de Puerto Rico Popular Master Defined Contribution Retirement Plan
Master Trust and/or [ ] the Employer's Defined Contribution Retirement Plan
Trust; and (iii) [X] this Adoption Agreement. The terms used in this Adoption
Agreement, as well as the rules to be complied with in connection with the Plan,
are fully explained in the [X] Popular Master Plan Document or [ ] the
Employer's Plan Document. When signing this Adoption Agreement, if applicable,
the Employer has received copy of the Banco Popular de Puerto Rico Popular
Master Defined Contribution Retirement Plan and the Popular Master Plan's
Summary Plan Description. The Banco Popular de Puerto Rico Popular Master
Defined Contribution Retirement Plan Master Trust is available upon request at
Banco Popular's main offices in Hato Rey, Puerto Rico.

                         1165(e) Plan Adoption Agreement
              Popular Master Defined Contribution Retirement Plan
               Copyright (c) 2001 by Banco Popular de Puerto Rico

                                       2
<PAGE>

Plan Sponsor

Name of Plan Sponsor: Pediatrix Medical Group of Puerto Rico

Address (Physical): c\o Pediatrix Medical Group Inc., 1301 Concord Terrace,
                    Sunrise, Florida, 33323

Address (Postal): (same)

Telephone: (954) 384-0175                   Telefax: (954) 233-3192

Name of Person for Banco Popular de Puerto Rico to Contact: Denise Morgan

Position: Benefits Manager

Telephone: (954) 384-0175 Telefax: (954) 233-3192 E-Mail: denise_morgan@
                                                          pediatrix.com

Plan Sponsor tax identification number: 66-0482357

Type of business:

[ ] Unincorporated Trade or Business

[ ] Partnership

[X] Corporation

[ ] Other (specify) _____________________________________________

Employer's taxable year:

[X] Calendar Year

[ ] Fiscal Year ending on _______________________________________

Employer Information. (Complete even if only one Employer will adopt the Plan;
attach additional sheets to provide information for additional Employers
adopting the Plan. References in this Adoption Agreement to any Employer shall
be in reference to all employers adopting the Plan.)

Name of Employer: Pediatrix Medical Group of Puerto Rico

Address (Physical): c\o Pediatrix Medical Group, Inc.,
                    1301 Concord Terrace, Sunrise Florida 33323

                                       3
<PAGE>

Address (Postal): same

Telephone: (954) 384-0175                   Telefax: (954) 233-3192

Name of Person for Banco Popular de Puerto Rico to Contact: Denise Morgan

Position: Benefits Manager

Telephone: (954) 384-0175 Telefax: (954) 233-3192 E-Mail: denise_morgan@
                                                          pediatrix.com

Employer tax identification number: 66-0482357

Type of business:

[ ] Unincorporated Trade or Business

[ ] Partnership

[X] Corporation

[ ] Other (specify) _________________________________________________

Employer's taxable year:

[X] Calendar Year

[ ] Fiscal year ending on ____________________________________________

Payroll frequency: [ ] Weekly             [ ] Bi-Weekly

                   [X] Semi-Monthly       [ ] Monthly

                   [ ] Semi-Weekly        [ ] Other

GENERAL PLAN INFORMATION

Plan Name: Pediatrix Medical Group of Puerto Rico Thrift and Profit Sharing
Plan.
(Employer's name and type of plan)

ADOPTION OR AMENDMENT OF PLAN

By signing this Adoption Agreement the Employer:

[ ] adopts the Banco Popular de Puerto Rico Popular Master Defined
    Contribution Retirement Plan and its Popular Master Trust

[ ] adopts the Banco Popular de Puerto Rico Popular Master Defined
    Contribution Retirement Plan and an Individual Trust

[ ] adopts an Individual Defined Contribution Retirement Plan and the Banco
    Popular de Puerto Rico Popular Master Defined Contribution Retirement Plan
    Master Trust,

[ ] amends certain options of an earlier Banco Popular de Puerto Rico
    Popular Master Defined Contribution Retirement Plan Adoption Agreement for
    the following Plan:

                                       4
<PAGE>

      Name of Plan: _________________________________________________

      Original Effective Date: _____________________________________

[X]   amends and restates the following Plan:

      Name of Plan: Pediatrix Medical Group of Puerto Rico Thrift and Profit
                    Sharing Plan

      Original Effective Date: January 1, 1993

Effective Date (cannot be earlier than the first day of the Plan Year in which
the Employer signs this Adoption Agreement).
The effective date of this Plan or amendment is: October 1,2002
                                                (month/day/year)
PLAN YEAR

The Plan Year will be a calendar year unless the Employer elects otherwise by
checking the box below;

[ ] The Plan Year shall begin

    on ___________________ and
               (month/day)

    end on __________________ .
               (month/day)

[ ] If applicable, the first Plan Year is a short Plan Year

    beginning on____________ and
                 (month/day)

    ending on ________________ .
                (month/day)

ACCOUNTING METHOD.

The Plan shall use the cash basis accounting method.

ELIGIBILITY FOR PLAN PARTICIPATION

WAIVER OF REQUIREMENTS FOR NEW PLANS

[X]  If checked, each Employee employed on the Effective Date of the Plan is
     automatically eligible to participate. Employees hired after the Effective
     Date of the Plan are eligible upon satisfying any service and/or age
     requirements specified below:

                                       5
<PAGE>

AGE REQUIREMENT. An employee must fulfill the following age requirement to
become a Participant:

[ ] No minimum age required,

[X] Minimum age 21 (not greater than 21).

[ ] Other______________________________

SERVICE REQUIREMENTS. An employee must fulfill the following service requirement
to become a Participant:

[X] No service requirement.

[ ] One year of service.

[ ] Other ________________________

METHOD FOR CALCULATING YEAR OF SERVICE.

[ ] HOURS OF SERVICE METHOD. An Employee's service will be determined by
    using the Hours of Service method as described in Article 3 of the Popular
    Master Plan document or the Employer's Individual Plan Document.

[X] ELAPSED TIME METHOD. An Employee's service will be determined using the
    elapsed time method, as described in Article 3 of the Popular Master Plan
    document or the Employer's Individual Plan Document.

Affiliates. Please list the affiliates for which service will be treated as
service under the Plan.

________________________________________________________________________________

_______________________________________________________________________________

________________________________________________________________________________

PREDECESSOR EMPLOYERS. Service with the following predecessor employers will be
treated as service under the Plan:

________________________________________________________________________________

________________________________________________________________________________

  ENTRY DATES

An Employee may elect to become a Participant and start making Employee
Contributions on any entry date on or after he or she satisfies the Plan's
eligibility requirements.

                                       6
<PAGE>

Indicate the Plan's entry dates:

[ ] Monthly Entry Dates. The first day of each month date.

[X] Quarterly Entry Dates. The first day of each of the first, fourth, seventh
    and tenth months of the Plan Year is an entry date.

[ ] Semi-Annual Entry Dates. The first day of each of the first and seventh
    months of the Plan Year is an entry date.

  COMPENSATION

EMPLOYEE PRE-TAX CONTRIBUTIONS

A Participant's Compensation for purposes of Employee Pre-Tax Contributions
shall mean the total compensation that is currently includible in income for
income tax purposes paid to him by the Employer during a Plan Year. Except that
if checked below, Compensation will exclude the following items:

[ ] bonuses

[ ] overtime

[ ] commissions

[ ] other items (specify)_______________________________________________________

    ____________________________________________________________________________

EMPLOYEE AFTER-TAX CONTRIBUTIONS

A Participant's Compensation for purposes of Employee After-Tax Contributions
shall mean the total compensation that is currently includible in income for
income tax purposes paid to him by the Employer during a Plan Year. Except that
if checked below, Compensation will exclude the following items:

[ ] bonuses

[ ] overtime

[ ] commissions

[ ] other items (specify)_______________________________________________________

    ____________________________________________________________________________

EMPLOYER MATCHING CONTRIBUTIONS

A Participant's Compensation for purposes of Employer Matching Contributions
shall mean the total compensation that is currently includible in income for
income tax purposes paid to him by the Employer during a Plan Year. Except that
if checked below, Compensation will exclude the following items:

[ ] bonuses

[ ] overtime

[ ] commissions

[ ] other items (specify)_______________________________________________________

    ____________________________________________________________________________

                                       7
<PAGE>

EMPLOYER PROFIT SHARING CONTRIBUTIONS

A Participant's Compensation for purposes of Employer Profit Sharing
Contributions shall mean the total compensation that is currently includible in
income for income tax purposes paid to him by the Employer during a Plan Year.
Except that if checked below, Compensation will exclude the following items:

[ ] bonuses

[ ] overtime

[ ] commissions

[ ] other items (specify)_______________________________________________________

    ____________________________________________________________________________

   CONTRIBUTIONS

NEGATIVE ELECTION

If the Employer so elects, each Employee shall be deemed to have elected to make
a Pre-Tax Contribution in the percentage indicated below commencing with the
first payroll period following completion of the eligibility requirements of the
Plan unless the Employee elects to receive cash instead. If this is a
restatement of an existing plan Employees not participating in the Plan on the
effective date of the restatement will be given a 3-month notice commencing on
the first day of the Plan Year next following the effective date of the
restatement during which to effect an election to receive cash. A Participant
who does not file an election to receive cash will become a Participant on the
first Entry Date following the three month period. The Employee may at any time
elect to not make Pre-Tax Contributions to the Plan. This is called the
"Negative Election". The Employer can also choose a "Positive Election" whereby
the Employee must make an affirmative election to make a pre-tax contribution.

[ ] Negative Election

    Percentage______% (1%-3%)

[X] Positive Election

EMPLOYEE CONTRIBUTIONS

Participants may make contributions as follows:

[ ] Pre-Tax Contributions.

[ ] After-Tax Contributions.

[X] Pre-Tax Contributions and/or After-Tax Contributions, at the election of the
    Participant.

Pre-Tax Contributions in a Plan Year may not exceed 10% of Compensation or
$7,500, in 1997, and $8,000, in 1998 and thereafter whichever is less.

After-Tax Contributions in a Plan Year, if authorized, may not exceed 10% of the
aggregate compensation paid to the Employee during all the years he or she has
been a Plan Participant. After-Tax Contributions may be subject to other
restrictions and rules established by the Plan Administrator.

                                       8
<PAGE>

Pre-Tax Contributions and/or After-Tax Contributions may not commence prior to
the date the Plan is adopted.

ROLLOVER CONTRIBUTIONS

The Plan's Trustee shall be authorized to receive rollover contributions:

[ ] Only if the Employee has met the participation requirements of the Plan as
    of the date of the contribution.

[X] Even if the Employee has not met the participation requirements of the Plan
    as of the date of the contribution.

MATCHING CONTRIBUTIONS

[ ] The Employer will make no Matching Contributions.

[X] The Employer will make a discretionary Matching Contribution equal
    to ____ cents for each dollar of a Participant's:

    [X] Pre-Tax Contributions.

    [ ] After-Tax Contributions.

    [ ] Pre-Tax Contributions and After-Tax Contributions.

However, the Employer will not make Matching Contributions
above_____% of the Participant's Compensation.

PROFIT SHARING CONTRIBUTIONS

[ ] The Employer will make no Profit Sharing Contributions

[X] For each Plan Year in which this Plan is in effect the Employer may
    make contributions to the Trust in one or more installments out of its Net
    Profits (as defined in section 6.2C.(3) of the Plan) for the Plan Year, in
    such amounts as the Employer may determine (if any). The Plan Year for
    which each contribution is made shall be designated at the time of the
    contribution. Profit-Sharing Contributions may not exceed the lesser of
    Employer's Net Profits or 15% of a Participant's Compensation in any Plan
    Year.

ALLOCATION OF EMPLOYER CONTRIBUTIONS

Profit Sharing Contributions shall be allocated as of the last day of such Plan
Year among the Employees who:

[ ] completed more than 500 hours of service during the Plan Year [ ] and [ ] or

[X] were employed by the Employer on the last day of the Plan Year [ ] and [ ]
    or

[ ] ____________________________________________________________________________

    ____________________________________________________________________________

                                       9
<PAGE>

Matching Contributions shall be allocated as of the last day of such Plan Year
among the Employees who:

[ ] completed more than 500 hours of service during the Plan Year [ ] and [ ] or

[X] were employed by the Employer on the last day of the Plan Year [ ] and [ ]
    or

[ ] ____________________________________________________________________________

QUALIFIED MATCHING AND NON-ELECTIVE CONTRIBUTIONS

Qualified Matching Contributions and Qualified Non-Elective Contributions, as
defined in the Popular Master Plan Document or the Employer's Plan Document,
will be taken into account for purposes of calculating the Actual Deferral
Percentages of Non-Highly Compensated Employees to the extent necessary to meet
the Actual Deferral Percentage test.

  VESTING

PRE-TAX AND/OR AFTER-TAX CONTRIBUTIONS ARE ALWAYS 100% VESTED.

MATCHING CONTRIBUTIONS AND/OR PROFIT SHARING CONTRIBUTIONS

You may elect a single vesting schedule for both Matching Contributions and
Profit Sharing Contributions or you may select different vesting schedules.
Matching Contributions and/or Profit Sharing Contributions will vest in
accordance with the following vesting schedule:

[ ] Full Vesting. Participants are 100% vested at all times.

[ ] Cliff Vesting. Participants are 100% vested after completing _____ years
    of service (insert number; cannot be greater than 3). The Participant will
    be 0% vested until completing the years of service specified above.

[X] Graded Vesting. Participants are vested in accordance with the following
    vesting schedule. (A Participant's vested percentage is the percentage
    inserted in column (2) or the percentage in column (3), whichever is
    greater. Spaces left blank are treated as zeros).

[X] Applicable to Matching Contribution and Profit Sharing Contributions.

[ ] Applicable to Matching Contributions only.

                              Graded Vesting Table

<TABLE>
<CAPTION>
   (1)                              (2)                       (3)
  Years of                         Vested               Minimum Required
  Service                        Percentage                Percentage
  -------                        ----------            ------------------
<S>                              <C>                   <C>
Less than 1                        _____                       0

At least 1                          30                         0

At least 2                          60                        20

At least 3                         100                        40

At least 4                         _____                      60

At least 5                         _____                      80

At least 6                         _____                     100
</TABLE>

                                       10
<PAGE>

Profit Sharing Contributions will vest in accordance with the following vesting
schedule:

[ ] FULL VESTING. Participants are 100% vested at all times.

[ ] CLIFF VESTING. Participants are 100% vested after completing ______ years
    of service (insert number; cannot be greater than 5). The Participant will
    be 0% vested until completing the years of service specified above.

[ ] GRADED VESTING. Participants are vested in accordance with the following
    vesting schedule. (A Participant's vested percentage is the percentage
    inserted in column (2) or the percentage in column (3), whichever is
    greater. Spaces left blank are treated as zeros).

                              Graded Vesting Table

<TABLE>
<CAPTION>
   (1)                              (2)                       (3)
  Years of                         Vested               Minimum Required
  Service                        Percentage                Percentage
  -------                        ----------            ------------------
<S>                              <C>                   <C>
Less than 1                        _____                       0

At least 1                         _____                       0

At least 2                         _____                       0

At least 3                         _____                      20

At least 4                         _____                      40

At least 5                         _____                      60

At least 6                         _____                      80

At least 7                         _____                     100
</TABLE>

Years of service excluded in determining vested percentages. Need not be
completed - check as many as desired.

[ ] Years completed before the effective date of this Plan (or a predecessor
    plan).

[ ] Years completed before the Participant's _______ birthday (insert
    birthday not greater than 18th).

  FORFEITURES

Forfeitures under the Plan will be (choose one):

[ ] allocated to Participant's accounts during the Plan Year in the proportion
    that each such Participant's Compensation during such Plan Year bears to the
    total Compensation during such Plan Year of all Participants.

[X] used to reduce the amount the Employer must contribute to the Plan.

Forfeitures will be made at the time specified in Section 8.4 of the Popular
Master Plan document. You may choose to maintain [ ] individual Participant
Suspense Accounts or [X] a Single Suspense Account for all forfeitures and
choose whether forfeitures will be invested according to [ ] the Participant's
investment directions or [X] in the default investment option selected by the
Plan Sponsor.

                                       11
<PAGE>

LOANS

[X]   Loans from the Plan will be permitted, subject to the Plan's loan rules.
      (Loans will not be available to Owner-Employees unless one of the
      following occurs: such person has at his expense obtained an
      administrative exemption from ERISA's prohibited transaction rules from
      the United States Department of Labor with respect to such loan or the
      United States Department of Labor has issued a prohibited transaction
      class exemption covering such loans.)

[ ]   Loans to Participants from the Plan are not permitted.

IN-SERVICE WITHDRAWALS

The following provisions will govern the availability of in-service withdrawals
from a Participant's accounts. See Article 9 of the Plan document for
additional details, including definitions and limitations.

Profit Sharing Contributions. In-service withdrawals from Profit Sharing
Contributions will not be allowed unless one of the following boxes is checked:

[X]   In-service withdrawals from Profit Sharing Contributions Account will only
      be allowed in case of a financial hardship as such term is defined in
      Article 9.1 of the Popular Master Plan Document or the Employer's
      Individual Plan Document.

[ ]   In-service withdrawals from Profit Sharing Contributions Account will be
      allowed for any reason.

Pre-Tax Contributions. In-service withdrawals from Pre-Tax Contributions will
only be allowed in case of a financial hardship as such term is defined in
Article 9.1 of the Popular Master Plan Document or the Employer's Individual
Plan Document.

After-Tax Contributions. In-service withdrawals from After-Tax Contributions
will be allowed for any reason.

Matching Contributions. In-service withdrawals from Matching Contributions will
not be allowed unless one of the following boxes is checked:

[X]   In-service withdrawals from Profit Sharing Contributions Account will
      only be allowed in case of a financial hardship as such term is defined in
      Article 9.1 of the Popular Master Plan Document or the Employer's
      Individual Plan Document.

[ ]   In-service withdrawals from Profit Sharing Contributions Account will be
      allowed for any reason.

Rollover Contributions. Refer to Article 9 of the Popular Master Plan document.

                                       12
<PAGE>

WITHDRAWALS AFTER AGE 59 1/2

[X]   If checked, after 59 1/2 a Participant may make in-service withdrawals
      from his Pre-Tax Contributions and, if applicable, from his Qualified
      Matching and Non-Elective Contributions Accounts without financial
      hardship (up to the vested percentage of each such accounts).

Financial Hardship. An in-service withdrawal will be on account of financial
hardship only if the Participant has an immediate and heavy financial need and
the withdrawal is necessary to meet such need.

A withdrawal will be deemed to be on account of an immediate and heavy financial
need if it is occasioned by:

      -     a deductible medical expense incurred by the Participant or his
            spouse, children or dependent; (not reimbursed by medical insurance
            or otherwise);

      -     purchase of the Participant's principal residence (not including
            mortgage payments);

      -     tuition payments for the next semester or quarter of post-secondary
            education for the Participant or his spouse, child or dependent;

      -     rent or mortgage payments to prevent the Participant's eviction from
            or the foreclosure of the mortgage on his principal residence; or

      -     such other event or circumstances as the Puerto Rico Secretary of
            the Treasury through regulations may permit.

A Participant must establish to the Plan Administrator's satisfaction both that
the Participant has an immediate and heavy financial need and that the
withdrawal is necessary to meet the need.

The Trustee and the Plan Administrator shall agree as to the most convenient way
of administering the financial hardship provisions of the Plan.

A Participant who makes a withdrawal on account of a financial hardship may not
make Pre-Tax Contributions or After-Tax Contributions hereunder (or under any
other Plan maintained by the Employer) for a period of 12 months following the
date of the in-service withdrawal.

Payment. Participant's in-service withdrawal request shall be paid as soon as it
is administratively feasible following the date in which the Plan Participant
requests the distribution.

RETIREMENT AGE

Normal Retirement Age. A Participant will be fully vested and may retire after
the latter of reaching age 65 or the fifth anniversary of the first day of the
Plan Year in which he/she commenced participation in the Plan.

Disability Retirement. A Participant will be fully vested and may retire before
normal retirement upon becoming disabled.

                                       13
<PAGE>

Early Retirement Age.

[ ]   If checked, a Participant will be fully vested and may retire prior to
      Normal Retirement Age upon reaching age_______ and completing_______years
      of service.

Distribution of Vested Benefits before Retirement, Death or Disability.

If the Participant terminates his employment with the Employer before reaching
his normal or early retirement age, becoming disabled or dying, Participant [X]
shall be [ ] shall not be allowed to apply for an early distribution of his plan
benefits.

Distribution of Benefits

Upon becoming entitled to the distribution of this Plan's benefits, the
Participants or their authorized representative must request from the Employer
that their benefits be distributed. The normal form of benefit under the Plan is
a lump sum distribution however, the Plan Sponsor may elect periodical payments
(below) as an optional form of benefit. If this Plan is a restatement of an
existing plan which provided for payment of benefits in the form of an annuity
this form of payment will be preserved. Please provide details in the space
provided below.

[ ]   periodical payments (monthly, quarterly, semiannual or annual installments
      of substantially equal amounts over a period of years certain not to
      exceed 10).

[ ]   Other (for amended and restated Plans with optional forms of benefits
      only)________

If the Employer elects more than one method of distribution hereunder,
Participants shall elect under which of such methods his or her benefit shall be
distributed.

Investment Funds

All investment instructions as to each Participant's account will be directed by
the Participant and/or the Employer and/or the Trustee. If no investment
instructions are provided by the Participant and/or the Employer, and the
Trustee is a directed trustee, the Participant's accounts will be invested in
the money market fund included in the investment funds chosen by the Plan
Sponsor.

