Exhibit 10.1
Loan Agreement
Dated January 22, 2010
Santander BanCorp (“Santander BanCorp”)
Santander Financial Services, Inc. (“Santander FS”)
(each a “Borrower” and together the “Borrowers”)

Banco Santander Puerto Rico (“Bank”)

 

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Loan Agreement Contents

                      Details     1              
 
                General terms     3              
1 Interpretation
            3   1.1  
Definitions
    3           1.2  
References to certain general terms
    6           1.3  
Number
    7           1.4  
Headings
    7              
2 The Facility and Facility Limits
            7   2.1  
Bank to fund
    7           2.2  
Maximum accommodation — Limits
    8           2.3  
Liability of the Borrowers
    8           2.4  
Purpose
    8              
3 Using the Facility
            9   3.1  
Drawing down
    9           3.2  
Requesting a drawdown
    9           3.3  
Effect of a Drawdown Notice
    9           3.4  
Conditions to drawdown
    9           3.5  
Conditions to all drawdowns
    9           3.6  
Benefit of conditions
    10              
4 Interest
            10   4.1  
Interest charges
    10              
5 Repaying and prepaying
            10   5.1  
Repayment
    10           5.2  
Prepayment
    10           5.3  
Prepayments not available for redrawing
    10              
6 Payments
            10   6.1  
Manner of payment
    10           6.2  
No Withholding
    11              
7 Cancellation
            11      
8 Increased costs
            11   8.1  
Compensation
    11           8.2  
Possible minimization
    12              
9 Illegality or impossibility
            12   9.1  
Bank’s right to suspend or cancel
    12           9.2  
Extent and duration
    13           9.3  
Notice requiring prepayment
    13              
10 Representations and warranties
            13   10.1  
Representations and warranties
    13           10.2  
Repetition of representations and warranties
    14           10.3  
Reliance
    14              
11 Undertakings
            15   11.1  
General undertakings
    15              
12 Default
            15   12.1  
Events of Default
    15          

 

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                      12.2  
Consequences of default
    17           12.3  
Investigation of default
    17              
13 Costs and indemnities
          17   13.1  
What the Borrowers agree to pay
    17           13.2  
Indemnity
    17              
14 Interest on overdue amounts
          18   14.1  
Obligation to pay
    18           14.2  
Compounding
    18           14.3  
Interest following judgment
    18              
15 Application of payments
          19      
16 Dealing with interests
          19   16.1  
No dealing by Borrowers
    19           16.2  
Dealings by Bank
    19              
17 Notices and other communications
          19   17.1  
Form — all communications
    19           17.2  
Form — communications sent by email
    19           17.3  
Delivery
    19           17.4  
When effective
    20           17.5  
When taken to be received
    20           17.6  
Receipt outside business hours
    20           17.7  
Waiver of notice period
    20              
18 General
          20   18.1  
Application to Transaction Documents
    20           18.2  
Prompt performance
    21           18.3  
Consents
    21           18.4  
Certificates
    21           18.5  
Set-off
    21           18.6  
Discretion in exercising rights
    21           18.7  
Partial exercising of rights; no waiver
    21           18.8  
No liability for loss
    21           18.9  
Conflict of interest
    21           18.10  
Remedies cumulative
    22           18.11  
Indemnities
    22           18.12  
Rights and obligations are unaffected
    22           18.13  
Inconsistent law
    22           18.14  
Supervening legislation
    22           18.15  
Time of the essence
    22           18.16  
Variation and waiver
    22           18.17  
Further steps
    22           18.18  
Counterparts
    23           18.19  
Governing law
    23              
 
                Schedule 1 — Conditions precedent (clause 3.4)     Sch. 1-1    
       
 
                Schedule 2 — Drawdown Notice (clause 3)     Sch. 2-1            
 
                Signature page     S-1          

 

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Details
Parties

          Parties   Santander BanCorp, Santander FS and Bank
Santander
  Name   Santander BanCorp
BanCorp
       
 
       
 
  IRS TAX ID   66-0573723
 
       
 
  Incorporated   Commonwealth of Puerto Rico
 
       
 
  Address   207 Ponce de Leon Avenue
 
      4th Floor
 
      San Juan, PR 00918
 
       
 
  Fax   787-777-4191
 
       
 
  Telephone   787-777-4486
 
       
 
  Email   fbruno@bspr.com
 
       
 
  Attention   Fernando L. Bruno
 
       
Santander FS
  Name   Santander Financial Services, Inc.
 
