March 23, 2005

 

Mr. José Ramón González

Santander BanCorp

Puerto Rico

 

Dear Mr. González:

We hereby confirm the terms and conditions with regards to your ratification as
President and Chief Executive Officer of Santander BanCorp and Banco Santander
Puerto Rico (hereafter "the Group"):

As agreed upon, we have agreed to terminate your employment agreement dated
April 30, 2002 and which shall be replaced in accordance to the terms and
conditions set forth herein, which shall be effective from January 1, 2005,
without recourse amongst the parties.

In your position, you shall be responsible for and will supervise all of the
business operations of the Group in Puerto Rico.

The conditions set forth herein shall be in full force and effect for two years
commencing on January 1, 2005 and ending, therefore, on January 1, 2007.

During the period whereby these conditions are in full force and effect, the
Group may terminate your employment if there is just cause, without any
compensation whatsoever. The Group may also terminate your employment without
just cause. In this latter case, you shall receive as indemnity the greater of
the following amounts:

The pending gross amount due from the time of termination of employment until
the date of expiration of this Agreement (January 1, 2007) in accordance to the
annual salary set forth in Section 5; or

$1,250,000 gross

If by the term of expiration of this Agreement the parties have not renewed the
same, the Group shall pay, unless you have been offered an extension to this
Agreement under the same terms and conditions hereby established and the
extension was rejected by you, in which case a payment of $1,250,000 shall be
made as the final compensation for your separation from the Group, as so thereby
liberating you from any additional responsibility under this Agreement, with
exception to the temporary non-competition clause under Section 7.

In the case of a change in control of the Group in Puerto Rico, the Group shall
compensate you the gross amount of $1,250,000 if the Group does not maintain you
in your present position and classification, or if there is a separation from
your position, or if any of the terms set forth herein shall not occur.
Consequently this indemnity shall not be cumulative. As to the effects of this
Agreement, "change in control" shall be defined as any circumstance that will
cause Banco Santander Central Hispano, S.A. to decrease its beneficial ownership
to less than 50% of the common stock in circulation.

Your gross annual salary for the year 2005 shall be $650,000.00. For the year
2006 this annual gross salary shall be $700,000.00. This salary shall be
distributed in the payment installments that the Group has established.

You will remain under the bonus policy of the Group. In that regard, this policy
shall be determined with each bonus period that will take place under the
following terms:

 a. Three quarters (3/4) of its amount shall be determined by reaching the
    annual budget of the Group and the conditions established by the Group's
    Compensation Committee.
 b. The remaining one-quarter will be based on the Santander BanCorp stock in
    regard to other competitors of reference in accordance to the agreed
    schedule, of which the Santander BanCorp Compensation Committee shall inform
    you.

Also, you may be eligible to participate in other compensations schemes that may
be established by the Compensation Committee.

The remainder of conditions and benefits shall be governed in accordance to the
applicable policies of officers and employees of your position at the Bank and
other terms and conditions agreed upon by you and so established in your July
19, 2001 contract.

You acknowledge that the functions and duties that you will perform under this
agreement are of an essentially confidential nature, and as so you will privy of
facts, matters, plans and strategies, as well as confidential financial
information of the Group and its clients. Therefore, you agree to maintain in
absolute confidentiality and abstain to disclose this information during and
after the term of this agreement.

In the supposed termination given under the circumstances contemplated under the
before the last paragraph of the fourth section, in consideration of the
benefits granted hereunder and the specific compensation recognized under such
section, you shall refrain from performing similar services to those performed
or will perform for the Group nor for any of its direct competitors of the Group
within the jurisdiction of Puerto Rico, until twelve months have elapsed from
your date of last employment with the Group.

Should any dispute arise with regards to the interpretation, validity,
compliance, or early termination of this agreement that shall not be solved by
the parties, you hereby agree to submit to compulsory arbitration in the City of
San Juan, Puerto Rico, in accordance to the American Arbitration Association
rules. The party that requests the arbitration must notify the other party, no
later than ten (10) days. The Bank shall pay the arbitration costs, including
the arbiter fees. Each party shall be responsible for its own attorney's fees as
well as the preparation and presentation of evidence.

Please execute this agreement as a sign of your approval. I take the opportunity
to wish you great success in your functions.

Sincerely,

María Calero Padrón

Executive Vice President

 

Signature of approval:

 

____________________________

José Ramón González