For purposes of the Plan, the Trustee [X] shall be [ ] shall not be considered
as a directed trustee.

Participant's Investment Instructions

The Participants will be allowed to modify their investments instructions on a
[X] daily [ ] monthly [ ] quarterly [ ] semi annual [ ] annual basis.

                                       14
<PAGE>

Participant's Contributions to the Plan

The Participants will be allowed to modify or suspend their pre-tax and/or their
after-tax contributions to the Plan on a [X]monthly [ ] quarterly [ ] semi
annual [ ] annual basis.

Popular Master Trust

By executing this Adoption Agreement the Plan Sponsor [X]adopts [ ] does not
adopt the Popular Master Trust established by Banco Popular de Puerto Rico to
carry out the purposes of the Plan and thus retains Banco Popular as Trustee.
The terms of the Trust and corresponding fees are contained in the Banco Popular
de Puerto Rico Master Defined Contribution Retirement Plan, Popular Master Trust
and Fee Schedule respectively, which are incorporated by reference into this
Adoption Agreement.

Recordkeeper

[X]   By executing this Adoption Agreement, the Plan Sponsor retains Banco
      Popular de Puerto Rico as Recordkeeper of the Plan pursuant to the
      Recordkeeping Agreement and Fee Schedule incorporated by reference into
      this Adoption Agreement.

[ ]   The Plan Sponsor has selected as recordkeeper for the Plan:

Name ___________________________________________________________________________

Address ________________________________________________________________________

        ________________________________________________________________________

Telephone No: __________________________________ Telefax: ______________________

Contact Person Name ____________________________________________________________

Telephone No: _________________  Telefax: ______________  E-Mail: ______________

Recordkeeper and Trustee's Fees

By executing this Adoption Agreement, the Plan Sponsor, if so selected, agrees
to retain Banco Popular de Puerto Rico as Recordkeeper and, if applicable, as
Trustee of the Plan, for an initial minimum period of three years. This
Agreement shall renew automatically for successive three year periods
indefinitely. The Plan Sponsor may terminate this Agreement at any time subject
to a written termination notice received by Banco Popular at least thirty days
prior to the effective date of

                                       15
<PAGE>
termination. If termination occurs during the initial three year period, the
Plan Sponsor agrees to compensate Banco Popular with a termination fee equal to
three times the total annual fees minus any amount already satisfied in
connection with the services rendered since the effective date of this
agreement. Banco Popular may change the Fee Schedule from time to time and shall
provide written notification to the Plan Sponsor. Termination may occur due to a
termination and liquidation of the Plan by the Plan Sponsor or due to a trust to
trust transfer whereby a successor trustee is appointed. Should Banco Popular be
instructed to carry out a trust to trust transfer, the Plan assets shall be
transferred in cash. Therefore, all positions of the Plan held in the investment
funds shall be liquidated.

VALUATION OF PARTICIPANT'S ACCOUNTS

The Participant's Accounts shall be valued [X] daily [ ] monthly [ ] quarterly
[ ] semi-annually [ ] annually.

PARTICIPANT'S ACCOUNT STATEMENTS

The Participants shall be provided with a statement of their account on a
[ ] monthly [X] quarterly [ ] semi-annually [ ] annual basis.

PLAN ADMINISTRATION

Plan Administrator. The Plan Sponsor is the legal Plan Administrator under
ERISA.

SERVICE FEE DISCLOSURE

Banco Popular has agreed to make available plan recordkeeping, directed trustee
services, certain administration services, and mutual fund investment choices
(which have been provided separately).

For providing certain administrative or shareholder services to the mutual
funds, Banco Popular will receive an administrative fee from the mutual funds.
The rate or amount of the fees to be paid to Banco Popular by each mutual fund
is shown in parentheses on the fund list.

Banco Popular's annual fee for its services as directed-trustee and recordkeeper
will be billed to the Plan Sponsor separately based on the separate fee
schedule.

Banco Popular reserves the right to change the funds on the funds list from time
to time. Banco Popular will provide the Plan Sponsor with 60 days advance
written notice of any change thereto and the corresponding change in fees if
any. Banco Popular will try to find a suitable alternative if the Plan Sponsor
does not agree with the proposed substitution. However, if the Plan Sponsor does
not object in writing within the 60-day period, Banco Popular will make the
change. If the Plan

                                       16
<PAGE>
Sponsor objects to the proposed change and a suitable alternative cannot be
found, the Plan Sponsor will be provided an additional 60 day period to find a
new trustee for the Plan.

By executing this Adoption Agreement the Plan Sponsor acknowledges that (i)
Banco Popular has provided the Plan Sponsor with the mutual fund list, (ii) the
mutual funds list contains the rate or amount of fees to be paid to Banco
Popular, (iii) Banco Popular has the right to modify the mutual funds lists in
such manner as Banco Popular, in its sole discretion, sees fit, (iv) the Plan
Sponsor has selected from the mutual funds list the mutual funds used as
investment options for the Plan, (v) the Plan Sponsor has received copies of
each mutual fund's Prospectus and Statement of Additional Information, and (vi)
the Plan Sponsor agrees with the procedures disclosed herein with relation to a
substitution of a particular mutual fund.

EXECUTION OF ADOPTION AGREEMENT

RESPONSIBILITIES OF THE PLAN SPONSOR.

The Plan Sponsor understands that, by establishing this Plan, it will have
certain legal responsibilities for which neither the Trustee nor the Plan
Sponsor will be responsible. The Plan Sponsor also understands that it will be
solely responsible for any taxes, costs or expenses arising from the
disqualification of the Plan. The Plan Sponsor warrants that it has obtained
legal and tax advice to the extent the Plan Sponsor deems necessary before
signing this Adoption Agreement.

Plan Sponsor
Name of Plan Sponsor: Pediatrix Medical Group of Puerto Rico
                      _________________________________________________________

Signed: Claire Fair
        _______________________________________________________________________

Print name and title: Claire Fair, Director of Human Resources
                      _________________________________________________________

Date: 9/20/02
      _________________________________________________________________________

Trustee
Name of Trustee: ______________________________________________________________

Address: ______________________________________________________________________

Signed: _______________________________________________________________________

Print name and title: _________________________________________________________

Date: _________________________________________________________________________

                                       17
<PAGE>

The identifying number for the Banco Popular de Puerto Rico Popular Master
Defined Contribution Retirement Plan document is 01 and for this Adoption
Agreement is 102. The Plan Sponsor is (insert Plan Sponsor's name and address):
Pediatrix Medical Group of Puerto Rico c/o Pediatrix Medical Group, 1301 Concord
Terrace, Sunrise, FL 33323. Banco Popular de Puerto Rico will notify you if it
amends or discontinues this Popular Master Plan.

The Plan Sponsor should insure that this Adoption Agreement has been filled out
completely and properly. Failure to do so may result in Plan disqualification.

                                       18
<PAGE>

                               POPULAR MASTER PLAN
                  PLAN SPONSOR'S SELECTION OF INVESTMENT FUNDS

Plan Sponsor Name: Pediatrix Medical Group of Puerto Rico

Plan Name: Pediatrix Medical Group of Puerto Rico Thrift and Profit Sharing Plan

The Plan Sponsor selects the following Investment Funds for the above named
plan: (At least three.)

1.    Fidelity Retirement Money Market Portfolio

2.    Fidelity Managed Income Portfolio

3.    Fidelity Ginnie Mae Fund

4.    Fidelity Investment Grade Bond Fund

5.    Fidelity Puritan Fund

6.    Fidelity Equity - Income II Fund
      (See attached for additional funds)

      In San Juan, Puerto Rico on the __ day of ____________ 200_.

Plan Sponsor

      Plan Sponsor Name: Pediatrix Medical Group of Puerto Rico

      Signed: Claire Fair

      Print name and Title: Claire Fair, Director of Human Resources

      Date: 9/20/02

TRUSTEE

      Trustee Name: ____________________________

      Signed: __________________________________

      Print name and Title: ____________________

      Date: ____________________________________

                                       19
<PAGE>

                               POPULAR MASTER PLAN
                  PLAN SPONSOR'S SELECTION OF INVESTMENT FUNDS

Plan Sponsor Name: Pediatrix Medical Group of Puerto Rico

Plan Name: Pediatrix Medical Group of Puerto Rico Thrift and Profit Sharing Plan

The Plan Sponsor selects the following Investment Funds for the above named
plan: (continued from first six selections)

7.    Fidelity Fund

8.    Fidelity Growth & Income Portfolio

9.    Spartan U.S. Equity Index Fund

10.   Fidelity Blue Chip Growth Fund

11.   Fidelity Contrafund

12.   INVESCO Dynamics Fund - Investor Class

13.   Neuberger Berman Genesis Fund - Trust Class

14.   Fidelity Overseas Fund

15.   Fidelity Worldwide Fund

16.   Pediatrix Stock Fund

17.   Fidelity Freedom Income Fund

18.   Fidelity Freedom 2000 Fund

19.   Fidelity Freedom 2010 Fund

20.   Fidelity Freedom 2020 Fund

21.   Fidelity Freedom 2030 Fund

22.   Fidelity Freedom 2040 Fund(SM)

<PAGE>
                                                                      ADDENDUM A

                               POPULAR MASTER PLAN
                       ADDITIONAL EMPLOYER'S INFORMATION

EMPLOYER INFORMATION (Complete even if only one Employer will adopt the Plan;
attach additional sheets to provide information for additional Employers
adopting the Plan. References in this Adoption Agreement to any Employer shall
be in reference to all employers adopting the Plan.)

Name of Employer: Pediatrix Medical Group of Puerto Rico

Address (Physical): c/o Pediatrix Medical Group,
                        1301 Concord Terrace
                        Sunrise, FL 33323

Address (Postal): (same)

Telephone: (954) 384-0175     Telefax:(954) 233-3192

Name of Person for Banco Popular de Puerto Rico to Contact: Denise Morgan

Position: Benefits Manager

Telephone: (954) 384-0175  Telefax:(954) 233-3192

E-Mail: denise_morgan@pediatrix.com

Employer tax identification number: 66-0482357

Type of business:

[ ]   Unincorporated Trade or Business

[ ]   Partnership

[X]   Corporation

[ ]   Other (specify)___________________________

Employer's taxable year:

[X]   Calendar Year

[ ]   Fiscal Year ending on ____________________

Payroll frequency:  [ ] Weekly                  [ ] Bi-Weekly

                    [X] Semi-Monthly            [ ] Monthly

                    [ ] Semi-Weekly             [ ] Other

                                       20
<PAGE>

                               POPULAR MASTER PLAN
                   MASTER DEFINED CONTRIBUTION RETIREMENT PLAN
                     AMENDED EFFECTIVE AS OF OCTOBER 1, 2001

<PAGE>

      The Banco Popular de Puerto Rico Master Defined Contribution Retirement
Plan (the "Popular Master Plan") may be adopted through the execution of an
adoption agreement (the "Adoption Agreement") as either a money purchase pension
plan or a profit-sharing plan (the "Plan"), which may, or may not, contain a
cash or deferred arrangement. The Plans established hereunder are intended to
qualify under Sections 1165(a), (e) and (g) of the Puerto Rico Internal Revenue
Code of 1994, as amended and to comply with all applicable requirements of Title
I of the Employee Retirement Income Security Act of 1974, as amended.

      By executing the Adoption Agreement, the Plan Sponsor has established a
Plan governed by the provisions of the Adoption Agreement and this Popular
Master Plan document for the benefit of the Plan Sponsor's eligible employees
and the eligible employees of Affiliates to which the Plan Sponsor has extended
participation and which the Affiliate has accepted. If a Plan Sponsor is
interested in establishing more than one type of Plan, a separate Adoption
Agreement must be executed for each Plan. The purpose of the Plan is to create a
retirement fund intended to help provide for the future security of the
Participants and their Beneficiaries. In no event shall any portion of the
principal or income of the Popular Master Trust established by the Banco Popular
de Puerto Rico and forming part of the Plan Sponsor's Plan, or the Trust
established by the Plan Sponsor to form part of its Plan, be used for, or
diverted to, any purpose other than the exclusive benefit of the Participants
and their Beneficiaries, except as and to the limited extent otherwise
specifically permitted under the Employee Retirement Income Security Act of
1974, as amended and the Puerto Rico Internal Revenue Code of 1994, as amended.

      The Plan consists of this Popular Master Plan Document, the Adoption
Agreement executed by the Plan Sponsor, the Popular Master Trust established by
Banco Popular de Puerto Rico and/or the Trust established by the Plan Sponsor,
as each may be amended from time to time. The Popular Master Plan Sponsor is
Banco Popular de Puerto Rico.

                               POPULAR MASTER PLAN
                   Master Defined Contribution Retirement Plan
                Copyright(C) 2001 by Banco Popular de Puerto Rico

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                   Page
                                                                                                                   ----
<S>                                                                                                                <C>
ARTICLE 1 CONSTRUCTIONS, INTENT AND APPLICABLE LAW.............................................................      2
       1.1    Construction.......................................................................................    2
       1.2    Intent.............................................................................................    2
       1.3    Governing Law......................................................................................    3
ARTICLE 2 DEFINITIONS............................................................................................    3
       2.1    "Actual Deferral Percentage".......................................................................    3
       2.2    "Adoption Agreement"...............................................................................    3
       2.3    "Affiliate"........................................................................................    3
       2.4    "After-Tax Contributions"..........................................................................    3
       2.5    "After-Tax Contributions Account"  ................................................................    3
       2.6    "Annuity Starting Date"............................................................................    4
       2.7    "Average Actual Deferral Percentage" ..............................................................    4
       2.8    "Beneficiary"......................................................................................    4
       2.9    "Compensation".....................................................................................    4
       2.10   "Disability".......................................................................................    4
       2.11   "Early Retirement Age"  ...........................................................................    4
       2.12   "Early Retirement Date.............................................................................    4
       2.13   "Earned Income"....................................................................................    5
       2.14   "Effective Date"...................................................................................    5
       2.15   "1165(e) Plan"   ..................................................................................    5
       2.16   "Eligible Spouse"..................................................................................    5
       2.17   "Employee".........................................................................................    5
       2.18   "Employer".........................................................................................    5
       2.19   "Employer Contributions"...........................................................................    5
       2.20   "Employer Contributions Account"...................................................................    5
       2.21   "Employer Securities"..............................................................................    5
       2.22   "Entry Date".......................................................................................    5
       2.23   "ERISA"............................................................................................    5
       2.24   "Excess Contributions".............................................................................    6
       2.25   "Excess Deferrals".................................................................................    6
       2.26   "Highly Compensated Employee" .....................................................................    6
       2.27   "IRC"..............................................................................................    6
       2.28   "Matching Contributions"...........................................................................    6
       2.29   "Matching Contributions Account"...................................................................    6
       2.30   "Money Purchase Contributions"  ...................................................................    6
       2.31   "Non-Highly Compensated Employee"..................................................................    6
       2.32   "Normal Retirement Age"............................................................................    6
       2.33   "Normal Retirement Date"...........................................................................    7
</TABLE>

                                       i
<PAGE>

<TABLE>
<S>                                                                                                                <C>
       2.34   "Owner-Employee"...................................................................................    7
       2.35   "Participant"......................................................................................    7
       2.36   "Plan".............................................................................................    7
       2.37   "Plan Administrator"...............................................................................    7
       2.38   "Plan Sponsor".....................................................................................    7
       2.39   "Plan Year"........................................................................................    7
       2.40   "Popular Master Plan"..............................................................................    7
       2.41   "Popular Master Plan Sponsor"......................................................................    7
       2.42   "Pre-Tax Contributions"............................................................................    7
       2.43   "Pre-Tax Contributions Account"....................................................................    7
       2.44   "Profit-Sharing Contributions".....................................................................    8
       2.45   "Qualified Employer Deferral Contributions"........................................................    8
       2.46   "Qualified Matching Contributions".................................................................    8
       2.47   "Qualified Matching Contributions Account".........................................................    8
       2.48   "Qualified Non-Elective Contributions".............................................................    8
       2.49   "Qualified Non-Elective Contributions Account".....................................................    8
       2.50   "Rollover Contributions"...........................................................................    9
       2.51   "Rollover Contributions Account....................................................................    9
       2.52   "Self-Employed Individual".........................................................................    9
       2.53   "Spousal Consent"..................................................................................    9
       2.54   "Trust"............................................................................................    9
       2.55   "Trustee"..........................................................................................   10
       2.56   "Valuation Date"...................................................................................   10
ARTICLE 3 PARTICIPATION..........................................................................................   10
       3.1    Initial Participation..............................................................................   10
       3.2    Termination of Participation.......................................................................   11
       3.3    Resumes Participation..............................................................................   11
       3.4    Rules Relating to Service..........................................................................   11
       3.5    Transfer of Employment.............................................................................   17
       3.6    Benefits for Owner-Employees.......................................................................   18
ARTICLE 4 PRE-TAX CONTRIBUTIONS..................................................................................   19
       4.1    Eligibility........................................................................................   19
       4.2    Pre-Tax Contribution Election......................................................................   19
       4.3    Collection of Pre-Tax Contributions................................................................   20
       4.4    Limitations on Pre-Tax Contributions...............................................................   20
       4.5    Actual Deferral Percentage Test....................................................................   21
       4.6    Qualified Non-Elective Contributions...............................................................   22
       4.7    Qualified Matching Contributions...................................................................   23
       4.8    Monitoring Participant's Actual Deferral Percentages ..............................................   23
       4.9    Excess Deferrals...................................................................................   25
       4.10   Limits on Discontinuance of Contributions..........................................................   25
</TABLE>

                                       ii
<PAGE>

<TABLE>
<S>                                                                                                                <C>
ARTICLE 5 AFTER TAX CONTRIBUTIONS................................................................................   25
       5.1    Eligibility........................................................................................   25
       5.2    Limits on Amount...................................................................................   26
       5.3    After-Tax Contribution Election....................................................................   26
       5.4    Collection of After-Tax Contributions..............................................................   26
ARTICLE 6 EMPLOYER AND MATCHING CONTRIBUTIONS....................................................................   27
       6.1    Eligibility........................................................................................   27
       6.2    Employer Contributions.............................................................................   27
       6.3    Allocation of Employer Contributions...............................................................   29
       6.4    Matching Contributions.............................................................................   29
ARTICLE 7 ROLLOVERS..............................................................................................   30
       7.1    Rollover Contributions ............................................................................   30
ARTICLE 8 VESTING................................................................................................   31
       8.1    Vesting ...........................................................................................   31
       8.2    Full Vesting.......................................................................................   31
       8.3    Payment of Vested Interest.........................................................................   32
       8.4    Forfeiture of Non-Vested Interest..................................................................   32
       8.5    Resumption of Employment...........................................................................   32
       8.6    Calculating Vested Interest After Withdrawal or Distribution.......................................   33
ARTICLE 9 IN-SERVICE WITHDRAWALS.................................................................................   34
       9.1    Withdrawal of Pre-Tax Contributions................................................................   34
       9.2    Withdrawal of After-Tax Contributions..............................................................   36
       9.3    Withdrawal of Matching Contributions...............................................................   37
       9.4    Withdrawals of Profit-Sharing Contributions........................................................   37
       9.5    Withdrawals of Rollover Contributions..............................................................   38
ARTICLE 10 DISTRIBUTION OF BENEFITS..............................................................................   38
       10.1   Methods of Distribution............................................................................   38
       10.2   Time of Distribution to Participant................................................................   43
       10.3   Time of Distribution to Beneficiary................................................................   45
       10.4   Small Account Balances.............................................................................   47
       10.5   Nonliability.......................................................................................   47
       10.6   Missing Persons....................................................................................   48
       10.7   Beneficiaries......................................................................................   48
ARTICLE 11 LOANS.................................................................................................   49
       11.1   In General . ......................................................................................   49
</TABLE>

                                      iii
<PAGE>

<TABLE>
<S>                                                                                                                <C>
ARTICLE 12 INVESTMENTS...........................................................................................   52
       12.1   In General.........................................................................................   52
       12.2   Participant Investment Directions..................................................................   52
       12.3   Rules for Exercise of Investment Options...........................................................   53
       12.4   Investment in Employer Stock.......................................................................   53
ARTICLE 13 ACCOUNTS..............................................................................................   54
       13.1   Separate Accounts..................................................................................   54
       13.2   Valuation and Allocation of Earnings and Losses to Participants Accounts...........................   54
       13.3   Allocation of Expenses.............................................................................   55
ARTICLE 14 PLAN ADMINISTRATION...................................................................................   55
       14.1   Plan Administrator.................................................................................   55
       14.2   Plan Administration................................................................................   56
       14.3   Compensation and Expenses..........................................................................   56
       14.4   Claims Procedures..................................................................................   57
       14.5   Agent for Legal Process............................................................................   58
ARTICLE 15 AMENDMENT, TERMINATION OR MERGER OF POPULAR MASTER PLAN AND PLAN .....................................   58
       15.1   Amendment by Popular Master Plan Sponsor...........................................................   58
       15.2   Amendment by the Plan Sponsor......................................................................   59
       15.3   Restrictions on Amendments.........................................................................   59
       15.4   Nonreversion.......................................................................................   60
       15.5   Termination of the Plan............................................................................   60
       15.6   Disposition and Termination of the Plan............................................................   61
       15.7   Merger of Employer and Plan........................................................................   61
ARTICLE 16 TRANSFERS FROM OR TO OTHER QUALIFIED PLANS............................................................   61
       16.1   Transfers from Another Plan of the Employer........................................................   61
       16.2   Transfers to Other Plans...........................................................................   62
ARTICLE 17 QUALIFIED DOMESTIC RELATIONS ORDER....................................................................   62
       17.1   General............................................................................................   62
       17.2   Definitions........................................................................................   63
       17.3   Payments after the Earliest Retirement Age.........................................................   63
       17.4   Treatment of Former Spouse as Surviving Spouse.....................................................   64
       17.5   Procedures.........................................................................................   64
       17.6   Procedures During Period of Determination..........................................................   64
</TABLE>

                                       iv
<PAGE>

<TABLE>
<S>                                                                                                                <C>
ARTICLE 18 MISCELLANEOUS.........................................................................................   65
       18.1   Non-Alienation and Non-Assignment of Benefits......................................................   65
       18.2   Limitation on Rights Created by Plan...............................................................   65
       18.3   Allocation of Responsibilities ....................................................................   66
       18.4   Current Address of Payee...........................................................................   66
       18.5   Application of Plan's Terms........................................................................   66
       18.6   Employers with Employees within and without Puerto Rico or that are
              members of an affiliated group of corporations or partnerships.....................................   66
       18.7   USERRA.............................................................................................   67
</TABLE>

                                        v
<PAGE>

ARTICLE 1 CONSTRUCTIONS, INTENT AND APPLICABLE LAW

      1.1 Construction

      Whenever used in the Popular Master Plan document, unless the context
clearly indicates otherwise, the masculine pronoun shall include the feminine,
the singular shall include the plural and the plural the singular. The
conjunction "or" shall include both the conjunctive and disjunctive, and the
adjective "any" shall mean one or more or all. Unless the context indicates
otherwise, the words "herein", "hereof, "hereunder" and words of similar import
refer to the Popular Master Plan as a whole and not only to the section in which
they appear. Article, section and paragraph headings have been inserted for
convenience of reference only and are to be ignored in any construction of the
provisions hereof. If any provision of the Popular Master Plan shall for any
reason be invalid or unenforceable, the remaining provisions shall nevertheless
be valid, enforceable and fully effective.

