RESIGNATION, RETIREMENT AND TRANSITION AGREEMENT

Exhibit 10.1

RESIGNATION, RETIREMENT AND TRANSITION AGREEMENT

THIS RESIGNATION, RETIREMENT AND TRANSITION AGREEMENT (“ Agreement ”) dated as of January 9, 2007 is made by and among Popular, Inc. a corporation organized under the laws of the Commonwealth of Puerto Rico (“ Popular ”); Popular Financial Holdings, Inc., a Delaware corporation (“ PFH ”) and Cameron E. Williams (“ Executive ”).

RECITALS

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

(a)  Resignation. The parties acknowledge and agree that effective on and as of January 9, 2007 (the “ Resignation Date ”), Executive shall resign (i) as President of PFH; and (ii) from all other positions Executive currently holds as an officer of any of the Popular Subsidiaries. In addition, effective on and as of a date to be agreed upon by the parties, but in any event not later than April 1, 2007, Executive shall resign from his position as a director of PFH and any of the other Popular Subsidiaries.

(b)  Transition Period. For the period commencing on the Resignation Date and ending on March 31, 2007 (the “ Transition Period ”), Executive shall continue to be employed by PFH to assist in the transition, integration and coordination of certain business lines of PFH into BPNA. Executive’s duties shall be performed during normal business hours and at such times and from such locations as are mutually acceptable to Executive and PFH. During the Transition Period, Executive shall have the title of Special Advisor and shall report directly to Roberto R. Herencia, the President of BPNA.

(c)  Compliance. During the Transition Period, Executive shall comply in full with (i) all applicable laws, orders and regulations, (ii) Popular’s Code of Ethics, Policies and Guidelines; and (iii) the employee manual in effect for PFH employees.

(d)  Payment of Salary/Benefits. During the Transition Period, Executive shall continue to receive Executive’s current base salary paid in the normal course in accordance with PFH’s payroll policy, as well as other compensation and benefits to which Executive is entitled in his current position (but not any accrued but unpaid bonus or other incentive compensation) with PFH. During the Transition Period, Executive shall not be entitled to participate in any bonus or incentive compensation program which may be in effect at PFH or Popular. In the event the Retirement Date shall be accelerated by mutual agreement of the parties, Executive shall continue to receive his current base salary and benefits during the Transition Period.

(e)  Retirement. On and as of March 31, 2007 (the “ Retirement Date ”) Executive shall retire from his employment at PFH and shall no longer be employed by PFH from and after such date.

(f)  Accrued Vacation Pay. On the Retirement Date, Executive shall be compensated for all accrued but unused vacation in accordance with PFH’s policy.

(g)  Company Automobile. On or as of the Retirement Date, Executive shall have the right to purchase the 2004 Lexus LS 430 presently used by Executive in the conduct of his duties at PFH for a book value as of March 31, 2007 of $8,552.00 which amount shall be paid by Executive to PFH.

(a)  Transition Payment. In exchange for Executive’s covenants and agreements contained in this Agreement, PFH shall pay to Executive a gross amount equal to $1,211,250.00, which amount, after all applicable deductions (the “ Transition Payment ”) shall be paid to Executive in one (1) lump sum within seven (7) days after the Retirement Date. Executive acknowledges that he is not otherwise entitled to the Transition Payment and the Transition Payment is solely being provided to Executive in consideration of the covenants and agreements made by Executive under this Agreement.

(b)  Medical Benefits. For a period of twelve (12) months following the Retirement Date, Executive will continue to be covered under PFH’s group health care plans (medical, dental and/or vision) under which Executive was covered as of the Resignation Date, at no cost to Executive.  This coverage shall count as COBRA continuation coverage (i.e., shall reduce the 18 months of COBRA coverage to which Executive is otherwise entitled).  PFH’s cost for Executive’s coverage under any self-insured plan for the 12-month coverage period will be considered wages to the Executive and will be reported on Executive’s Form W-2 as taxable compensation, and Executive will be responsible for any withholding taxes due as a result thereof.    Following the end of the 12-month coverage period, Executive shall be entitled to elect COBRA continuation coverage for the remainder of such period subject to Executive’s timely payment of the full COBRA premium. 