       
 
  IRS TAX ID   66-0422347
 
       
 
  Incorporated   Commonwealth of Puerto Rico
 
       
 
  Address   207 Ponce de Leon Avenue
 
      4th Floor
 
      San Juan, PR 00918
 
       
 
  Fax   787-777-4191
 
       
 
  Telephone   787-777-4486
 
       
 
  Email   fbruno@bspr.com
 
       
 
  Attention   Fernando L. Bruno

 

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          Parties   Santander BanCorp, Santander FS and Bank
Bank
  Name   Banco Santander Puerto Rico
 
       
 
  IRS TAX ID   66-312389
 
       
 
  Incorporated in   Commonwealth of Puerto Rico
 
       
 
  Address   207 Ponce de Leon Avenue
 
      5th Floor
 
      San Juan, PR 00918
 
       
 
  Fax   787-767-7913
 
       
 
  Telephone   787-777-4534
 
       
 
  Email   jmoreno@bspr.com
 
       
 
  Attention   Juan Moreno

Summary of facility

             
Facility
  Facility Limit   $612,000,000
 
           
 
  Santander BanCorp
Facility Limit   $182,000,000
 
           
 
  Santander FS
Facility Limit   $430,000,000
 
           
 
  Availability Period   The period from the date of this agreement to
January 26, 2010
 
           
 
  Maturity Date   March 23, 2010
 
           
 
  Interest Rate   0.67% per annum
 
           
 
  Purpose   To refinance short-term borrowings from the Bank and for general
corporate purposes.

 

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Loan Agreement
General terms

1   Interpretation

1.1   Definitions

These meanings apply unless the contrary intention appears:
Amount Owing means the total of all amounts which are then due for payment, or
which will or may become due for payment, in connection with any Transaction
Document (including transactions in connection with them) to the Bank.
Authorized Officer means any appointed by the party to act as an Authorized
Officer for the purposes of the Transaction Documents
Availability Period means the period from the date of this agreement to
January 26, 2010.
Bank means the person so described above in the Details.
Borrower means Santander BanCorp or Santander FS, as the context requires.
Borrowers mean, collectively, Santander BanCorp and Santander FS.
Business Day means a day on which banks are open for general banking business in
Madrid, Spain, New York, New York and San Juan, Puerto Rico (not being a
Saturday, Sunday or public holiday in any such place).
Control of a corporation includes the direct or indirect power to directly or
indirectly:

  (a)   direct the management or policies of the corporation; or     (b)  
control the membership of the board of directors;

whether or not the power has statutory, legal or equitable force or is based on
statutory, legal or equitable rights and whether or not it arises by means of
trusts, agreements, arrangements, understandings, practices, the ownership of
any interest in shares or stock of the corporation or otherwise.
Costs include costs, charges and expenses, including those incurred in
connection with advisors.
Default Rate means the Interest Rate plus 2% per annum.
Details mean the section of this agreement headed “Details.”
Directive means:

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  (a)   a law; or     (b)   a treaty, an official directive, request,
regulation, guideline or policy (whether or not having the force of law) with
which banks in Puerto Rico and the United States generally comply in carrying on
their business.

Drawdown Date means the date on which a drawdown is or is to be made.
Drawdown Notice means a completed notice containing the information and
representations and warranties set out in Schedule 2.
Drawing means the outstanding principal amount of a drawdown made under the
Facility.
Event of Default means an event so described in clause 12.
Facility means the Santander BanCorp Facility or the Santander FS Facility or
both, as the context requires.
Facility Limit means the sum of the Santander BanCorp Facility Limit and the
Santander FS Facility Limit, as each may be reduced or cancelled under this
agreement.
Financial Report means a financial report consisting of:

  (a)   financial statements; and     (b)   any notes to those financial
statements; and     (c)   any directors’ or officers’ declaration about the
financial statements and notes,

together with any reports (including any directors’ or officers’ reports)
attached to any of those documents or intended to be read with any of them.
A person is Insolvent if:

  (a)   it is generally unable to pay its debts as such debts become due, or
shall admit in writing its inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors; or     (b)   any proceeding
shall be instituted by or against it seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of any order for relief or the appointment of a receiver,
trustee, or other similar official for it or for any substantial part of its
property and, in the case of any such proceeding instituted against it (but not
instituted by it) that is being diligently contested by it in good faith, either
such proceeding shall remain undismissed or unstayed for a period of sixty
(60) calendar days or any of the actions sought in such proceeding (including,
without limitation, the entry of any order for relief against, or

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      the appointment of a receiver, trustee, custodian or other similar
official for, it or any substantial part of its property) shall occur; or    
(c)   it shall take any action to authorize any of the actions set forth above.