      1.2 INTENT

      It is the intent that the Popular Master Plan shall at all times be a
qualified plan and the Trust shall at all times be exempt from taxation under
Section 1165(a) of the IRC and Section 501(a) of the United States Internal
Revenue Code of 1986, as amended (as provided in Section 1022(i)(l) of ERISA).
It is also intended that the cash or deferred arrangement contained in the
Popular Master Plan meet the requirements of Section 1165(e) of the IRC.

      The Popular Master Plan is a master plan which has received a favorable
determination letter from the Puerto Rico Treasury Department (the "Department")
under Section 1165 of the IRC and the regulations issued thereunder.
Notwithstanding, each Plan Sponsor must obtain a separate favorable
determination letter from the Department with regards to its Plan. Banco Popular
de Puerto Rico will assist the Plan Sponsor with its request for a favorable
determination letter and will, on behalf of the Plan Sponsor, file it with the
Department. The Master Plan Sponsor shall be responsible for continuing the
tax-qualified status of the Popular Master Plan pursuant to the IRC, compliance
with ERISA, in particular with Title I thereof, and any applicable laws. The
Plan Sponsor shall warrant and represent the it's Plan shall be operated in
compliance with the IRC, ERISA and any other applicable laws. The Plan Sponsor
is solely responsible for maintaining the tax qualified status of the Plan in
operation. It shall be the duty of the Master Plan Sponsor to maintain the
Popular Master Plan and the Plan, tax qualified in form.

                                       2
<PAGE>

      1.3 GOVERNING LAW

      The Popular Master Plan and all rights hereunder shall be governed by and
construed in accordance with the laws of the Commonwealth of Puerto Rico to the
extent such laws have not been preempted by applicable federal law.

ARTICLE 2 DEFINITIONS

      Whenever used in the Popular Master Plan, unless the context clearly
indicates otherwise, the following terms shall have the following meanings:

      2.1 "ACTUAL DEFERRAL PERCENTAGE" shall mean, the ratio (expressed as a
percentage to the nearest one-hundredths of one percent) of (1) the sum of
Pre-Tax Contributions and Qualified Employer Deferral Contributions actually
paid over to the Trust on behalf of each Participant for the Plan Year to (2)
the Participant's Compensation for such Plan Year (whether or not the Employee
was a Participant for the entire Plan Year). For purposes of computing actual
deferral percentages, an Employee who would be a Participant but for the
failure to make Pre-Tax Contributions shall be treated as a Participant on whose
behalf zero (0) Pre-Tax Contributions are made.

      2.2 "ADOPTION AGREEMENT" shall mean the Banco Popular de Puerto Rico
Master Defined Contribution Retirement Plan Adoption Agreement executed by the
Plan Sponsor to establish or amend the Plan Sponsor's Plan and to specify
optional provisions as part of the Plan Sponsor's Plan.

      2.3 "AFFILIATE" shall mean

      A. any corporation which is a member of the same controlled group of
corporations (within the meaning of ERISA Section 210(c)) as is the Plan
Sponsor, and

      B. any other trade or business (whether or not incorporated) under common
control (within the meaning of ERISA Section 210(d)) with the Plan Sponsor.

      2.4 "AFTER-TAX CONTRIBUTIONS" shall mean voluntary contributions made by a
Participant to the Plan during the Plan Year as described in Article 5.

      2.5 "AFTER-TAX CONTRIBUTIONS ACCOUNT", with respect to a Participant,
shall mean the account established under the Plan for such Participant
representing the After-Tax Contributions plus any gains or losses allocated to
such account in accordance with the provisions of the Plan, as

                                       3
<PAGE>

adjusted to reflect distributions therefrom. Such account will be fully vested
and nonforfeitable at all times.

      2.6 "ANNUITY STARTING DATE" shall mean the first day of the first period
for which an amount is payable as an annuity or, in the case of a benefit not
payable in the form of an annuity, the first day in which all events have
occurred which entitle the Participant to such benefit.

      2.7 "AVERAGE ACTUAL DEFERRAL PERCENTAGE" shall mean the average (expressed
as a percentage to the nearest one-hundredth of one percent) of the Actual
Deferral Percentage of Participants in a group.

      2.8 "BENEFICIARY" shall mean the person or persons (natural or otherwise)
designated by a Participant or Beneficiary, or by the Plan, to receive any
benefit payable upon the death of the Participant or Beneficiary.

      2.9 "COMPENSATION", unless elected otherwise in the Adoption Agreement,
shall mean with respect to any Participant total compensation paid by the
Employer during the Plan Year that is currently includible in income for income
tax purposes. Amounts contributed by the Employer under the Plan, except for
Pre-Tax Contributions, and any nontaxable fringe benefits shall not be
considered as Compensation. For a Self-Employed Individual, Compensation will
mean his Earned Income.

      2.10 "DISABILITY" shall mean a physical or mental condition which in the
judgment of the Plan Administrator, based upon medical reports and other
evidence satisfactory to the Plan Administrator, presumably permanently prevents
an Employee from satisfactorily performing usual duties for the Employer or the
duties of such other position or job which the Employer makes available and for
which such Employee is qualified by reason of training, education, or
experience. Qualification by an Employee for permanent Disability benefits under
the social security system shall be deemed adequate evidence of Disability for
purposes of this Plan.

      2.11 "EARLY RETIREMENT AGE" shall mean the early retirement date selected
in the Adoption Agreement.

      2.12 "EARLY RETIREMENT DATE" shall mean the first day of any month
coinciding with or following a Participant's attainment of Early Retirement Age.

                                       4
<PAGE>

      2.13 "EARNED INCOME" shall mean, with respect to a Self-Employed
Individual, the net earnings from self employment in the trade or business with
respect to which the Plan is established, for which the personal services of the
individual are a material income producing factor. Net earnings will be
determined without regard to items excluded from gross income and the deductions
allocable to such items. Net earnings are reduced by contributions by the
Employer to a qualified plan to the extent deductible under IRC Section 1023(n).

      2.14 "EFFECTIVE DATE" shall mean the date elected in the Adoption
Agreement.

      2.15 "1165(e) PLAN" shall mean a profit sharing plan containing a cash or
deferred arrangement qualified under Section 1165(e) of the IRC.

      2.16 "ELIGIBLE SPOUSE" shall mean that spouse to whom a Participant is
married on either the Annuity Starting Date or the date of this death, whichever
occurs earlier.

      2.17 "EMPLOYEE" SHALL mean any person employed by the Employer, but
excludes any person who is employed as an independent contractor. Employee
includes a Self-Employed Individual and an Owner-Employee.

      2.18 "EMPLOYER" shall mean the Plan Sponsor and any other Employers named
in the Adoption Agreement.

      2.19 "EMPLOYER CONTRIBUTIONS" shall mean Profit-Sharing Contributions or
Money Purchase Contributions made by the Employer to the Plan pursuant to the
provisions of Article 6.

      2.20 "EMPLOYER CONTRIBUTIONS ACCOUNT", with respect to a Participant,
shall mean the account established under the Plan for such Participant
representing the Employer Contributions (and any forfeitures) plus any gains or
losses allocated to such account in accordance with the provisions of the Plan,
as adjusted to reflect distributions therefrom.

      2.21 "EMPLOYER SECURITIES" shall mean stock issued by the Employer or an
Affiliate and which is publicly traded on a nationally recognized stock
exchange.

      2.22 "ENTRY DATE" shall mean the date(s) elected in the Adoption Agreement
on which Participants may commence participation in the Plan.

      2.23 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.

                                       5
<PAGE>

      2.24 "EXCESS CONTRIBUTIONS" shall mean, with respect to any Plan Year, the
excess of:

      A. The aggregate amount of Pre-Tax Contributions and Qualified Employer
Deferral Contributions actually taken into account in computing the Actual
Deferral Percentage of Highly Compensated Employees for such Plan Year, over

      B. The maximum amount of such contributions permitted by the actual
deferral percentage test.

      2.25 "EXCESS DEFERRALS" shall mean those Pre-Tax Contributions that are
includible in a Participant's gross income under IRC Section 1165(e)(7) to the
extent such Participant's Pre-Tax Contributions for a taxable year exceed the
lesser of 10% of the Participant's Compensation or $8,000 (or any other dollar
limitation in effect in the future).

      2.26 "HIGHLY COMPENSATED EMPLOYEE" shall mean, with respect to a Plan
Year, any Employee who, determined on the basis of Compensation for such Plan
Year, has Compensation greater than two-thirds (2/3) of all other Participants.

      2.27 "IRC" shall mean the Puerto Rico Internal Revenue Code of 1994, as
amended.

      2.28 "MATCHING CONTRIBUTIONS" shall mean contributions made by the
Employer to the Plan on behalf of a Participant on account of a Participant's
After-Tax or Pre-Tax Contributions.

      2.29 "MATCHING CONTRIBUTIONS ACCOUNT", with respect to a Participant,
shall mean the account established under the Plan for such Participant
representing the Matching Contributions plus any gains or loss allocated to such
account in accordance with the provisions of the Plan, as adjusted to reflect
distributions therefrom.

      2.30 "MONEY PURCHASE CONTRIBUTIONS" shall mean contributions made by the
Employer pursuant to a Money Purchase Pension Plan using the formula established
in the Adoption Agreement.

      2.31 "NON-HIGHLY COMPENSATED EMPLOYEE" shall mean those Participants that
are not Highly Compensated Employees.

      2.32 "NORMAL RETIREMENT AGE" shall mean the later of:

      A. Age sixty-five (65); or

      B. The Participant's age on the fifth anniversary of the first day of the
Plan Year in which he/she commenced participation in the Plan.

                                       6
<PAGE>

      2.33 "NORMAL RETIREMENT DATE" shall mean the first day of the month
following the end of the Plan Year in which a Participant has attained Normal
Retirement Age.

      2.34 "OWNER-EMPLOYEE" shall mean an individual who is a sole proprietor,
or who is a partner or shareholder owning more than 10 percent of either the
capital or profits interest of a special partnership or corporation of
individuals.

      2.35 "PARTICIPANT" shall mean any Employee who has become eligible to
participate in the Plan and has not for any reason become ineligible to
participate in the Plan.

      2.36 "PLAN" shall mean the Plan Sponsor's Plan as set forth in this
Popular Master Plan Document and the Adoption Agreement executed by the Plan
Sponsor, including all amendments to either document.

      2.37 "PLAN ADMINISTRATOR" shall mean the person or persons designated by
the Plan Sponsor through duly approved resolutions of its Board of Directors, to
control and manage the operation and administration of the Plan as provided in
Article 14.

      2.38 "PLAN SPONSOR" shall mean the Employer establishing a Plan pursuant
to the execution of an Adoption Agreement under this Popular Master Plan.

      2.39 "PLAN YEAR" shall mean the calendar year unless another Plan Year is
specified in the Adoption Agreement.

      2.40 "POPULAR MASTER PLAN" shall mean the Master Defined Contribution
Retirement Plan sponsored by Banco Popular de Puerto Rico, as set forth in this
document.

      2.41 "POPULAR MASTER PLAN SPONSOR" shall mean Banco Popular de Puerto
Rico, or any successor thereof.

      2.42 "PRE-TAX CONTRIBUTIONS" shall mean any Employer contributions made to
the Plan at the election of the Participant, in lieu of cash compensation,
pursuant to a salary reduction agreement or other deferral mechanism.

      2.43 "PRE-TAX CONTRIBUTIONS ACCOUNT", with respect to a Participant, shall
mean the account established under the Plan for such Participant representing
the Pre-Tax Contributions plus any gains or losses allocated to such account in
accordance with the provisions of the Plan, as adjusted to reflect distributions
therefrom. Such account will be fully vested and nonforfeitable at all times.

                                       7
<PAGE>

      2.44 "PROFIT-SHARING CONTRIBUTIONS" shall mean contributions made by the
Employer pursuant to a Profit-Sharing Plan.

      2.45 "QUALIFIED EMPLOYER DEFERRAL CONTRIBUTIONS" shall mean Qualified
Non-Elective Contributions and Qualified Matching Contributions which are taken
into account under this Plan, and any other qualified plans that are maintained
by the Employer which are aggregated with this Plan under section 4.5B. and C.,
in determining a Participant's Actual Deferral Percentage.

      2.46 "QUALIFIED MATCHING CONTRIBUTIONS" shall mean Matching Contributions
which are taken into account under the Plan in determining a Participant's
Actual Deferral Percentage. In order for Matching Contributions to be considered
as Qualified Matching Contributions, the Matching Contributions must be one
hundred percent (100%) vested and nonforfeitable when made and must not be
distributable under the Plan to Participants or their Beneficiaries earlier than
provided in section 4.4C.

      2.47 "QUALIFIED MATCHING CONTRIBUTIONS ACCOUNT", with respect to a
Participant, shall mean the account established under the Plan for such
Participant representing the Qualified Matching Contributions plus any gains or
losses allocated to such account in accordance with the provisions of the Plan,
as adjusted to reflect distributions therefrom. Such account will be fully
vested and nonforfeitable at all times.

      2.48 "QUALIFIED NON-ELECTIVE CONTRIBUTIONS" shall mean contributions made
by the Employer to this Plan (other than Pre-Tax Contributions and Matching
Contributions) which are taken into account in determining a Participant's
Actual Deferral Percentage and which the Participant may not elect to receive in
cash until distributed from the Plan. In order for such contributions to be
considered as Qualified Non-Elective Contributions, they must be one hundred
percent (100%) vested and nonforfeitable when made and must not be distributable
under the terms of the Plan to Participants or their Beneficiaries earlier than
provided in section 4.4C.

      2.49 "QUALIFIED NON-ELECTIVE CONTRIBUTIONS ACCOUNT", with respect to a
Participant, shall mean the account established under the Plan for such
Participant representing the Qualified Non-Elective Contributions plus any gains
or losses allocated to such account in accordance with the provisions of the
Plan, as adjusted to reflect distributions therefrom. Such account will be fully
vested and nonforfeitable at all times.

                                       8
<PAGE>

      2.50 "ROLLOVER CONTRIBUTIONS" shall mean contributions to the Plan as
described in Article 7.

      2.51 "ROLLOVER CONTRIBUTIONS ACCOUNT", with respect to a Participant,
shall mean the account established under the Plan for such Participant
representing the Rollover Contributions plus any gains or losses allocated
thereto, in accordance with the provisions of the Plan, as adjusted to reflect
distributions therefrom. Such account will be fully vested and nonforfeitable at
all times.

      2.52 "SELF-EMPLOYED INDIVIDUAL" shall mean an individual who has Earned
Income for the taxable year from the trade or business for which the Plan is
established, or an individual who would have had Earned Income but for the fact
that the trade or business had no net profits for the taxable year.

      2.53 "SPOUSAL CONSENT" shall mean the Eligible Spouse's written consent
which acknowledges the effect of the Participant's election and is witnessed by
the Plan Administrator (or any Plan representative appointed by the Plan
Administrator for such purposes) or a notary public. The written consent shall
specify the nonspouse Beneficiary, if any (and, in the case of a Participant's
election to waive a qualified joint and survivor annuity, the alternate form of
distribution elected). A Spousal Consent shall be irrevocable unless the
Participant changes his Beneficiary designation or revokes his election to waive
the qualified joint and survivor annuity or the qualified pre-retirement
survivor annuity, as applicable; upon such event, a consent shall be deemed to
be revoked. Notwithstanding the foregoing, Spousal Consent is not required if
the Participant establishes to the satisfaction of a Plan Administrator that
such written consent may not be obtained because there is no Eligible Spouse or
that the Eligible Spouse cannot be located. In addition, no Spousal Consent is
necessary if the Participant has been legally separated or abandoned within the
meaning of local law and the Participant provides the Plan Administrator with a
court order to that effect, so long as such court order does not conflict with a
qualified domestic relations order as defined in Article 17. If the Eligible
Spouse is legally incompetent to consent, the Eligible Spouse's legal guardian
may consent on his/her behalf, even if the legal guardian is the Participant.

      2.54 "TRUST" shall mean the Popular Master Trust established by Banco
Popular de Puerto Rico in relation to the Popular Master Plan and adopted by the
Plan Sponsor as part of its Plan and/or the separate trust established by the
Plan Sponsor for purposes of the Plan, as specified in the

                                       9
<PAGE>

Adoption Agreement, in both cases for the safekeeping and investment of Plan
assets and the payment of the benefits provided by the Plan.

      2.55 "TRUSTEE" shall mean Banco Popular de Puerto Rico or such other
person appointed in the Adoption Agreement.

      2.56 "VALUATION DATE" shall mean the last business day of the Plan Year or
such other date or dates specified in the Adoption Agreement.

ARTICLE 3 PARTICIPATION

      3.1 INITIAL PARTICIPATION

      An Employee shall become a Participant in the Plan in accordance with the
following requirements:

      A. Each Employee who, on the Effective Date of the Plan, has complied with
the minimum age and service requirements specified in the Adoption Agreement
will become a Participant as of such date.

      B. Each Employee (other than one who is a Participant under subsection a.
above) will become a Participant on the Entry Date immediately following the
date in which he complies with the minimum age and service requirements
specified in the Adoption Agreement.

      C. Employees who are included in a unit of Employees covered by a
collective bargaining agreement between the Employer and Employee
representatives, where retirement benefits were the subject of good faith
bargaining with the Employer and the agreement does not call for his inclusion
in the Plan and Employees who are nonresidents of Puerto Rico are not allowed to
participate in the Plan.

      D. Unless specified otherwise in the Adoption Agreement, the Entry Dates
will be the first day of the first and seventh months of the Plan Year (January
1 and July 1 for calendar year Plans). If the Adoption Agreement provides for
additional or other Entry Dates, the Entry Dates will be as so specified;
provided that the first day of the Plan Year will always be an Entry Date.

      E. If the Plan permits Pre-Tax Contributions or After-Tax Contributions,
each Employee who has become a Participant under the preceding subsections of
this section may make Pre-Tax Contributions and/or After-Tax Contributions
subject to the applicable provisions of the Plan and the Adoption Agreement, and
such an Employee will be considered a Participant even if he elects

                                       10
<PAGE>

not to make Pre-Tax Contributions or After-Tax Contributions. However, an
Employee may not make Pre-Tax Contributions and/or After-Tax Contributions
before the date the Employer signs the Adoption Agreement.

      3.2 TERMINATION OF PARTICIPATION

      An Employee will cease to be a Participant when he is no longer eligible
to participate in the Plan due either to a change in his employment status or to
the termination of his service as an Employee because of Disability, death,
retirement or any other reason.

      3.3 RESUMES PARTICIPATION

      If a former Participant returns to service with the Employer, he will
resume participation in the Plan immediately upon his return.

      3.4 RULES RELATING TO SERVICE

      The rules and definitions regarding the computation of years of service
for purposes of determining eligibility to participate in the Plan and vesting
will be as follows:

      A. HOURS OF SERVICE METHOD. The definitions and rules in this subsection
will apply to Plan Sponsors who in the Adoption Agreement elected to have
Employees' service determined under the hours of service method.

            1. EMPLOYMENT COMMENCEMENT DATE means the date on which an Employee
first performs an hour of service; or, in the case of an Employee who has
incurred one or more breaks in service, as defined below, such Employee's
employment commencement date shall mean the date on which such Employee first
performs an hour of service following such breaks in service.

            2. ELIGIBILITY COMPUTATION PERIOD, with respect to an Employee,
means the period of twelve (12) consecutive months commencing on an Employee's
most recent employment commencement date, or any anniversary thereof, in which
he is credited with at least 1000 hours of service.

            3. YEAR OF SERVICE, with respect to an Employee, means an
eligibility computation period during which an Employee completes at least 1,000
hours of service regardless of whether such Employee is in service continuously
during all of such eligibility computation period. An Employee who completes one
thousand (1,000) hours of service during an eligibility computation period shall
not be deemed to have completed a year of service until the last day of such

                                       11
<PAGE>

eligibility computation period regardless of when such Employee completes such
one thousand (1,000) hours of service.