(c)  Equity Grants. At various times during Executive’s employment by PFH, Executive was awarded restricted stock (the “ Equity Grants ”) under the Popular, Inc. 2004 Omnibus Incentive Plan (the “ Plan ”). In consideration of Executive’s resignation and other agreements and covenants of Executive made in this Agreement, Popular and PFH agree that Popular will take all action to (i) ensure that no such Equity Grant expires upon Executive’s resignation and retirement and (ii) accelerate the vesting of any unvested portion of the Equity Grants as of the Retirement Date. The certificates evidencing such Equity Grants shall be delivered by Popular to Executive as soon as administratively practicable after the Retirement Date. All other terms and provisions of the Equity Grants as set forth the applicable agreements relating to the Plan shall remain in full force and effect. To the Extent that any of the foregoing actions require the amendment to the Plan documents, Executive, by his execution of this Agreement, consents to such amendments. Executive acknowledges and agrees that he will be subject to the provisions of Section 16 of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”) with respect to the sale or disposition of the Equity Grants.

(d)  SERP. Executive and PFH acknowledge and agree that (i) Executive is fully vested under PFH’s Supplemental Executive Retirement Plan (“ SERP ”); (ii) no additional benefits shall accrue under SERP after the Resignation Date; (iii) Executive’s vested balance under the SERP as of December 30, 2006 is $410,540.88 and shall be recalculated as of the Retirement Date (and shall be subject to investment fluctuations based upon Executive’s elections through date of distribution); and (iv) all benefits accrued under the SERP shall be paid to Executive in accordance with the payment election made by Executive under the SERP. Executive acknowledges and agrees that no other benefits shall accrue to him and no other payments shall be made to him with respect to the SERP.

(e)  Popular 401(k) Plan. Executive and PFH acknowledge and agree that Executive is a participant in the Popular, Inc. USA 401(k) Savings and Investment Plan (the “ 401 (k) Plan ”) and that Executive’s benefits under the 401(k) Plan shall be determined in accordance with the provisions thereof and any election related thereto. Executive’s participation in the 401(k) Plan shall end on the Retirement Date. 401(k) deductions will not be deducted from, nor made by PFH with respect to, the Transition Payment.

(f)  Voluntary Deferral Plan. Executive’s participation in the Popular Financial Holdings Deferral Plan shall end on the Resignation Date. Executive’s vested balance under such plan shall be calculated as of the Retirement Date and shall be subject to investment fluctuations based upon Executive’s elections through date of distribution.

(g)  No Further Benefits, Payments, Etc. Executive acknowledges and agrees that except as expressly provided herein, Executive’s coverage or participation under any voluntary deferral plan, benefit plan, program, policy or arrangement sponsored or maintained by PFH or Popular shall cease and be terminated as of the Resignation Date. Executive further acknowledges and agrees that no payment made by PFH pursuant to this Agreement is subject to any employer matching obligation or any other employer contribution under any benefit or deferred compensation plan, whether or not any such payment is characterized as wages or other compensation.

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

(a) Executive shall execute and deliver the release attached hereto as Annex A (the “ Release ”) on the Retirement Date.

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

“ Competitive Enterprise ” means any business enterprise that either (1) engages in the nonprime consumer mortgage business or the consumer mortgage servicing business (whether prime or nonprime) in the United States provided PFH or any Popular Subsidiary is engaged in such business while this Section 5 is in effect; or (2) holds a 5% or greater equity, voting or profit participation interest in any enterprise that engages in such a competitive activity.

“ Solicit ” means any direct or indirect communication, initiation, advice, encouragement or request of any person to take or refrain from taking any action (regardless of who initiated the communication in which the preceding occurs).

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

(1) In the course of Executive’s employment as President of PFH, Executive has and has had access to Proprietary Information and PFH’s client base and will profit from the goodwill associated with PFH. On the other hand, in view of Executive’s access to Proprietary Information and his importance to PFH, if Executive competes with PFH for some time after his employment, PFH will likely suffer significant harm (but the amount of the loss to PFH would be uncertain and not readily ascertainable). This Agreement provides Executive with substantial additional benefits over Executive’s prior arrangements with PFH, including the substantial additional compensation referred to in Section 2 hereof. In return for the benefits that Executive will receive from PFH and Popular and to induce PFH and Popular to enter into this Agreement and in light of the potential harm Executive could cause PFH, Executive agrees to the provisions of this Section 5. Neither PFH nor Popular would have entered into this Agreement if Executive did not agree to this Section 5.