            4. HOURS OF SERVICE:

                  a. each hour for which an Employee is paid, or entitled to
payment, by the Employer for the performance of duties for the Employer during
any eligibility computation period. These hours will be credited to the Employee
for the eligibility computation period in which the duties are performed;

                  b. each hour for which an Employee is paid, or entitled to
payment, by the Employer on account of a period of time during which no duties
are performed (irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity (including
Disability), layoff, jury duty, military duty or leave of absence.
Notwithstanding the preceding sentence, no more than 501 hours of service shall
be credited under this subsection b. to an Employee on account of any single
continuous period during which the Employee performs no duties (whether or not
such period occurs within a single eligibility computation period). Hours under
this subsection b. will be calculated and credited under United States
Department of Labor Regulations, 29 C.F.R. Section 2530.200b-2(b) and (c), which
are incorporated herein by this reference;

                  c. each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer. The same hours of
service shall not be credited both under subsections a. or b., as the case may
be, and under this subsection c.; and no more than 501 hours of service shall be
credited under this subsection c. with respect to payments of back-pay, to the
extent that such pay is agreed to or awarded for a period of time described in
subsection b. during which the Employee did not perform or would not have
performed any duties. These hours will be credited to the Employee for the
eligibility computation period(s) to which the award or agreement pertains
rather than the computation period in which the award, agreement or payment is
made;

                  d. in addition to hours credited to an Employee under
subsections a. through c. above, an Employee will be credited with the number of
hours (not exceeding 40 for a full week or pro rata portion of 40 for a partial
week) he normally would have worked except for the fact that he was absent on
one of the following types of unpaid absence: (i) leave of absence for a period
authorized by the Employer under a leave policy applied uniformly to all
Employees, provided he

                                       12
<PAGE>

returns to service with the Employer at or before the expiration of such period;
or (ii) leave of absence for service in the armed forces of the United States,
provided he returns to service with the Employer within the period during which
his reemployment rights are protected by law; and

                  e. solely for purposes of determining whether a break in
service, as defined in subsection 5, has occurred in an eligibility computation
period, an Employee who is absent from work for maternity or paternity reasons
will receive credit for the hours of service which would otherwise have been
credited to such Employee but for such absence, (or in any case in which such
hours cannot be determined, eight hours of service per day of such absence). For
purposes of this subsection e., an absence from work for maternity or paternity
reasons means an absence (i) by reason of the pregnancy of the Employee, (ii) by
reason of a birth of a child of the Employee, (iii) by reason of the placement
of a child with the Employee in connection with the Employee's adoption of such
child, or (iv) for purposes of caring for such child for a period beginning
immediately following such birth or placement. No more than 501 hours of service
shall be credited under this subsection e. The hours of service credited under
this subsection e. will be credited (i) in the eligibility computation period in
which the absence begins if the crediting is necessary to prevent a break in
service in that period, or (ii) in all other cases, in the following eligibility
computation period if necessary to prevent a break in service in that
eligibility computation period.

            5. BREAK IN SERVICE, with respect to an Employee, means a
computation period during which such Employee does not complete more than five
hundred (500) hours of service. Transfer of employment from an Employer to
another shall not in and of itself cause a break in service.

            6. VESTING COMPUTATION PERIOD, for purposes of computing an
Employee' nonforfeitable right to his Employer Contributions Account and/or
Matching Contributions Account, an Employee's vesting computation period(s) will
be the period of twelve (12) consecutive months commencing on an Employee's most
recent employment commencement date, or any anniversary thereof, in which he is
credited with at least 1000 hours of service.

            7. COUNTING YEARS OF SERVICE FOR PARTICIPATION, all of an Employee's
years of service with the Employer are counted toward meeting the Plan's
participation eligibility requirement (if any), except that, if the Plan
provides for 100% vesting after two years or less of service, service

                                       13
<PAGE>

before a break in service which occurs before the Employee satisfies the Plan's
requirement for eligibility will be disregarded. However, the preceding sentence
will not apply if the Employer's Plan is a 1165(e) Plan.

                  If the service requirement to become a Participant as
specified in the Adoption Agreement includes a fractional year, an Employee will
not be required to complete any minimum number of hours of service to receive
credit for such fractional year.

            8. COUNTING YEARS OF SERVICE FOR VESTING. For purposes of
determining a Participant's vested percentage, all of his years of service will
be counted, except that, if the Plan specifically so provided, the following
years of service will not be counted:

                  a. years of service completed before age 18;

                  b. years of service before the Employer maintained the Plan or
a predecessor plan.

                  A plan is a predecessor plan if it was terminated on or after
the date it was required to comply with ERISA and within five years before or
after the Effective Date of the Plan. A plan is not treated as a predecessor
plan with respect to an Employee unless he was a participant in such plan.

            9. SERVICE WITH OTHER ORGANIZATIONS.

                  a. To determine whether an Employee is a Participant and to
determine his vested percentage, an Employee will receive credit for Hours of
Service under section 3.4A.4 for employment with the Employer and any Affiliate.
Service credited under this paragraph shall be limited to the period that the
other entities were related to the Employer in the manner described in section
2.3 of the Popular Master Plan document, unless the Plan Sponsor has elected in
the Adoption Agreement to recognize service with any such entity for any period
prior to the time such relationship commenced.

                  b. If the Employer maintains a plan of a predecessor employer,
service with the predecessor employer will be treated as service with the
Employer.

                  c. If not treated as service with the Employer under section
3.4A.9.b above, service with any entity specifically so designated in the
Adoption Agreement will be treated as service with the Employer.

                                       14
<PAGE>

      B. ELAPSED TIME METHOD. The definitions and rules in this subsection will
apply to Plan Sponsors who in the Adoption Agreement elected to have Employees'
service determined under the elapsed time method.

            1. SERVICE

                  a. IN GENERAL. Service of an Employee includes all of the
following:

                        i. any period of service, as defined below, whether or
not continuous; and

                        ii. for a reemployed Employee, any period of severance
provided that his reemployment commencement date occurs within one year after
his severance date.

                  b. YEAR OF SERVICE. To determine an Employee's years of
service, all of his service will be aggregated and each 365 days of such
aggregated service will constitute a year of service. If any provision of the
Plan calls for completion of a fractional year of service, such fraction of 365
days of the Employee's aggregated service will satisfy the provision; for
example, if one-half year of service is required, then such requirement will be
met when the Employee's aggregated service equals 183 days.

            2. DEFINITIONS RELATING TO SERVICE

                  a. PERIOD OF SERVICE shall mean an Employee's service,
beginning on his employment commencement date or reemployment commencement date
and ending on his severance date.

                  b. EMPLOYMENT COMMENCEMENT DATE. An Employee's employment
commencement date is the date on which he first completes an hour of service, as
defined below.

                  c. REEMPLOYMENT COMMENCEMENT DATE. In the case of an Employee
who has a period of severance which is not taken into account under subsection
l.a.ii., the reemployment date is the date on which he first completes an hour
of service after such period of severance.

                  d. PERIOD OF SEVERANCE. A period of severance of an Employee
means a period beginning on his severance date and, if applicable, ending on his
reemployment commencement date.

                                       15
<PAGE>

      In the case of an Employee who is absent from work for maternity or
paternity reasons, the 12-consecutive month period beginning on the date of such
absence will constitute a year of service; the first anniversary of the first
date of such absence will be treated as neither a period of service nor a period
of severance; any period after the 24-consecutive month period beginning on the
date of such absence will constitute a period of severance. For purposes of this
section, an absence from work for maternity or paternity reasons means an
absence (1) by reason of the pregnancy of the Employee, (2) by reason of the
birth of a child of the Employee, (3) by reason of the placement of a child with
the Employee in connection with the Employee's adoption of such child, or (4)
for purposes of caring for such child for a period beginning immediately
following such birth or placement.

      Each Employee will share in Employer Contributions and Matching
Contributions for the period beginning on the date the Employee commences
participation under the Plan and ending on the date on which such Employee
severs employment with the Employer or is no longer a Participant

                  e. SEVERANCE FROM SERVICE DATE. An Employee's severance from
service date is the earlier of:

                        i. the date on which he quits, retires, is discharged or
dies, or

                        ii. the first anniversary of the first day of a period
during which he is absent (with or without compensation) from performing duties
for the Employer for any reason other than quit, retirement, discharge or death,
such as vacation, holiday, sickness, leave of absence or layoff. Transfer of
employment from an Employer to another shall not be considered a Severance from
Service.

                  f. HOUR OF SERVICE. Hour of service is an hour for which the
Employee is paid or entitled to payment for the performance of duties for the
Employer.

            3. COUNTING YEARS OF SERVICE FOR PARTICIPATION. All of an Employee's
years of service with the Employer are counted toward meeting the Plan's
participation requirement (if any), except that, if the Plan provides for 100%
vesting after two years or less of service, service will be disregarded if it
was completed before a period of severance of one year or more which occurs
before the Employee satisfied the Plan's service requirement for eligibility.
However, the preceding sentence will not apply if the Employer's Plan is an
1165(e) Plan.

                                       16
<PAGE>

            4. COUNTING YEARS OF SERVICE FOR VESTING. For purposes of
determining a Participant's vested percentage, all of his years of service will
be counted except that, if the Plan so provides, the following years of service
will not be counted:

                  a. service completed before age 18;

                  b. service before the Employer maintained this Plan or a
predecessor Plan.

            A plan is a predecessor plan if it was terminated on or after the
date it was required to comply with ERISA and within five years before or after
the Effective Date of this Plan. A plan is not treated as a predecessor plan
with respect to an Employee unless he was a participant in such plan.

            5. SERVICE WITH OTHER ORGANIZATIONS.

                  a. To determine whether an Employee is a Participant and to
determine his vested percentage, an Employee will receive credit for Hours of
Service under section 3.4A.4 for employment with the Employer and any Affiliate.
Service credited under this paragraph shall be limited to the period that the
other entities were related to the Employer in the manner described in section
2.3 of the Popular Master Plan document, unless the Plan Sponsor has elected in
the Adoption Agreement to recognize service with any such entity for any period
prior to the time such relationship commenced.

                  b. If the Employer maintains a plan of a predecessor employer,
service with the predecessor employer will be treated as service with the
Employer.

                  c. If not treated as service with the Employer under section
3.4B.5.b above, service with any entity specifically so designated in the
Adoption Agreement will be treated as service with the Employer.

      3.5 TRANSFER OF EMPLOYMENT

      A Participant who ceases to be a member of a class of employees eligible
to participate in the Plan who becomes a member of another class of employees
eligible to participate in another plan of the Employer shall have, to the
extent not otherwise prohibited by the IRC or ERISA, his Employer Contributions
Account, After-Tax Contributions Account, Pre-Tax Contributions Account,
Qualified Matching Contributions Account, Qualified Non-Elective Contributions
Account and Rollover

                                       17
<PAGE>

Contributions Account transferred to the new plan in which he is eligible to
participate. Vesting shall continue in accordance with the terms of the new
plan.

      3.6 BENEFITS FOR OWNER-EMPLOYEES

      A. If the Plan provides contributions or benefits for one or more
Owner-Employees who together control the trade or business with respect to which
the Plan is established, and who also control as Owner-Employees, one or more
other trades or businesses, the Plan and plans established with respect to such
other trades or businesses must, when looked at as a single plan, satisfy
Sections 1165 (a) and (g) of the IRC with respect to the Employees of the trade
or business with respect for which the Plan is established and all such other
trades or businesses. If the Plan provides contributions or benefits for one or
more Owner-Employees who control one or more other trades or businesses, the
Employees of each other trades or businesses must be included in a plan which
satisfies the requirements of Sections 1165(a) and (g) of the IRC and which
provides contributions and benefits not less favorable than those provided for
such Owner-Employee under the Plan. If an individual is covered as an
Owner-Employee under two or more additional plans of trades or businesses not
controlled by him, and the individual controls one or more other trades or
businesses, the contributions or benefits of the Employees under the plan of the
trade or business controlled by him must be at least as favorable as those
provided for him under the plan of the trade of business not controlled by him.
For purposes of this subsection, an Owner-Employee, or two or more
Owner-Employees, shall be considered to control a trade or business if such
Owner-Employee, or such two or more Owner-Employees together:

            1. own the entire interest in an unincorporated trade or business,
or

            2. in the case of a special partnership or corporation of
individuals, own more than 50 percent of either the capital interest or the
profits interest in such partnership or corporation of individuals.

      For purposes of the preceding sentence, an Owner-Employee or two or more
Owner-Employees shall be treated as owning any interest in a special partnership
or corporation of individuals which is owned, directly or indirectly, by a
special partnership or corporation of individuals, which such Owner-Employee or
such two or more Owner-Employees are considered to control within the meaning of
the preceding sentence.

                                       18
<PAGE>

ARTICLE 4 PRE-TAX CONTRIBUTIONS

      4.1 ELIGIBILITY

      A. If the Employer's Plan is a profit-sharing plan an Employee who meets
the participation requirements of section 3.1 may elect to, if the Adoption
Agreement so provides,

            1. elect to make Pre-Tax Contributions under IRC Section 1165(e), or

            2. elect to not make Pre-Tax Contributions under IRC Section 1165(e)
and receive cash instead.

      4.2 PRE-TAX CONTRIBUTION ELECTION

      The Participant may file a written election with the Plan Administrator
indicating (i) the amount, of Pre-Tax Contributions he wishes to make and
agreeing to reduce his Compensation by such amount, or (ii) electing to not make
Pre-Tax Contributions and not have his Compensation reduced. Either election may
be filed in such manner as the Plan Administrator may provide. If the Plan
Sponsor so elects in the Adoption Agreement and unless the Employee elects
otherwise, each Employee shall be deemed to have made an election to make a
Pre-Tax Contribution equal to the percentage of the Employee's Compensation
selected by the Plan Sponsor in the Adoption Agreement. Subject to any rules
specified in the Adoption Agreement or established by the Plan Administrator, a
Participant may increase, decrease, discontinue or resume his Pre-Tax
Contributions during a Plan Year by filing an appropriate form with the Plan
Administrator or in such other manner as the Plan Administrator may provide. A
discontinuance of Pre-Tax Contributions will be effective as soon as reasonably
practicable after the Plan Administrator's receipt of the Participant's election
form. An increase or decrease of Pre-Tax Contributions, or a resumption after a
discontinuance, will be effective as of the Entry Date next following the
Participant's timely election.

      No change under the preceding paragraph may cause a Participant's Pre-Tax
Contributions to exceed the maximum provided for under section 4.4.

      The Plan Administrator, with the approval of the Popular Master Plan
Sponsor, may establish reasonable rules of uniform application governing
Participants' elections and changes. Such rules may include the number and
frequency of elections or changes during any Plan Year, effective dates for
elections or changes (for example, the first day of the payroll period
coinciding with or next

                                       19
<PAGE>

following the applicable election or change date), cutoff dates for timely
filing of elections or changes, and other rules to facilitate operation of this
article.

      Notwithstanding the preceding, a Participant will be permitted to change
his election at least once each year.

      4.3 COLLECTION OF PRE-TAX CONTRIBUTIONS

      The Employer will collect Participants' Pre-Tax Contributions using
payroll procedures. The Employer will transfer the amounts collected to the
Trustee as of the earliest date when such contributions can reasonably be
segregated from the Employer's general assets, but not later than fifteen (15)
business days after the end of the month in which such amounts would otherwise
have been payable to the Participant in cash.

      4.4 LIMITATIONS ON PRE-TAX CONTRIBUTIONS

      A. LIMITS ON PRE-TAX CONTRIBUTIONS. The minimum amount of Pre-Tax
Contributions the Participant may elect to make is one percent (1%) of his
Compensation. Pre-Tax Contributions may not exceed the lesser of: (1) ten
percent (10%) of the Participant's Compensation up to a maximum of $8,000 (or
any other dollar limitation under the IRC in the future) in any calendar year;
(2) the maximum amount permitted under section 4.5 for Highly Compensated
Employees for any Plan Year; or (3) any maximum or other limitation imposed by
the Plan Administrator. The Plan Administrator shall be responsible for ensuring
compliance with these limitations on Pre-Tax Contributions.

      If a Participant makes Pre-Tax Contributions in a calendar year equal to
the legal applicable maximum, his Pre-Tax Contributions will immediately cease.

      B. LIMITS DUE TO WITHDRAWALS. Notwithstanding section 4.1 and section
4.4A. above, a Participant who makes a withdrawal on account of a financial
hardship under section 9.1 may not make Pre-Tax Contributions or After-Tax
Contributions hereunder (or under any other Plan maintained by the Employer) for
a period of 12 months following the date of the in-service withdrawal. Also, in
the taxable year following the date of the withdrawal, such a Participant may
not make Pre-Tax Contributions which, when added to his Pre-Tax Contributions
made during the taxable year of the withdrawal, exceed the amount specified in
subsection A. above.

                                       20
<PAGE>

      C. LIMITS ON DISTRIBUTIONS. Pre-Tax Contributions may not be distributed
to Participants or their Beneficiaries earlier than:

            1. separation from service, death or Disability,

            2. termination of the Plan without the establishment of a successor
plan,

            3. the date of the sale or other disposition to an unrelated entity
of substantially all of the assets used by the Employer in a trade or business,
provided the Employee continues in employment with the purchaser of the assets,

            4. the date of sale or other disposition to an unrelated entity of a
subsidiary of the Employer, provided the Employee continues in employment with
the subsidiary,

            5. reaching the age of fifty-nine and a half (59 1/2) years, or

            6. a case of financial hardship, as defined in section 9.1.

      4.5 ACTUAL DEFERRAL PERCENTAGE TEST

      A. As of the last day of each Plan Year, the Average Actual Deferral
Percentages of Highly Compensated Employees (such average is called the HCE-ADP
in this section) may not exceed the Average Actual Deferral Percentages of
Non-Highly Compensated Employees (such average is called the NHCE-ADP in this
section) by more than the amount specified in the following table:

      IF NHCE-ADP IS:                  HCE-ADP may not exceed:
      less than 2%                     two times NHCE-ADP
      2% but less than 8%              two percentage points more than NHCE-ADP
      8% or higher                     10%

      The determination and treatment of Participant's Actual Deferral
Percentages will be subject to the requirements of any applicable regulations
under ERISA or the IRC.

      B. The Actual Deferral Percentage for any Participant who is a Highly
Compensated Employee for the Plan Year and who is eligible to make Pre-Tax
Contributions (and, if applicable, to receive Qualified Employer Deferral
Contributions allocated to his accounts) under two or more arrangements
described in IRC Section 1165(e) that are maintained by the Employer, shall be
determined as if such Pre-Tax Contributions (and, if applicable, such Qualified
Employer Deferral Contributions) were made under a single arrangement. If a
Highly Compensated Employee participates in two or more cash or deferred
arrangements that have different Plan Years, all cash or

                                       21
<PAGE>

deferred arrangements ending with or within the same calendar year shall be
treated as a single arrangement.

      C. In the event that this Plan satisfies the requirements of IRC Sections
1165(e), 1165(a)(3) or 1165(a)(4) only if aggregated with one or more other
Plans, or if one or more other Plans satisfy the requirements of such Sections
of the IRC only if aggregated with this Plan, then this section shall be applied
by determining the Actual Deferral Percentage of Employees as if all such Plans
were a single Plan.

      D. For purposes of determining the Actual Deferral Percentage test,
Pre-Tax Contributions and Qualified Employer Deferral Contributions must be made
before the last day of the twelve-month period immediately following the Plan
Year to which contributions relate.

      E. The Employer shall maintain records sufficient to demonstrate
satisfaction of the Actual Deferral Percentage test and the amount of Qualified
Employer Deferral Contributions used in such test.

      4.6 QUALIFIED NON-ELECTIVE CONTRIBUTIONS

      If the Plan provides for Profit-Sharing Contributions and such
contributions meet the requirements of this section, then, subject to the
requirements of applicable regulations, the Plan Administrator may elect to
treat all or part of such contributions as Qualified Non-Elective Contributions
which will be considered Qualified Employer Deferral Contributions for purposes
of the Actual Deferral Percentage test of section 4.5, above.

      Profit-Sharing Contributions meet the requirements of this section if they
are always fully vested when made, and they are subject to the limitations on
distribution of section 4.4C. Also, any Profit-Sharing Contributions not treated
as Qualified Employer Deferral Contributions under the preceding paragraph must
be nondiscriminatory under IRC Section 1165(a)(4).

      In lieu of distributing Excess Contributions as provided in section 4.8A.
of the Plan, the Employer may make Qualified Non-Elective Contributions under
the Plan on behalf of Non-Highly Compensated Employees in an amount as is needed
to meet the Actual Deferral Percentage test. In such case, the allocation of
Qualified Non-Elective Contributions shall be made only to the accounts of
Participants who are Non-Highly Compensated Employees in the ratio that each
Participant's

                                       22
<PAGE>

Compensation for the Plan Year bears to the Compensation of all such
Participants for such Plan Year.

      4.7 QUALIFIED MATCHING CONTRIBUTIONS

      Generally, Matching Contributions will not be included in determining a
Participant's Deferral Percentage. However, if the Plan provides for Matching
Contributions and such contributions meet the requirements of this section, the
Plan Administrator may elect to treat all or part of such contributions as
Qualified Matching Contributions which will be considered Qualified Employer
Deferral Contributions for purposes of the Actual Deferral Percentage tests of
section 4.5 above.

      Matching Contributions meet the requirements of this section if they are
fully vested when made, and they are subject to the limitations on distribution
of section 4.4C.