(2) This Section 5 limits Executive’s ability to earn a livelihood in a Competitive Enterprise and Executive’s relationships with Clients. Executive acknowledges, however, that complying with this Section 5 will not result in severe economic hardship for Executive or Executive’s family.

(c)  Non-Competition. During Executive’s employment and, for the period of one year following the Retirement Date, Executive agrees that he will not directly or indirectly:

(1) hold a 5% or greater equity, voting or profit participation interest in a Competitive Enterprise; or

(2) associate (including as a director, officer, employee, partner, consultant, agent or advisor) with a Competitive Enterprise and in connection with Executive’s association engage, or directly or indirectly manage or supervise personnel engaged, in any activity:

(A) that is substantially related to any activity that Executive was engaged in,

(B) that is substantially related to any activity for which Executive had direct or indirect managerial or supervisory responsibility, or

(C) that calls for the application of specialized knowledge or skills substantially related to those used by Executive in his activities;

in each case , for PFH or the Popular Subsidiaries at any time before the end of Executive’s employment.

(d)  Non-Solicitation of PFH or Popular Employees. During Executive’s employment and for one year following the Retirement Date, Executive agree that he will not directly or indirectly attempt to Solicit anyone who is then an employee, agent or contractor of PFH or any Popular Subsidiary (or who was an employee, agent or contractor of PFH or any Popular Subsidiary within the prior six months) to resign from PFH or any Popular Subsidiary or to apply for or accept employment with any Competitive Enterprise. The term “Solicit” shall not be deemed to include solicitation or employment of individuals who shall respond to public advertisement media of general distribution ( i.e. , not targeted to present or former PFH employees) without specific instruction or direction by Executive or whom shall have been previously terminated or the subject of a reduction at PFH.

(e)  Executive’s Payment Obligations/Off-sets . If Executive shall fail to comply with this Section 5, other than any isolated, insubstantial and inadvertent failure that is not in bad faith, Executive will pay PFH any Transition Payment that Executive shall have received in connection with this Agreement. PFH will have the right to offset Executive’s obligations under this Section against any amounts otherwise owed to Executive by PFH or Popular, including under this Agreement. This payment obligation is in addition to any rights that PFH may have under this Section 5.

(f)  Notice to New Employers . Before Executive accepts employment with any other person or entity while any of Section 5(c) or 5(d) is in effect, Executive will provide the prospective employer with written notice of the provisions of this Section 5 and will deliver a copy of the notice to PFH.

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

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

(a)  Consideration . This Agreement is entered into as a material inducement to PFH and Popular in consideration of the mutual covenants contained in this Agreement. The parties to this Agreement acknowledge the receipt and sufficiency of the consideration to this Agreement and intend this Agreement to be legally binding.

(b)  Amendments and Waivers . Any provision of this Agreement may be amended or waived but only if the amendment or waiver is in writing and signed, in the case of an amendment, by all of the parties, or, in the case of a waiver, by the party that would have benefited from the provision waived.

(c)  Bank Regulatory Limitation . If any payment or benefit under this Agreement would otherwise be a golden parachute payment within the meaning of Section 18(k) of the Federal Deposit Insurance Act (a “ Golden Parachute Payment ”) that is prohibited by applicable law, then the total payments and benefit will be reduced to the greatest amount that could be made to you without there being a Golden Parachute Payment. PFH and Popular shall provide Executive with the opportunity to select the order in which payments or benefits are reduced.

(d)  Severability . If any provision of this Agreement is found by any court of competent jurisdiction (or legally empowered agency) to be illegal, invalid or unenforceable for any reason, then (i) the provision will be amended automatically to the minimum extent necessary to cure the illegality or invalidity and permit enforcement and (ii) the remainder of this Agreement will not be affected. In particular, if any provision of Section 5 is so found to violate law or be unenforceable because it applies for long