      Qualified Matching Contributions will be taken into account as Qualified
Employer Deferral Contributions for purposes of calculating the Actual Deferral
Percentages, subject to such other requirements as may be prescribed by the
Puerto Rico Secretary of the Treasury and shall be made as are needed to meet
the Actual Deferral Percentage test. The Employer will make Qualified Matching
Contributions to the Plan on behalf of Participants who are Non-Highly
Compensated Employees who make either Pre-Tax Contributions and/or After-Tax
Contributions to the Plan.

      4.8 MONITORING PARTICIPANT'S ACTUAL DEFERRAL PERCENTAGES

      The Plan Administrator (or an administrative service provider - which may
be the Trustee or the Popular Master Plan Sponsor - retained by the Plan
Administrator to perform recordkeeping and other administrative duties) will
monitor Participants' Actual Deferral Percentages to insure compliance with the
requirements of section 4.5 above. Any adjustments in Participants' elections or
Actual Pre-Tax Contributions necessary to meet the requirements of section 4.5
will be made as follows: the Plan Administrator will reduce the Actual Deferral
Percentage of the participating Highly Compensated Employee who has the highest
Actual Deferral Percentage until it reaches the Actual Deferral Percentage of
the next participating Highly Compensated Employee(s) with the next highest
Actual Deferral Percentage; then the Plan Administrator will reduce the Actual
Deferral Percentages of both or all such participating Highly Compensated
Employees until they reach that of the Highly Compensated Employee(s) with the
then next highest Actual Deferral Percentage; and

                                       23
<PAGE>

so on. The foregoing reductions will be made only to the extent necessary to
meet the requirements of section 4.5.

      A. EXCESS CONTRIBUTIONS. The Plan Administrator will adjust Pre-Tax
Contributions elections by Highly Compensated Employees in accordance with the
preceding paragraph at such time or times before or during a Plan Year as the
Plan Administrator deems advisable to insure that the requirements of section
4.5 are met as of the last day of the Plan Year.

            If, notwithstanding the preceding sentence, the requirements of
section 4.5 are not met as of the last day of a Plan Year, such adjustments may
be made after the end of a Plan Year in one or a combination of the following
ways: (i) paying to a Participant the amount of his Excess Contributions plus
earnings (or losses) on such excess, (ii) recharacterizing the Excess
Contributions of such a Participant as After-Tax Contributions during such year,
or (iii) in the Employer's discretion, by making Qualified Non-Elective
Contributions or Qualified Matching Contributions that meet the requirements of
section 4.6 or 4.7, respectively, on behalf of Non-Highly Compensated Employees
in the amount needed so that the requirements of section 4.5 are met. For
purposes of the preceding sentence, any such payment or recharacterization of
Excess Contributions will be designated as such by the Employer, and will be
made by the end of the succeeding Plan Year. However, the amount to be paid or
recharacterized will be reduced by any amounts relating to such Plan Year
previously withdrawn by the Participant. For purposes of clause (ii) of this
paragraph, recharacterizing will be available only if the Adoption Agreement
permits After-Tax Contributions.

            Recharacterized amounts will remain nonforfeitable and subject to
the same distribution requirements as Pre-Tax Contributions. Amounts may not be
recharacterized by a Highly Compensated Employee to the extent that such amount
in combination with other After-Tax Contributions made by that Employee would
exceed any stated limit provided in the Adoption Agreement, or by the Puerto
Rico Secretary of the Treasury, on After-Tax Contributions. Recharacterized
amounts will be taxable to the Participant in the tax year in which the
Participant would have received them in cash.

            Recharacterization must occur no later than two and one-half months
after the last day of the Plan Year in which such Excess Contributions arose and
is deemed to occur no earlier than

                                       24
<PAGE>

the date the last Highly Compensated Employee is informed in writing of the
amount recharacterized and the consequences thereof.

            Excess Contributions shall be distributed from the Participant's
Pre-Tax Contributions Account and Qualified Matching Contributions Account (if
applicable) in proportion to the Participant's Pre-Tax Contributions and
Qualified Matching Contributions (to the extent used in the Actual Deferral
Percentage test) for the Plan Year. Excess Contributions shall be distributed
from the Participant's Qualified Non-Elective Contributions Account only to the
extent that such Excess Contributions exceed the balance in the Participant's
Pre-Tax Contributions Account and Qualified Matching Contributions Account.

            A distribution of Excess Contributions under this section may be
made notwithstanding any otherwise applicable restrictions or Spousal Consent
requirements on in-service withdrawals or distributions.

      4.9 EXCESS DEFERRALS

      Notwithstanding any other provision of the Plan, Excess Deferrals, plus
any income and minus any loss allocable thereto, shall be distributed no later
than April 15 to any Participant to whose account Excess Deferrals were assigned
for the preceding year and who claims Excess Deferrals for such taxable year. A
withdrawal of an Excess Deferral under this section may be made notwithstanding
any otherwise applicable restrictions or Spousal Consent requirement on
in-service withdrawals. The amount of any Excess Deferrals to be withdrawn under
this section will be reduced by any amounts previously distributed or
recharacterized under section 4.8.

      4.10 LIMITS ON DISCONTINUANCE OF CONTRIBUTIONS

      Notwithstanding section 4.1, section 4.2 and section 4.4A. above, a
Participant who discontinues his or her Pre-Tax Contributions may not make
Pre-Tax Contributions or After-Tax Contributions hereunder (or under any other
Plan maintained by the Employer) for a period of 12 months following the date of
such discontinuance of the Pre-Tax Contributions.

ARTICLE 5 AFTER TAX CONTRIBUTIONS

      5.1 ELIGIBILITY

      If the Adoption Agreement so provides, an Employee may elect to make
After-Tax Contributions. After-Tax Contributions are voluntary and no Employee
will be required to make

                                       25
<PAGE>

such contributions. After-Tax Contributions Accounts are fully vested and
nonforfeitable at all times.

      5.2 LIMITS ON AMOUNT

      The minimum amount of After-Tax Contributions a Participant may elect is 1
percent of his Compensation. After-Tax Contributions for any Plan Year may not
exceed the lesser of 10% of the Aggregate Compensation paid to the Employee
during all the years he or she has been a Plan Participant or any other
limitation imposed by the Plan Administrator. The Plan Administrator shall
establish such written policies, restrictions and rules pertaining to After-Tax
Contributions as may be necessary for Plan administration or for compliance with
the IRC. The Plan Administrator shall adjust in the future this maximum
limitation as needed to ensure that the Plan shall meet any limits prescribed by
the IRC and Regulations thereunder. Additional restrictions on After-Tax
Contributions may apply in certain cases to Participants who make an in-service
withdrawal on account of a financial hardship under section 9.1. (See the first
sentence of section 4.4B.) The Plan Administrator shall be responsible for
ensuring compliance with the limitations on After-Tax Contributions.

      5.3 AFTER-TAX CONTRIBUTION ELECTION

      The procedures for electing and changing After-Tax Contributions will be
similar to those described in section 4.2.

      5.4 COLLECTION OF AFTER-TAX CONTRIBUTIONS

      The Employer will collect Participants' After-Tax Contributions using
payroll or other procedures.

      The Employer will transfer the amounts collected to the Trustee as of the
earliest date on which such contributions can reasonably be segregated from the
Employer's general assets, but not later than fifteen (15) business days after
the end of the month in which such amounts are received by the Employer or the
date on which such amounts would otherwise have been payable to the Participant
in cash.

                                       26
<PAGE>

ARTICLE 6 EMPLOYER AND MATCHING CONTRIBUTIONS

      6.1 ELIGIBILITY

      If the Adoption Agreement so provides, the Employer will make Employer
Contributions (Money Purchase Contributions or Profit-Sharing Contributions)
and/or Matching Contributions to all Participants pursuant to the provisions of
this Article 6. Participants will have a vested and nonforfeitable interest in
their Employer Contributions Account and Matching Contributions Account in
accordance with the vesting schedule specified in the Adoption Agreement.

      6.2 EMPLOYER CONTRIBUTIONS

      A. IN GENERAL. For each Plan Year that the Plan is in effect, the Employer
will make Employer Contributions (Money Purchase Contributions or Profit-Sharing
Contributions) in cash, the amount (if any) to be determined according to the
provisions of this Article. If, due to miscalculation or error, the Employer
Contributions exceed the amount prescribed or determined by the Employer, such
excess may, at the election of the Employer, be treated as a contribution for
the succeeding Plan Year or years.

      The Employer Contribution may be paid in a single sum or installments, but
the total amount will be paid to the Trustee not later than the time (including
extensions thereof) prescribed by law for filing the Employer's Puerto Rico
income tax return for its taxable year ending with or within the Plan Year.

      B. MONEY PURCHASE PENSION PLANS. If pursuant to the Adoption Agreement the
Plan is a money purchase pension plan, the following provisions will apply:

            1. MONEY PURCHASE CONTRIBUTION. For each Plan Year the Employer will
contribute an amount which will equal the contribution required for all
Participants entitled to receive an allocation for such year under the
contribution formula elected in the Adoption Agreement.

            2. MAXIMUM CONTRIBUTION. Employer Contributions to the Plan shall
not exceed the maximum amount which the Employer may deduct under IRC Section
1023(n), or any successor provision or similar statutory provisions hereafter
enacted.

            3. FORFEITURES. Forfeitures will be applied as specified in the
Adoption Agreement. No forfeitures will occur solely as a result of an
Employee's withdrawal of Employee

                                       27
<PAGE>

contributions. Forfeitures will be allocated in the same proportion that a
Participant's Compensation bears to the total Compensation of all Participants.

      C. PROFIT-SHARING PLANS. If pursuant to the Adoption Agreement the Plan is
a profit-sharing plan, the following provisions will apply:

            1. PROFIT-SHARING CONTRIBUTION. If specified in the Adoption
Agreement, for each Plan Year in which the Plan is in effect, the Employer shall
make contributions to the Trust in such amounts as it may determine; the
Employer will not be obligated to contribute any particular amount in a Plan
Year or to make any contribution at all in any particular Plan Year.

            2. MAXIMUM CONTRIBUTION. All Employer Contributions to the Plan
shall be made out of Net Profits and shall not exceed the lesser of:

                  a. The Employer's Net Profits; or

                  b. The maximum amount permitted to be deducted by the Employer
under IRC Section 1023(n), or any successor or similar statutory provisions
hereafter enacted.

            3. NET PROFITS DEFINED. "Net Profits" for purposes of this formula
shall mean, in the case of a for profit Employer, the taxable income of the
Employer as determinable for Puerto Rico income tax purposes, without any
deduction for taxes based upon income or for contributions made by the Employer
under the Plan or to any other qualified plans maintained by the Employer and
including any undistributed Net Profits from prior years, after deduction of
taxes based upon income and contributions made by the Employer under the Plan or
any other qualified plans maintained by the Employer. In the case of an Employer
that is an insurance company, "Net Profits" shall mean the net income as
presented on the insurance company's financial statements for the year in
question prepared in accordance with generally accepted accounting principles,
without any deduction for taxes based upon income or for contributions made by
the Employer under the Plan or to any other qualified plans maintained by the
Employer and including any retained earnings after deduction of taxes based upon
income and contributions made by the Employer under the Plan or any other
qualified plans maintained by the Employer. In the case of a not-for profit
Employer, "Net Profits" shall mean the surplus of the Employer as determinable
for Puerto Rico income tax purposes, without any deduction for contributions
made by the Employer under the Plan or to any other qualified plans maintained
by the Employer and including any accumulated surplus from prior years, after
deduction

                                       28
<PAGE>

of contributions made by the Employer under the Plan or any other qualified
plans maintained by the Employer.

            4. FORFEITURES. Forfeitures will be applied as specified in the
Adoption Agreement. No forfeitures will occur solely as a result of an
Employee's withdrawal of Employee contributions. Forfeitures will be allocated
in the same proportion that a Participant's Compensation bears to the total
Compensation of all Participants.

      6.3 ALLOCATION OF EMPLOYER CONTRIBUTIONS

      Employer Contributions for each Plan Year shall be allocated as of the
last day of such Plan Year (even though receipt of the Employer Contributions by
the Trustee may take place after the close of such Plan Year) among the Employer
Contributions Accounts of those Participants who either completed more than 500
hours of service or were actively employed by the Employer at the end of such
Plan Year or meet such other test provided for in the Adoption Agreement

      Notwithstanding the above, a Participant whose employment with the
Employer terminates because of his retirement, Disability or death during the
Plan Year is not required to fulfill the foregoing employment requirement to
share in the allocation of Employer Contributions for such Plan Year.

      Employer Contributions will be allocated so that each Participant receives
a proportionate amount of the total Employer Contribution equal to the ratio of
his Compensation over the Compensation of all Participants for the Plan Year
(Employer Contributions to a profit-sharing plan), or so that each Participant
receives the percentage of his Compensation for the Plan Year specified in the
Adoption Agreement (money purchase pension plan).

      6.4 MATCHING CONTRIBUTIONS

      A. AMOUNT OF CONTRIBUTION. If so chosen in the Adoption Agreement, for
each matching period, as defined below, the Employer will make a Matching
Contribution in cash on behalf of each Participant who makes Pre-Tax
Contributions under Article 4 and/or After-Tax Contributions under Article 5
during such period. A Participant will be required to be an Employee on the last
day of a matching period (or to have left employment during such period because
of retirement, death or Disability) in order to receive a Matching Contribution
for such period.

                                       29
<PAGE>

      The amount of such Matching Contribution will be as specified in the
Adoption Agreement. The Employer will not make a Matching Contribution with
respect to any Excess Contributions under section 4.8.

      The Plan Administrator will select the matching period, which may be the
Plan Year or a period shorter than the Plan Year such as each month, three
months (quarterly), four months (tri-annual) or six months (semi-annual).
Matching contributions for a matching period will be transferred to the Trustee
within a reasonable time after the end of such period. However, the total amount
of the Employer's Matching Contributions for a Plan Year will be paid to the
Trustee by the time specified in section 6.2.

      Matching Contributions shall be vested in accordance with the vesting
schedule selected in the Adoption Agreement. In any event, Matching
Contributions shall be fully vested at Normal Retirement Age, upon the complete
or partial termination of the Plan, or upon the complete discontinuance of
contributions by the Employer.

      B. SOURCE OF CONTRIBUTIONS. In a profit-sharing or 1165(e) plan, the
Matching Contributions required under this section will be limited to the
Employer's Net Profits, as defined in section 6.2C.3.

      C. USE OF FORFEITURES. Any forfeitures which the Adoption Agreement
specifies will be used to reduce the amount of contributions the Employer must
make to the Plan, will be allocated to the accounts of Participants during the
Plan Year to which the matching period belongs in the proportion that each
Participant's Compensation bears to the total Compensation of all Participants
for the Plan Year.

ARTICLE 7 ROLLOVERS

      7.1 ROLLOVER CONTRIBUTIONS

      A. With the approval of the Plan Administrator, an Employee may:

            1. make a rollover transfer to the Plan of cash in an amount which
constitutes all of a qualifying rollover distribution, as defined in IRC Section
1165(b)(2); or

            2. cause any amount which could be rolled over to the Plan under
subsection 1. to be transferred directly to the Trustee of the Plan from the
Trustee or custodian of a Puerto Rico qualified plan or annuity. In the case of
such transfers directly from another Puerto Rico qualified

                                       30
<PAGE>

plan funded through a trust or annuity contract, amounts consisting of the
following will be accounted for separately: Employer contributions to a money
purchase plan, Employer Contributions to a profit-sharing or 1165(e) plan,
pre-tax contributions and after-tax contributions. The Employer will be
responsible for providing the Plan Administrator with records that will reflect
such amounts separately.

      B. The Employer, the Plan Administrator and the Trustee have no
responsibility for determining the propriety of, proper amount or time of, or
status as a tax free transaction of any transfer under subsection A. above.

      C. If an Employee who is not yet a Participant makes a transfer under
subsection a above, he will be considered to be a Participant with respect to
administering such transferred amount only. He will not be a Participant for any
other purpose of the Plan until he completes the participation requirements
under Article 3.

      D. The Employer, Plan Administrator or Trustee in its discretion may
direct the return to the Employee (or the retransfer to another Trustee or
custodian designated by the Employee) of any transfer to the extent that such
return is deemed necessary to insure the continued qualification of this Plan
under IRC Section 1165 (a) or that holding such contribution hereunder would be
administratively burdensome.

      E. The Plan Administrator will credit any Rollover Contribution to the
Participant's Rollover Contributions Account as soon as practicable after
receipt thereof by the Trustee. Any amounts separately accounted for under
subsection A.2. above will be separately accounted for hereunder as subaccounts
within the Employee's Rollover Contributions Account.

ARTICLE 8 VESTING

      8.1 VESTING

      A Participant will have a vested and nonforfeitable interest in that
percentage of his Employer Contributions Account and/or Matching Contributions
Account determined under the vesting schedule specified in the Adoption
Agreement.

      8.2 FULL VESTING

      Notwithstanding section 8.1, Participants will become fully vested in
their Employer Contributions Account and/or Matching Contributions Account upon
the earlier of (i) reaching

                                       31
<PAGE>

Normal Retirement Age while still employed by the Employer; (ii) upon retirement
at their Normal Retirement Date or at an Early Retirement Date as specified in
the Adoption Agreement; (iii) upon Disability as defined in section 2.10; or
(iv) upon death while still an Employee.

      8.3 PAYMENT OF VESTED INTEREST

      A Participant's vested interest in his accrued benefit will be paid or
payment will begin, on a date elected by the Participant in one or more of the
methods described in section 10.1 as elected by the Participant subject to the
rules of Article 10.

      8.4 FORFEITURE OF NON-VESTED INTEREST

      A Participant who has separated from service will forfeit the non-vested
portion of his accrued benefit on the earlier of (i) the day after he incurs a
period of five consecutive breaks in service (as per section 3.4A. if the Plan
counts service for vesting purposes using the hours of service method), or a
Period of Severance of sixty (60) months (as per section 3.4B., if the Plan
counts service for vesting purposes using the elapsed time method) or, (ii) the
date the Participant receives a distribution of the Participant's entire
nonforfeitable portion of his accrued benefit derived from Employer
Contributions. Forfeitures will be applied as provided in Articles 6.2B.3. and
6.2C.4. of this Plan.

      8.5 RESUMPTION OF EMPLOYMENT

      A former Participant who returns to employment with the Employer after a
period of less than five consecutive breaks in service (as per section 3.4A., if
the Plan counts service for vesting purposes using the hours of service method)
or a Period of Severance of sixty (60) months (as per section 3.4B., if the Plan
counts service for vesting purposes using the elapsed time method) will receive
credit for all his prior years of service for vesting purposes.

      If a Participant receives a distribution and resumes employment covered
under the Plan before the Participant has 5 consecutive Breaks in Service (as
per section 3.4A., if the Plan counts service for vesting purposes using the
hours of service method) or a Period of Severance of sixty (60) months (as per
section 3.4B., if the Plan counts service for vesting purposes using the elapsed
time method), the Employer shall restore to the Participant's Employer Account
an amount equal to the dollar amount of the Forfeitures from such accounts if
the Participant repays to the Plan an amount equal to the dollar amount of the
distributions from the Participant's Employer Account in

                                       32
<PAGE>

accordance with this section 8.5. Such repayment must be made before the earlier
of (a) 5 years after the first date on which the Participant is subsequently
reemployed by the Employer, or (b) the date the Participant incurs 5 consecutive
Breaks in Service (as per section 3.4A., if the Plan counts service for vesting
purposes using the hours of service method) or a Period of Severance of sixty
(60) months (as per section 3.4B., if the Plan counts service for vesting
purposes using the elapsed time method) following the date of distribution.

      8.6 CALCULATING VESTED INTEREST AFTER WITHDRAWAL OR DISTRIBUTION

      A. This section applies only in cases in which the Plan Sponsor chooses in
the Adoption Agreement the graded vesting schedule. Where a Participant's
Employer Contributions Account and/or Matching Contributions Account is charged
with a withdrawal or distribution at a time when he is not fully vested in such
account, the remaining balance of the Participant in such account will be
credited to a separate suspense account within the Participant's Employer
Contributions Account and/or Matching Contributions Account, or accounting
records will be maintained in a manner which has the same effect as establishing
a separate suspense account. The Participant's vested interest in such separate
suspense account will be determined in accordance with the following formula:

            X = P(AB + W/D) - W/D

     For purposes of the formula:

            1. "X" is the Participant's vested interest in the separate suspense
account at the time the formula is applied;

            2. "P" is the Participant's vested percentage in his/her Employer
Contributions Account and/or Matching Contributions Account at the time the
formula is applied;

            3. "AB" is the balance in the separate suspense account at the time
the formula is applied; and

            4. "W/D" is the amount withdrawn by, or distributed to, the
Participant at the time the formula is applied.

      The term remaining balance as used in this section means a Participant's
interest in his Employer Contributions Account and/or Matching Contributions
Account remaining after a withdrawal or distribution of a portion or all of his
vested interest therein.

                                       33
<PAGE>

ARTICLE 9 IN-SERVICE WITHDRAWALS

      9.1 WITHDRAWAL OF PRE-TAX CONTRIBUTIONS

      A. AMOUNT. Except as otherwise provided in Section 9.1C., a Participant
other than an Owner-Employee, may make in-service withdrawals from his Pre-Tax
Contributions Account in the event of financial hardship only. The maximum
withdrawal from the Participant's Pre-Tax Contributions Account is the smaller
of the amount of his Pre-Tax Contributions, without earnings or investment
gains, or the amount needed to alleviate his financial hardship. A Participant,
however, may not apply for more than two (2) in-service withdrawals in any Plan
Year.

      B. FINANCIAL HARDSHIP.

            1. An in-service withdrawal will be on account of financial hardship
only if the Participant has an immediate and heavy financial need and the
withdrawal is necessary to meet such need.

            2. A withdrawal will be deemed to be on account of an immediate and
heavy financial need if it is occasioned by:

                  a. a deductible medical expense incurred by the Participant,
his spouse, or dependent;

                  b. purchase of the Participant's principal residence (not
including mortgage payments);

                  c. tuition payments and educational expenses for the next
twelve months of post-secondary education for the Participant, his spouse,
children or dependents;

                  d. rent or mortgage payments to prevent the Participant's
eviction from or the foreclosure of the mortgage on his principal residence; or

                  e. such other event or circumstances as the Puerto Rico
Secretary of the Treasury through administrative determinations, notices or
other documents of general application may permit.

            3. A withdrawal will be deemed necessary to satisfy the
Participant's financial needs if:

                  a. the Participant has made all non-financial hardship
withdrawals and obtained all nontaxable loans available under all of the
Employer's qualified retirement Plans; and

                                       34
<PAGE>

 each such other Plan which provides for Pre-Tax Contributions contains
 restrictions similar to those in section 4.4B.;

                  b. the financial need cannot be satisfied through insurance
reimbursement or compensation or through other means;

                  c. the financial need cannot be satisfied through the
reasonable liquidation of the Participant's assets to the extent the liquidation
itself does not cause a financial hardship;

                  d. the financial need cannot be satisfied by stopping all of
the Participant's contributions to the Plan;

                  e. the Participant has obtained all commercial loans available
on reasonable commercial terms; or

                  f. the Participant satisfies such other requirements as may be
prescribed by the Puerto Rico Secretary of the Treasury.

            4. A Participant must establish to the Plan Administrator's
satisfaction both that the Participant has an immediate and heavy financial need
and that the withdrawal is necessary to meet the need, as provided in
subsections 2. and 3. above.

                  A Participant's application for a financial hardship
withdrawal may be in writing on such form and containing such information (or
other evidence or materials establishing the Participant's financial hardship)
or through such other means as the Plan Administrator may require. The Plan
Administrator's determination of the existence of and the amount needed to meet
a financial hardship will be binding on the Participant.

      Any withdrawal under this section will be paid to the Participant as soon
as practicable after the Plan Administrator's receipt of the Participant's
withdrawal form.

      C. WITHDRAWALS AFTER AGE 59 1/2. Notwithstanding subsection B. above,

            1. to the extent provided in the Adoption Agreement, a Participant
including an Owner-Employee may make in-service withdrawals from his Pre-Tax
Contributions, Qualified Matching and/or Qualified Non-Elective Contributions
Accounts after he has reached age 59-1/2; and

            2. a Participant may make in-service withdrawals from his Pre-Tax
Contributions, Qualified Matching and/or Qualified Non-Elective Contributions
Accounts under the

                                       35
<PAGE>

following circumstances: (i) termination of the Plan without the establishment
of a successor Plan; (ii) the sale or other disposition to an unrelated entity
of substantially all of the assets used by the Employer in a trade or business,
provided the Employee continues in employment with the purchaser of the assets;
(iii) the sale or other disposition to an unrelated entity of a subsidiary of
the Employer, provided the Employee continues in employment with the subsidiary.

      D. SPOUSAL CONSENT TO IN-SERVICE WITHDRAWALS. If a withdrawal under this
section is made from a Plan that is a restatement of an existing plan which
provided for the payment of benefits in the form of an annuity. A married
Participant's spouse must consent to an in-service withdrawal under this
section. Such consent must be in writing and witnessed by a notary public or the
Plan Administrator (or any Plan representative appointed by the Plan
Administrator for such purpose).

      E. PAYMENT. Any withdrawal under this section will be paid to the
Participant as soon as practicable after the Plan Administrator's receipt of a
complete and accurate Participant's withdrawal form.

      F. LIMITATION ON FUTURE CONTRIBUTIONS. A Participant who makes a hardship
withdrawal under this section may not make a Pre-Tax Contribution and After-Tax
Contribution for a period of up to 12 months following such in-service
withdrawal. The Participant shall also be subject to the additional restrictions
imposed on section 4.4B. of this Plan.

      G. INCORPORATION OF REGULATIONS. In administering the financial hardship
withdrawal provisions, the Plan Administrator shall comply with the applicable
IRC regulations which are incorporated herein by reference.

      9.2 WITHDRAWAL OF AFTER-TAX CONTRIBUTIONS

      A. AMOUNT. A Participant whose employment has not terminated may upon
reasonable advance written notice to the Plan Administrator withdraw all or any
portion of his After-Tax Contributions Account to the extent not previously
withdrawn. In the case of a Participant who is an Owner-Employee who has not
reached the age of 59 1/2, the maximum amount that may be withdrawn is the
Owner-Employee's After-Tax Contributions to the extent not previously withdrawn.

      B. PAYMENT. Any withdrawal under this section will be paid to the
Participant as soon as practicable after the Plan Administrator's receipt of a
complete and accurate Participant's

                                       36
<PAGE>

withdrawal form; however the plan Administrator may approve an earlier payment
of some or all of the amount to be withdrawn if such earlier payment would not
be detrimental to the interests of the other Participants.

      C. LIMITATION ON FUTURE WITHDRAWALS. If so provided in the Adoption
Agreement, a Participant who makes an in-service withdrawal under this section
may not make a Pre-Tax Contribution or After-Tax Contribution for a period of 12
months following the date of such in-service withdrawal. The Participant shall
also be subject to the additional restrictions imposed on Article 4.4B of this
Plan.

      The Popular Master Plan Sponsor and the Plan Administrator may establish
reasonable minimum withdrawal amounts and reasonable limitations on the
frequency or number of withdrawals during a Plan Year. No forfeitures will occur
solely as a result of an Employee's making an in-service withdrawal.

      9.3 WITHDRAWAL OF MATCHING CONTRIBUTIONS

      A. AMOUNT. A Participant other than a Participant who is an Owner-Employee
who has not reached the age of 59 1/2 may make in-service withdrawals from his
vested portion of his Matching Contributions Account, to the extent provided in
the Adoption Agreement. The Adoption Agreement may limit such in-service
withdrawals to financial hardship situations, or may permit in-service
withdrawals for reasons other than financial hardship.

      Any withdrawal under this section will be paid to the Participant as soon
as practicable after the Plan Administrator's receipt of a complete and accurate
Participant's withdrawal form.

      9.4 WITHDRAWALS OF PROFIT-SHARING CONTRIBUTIONS

      A. AMOUNT. A Participant other than a Participant who is an Owner-Employee
who has not reached the age of 59 1/2 may make in-service withdrawals from his
vested portion of his Profit-Sharing Contributions Account, to the extent
provided in the Adoption Agreement. The Adoption Agreement may limit such
in-service withdrawals to financial hardship situations, or may permit in-
service withdrawals for reasons other than financial hardship.

      Any withdrawal under this section will be paid to the Participant as soon
as practicable after the Plan Administrator's receipt of the Participant's
withdrawal form.

      B. LIMITATION ON FUTURE WITHDRAWALS. If so provided in the Adoption
Agreement, a

                                       37
<PAGE>

Participant who makes an in-service withdrawal under this section may not make a
Pre-Tax Contribution or After-Tax Contribution for a period of 12 months
following the date of such in-service withdrawal. The Participant shall also be
subject to the additional restrictions imposed in section 4.4B. of this Plan.

      9.5 WITHDRAWALS OF ROLLOVER CONTRIBUTIONS

      A. AMOUNTS. A Participant may upon reasonable advance written notice to
the Plan Administrator withdraw all or any portion of his Rollover Contributions
Account. The Plan Administrator may establish reasonable minimum withdrawal
amounts.

      Notwithstanding the preceding paragraph, amounts separately accounted for
under section 7.1A.2. will be subject to restrictions on withdrawal as follows:
Employer Contributions to a money purchase plan or profit-sharing plan are not
available for in-service withdrawal; pre-tax contributions are available for in
service withdrawal only under section 9.1; Qualified Employer Deferral
Contributions are not available for in-service withdrawal; matching and
after-tax contributions are available for in-service withdrawal, as provided in
the Adoption Agreement.

      B. PAYMENT. Any withdrawal under this section will be paid to the
Participant as soon as practicable after the Plan Administrator's receipt of a
complete and accurate Participant's withdrawal form; however, the Plan
Administrator may approve an earlier payment of all or some of the amount to be
withdrawn if such earlier payment would not be detrimental to the interests of
the other Participants.

ARTICLE 10 DISTRIBUTION OF BENEFITS

      10.1 METHODS OF DISTRIBUTION

      A. The distribution of benefits to which a Participant may become entitled
shall be made in accordance with this Article 10.

            1. The benefits provided by the Plan shall be distributed under
whichever of the following methods is elected in the Adoption Agreement:

                  a. The purchase of a nontransferable, conventional fixed or
variable annuity contract, providing payments at least annually, of such type
and from such insurance company approved by the Plan Administrator;

                                       38
<PAGE>

                  b. A single distribution of the entire vested balance then
standing in the Participant's accounts; or

                  c. Payments in monthly, quarterly, semiannual or annual
installments of substantially equal designated amounts over a period of years
certain not to exceed 10.

      If more than one method of distribution is elected in the Adoption
Agreement, then, the Participants shall elect under which of those methods his
or her benefits shall be distributed.

      Except in the case of a Participant in a profit sharing or 1165(e) version
of this Popular Master Plan, retirement benefits to a married Participant will
be paid in the form of a qualified joint and survivor annuity unless the
Participant elects otherwise as provided in subsection A.2.b. below. Under a
profit sharing or 1165(e) version of this Popular Master Plan, the Participant
will receive his benefits in the form of a lump sum payment unless the profit
sharing or 1165(e) Plan (i) elects periodical payments in monthly, quarterly,
semiannual or annual installments of substantially equal amounts over a period
of years certain not to exceed 10 or (ii) is a restatement of an existing plan
which provided for payment of benefits in the form of an annuity in which case,
this form of benefit will be preserved. If the Participant elects or is entitled
to receive his accrued benefits under this Popular Master Plan in the form of a
lump sum payment, such benefits shall be paid, at the Participant's discretion,
in cash, common stock of the Plan Sponsor, if applicable, or a combination
thereof. The value of the Participant's benefits shall be determined as provided
in Article 9.2.B. of this Popular Master Plan.

      An election to receive a Plan distribution under any method set forth in
this subsection A.l for an Annuity Starting Date which occurs on or after the
Participant's Normal Retirement Age, Early Retirement Age or Disability shall
apply to all subsequent distributions made from the Participant's accounts.
Except with respect to the payment of a qualified joint and survivor annuity
pursuant to subsection A.2. below or a lump-sum distribution, the Participant
shall in all cases elect a distribution method which requires that the present
value of the payments to be made to the Participant exceed fifty percent (50%)
of the present value of the total payments to be made to the Participant and his
Beneficiary, determined as of the date such payments commence.

                                       39
<PAGE>

      2. If at any time the Participant elects or has elected that his benefits
be paid through the purchase of an annuity, the Plan Administrator shall direct
the Trustee to purchase an annuity contract in the form of a qualified joint and
survivor annuity for all distributions to the Participant.

            a. The term "qualified joint and survivor annuity" means an annuity
that commences immediately for the life of the Participant if he does not have
an Eligible Spouse or, if he has an Eligible Spouse, an annuity that commences
immediately, which is at least as valuable as any other alternate form of
benefit payable under the Plan, for the joint lives of the Participant and his
Eligible Spouse, Upon the election of the Participant, which may be made at any
time and any number of times, the survivor annuity shall be fifty percent (50%)
or one hundred percent (100%) of the amount of the annuity payable during the
joint lives of the Participant and his Eligible Spouse, both of which shall be
actuarially equivalent; provided that in the event no election is made, the
survivor annuity shall be fifty percent (50%) of the amount payable during
the Participant's and his Eligible Spouse's joint lives. In determining the
Participant's interest subject to the qualified joint and survivor annuity
requirement, any security interest held by the Plan by reason of a loan
outstanding to the Participant shall reduce the Participant's interest if the
security interest is treated as payment in satisfaction of the Plan loan to the
Participant.

            b. Notwithstanding the foregoing, a Participant may elect to waive
the qualified joint and survivor annuity and thereby receive an alternate form
of distribution. Such waiver must be made within the ninety (90) day period
ending on the Participant's Annuity Starting Date with respect to such benefit.
A Participant may subsequently revoke an election to waive a qualified joint and
survivor annuity and elect again to waive the qualified joint and survivor
annuity at any time and any number of times prior to such Annuity Starting Date.
All such elections and revocations shall be in writing. Any election to waive a
qualified joint and survivor annuity (1) must specify the alternate form of
distribution elected, (2) must be accompanied by the designation of a specific
nonspouse beneficiary (including any class of beneficiaries or any contingent
beneficiaries) who will receive the benefit upon the Participant's death, if
applicable, and (3) must be accompanied by a Spousal Consent, to the extent
required pursuant to section 2.53.

                                       40
<PAGE>

      B. If a Participant dies before the Annuity Starting Date with respect to
such benefits, the portion of his vested accounts balances which are not
currently being distributed in the form of a qualified joint and survivor
annuity shall be distributed as provided in this subsection B.

            1. If the Participant is unmarried on the date of his death, his
entire interest (reduced by any security interest held by the Plan by reason of
a loan outstanding to the Participant) shall be distributed to his Beneficiary
in a single distribution or in installments at the time set forth in section
10.3.

            2. Except as provided in subsection 3 below, if the Participant is
married on the date of his death, his entire interest (reduced by any security
interest held by the Plan by reason of a loan outstanding to the Participant)
shall be distributed to his Beneficiary in a single distribution or in
installments at the time set forth in section 10.3.

            3. If the Participant is married on the date of his death and the
Plan is, with respect to the Participant, an offset plan or a direct or indirect
transferee (in a transfer after December 31, 1984) of a defined benefit plan, a
money purchase pension plan (including a target benefit plan), or a stock bonus
or profit-sharing plan which otherwise would be required to provide for a life
annuity form of payment to the Participant, then fifty percent (50%) of the
Participant's vested interest as of the date of his death (or fifty percent
(50%) of the amount of the Participant's accounts attributable to the
transferred amount, if such transferred amount is separately accounted for and
gains, losses, withdrawals, contributions, forfeitures, and other credits or
charges are allocated on a reasonable basis between the transferred amount and
other assets in the Participant's accounts) shall be applied toward the purchase
of an annuity for the life of his Eligible Spouse (a "qualified pre-retirement
survivor annuity") unless otherwise elected as provided below. This Plan shall
be considered to be an offset plan if it is used to offset benefits in a plan
which is subject to the survivor annuity requirements with respect to the
Participant whose benefits are offset. In determining the Participant's
interest, any security interest held by the Plan by reason of a loan outstanding
to the Participant shall reduce the Participant's interest if the security
interest is treated as payment in satisfaction of the Plan loan to the
Participant. The portion of the Participant's vested interest not applied to the
purchase of the qualified pre-retirement survivor annuity shall be distributed
to the Participant's Beneficiary as provided in subsection B.:

                                       41
<PAGE>

                  a. Within the applicable notice period, each Participant shall
be furnished with a written "notice of the qualified pre-retirement survivor
annuity" in such terms and in such manner as would be comparable to the "general
notice of distribution" provided pursuant to section 10.2A. This notice must be
accompanied by a general description of the eligibility conditions, relative
values, and other material features of each method of distribution under section
10.1A.1. The "applicable notice period" means, with respect to each Participant,
whichever of the following periods ends last: (1) the period beginning with the
first day of the Plan Year in which the Participant attains age 32 and ending
with the close of the Plan Year preceding the Plan Year in which the Participant
attains age 35; (2) the period commencing one year before an ending one year
after the individual becomes a Participant; or (3) the period commencing one
year before and ending one year after the annuity requirement of section
10.1A.1. a first applies to such Participant. In addition, the applicable notice
period for a Participant who separates from service before attaining age 35
shall be the period beginning one year before and ending one year after the
Participant's separation from service. Such notice shall be given to the
Participant in person, by mailing, by posting, or by placing it in an Employer
publication which is distributed in such a manner as to be reasonably available
to such Participant. If the explanation is to be posted, it shall be posted at
the location within the Participant's principal place of employment which is
customarily used for employer notices to employees with regard to
labor-management relations matters.

                  b. A Participant may elect to waive a qualified pre-retirement
survivor annuity, revoke such election, and elect again to waive the qualified
pre-retirement survivor annuity at any time and any number of times during the
applicable election period. All such elections and revocations shall be in
writing. Any election to waive a qualified pre-retirement survivor annuity must
be accompanied by (1) the designation of a specific nonspouse beneficiary
(including any class of beneficiaries or any contingent beneficiaries) who will
receive the benefit upon the Participant's death, if applicable, and (2) a
Spousal Consent to the extent required by section 2.53. The "applicable election
period" for the waiver of the qualified pre-retirement survivor annuity shall
commence once the Participant receives a written explanation of such annuity as
set forth in section 10.1B.3.a above or on the first day of the Plan Year in
which the Participant attains age 35, whichever occurs earlier. Any waiver of
the qualified pre-retirement survivor annuity made prior

                                       42
<PAGE>

to the first day of the Plan Year in which the Participant attained age 35 shall
become invalid as of such date and a new waiver must be issued in order for a
waiver of a qualified pre-retirement survivor annuity to be effective.

                  c. Except as provided in subsection d. below, the qualified
pre-retirement survivor annuity benefit shall only apply to a Participant if he
is credited with at least one Hour of Service with the Employer on or after
August 23, 1984.

                  d. If a Participant dies with an effective waiver of the
qualified pre-retirement survivor annuity in force or the Eligible Spouse so
elects after the Participant's death, his account shall be distributed in the
manner specified for unmarried Participants in section 10.1B.1. above.

      10.2 TIME OF DISTRIBUTION TO PARTICIPANT

      A. The Plan Administrator must provide the Participant with "general
notice of distribution" no less than thirty (30) and no more than ninety (90)
days before the Participant's Annuity Starting Date. Such notice must be in
writing and must set forth the following information: (i) an explanation of the
eligibility requirements for, the material features of, and the relative values
of the alternate forms of benefits available under section 10.1 A., and (ii) the
Participant's right to defer receipt of a Plan distribution under sections
10.2C. and D. If the Plan is a transferee or offset plan with respect to the
Participant as set forth in section 10.1B.3, the general notice also shall
include (a) the terms and conditions of a qualified joint and survivor annuity;
(b) the Participant's right to make, and the effect of, an election to waive the
qualified joint and survivor annuity; (c) the rights of the Participant's
Eligible Spouse; and (d) the right to make, and the effect of, a revocation of
an election to waive a qualified joint and survivor annuity. Such notice shall
be given to the Participant in person, by mailing, by posting, or by placing it
in an employer publication which is distributed in such a manner as to be
reasonably available to such Participant. If the notice is to be posted, it
shall be posted at the location within the Participant's principal place of
employment which is customarily used for employer notices to employees with
regard to labor-management relation matters.

      B. Upon receipt of the general notice of distribution, a Participant may
consent to receive a distribution of his vested accounts (based upon the
valuation of his vested account as of the Valuation Date preceding his
termination of service) as soon as practicable after his termination of

                                       43
<PAGE>

service. Such consent may be in writing or in such other manner as the Plan
Administrator may provide. A Participant's vested accounts shall be distributed
in the manner set forth in section 10.1A. If at any time the Participant elects
or has elected that his benefits be paid through the purchase of an annuity
other than a qualified joint and survivor annuity, the Participant's consent to
receive such distribution prior to his Normal Retirement Age must be accompanied
by the written consent of the Participant's Eligible Spouse, if married, which
is comparable to the Spousal Consent requirements in section 2.53.

      C. Subject to the maximum deferral requirements of sections 10.2E. and F.,
a Participant may elect to defer receipt of a Plan distribution, provided that
such election is in writing, described the form of benefit payment, indicates
the date the distribution is to commence, and is signed by the Participant. To
the extent not consistent with section 10.2D. below, in the event that the
Participant does not elect to defer receipt of his distribution, payment of the
vested balance in the Participant's accounts shall begin no later than the 60th
day after the latest of the close of the Plan Year in which:

            1.    The Participant attains the earlier of age sixty-five (65) or
                  Normal Retirement Age;

            2.    Occurs the tenth (10th) anniversary of the year in which the
                  Participant entered the Plan; or

            3.    The Participant terminates service with the Employer.

      D. In the event that the Participant has terminated service and the
Participant (and the Eligible Spouse, if applicable) neither consents to receive
a Plan distribution nor elects to defer receipt of a Plan distribution, the
Participant's accounts shall be distributed in the normal benefit form as soon
as practicable thereafter, but in no event before the date the Participant
attains Normal Retirement Age, if such vested accounts exceed $5,000 (or, if the
Participant's vested accounts exceeded $5,000 prior to such distribution, is
less than or equal to $5,000 for distributions made after the initial
distribution date). Effective January 1, 2002 and solely for distributions
occurring after this date, in computing the value of a Participant's vested
accounts to determine whether they exceed $5,000, Rollover Contributions and the
earnings thereon shall be disregarded. For purposes of this section, "normal
benefit form" shall mean a single distribution or, if the Plan is a transferee
or offset

                                       44
<PAGE>

plan with respect to the Participant as set forth in section 10.1A.I.a., a
qualified joint and survivor annuity as set forth in section 10.1A.l.b. and
10.1A.2., respectively.

      E. If the form of distribution is other than a single distribution, then
the Participant's entire interest shall be paid over a period not extending
beyond the life (or the life expectancy) of the Participant and his Beneficiary.
For purposes of this subsection, a Participant may elect (other than in the case
of a life annuity) to have the life expectancy of either he or his spouse, or
both, redetermined; provided, however, that if a timely election is not made,
such redetermination shall not be made. A Participant's election to redetermine
life expectancy shall be made no later than the time distributions are required
to commence under subsection F. below, shall be irrevocable, shall specify the
frequency with which redeterminations are to be made (not more frequently than
annually), and shall require that such redeterminations be made from that date
forward.

      F. Notwithstanding anything to the contrary contained in this Plan,
distribution of the vested balance in the Participant's accounts, or the first
installment of such distribution, shall be made or commenced, at the employee's
option, on the April 1 of the calendar year following the calendar year in which
the Participant attains age 70-1/2%. If the amount of the required payment
cannot be ascertained by the date payment is to be made or commenced, or if it
is not possible to make such payment because of the Plan Administrator's
inability to locate the Participant after making reasonable efforts to do so, a
payment retroactive to the required commencement date shall be made no later
than sixty (60) days after the date the amount of such payment can be
ascertained or the Participant is located.

      10.3 TIME OF DISTRIBUTION TO BENEFICIARY

      A. A Participant's Beneficiary may consent to receive a distribution of
the Participant's vested accounts balances which shall commence within ninety
(90) days (or within such longer period as is reasonable based on the particular
facts and circumstances) after the Participant's death, to be distributed in the
manner set forth in section 10.1B, If the Beneficiary is the Participant's
Eligible Spouse, such consent must be comparable to the Spousal Consent
requirements in section 2.53.

      B. A Beneficiary may elect to defer such distribution beyond the time
specified in subsection A above, provided that such election is in writing,
describes the form of benefit payment

                                       45
<PAGE>

to be received, indicates the date distributions are to commence, is signed by
the Beneficiary, and satisfied the requirements of subsection D. below.

      C. In the event that the Beneficiary neither consents to receive a Plan
distribution nor elects to defer receipt of a Plan distribution, the Beneficiary
shall receive a Plan distribution in the normal benefit form within ninety (90)
days (or within such longer period as is reasonable based on the particular
facts and circumstances) after the Participant's death. For purposes of this
subparagraph, "normal benefit form" shall mean a single distribution and, to the
extent required by section 10.1B.3., a qualified pre-retirement survivor
annuity. Notwithstanding the foregoing but subject to subsection d. below, if
the Beneficiary is the Participant's Eligible Spouse and the Plan is a
transferee or offset plan with respect to the Participant as set forth in
section 10.1A.l.a., the Beneficiary shall not receive a Plan distribution before
the date the Participant attained or would have attained Normal Retirement Age
if the Participant's vested accounts exceed $5,000 at the time of distribution
(or, if the Participant's vested accounts exceeded $5,000 prior to such
distribution, is less than or equal to $5,000 for distributions made after the
initial distribution date). Effective January 1, 2002 and solely for
distributions occurring after this date, in computing the value of a
Participant's vested accounts to determine whether they exceed $5,000, Rollover
Contributions and the earnings thereon shall be disregarded.

      D. Notwithstanding any provision of this Article to the contrary, any
distribution to a Participant's Beneficiary must comply with the following
requirements:

            1. If distributions to a Participant have begun and the Participant
dies before the entire interest has been distributed to him, the remaining
portion shall be distributed at least as rapidly as under the distribution
method being utilized on the date of his death.

            2. Except as provided in subsection D.3. below, in no event shall
distributions be made later than December 31 of the calendar year which contains
the fifth anniversary of the Participant's death unless the Participant's
designated Beneficiary elects to receive payments in substantially equal
installments at least annually for a period not exceeding the Beneficiary's life
expectancy, in which case the first installment must be made by December 31 of
the calendar year immediately following the calendar year of the Participant's
death. Any such election shall be made prior to the date the distribution is
scheduled to commence.

                                       46
<PAGE>

            3. An Eligible Spouse who elects to receive installment payments as
set forth in subsection D.2. above, over such Eligible Spouse's life expectancy
(which may be redetermined no more frequently than annually) may defer
commencement of payments until December 31 of the calendar year the deceased
Participant would have attained age 70 1/2. Such an election shall be made by
the earlier of (a) the date the distribution is required to commence under the
preceding sentence, or (b) December 31 of the calendar year which contains the
fifth anniversary of the Participant's death. An Eligible Spouse who elects to
have her life expectancy redetermined must do so no later than the time
distributions are required to commence under this subsection, at which time the
election will be irrevocable and shall apply to all subsequent years; provided,
however, that if no election is made by the time distribution is required to
commence, life expectancy may not be redetermined. If the Eligible Spouse elects
to defer such distribution in accordance with this subsection and the Eligible
Spouse dies leaving an unpaid balance, the balance shall be distributed no later
than December 31 of the calendar year which contains the fifth anniversary of
the Eligible Spouse's death to the Beneficiary designated by the Participant or,
in the absence of such designation, to the estate of the Eligible Spouse.

      10.4 SMALL ACCOUNT BALANCES

      Notwithstanding anything to the contrary in sections 10.1, 10.2 and 10.3,
if the Participant has terminated service or has died with a vested accounts
balance of $5,000 or less on the date distributions commence, the entire value
of the Participant's vested accounts shall be distributed in a single sum
distribution as soon as practicable to the Participant, or, in the event of his
death, to his Beneficiary. Effective January 1, 2002 and solely for
distributions occurring after this date, in computing the value of a
Participant's vested accounts to determine whether they exceed $5,000, Rollover
Contributions and the earnings thereon shall be disregarded.

      10.5 NONLIABILITY

      Any payment to any Participant, or to his legal representative or
Beneficiary, in accordance with the provisions of the Plan, shall to the extent
thereof be in full satisfaction of all claims hereunder against the Trustee, the
Plan Administrator and the Employer, any of whom may require such Participant,
legal representative or Beneficiary, as a condition precedent to such payment,
to execute a receipt therefor in such form as shall be determined by the
Trustee, the Plan Administrator,

                                       47
<PAGE>

or the Employer, as the case may be. The Employer does not guarantee the Trust,
the Participants, former Participants or their Beneficiaries against lost of or
depreciation in value of any right or benefit that any of them may acquire under
the terms of this Plan. All benefits payable hereunder shall be paid or provided
for solely from the Trust, and the Employer does not assume any liability or
responsibility therefor.

      10.6 MISSING PERSONS

      In the case of any benefit payable to a Participant, Beneficiary or any
other person so entitled under this Plan, if the Plan Administrator is unable to
locate the Participant, Beneficiary or person within six (6) months from the
date a certified letter was mailed to such Participant, Beneficiary or other
person notifying him of the benefit, the Plan Administrator shall utilize the
United States Social Security Administration's ("SSA") services in forwarding a
notice to the Participant's, Beneficiary's or person's last address in the SSA's
records. Any fee payable for the SSA's service shall be charged to the missing
Participant's, Beneficiary's or person's Account. If six (6) months after the
date the SSA's services were used, the benefit remains unpaid the Plan
Administrator shall direct the Trustee to establish a segregated account. This
account shall share in the allocations of Trust income or loss on a segregated
basis. The Trustee shall continue to maintain this segregated account until: (a)
the Participant, Beneficiary or person entitled to the benefit makes application
therefore; or (b) the benefit reverts by escheat to the state, whichever occurs
first.

      10.7 BENEFICIARIES

      A. DESIGNATION OF BENEFICIARY. Subject to the qualified pre-retirement
survivor annuity and qualified joint and survivor annuity requirements set forth
in this Article 10, a Participant shall have the right to designate, on forms
provided by the Employer, a Beneficiary or Beneficiaries to receive the benefits
herein provided in the event of this death (reduced by any security interest
held by the Plan by reason of a loan outstanding to the Participant) and to
revoke such designation or to substitute another Beneficiary or Beneficiaries at
anytime. Notwithstanding the preceding sentence, if this Plan is not a
transferee or offset plan with respect to the Participant, a married
Participant's initial designation of a Beneficiary or change in Beneficiary
designation to someone other than or in addition to his Eligible Spouse shall
not be effective unless Spousal Consent is obtained.

                                       48
<PAGE>

      B. ABSENCE OF VALID DESIGNATION OF BENEFICIARIES. If, upon the death of a
Participant, former Participant or Beneficiary, there is no valid designation of
Beneficiary on file with the Employer, the following shall be designated by the
Plan Administrator as the Beneficiary or Beneficiaries, in order of priority:

            1. The surviving spouse;

            2. Surviving children, including adopted children, in equal shares;

            3. Surviving descendants, per stirpes;

            4. Surviving parents, in equal shares;

            5. The Participant's estate;

            6. The Beneficiaries estate.

      The determination of the Plan Administrator as to which persons, if any,
qualify within the categories listed above shall be final and conclusive upon
all persons.

      However if the Plan is established for an Owner-Employee such that the
Owner-Employee is the sole Participant in the Plan, upon the death of the
Owner-Employee, the Plan Administrator shall designate the Participant's estate
as the Beneficiary.

ARTICLE 11 LOANS

      11.1 IN GENERAL

      If the Adoption Agreement so provides, loans will be available from the
Plan. If loans are available, the Plan Administrator will establish guidelines
and procedures for loans from the Plan to Participants in specific instances,
which guidelines may include limitations on the number of loans that may be
outstanding to a Participant at any time or on the frequency of loans. Each loan
must be approved by the Plan Administrator and must conform to the loan
guidelines and procedures. The guidelines and procedures must be formulated and
administered so that they conform with ERISA Section 408(b)(l) and ERISA Reg.
Section 2550.408-1(d) and Article 1165-l(b)(9) of the Regulations issued under
Section 1165 of the IRC. In addition, the following requirements of this section
must be satisfied.

      A, Loans are available to all Participants and any other person required
by the United States Department of Labor on a reasonably equivalent basis.
However, no loan will be made to a Participant who is an Owner-Employee or a
shareholder-employee unless such person has at his

                                       49
<PAGE>

expense obtained an administrative exemption from ERISA's prohibited transaction
rules from the United States Department of Labor with respect to such loan,
unless the United States Department of Labor has issued a prohibited transaction
class exemption covering such loans. Any loan will be evidenced by a promissory
note signed by the Participant.

      B. Loans shall not be made available to Highly Compensated Employees in an
amount greater than the amount made available to Non-Highly Compensated
Employees.

      C. Loans are adequately secured and bear a reasonable rate of interest.
However, no more than fifty percent (50%) of a Participant's non-forfeitable
accrued benefit may be pledged as collateral.

      Each loan hereunder will be a Participant-directed investment for the
benefit of the Participant requesting such loan; accordingly, any default in the
repayment of principal or interest of any loan hereunder will reduce the amount
available for distribution to such Participant (or his Beneficiary). Thus, any
loan hereunder will be effectively and adequately secured by the Participant's
accounts.

      D. A loan to a Participant (when added to the outstanding balance of all
other loans from this Plan and any other qualified plan maintained by the
Employer) shall not be in an amount that exceeds the lesser of:

            1. $50,000 reduced by the excess, if any, of:

                  i. the highest outstanding balance of loans from the plan
during the one-year period ending on the day before such loan is made, over

                  ii. the outstanding balance of loans from the Plan on the date
such loan is made; or

            2. fifty percent (50%) of the vested Participant's account balances.

      A Participant, however, may not have outstanding more than two (2) loans
in any Plan Year.

      E. Except as provided in the next sentence, the maximum term of a loan
will be five years. If a Participant requests a loan for the acquisition of the
principal residence of the Participant, the maximum repayment period will be
determined by reference to bank loans for the same purpose.

      F. A Participant must obtain the consent of his or her spouse, if any,
within the 90 day period before the time the account balance is used as security
for the loan. A new consent is required

                                       50
<PAGE>

if the account balance is used as security for any increase in the loan balance,
for renegotiation, extension, renewal, or other revision of the loan. However,
Spousal Consent is not necessary if the total amount of loans outstanding
hereunder does not exceed $5,000. The consent of any subsequent spouse will not
be necessary in order to foreclose the Plan's security interest in the
Participant's account balance if the Participant's then spouse validly consented
to the original use of the account balance as security (or if the Participant
was unmarried at such time).

      If a valid Spousal Consent has been obtained in accordance with this
section, then, notwithstanding any other provision of this Plan, the portion of
the Participant's vested account balance used as a security interest held by the
Plan by reason of a loan outstanding to the Participant shall be taken into
account for purposes of determining the amount of the account balance payable at
the time of death or distribution, but only if the reduction is used as
repayment of the loan. If less than 100% of the Participant's vested account
balance (determined without regard to the preceding sentence) is payable to the
surviving spouse, then the account balance shall be adjusted by first reducing
the vested account balance by the amount of the security used as repayment of
the loan, and then determining the benefit payable to the surviving spouse.

      G. The Plan Administrator may require a Participant to agree to repay the
principal and interest of a loan through regular payroll deduction payments. The
Plan Administrator may establish back-up repayment procedures for Participants
who do not make payroll deduction repayment; except as may otherwise be
permitted under ERISA or the IRC, any such back-up procedures will provide for
substantially level amortization payments made quarterly or more frequently. Any
loan hereunder may be prepaid, in whole or in part, at any time without penalty.
If a Participant's service as an Employee is terminated for any reason, the
entire unpaid principal and interest of any loan then outstanding to such
Participant will become immediately due and payable.

      If a Participant defaults on any payment of interest or principal of a
loan hereunder or defaults upon any other obligation relating to such loan, the
Plan Administrator may take (or direct the Trustee to take) such action or
actions as it determines to be necessary to protect the interest of the Plan.
Such actions may include commencing legal proceedings against the Participant,
or foreclosing on any security interest in the Participant's account or other
security given in connection with a loan hereunder. In the event of a default,
foreclosure on the Participant's note and attachment of one or

                                       51
<PAGE>

more of the Participant's accounts given as security will not occur until a
distributable event occurs in the Plan.

      An assignment or pledge of any portion of the Participant's interest in
the Plan and a loan, pledge, or assignment with respect to any insurance
contract purchased under the Plan, will be treated as a loan under this section.

      H. In the case of any Participant with one or more loans outstanding
hereunder, the amount available for distribution to such Participant (or his
Beneficiary) will consist of the Participant's vested account balance(s) (not
including the outstanding principal and accrued but unpaid interest on such
loans), plus the notes representing such loans.

ARTICLE 12 INVESTMENTS

      12.1 IN GENERAL

      A. Investment Funds will mean any investment fund or Employer Securities
chosen in an addendum to the Adoption Agreement as an investment medium for the
Plan. The Popular Master Plan Sponsor and the Plan Administrator shall have the
discretion to make available and terminate such funds as they shall deem
appropriate.

      B. The Popular Master Plan Sponsor may impose requirements concerning the
investment funds or securities in which contributions to the Plan must be
invested, and the Employer agrees to observe such requirements as a condition of
participating in this Popular Master Plan. Subject to such requirements, the
Employer may permit each Participant to direct the investment of some or all of
the contributions to his accounts. To the extent that Participants do direct the
investment of their accounts, it is intended that ERISA Section 404(c) apply to
the Plan, and neither the Employer, the Plan Administrator, the Trustee, the
Popular Master Plan Sponsor nor any other fiduciary will have any responsibility
or liability for the Participant's exercise of such investment control or for
any loss of diminution in value occasioned thereby.

      The Trustee shall be considered a directed Trustee unless it is otherwise
agreed to by the parties in the Adoption Agreement.

      12.2 PARTICIPANT INVESTMENT DIRECTIONS

      A. If the Employer allows, amounts credited to a Participant's accounts
will be invested

                                       52
<PAGE>

in the investment funds selected for the Plan by the Plan Sponsor in accordance
with the Participant's directions. Such Participant investment control may be
permitted with respect to certain types of contributions but not others. Where
allowed, a Participant's investment directions will govern the investment of
contributions to his accounts and the transfer of amounts in one investment fund
to another. Participants' exercise of investment control over their accounts
will be subject to any rules of the Plan Administrator under section 12.3.

      B. Subject to the Popular Master Plan Sponsor's requirements under section
12.1B. above, the investment of any account over which the Participant does not
exercise investment control under subsection A. above shall be made in the money
market fund included in the investment funds chosen by the Plan Sponsor.

      12.3 RULES FOR EXERCISE OF INVESTMENT OPTIONS

      Any designation of investments by the Participants will be subject to
nondiscriminatory general rules established by the Plan Administrator and the
Trustee; such rules may include; (a) restrictions on the minimum amount or
percentage of any contribution which may be placed in any particular investment
fund; (b) restrictions on the use of different amounts or percentages for
different types of contributions; (c) minimums or maximums (or both) on the
amount which may be invested or transferred to or from any particular investment
fund; and (d) restrictions on the time and frequency of designations, changes in
designations and transfers from one investment fund to another including the
required advance notice.

      These rules may differ for different types of contributions. The effective
date of any change in a Participant's election respecting allocation of
contributions among investment funds or any transfer from one fund to another
must coincide with a valuation date for each fund, unless the Plan
Administrator, Popular Master Plan Sponsor and Trustee provide otherwise.

      12.4 INVESTMENT IN EMPLOYER STOCK

      A. Voting of Employer Stock Generally.

            Each Participant shall have the right and shall be afforded the
opportunity to instruct the Trustee how to vote at any meeting of the
shareholders of the issuer of Employer Stock the total number of shares of
Employer Stock held in the Participant's Account. Instructions by Participants
to the Trustee shall be in such form and pursuant to such requirements as the
Plan Administrator and

                                       53
<PAGE>

the Trustee may prescribe. Any such instructions shall remain in the strict
confidence of the Trustee. Any share for which no such instructions are received
by the Trustee shall not be voted by the Trustee.

      B. Tender of Exchange Offers.

            In the event of a tender or exchange offer for any or all shares of
Employer Stock, the Plan Administrator and the Trustee shall notify each
Participant or Beneficiary and utilize its best efforts to timely distribute or
cause to be distributed to him such information as will be distributed to the
shareholders of the issuer of the Employer Stock in connection with any such
tender or exchange offer. Each Participant or his Beneficiary shall have the
right to instruct the Trustee in writing not to tender or exchange shares of
Employer Stock credited to his account under the Trust. The Trustee shall not
tender or exchange any shares of common stock credited to a Participant's
Account under the Trust unless instructions to tender or exchange such shares
have been received.

      ARTICLE 13 ACCOUNTS

      13.1 SEPARATE ACCOUNTS

      A. The Plan Administrator and the Trustee shall establish and maintain,
where appropriate, separate accounts for each Participant, including Pre-Tax
Contributions Account, After-Tax Contributions Account, Employer Contributions
Account, Matching Contributions Account, and Rollover Contributions Account; a
Participant's Rollover Contributions Account may contain subaccounts as provided
in section 7.1. Earnings will be credited to such accounts (and subaccounts) in
accordance with the provisions of this Article. Since these individual accounts
are maintained only for accounting purposes, a segregation of the Trust assets
within each account is not required.

      B. The Plan Administrator may itself maintain records of Participants'
accounts or may arrange for such records to be maintained by an outside service
provider (which may be the Popular Master Plan Sponsor or Trustee or a person
contracted by the Popular Master Plan Sponsor or Trustee). If the Plan
Administrator arranges with a service provider to maintain records of
Participants' accounts, the Plan Administrator will provide such information as
is necessary for the service provider to maintain such accounts as required
herein.

      13.2 VALUATION AND ALLOCATION OF EARNINGS AND LOSSES TO PARTICIPANTS
ACCOUNTS

                                       54
<PAGE>

      As of each Valuation Date, the Plan Administrator shall allocate to the
account of each Participant the net earnings and gains or losses on the
Participant's account received by the Trustee since the preceding Valuation
Date.

      13.3 ALLOCATION OF EXPENSES

      Any fees and expenses will be paid by the Trust unless the Employer elects
to pay any or all such fees and expenses; in such event, any fee or expense not
paid by the Employer will be paid from the Trust and will be allocated to the
accounts of Participants or to collective investment funds in which accounts are
invested in a manner which reasonably reflects the accounts and investment funds
that generated such fees and expenses. Approximations may be used whenever its
is not feasible to allocate such expenses on an exact basis. Recordkeeping
expenses properly allocable to a Participant's Account, such as, but not limited
to, loan originations fees, shall be so allocated and charged.

      If the Plan is terminated, amounts remaining in the Trust after all
Participants' account have been distributed to the Participants in accordance
with the Plan shall be distributed to the Employer.

ARTICLE 14 PLAN ADMINISTRATION

      14.1 PLAN ADMINISTRATOR

      The Plan Sponsor will be the Plan Administrator for purposes of section
3(16) of ERISA, and any reference in this document or the Adoption Agreement to
the Plan Administrator means the Plan Sponsor. The Plan Sponsor may in the
Adoption Agreement designate an individual or a group of individuals acting as a
committee to act on the Plan Sponsor's behalf in carrying out its duties as Plan
Administrator. Such persons may, but need not, be Participants or Employees,
partners, or officers of the Employer. The Plan Sponsor will notify the
Trustee of any such appointment. The Plan Sponsor may remove any such individual
or committee member at any time with or without cause, by filing written notice
of his removal with the Trustee. Any such individual or committee member may
resign at any time by filing his written resignation with the Plan Sponsor and
the Trustee. A vacancy however arising, will be filled by the Plan Sponsor.

      If the Plan Sponsor does not appoint an individual or committee to act for
the Plan Sponsor, the Plan Sponsor will carry out the responsibilities of the
Plan Administrator. If the Plan Sponsor is a sole proprietorship, in the event
of the sole proprietor's death, his executor or administrator will

                                       55
<PAGE>

be the Plan Administrator. If the Plan Sponsor is a partnership, in the event of
the death of all the partners, the executor or administrator of the last to die
will be the Plan Administrator.

      14.2 PLAN ADMINISTRATION

      The Plan Administrator is a named fiduciary of the Plan. In addition, the
Plan Administrator shall have the power and the duty to perform the following
administrative functions according to the policies, interpretations, rules,
practices and procedures established by the Plan Sponsor in accordance with the
respective areas of named fiduciary responsibilities:

      A. Apply Plan rules determining eligibility for participation or benefits;

      B. Calculate service and compensation credits for benefits;

      C. Prepare employee communications materials;

      D. Maintain Participants' service and employment records;

      E. Prepare reports required by government agencies, which shall include
maintaining records to demonstrate compliance with the Actual Deferral
Percentage test of Article 4 of the Plan that indicate the extent that Qualified
Non-Elective Contributions and Qualified Matching Contributions were taken into
account to satisfy such requirements;

      F. Calculate benefits;

      G. Orient new Participants and advise Participants regarding their rights
and options under the Plan;

      H. Collect contributions and apply contributions as provided in the Plan;

      I. Prepare reports concerning Participants' benefits; and

      J. Process claims.

      The Plan Administrator (and those to whom it has delegated its authority)
shall have vested in it under the terms of this Plan full discretionary and
final authority when exercising its duties hereunder.

      14.3 COMPENSATION AND EXPENSES

      The Plan Administrator will serve without compensation unless otherwise
determined by the Plan Sponsor, but no Employee of an Employer will be
compensated for his service as Plan Administrator. All reasonable expenses of
operating and administering the Plan will be paid by the Employer or from the
assets of the Trust, as provided in section 13.3. Such expenses include the

                                       56
<PAGE>

compensation of all persons employed or retained by the Plan Administrator (such
as attorneys, accountants, actuaries, trustee or other consultants or
specialists), premiums for insurance or bonds protecting the Plan and required
by law or deemed advisable by the Plan Administrator, and all other fees,
expenses or costs of Plan administration.

      14.4 CLAIMS PROCEDURES

      A. FILING OF CLAIM. A Participant or Beneficiary who believes he is
entitled to a benefit which he has not received may file a claim in writing with
the Plan Administrator. The Plan Administrator may require a claimant to submit
additional information, if necessary to process the claim. The Plan
Administrator shall review the claim and render its decision within ninety (90)
days from the date the claim is filed (or the requested additional information
is submitted, if later), unless special circumstances require an extension of
time for processing the claim. If such an extension is required, written notice
of the extension shall be furnished the claimant within the initial ninety (90)
day period. The notice shall indicate the special circumstances requiring the
extension and the date by which the Plan Administrator expects to reach a
decision on the claim. In no event shall the extension exceed a period of ninety
(90) days from the end of the initial period.

      B. NOTICE OF CLAIM DENIED. If the Plan Administrator denies a claim, in
whole or in part, it shall provide the claimant with written notice of the
denial within the period specified in subparagraph a. The notice shall be
written in language calculated to be understood by the claimant, and shall
include the following information:

            1. The specific reason for such denial;

            2. Specific reference to pertinent Plan provisions upon which the
denial is based;

            3. A description of any additional material or information which may
be needed to clarify or perfect the request, and an explanation of why such
information is required; and

            4. An explanation of the Plan's review procedure with respect to the
denial of benefits.

      C. REVIEW PROCEDURE. Any claimant whose claim has been denied, in whole or
in part, shall follow those review procedures as set forth herein.

            1. A claimant whose claim has been denied, in whole or in part, may
request a full and fair review of the claim by the Plan Administrator by making
written request therefor within

                                       57
<PAGE>
sixty (60) days of receipt of the notification of denial. The Plan
Administrator, for good cause shown, may extend the period during which the
request may be filed. The claimant shall be permitted to examine all documents
pertinent to the claim and shall be permitted to submit issues and comments
regarding the claim to the Plan Administrator in writing.

      2. The Plan Administrator shall render its decision within sixty (60) days
after receipt of the application for review, unless special circumstances (such
as the need to hold a hearing) require an extension of time for processing, in
which case the decision shall be rendered as soon as possible but not later than
one hundred and twenty (120) days after receipt of a request for review. If an
extension of time is necessary, written notice shall be furnished the claimant
before the extension period commences.

      3. The Plan Administrator shall decide whether a hearing shall be held on
the claim. If so, it shall notify the claimant in writing of the time and place
for the hearing. Unless the claimant agrees to a shorter period, the hearing
shall be scheduled at least fourteen (14) days after the date of the notice of
hearing. The claimant and/or his authorized representative may appear at any
such hearing.

      4. The Plan Administrator shall send its decision on review to the
claimant in writing within the time specified in his section. If the claim is
denied, in whole or in part, the decision shall specify the reasons for the
denial in a manner calculated to be understood by the claimant, referring to the
specific Plan provisions on which the decision is based. The Plan Administrator
shall not be restricted in its review to those provisions of the Plan cited in
the original denial of the claim.

      5. If the Plan Administrator does not furnish its decision on review
within the time specified in this subsection c., the claim shall be deemed
denied on review.

      14.5 AGENT FOR LEGAL PROCESS

      The Plan Sponsor shall be the agent for service of legal process.

ARTICLE 15 AMENDMENT, TERMINATION OR MERGER OF POPULAR MASTER PLAN AND PLAN

      15.1 AMENDMENT BY POPULAR MASTER PLAN SPONSOR

                                       58
<PAGE>

      The Popular Master Plan Sponsor may amend any or all provisions of this
Popular Master Plan at any time without obtaining the consent of the Employer,
and the Employer hereby expressly delegates authority to amend this Popular
Master Plan to the Popular Master Plan Sponsor.

      15.2 AMENDMENT BY THE PLAN SPONSOR

      Except for changes of design options selected in the Adoption Agreement,
if the Plan Sponsor amends the Plan or non-elective portions of the Adoption
Agreement it will no longer participate in this Popular Master Plan and will be
considered to have an individually designed plan.

      15.3 RESTRICTIONS ON AMENDMENTS

      No amendment under section 15.1 or 15.2 will:

      A. cause or permit any part of the assets of the Trust to be diverted to
purposes other than the exclusive benefit of Participants and their
Beneficiaries, or cause or permit any portion of such assets to revert to or
become the property of the Employer;

      B. retroactively deprive any Participant of any benefit of which he was
entitled hereunder by reason of contributions made by the Employer or the
Participant before the amendment, unless such amendment is necessary to conform
the Trust or Plan to, or satisfy the conditions of any law, governmental
regulation or ruling or to permit the Plan and Trust to meet the requirements of
ERISA and the IRC;

      C. decrease a Participant's account balance, except as permitted in ERISA
Section 302(c)(8). For purposes of this paragraph, a Plan amendment which has
the effect of decreasing a Participant's account balance or eliminating an
optional form of benefit, with respect to benefits attributable to service
before the amendment shall be treated as reducing an accrued benefit;

      D. if the vesting schedule of a Plan is amended, for an Employee who is a
Participant as of the later of the date such amendment is adopted or the date it
becomes effective, cause the nonforfeitable percentage (determined as of such
date) of such Employee's right to his Employer-derived accrued benefit to be
less than his percentage computed under the Plan without regard to such
amendment; also, if an amendment affects the vesting schedule of a Plan, any
Participant with three (3) or more Years of Service will have his vesting
determined under the pre-amendment vesting schedule if this would result in such
Participant having a greater vested interest then under the new vesting
schedule.

                                       59
<PAGE>

      E. eliminate an optional form of distribution in violation of ERISA
Section 204(g); or

      F. increase or otherwise affect the duties, liabilities or rights of the
Trustee unless the Trustee consents thereto in writing.

      15.4 NONREVERSION

      Except as provided in this section, the assets of the Plan shall never
inure to the benefit of an Employer; such assets shall be held for the exclusive
purpose of providing benefits to Participants and their Beneficiaries and for
defraying the reasonable administrative expenses of the Plan.

      A. If an Employer Contribution is made by virtue of a mistake of fact, to
the extent permitted by applicable law, this section shall not prohibit the
return of such contribution to the Employer within one (1) year after the
payment of the contribution.

      B. If a deduction for an Employer Contribution is disallowed under IRC
Section 1023(n), or any successor provision thereto, to the extent permitted by
applicable law, the contribution shall be returned to the Employer (to the
extent disallowed) within one (1) year after such disallowance.

      C. If the Plan is terminated amounts remaining in the Trust after all
Participants' account have been distributed to the Participants in accordance
with the Plan shall be distributed to the Employer.

      15.5 TERMINATION OF THE PLAN

      Although the Plan Sponsor has established the Plan with the bona fide
intention and expectation that it will be able to make contributions
indefinitely, nevertheless the Plan Sponsor is not and shall not be under any
obligation or liability whatsoever to continue its contributions or to maintain
the Plan for any given length of time. An Employer may in its sole and absolute
discretion, discontinue such contributions or terminate the Plan with respect to
its Employees, in accordance with the provisions of the Plan, at any time with
no liability whatsoever for such discontinuance or termination. If the Plan is
terminated or partially terminated, or if contributions of an Employer are
completely discontinued, the rights of all affected Participants in their
accounts shall thereupon become nonforfeitable, notwithstanding any other
provisions of the Plan. However, the Trust shall continue until all
Participants' accounts have been completely distributed to or for the benefit of
the Participants, in accordance with the Plan.

                                       60
<PAGE>

      15.6 DISPOSITION AND TERMINATION OF THE PLAN

      A. Upon complete or partial termination of the Plan, the Plan
Administrator will determine, subject to the joint and survivor rules of this
Plan, whether to direct the Trustee to continue to hold the accounts of
Participants affected by the termination or partial termination, to disburse
them as immediate benefit payments, to purchase immediate or deferred annuity
contracts, or to follow any other procedure he deems advisable. The Trustee will
follow the directions of the Plan Administrator.

      B. For purposes of each Employer adopting the Plan, the Trustee created
hereunder will terminate when all the assets in the Trust related to such
Employer have been distributed.

      15.7 MERGER OF EMPLOYER AND PLAN

      A. If the Employer merges or consolidates with or into a corporation, or
if substantially all of the assets of the Employer are transferred to another
business, the Plan hereby created shall terminate on the effective date of such
merger, consolidation or transfer. However, if the surviving corporation
resulting from such merger or consolidation, or the business to which the
Employer's assets have been transferred, adopts this Plan, it shall continue and
such corporation or business shall succeed to all rights, powers and duties of
the Employer hereunder. The employment of any Employee who continues in the
employ of such successor corporation or business shall not be deemed to have
been terminated for any purpose hereunder.

      B. In no event shall this Plan be merged or consolidated with any other
plan, nor shall there be any transfer of assets or liabilities from this Plan to
any other plan, unless immediately after such merger, consolidation or transfer,
each Participant's benefits, if such other plan were then to terminate, are at
least equal to or greater than the benefits to which the Participant would have
been entitled, had this Plan been terminated immediately before such merger,
consolidation, or transfer.

ARTICLE 16 TRANSFERS FROM OR TO OTHER QUALIFIED PLANS

      16.1 TRANSFERS FROM ANOTHER PLAN OF THE EMPLOYER

      A. Notwithstanding any other provision hereof, the Employer, with the
approval of the Popular Master Plan Sponsor, may cause to be transferred to the
Trustee all or any of the assets held (whether by a Trustee, custodian, or
otherwise) under any other defined contribution Plan which satisfies the
requirements of IRC Section 1165(a) and which is maintained by the Employer for
the

                                       61
<PAGE>

benefit of any of the Participants hereunder. If the Trustee is keeping separate
accounts for each Participant, any such assets so transferred will be
accompanied by written instructions from the Employer or Plan Administrator
naming the Participants for whose benefit such assets have been transferred and
showing separately the respective contributions by the Employer and by the
Participants and the current value of the assets attributable thereto.

      B. Upon receipt of any assets transferred to it under subsection (a), the
Trustee may sell any non-cash assets and invest the proceeds and any cash
transferred to it. The Trustee will make appropriate credits to the proper
accounts in accordance with the Employer's or Plan Administrator's instructions.

      16.2 TRANSFERS TO OTHER PLANS

      Upon the written request of the Employer, the Trustee will transfer an
amount designated by the Employer to the Trustee or custodian of any other
qualified Plan under which Plan Participants are covered.

ARTICLE 17 QUALIFIED DOMESTIC RELATIONS ORDER

      17.1 GENERAL

      A. The provisions of section 18.1 shall not be applicable to a Qualified
Domestic Relations Order (as defined in section 17.2), and payment of benefits
under the Plan shall be made in accordance with the terms of such order,
provided that such order:

            1. creates or recognizes the existence of an alternate payee's (as
defined in section 17.2) right to, or assigns to an alternate payee the right
to, receive all or a portion of the benefits payable to a Participant under the
Plan;

            2. clearly specifies:

                  a. the name and the last known mailing address (if any) of the
Participant and the name and mailing address of each alternate payee covered by
the order;

                  b. the amount or percentage of the Participant's benefits to
be paid by the Plan to each such alternate payee or the manner in which such
amount or percentage is to be determined;

                  c. the number of payments or the period to which the order
applies; and

                  d. the name of each plan to which such order applies;

                                       62
<PAGE>

            3. does not require the Plan to provide any type or form of benefit,
or any option, not otherwise provided under the Plan;

            4. does not require the Plan to provide increased benefits
(determined on the basis of actuarial value); and

            5. does not require the payment of benefits to an alternate payee
which are required to be paid to another alternate payee under another order
previously determined to be Qualified Domestic Relations Order.

      17.2 DEFINITIONS

      A. The following terms shall have the following meanings for purposes of
this Article:

            1. "ALTERNATE PAYEE" means any spouse, former spouse, child or other
dependent of a Participant who is recognized by a domestic relations order as
having a right to receive all, or a portion of, the benefits payable under the
Plan with respect to such Participant.

            2. "QUALIFIED DOMESTIC RELATIONS ORDER" means any judgment, decree
or order (including approval of a property settlement agreement), which:

                  a. relates to the provision of child support, alimony
payments, or marital property rights to a spouse, former spouse, child, or other
dependent of a Participant;

                  b. is made pursuant to a state domestic relations law
(including a community property law); and

                  c. which meets the requirements of the foregoing section 17.1.

      17.3 PAYMENTS AFTER THE EARLIEST RETIREMENT AGE

      A. In the case of any payment made before a Participant has separated from
service, a Qualified Domestic Relations Order shall not be considered as failing
to meet the requirements of section 17.1C. solely because such order requires
that payment of benefits be made to an alternate payee:

            1. on or after the date on which the Participant first attains (or
would have attained) the earliest retirement age;

            2. as if the Participant had retired on the date on which such
payment is to begin under such order (but taking into account only the present
value of benefits accrued); and

                                       63
<PAGE>

            3. in any form in which such benefits may be paid under the Plan to
the Participant.

      17.4 TREATMENT OF FORMER SPOUSE AS SURVIVING SPOUSE

      A. To the extent provided in any Qualified Domestic Relations Order:

            1. the former spouse of a Participant shall be treated as a
"surviving spouse" of such Participant for purposes of Section 205 of ERISA; and

            2. if married for at least one (1) year to the Participant, such
former spouse shall be treated as meeting the requirements of Section 205(f) of
ERISA.

      17.5 PROCEDURES

      The Plan Administrator shall promptly notify a Participant and any other
alternate payee of the receipt of a domestic relations order and of the Plan's
procedure for determining whether the order meets the requirements of a
Qualified Domestic Relations Order under this Article. Within a reasonable
period of time after the receipt of such order, the Plan Administrator, in
accordance with such procedures as it shall from time to time establish, shall
determine whether such order meets the requirements of a Qualified Domestic
Relations Order under this Article and shall notify the Participant and each
alternate payee of such determination.

      17.6 PROCEDURES DURING PERIOD OF DETERMINATION

      During any period of time in which the issue of whether a domestic
relations order meets the requirements of a Qualified Domestic Relations Order
under this Article is being determined by a court of competent jurisdiction, the
Plan Administrator shall segregate in a separate account in the Plan or in an
escrow account the amounts which would have been payable to the alternate payee
during such period if the order had been determined to be a Qualified Domestic
Relations Order under this Article. If within eighteen (18) months such order is
determined to be a Qualified Domestic Relations Order under this Article, the
Plan Administrator shall instruct the Trustee to pay the segregated amounts
(plus any interest thereon) to the person or persons entitled thereto. If within
eighteen (18) months it is determined that such order is not a Qualified
Domestic Relations Order under this Article, or the issue as to whether such
order so qualifies is not resolved, then the Plan Administrator shall instruct
the Trustee to pay the segregated amounts (plus any interest thereon) to

                                       64
<PAGE>

the person or persons who would have been entitled to such amounts if there had
been no order. Any determination that an order is a Qualified Domestic Relations
Order under this Article which is made after the end of the eighteen (18) month
period, shall be applied prospectively only.

ARTICLE 18 MISCELLANEOUS

      18.1 NON-ALIENATION AND NON-ASSIGNMENT OF BENEFITS

      Except as provided in Article 17, no benefit under this Plan shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge, and any attempt so to do shall be void, nor shall
any benefit be in any manner liable for or subject to garnishment, attachment,
execution or levy, or liable for or subject to the debts, contracts,
liabilities, engagements or torts of the person entitled to such benefit; and in
the event that the Plan Administrator shall find that any Participant or other
person entitled to a benefit under this plan has become bankrupt or that any
attempt has been made to anticipate, alienate, sell, transfer, assign, pledge,
encumber or charge any of his benefits under this Plan, then such benefit shall
cease and terminate and in that event the Plan Administrator shall hold or apply
the same to or for the benefit of such Participant or such other person, his
spouse, children, parents or other blood relatives, or any of them.

      18.2 LIMITATION ON RIGHTS CREATED BY PLAN

      A. The adoption and maintenance of the Plan and Trust will not be
construed to give a Participant the right to continue in the employ of the
Employer or to interfere with the right of the Employer to discharge, lay off or
discipline a Participant at any time, or give the Employer the right to require
any Participant to remain in its employ or to interfere with the Participant's
right to terminate his employment.

      B. The adoption and maintenance of the Plan and Trust, the creation of any
account or the payment of any benefit will not be construed as creating any
legal or equitable right against the Employer or the Trust except as this Plan
specifically provides.

      C. The Employer, the Trustee, the Plan Administrator and the Rollover
Contributions Account do not guaranty the payment of benefits hereunder and
benefits will be paid only to the extent of the assets of the Trust. It is a
condition of participation in the Plan that each Participant (and his
Beneficiary or anyone else claiming through him) will look only to the assets of
the Trust for the payment of any benefit to which he or his Beneficiary or other
person is entitled.

                                       65
<PAGE>

      18.3 ALLOCATION OF RESPONSIBILITIES

      The Employer, the Trustee and the Plan Administrator will each have only
those duties and responsibilities specifically allocated to each of them under
the Plan. There will be no joint fiduciary responsibility between or among
fiduciaries unless specifically stated otherwise. Any person may serve in more
than one fiduciary capacity.

      18.4 CURRENT ADDRESS OF PAYEE

      The Plan Administrator, the Trustee and the Employer have no obligation to
locate any person entitled to payments hereunder and will be fully protected if
all payments, notices and other papers are mailed to the last address of which
such person has notified the Plan Administrator in writing, or are withheld
pending receipt of proof of his current address and proof that he is alive.

      18.5 APPLICATION OF PLAN'S TERMS

      A. If an Employee retired, died or otherwise terminated his service before
the Effective Date of the Plan, the Employee and his beneficiaries will receive
no benefits and will have no rights under the Plan.

      B. If an Employee retires, dies or otherwise terminates his service on or
after the Effective Date of the Plan, the benefits and rights of the Employee
and his beneficiaries will be determined in accordance with the terms of the
Plan that are in effect on the date of such termination of service.

      C. The allocations to a Participant's account for any year of reference
will be determined in accordance with the terms of the Plan that are in effect
for such year.

      18.6 EMPLOYERS WITH EMPLOYEES WITHIN AND WITHOUT PUERTO RICO OR THAT ARE
MEMBERS OF AN AFFILIATED GROUP OF CORPORATIONS OR PARTNERSHIPS

      A. The satisfaction of the participation and non-discrimination
requirements of Sections 1165(a)(3)(A), 1165(a)(4), and 1165(e)(3) of the IRC
shall be determined by taking into the account the active Employees that the
Employer has in Puerto Rico. Notwithstanding the above, in the case of an
Employer having Employees within and without Puerto Rico or that are members of
an affiliated group of corporations or partnerships (within the meaning of
Section 1028 of the IRC) that adopt the same plan, said Employer or Employers
may elect to meet the above mentioned requirements as follows:

                                       66
<PAGE>

            1. By taking into the account all the active Employees (employed
within and without Puerto Rico) of the Employers or of each individual employer;

            2. By taking into the account all the Employees of the affiliated
group of corporation or partnerships (even if some of the members of the
affiliated group of corporations or partnerships have no Employees in Puerto
Rico);

            3. By taking into the account all the Employees of those members of
the affiliated group of corporations or partnerships having Employees in Puerto
Rico; or

            4. By taking into the account all the Employees employed by the
members of the affiliated group of corporations or partnerships in Puerto Rico.

      The above-mentioned options shall be available as long as the Plan offers
to the Puerto Rico resident Employees the same benefits offered to those
Employees located outside of Puerto Rico.

      18.7 USERRA

      Notwithstanding any provision of this Plan to the contrary, contributions,
benefits and service credit with respect to qualified military service will be
provided in accordance with the Uniformed Services Employment and Reemployment
Rights Act, effective for employment on or after December 12, 1994.

                                       67

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00075-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00075-of-00352.parquet"}]]