Interest Payment Date means the Maturity Date.
Interest Rate means 0.67% per annum.
Limit means:

  (a)   the Facility Limit;     (b)   the Santander BanCorp Facility Limit; and
    (c)   Santander FS Facility Limit,

or any of them, as the context requires.
Material Adverse Effect means a material adverse effect on:

  (a)   the applicable Borrower’s ability to comply with its obligations under
any Transaction Document; or     (b)   the Bank’s rights under a Transaction
Document; or     (c)   the business or financial condition of the applicable
Borrower.

Maturity Date means March 23, 2010.
Potential Event of Default means an event which, with the giving of notice,
lapse of time or fulfillment of any condition, would be likely to become an
Event of Default.
Santander means Banco Santander, S.A.
Santander BanCorp Facility means the facility made available to Santander
BanCorp under this agreement.
Santander BanCorp Facility Limit means $182,000,000.
Santander FS Facility means the facility made available to Santander FS under
this agreement.
Santander FS Facility Limit means $430,000,000.
Santander Group means the corporate group comprising Santander and its
consolidated Subsidiaries.

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Security Agreement, Pledge and Assignment means the Security Agreement, Pledge
and Assignment dated on or about the date of this Loan Agreement, between
Santander and the Bank.
Subsidiary of an entity means another entity which:

  (a)   is a subsidiary of the first entity within the meaning of any applicable
law, if the context requires it; or     (b)   is part of the consolidated entity
constituted by the first entity and the entities it is required to include in
the consolidated financial statements it prepares, or would be if the first
entity was required to prepare consolidated financial statements.

Taxes means any and all taxes, imposts, duties, charges, fees, levies or other
charges or assessments of whatever nature, including income, gross receipts,
“patente”, excise, real or personal property, sales, withholding, social
security, retirement, unemployment, occupation, use, service, license, net
worth, payroll, franchise, and transfer and recording, imposed by the United
States Internal Revenue Service, the Commonwealth of Puerto Rico Department of
the Treasury, the Municipal Revenue Collections Center of Puerto Rico, or any
other taxing authority (whether domestic or foreign, including any federal,
state, Puerto Rico, United States possession, county, municipal, local or
foreign government or any subdivision or taxing agency thereof), whether
computed on a separate, consolidated, unitary, combined or any other basis,
including interest, fines, penalties or additions to tax attributable to or
imposed on or with respect to any such taxes, charges, fees, levies or other
assessments.
Transaction Documents means:

  (a)   this agreement;     (b)   any Drawdown Notice;     (c)   the Security
Agreement, Pledge and Assignment;     (d)   any document which a Borrower or
Santander acknowledges in writing to be a Transaction Document; and     (e)  
any other document connected with any of them.

1.2   References to certain general terms

Unless the contrary intention appears, in this agreement:

  (a)   a reference to a group of persons is a reference to any two or more of
them jointly and to each of them individually;     (b)   an agreement,
representation or warranty in favor of two or more persons is for the benefit of
them jointly and each of them individually;

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  (c)   an agreement, representation or warranty by two or more persons binds
them jointly and each of them individually but an agreement, representation or
warranty by the Bank binds the Bank individually only;     (d)   a reference to
any thing (including an amount) is a reference to the whole and each part of it;
    (e)   a reference to a document (including this agreement) includes any
variation or replacement of it;     (f)   a reference to United States dollars,
dollars, $ or US$ is a reference to the lawful currency of the United States of
America;     (g)   a reference to a time of day is a reference to Puerto Rico
time;     (h)   the word “person” includes any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, limited liability company, institution, entity, party or government
(whether national, federal, state, county, city, municipal, or otherwise,
including, without limitation, any instrumentality, division, agency, body or
department thereof);     (i)   a reference to a particular person includes the
person’s executors, administrators, successors, substitutes (including persons
taking by novation) and assigns;     (j)   the words “including,” “for example”
or “such as” when introducing an example, do not limit the meaning of the words
to which the example relates to that example or examples of a similar kind;    
(k)   an Event of Default or Potential Event of Default is “continuing” if it
has not been waived by, or remedied to the satisfaction of, the Bank.

1.3   Number

The singular includes the plural and vice versa.

1.4   Headings

Headings and the Summary in the Details are for convenience only and do not
affect the interpretation of this agreement.

2   The Facility and Facility Limits   2.1   Bank to fund

The Bank agrees to provide the loans requested by the Borrowers under this
agreement.

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2.2   Maximum loans — Limits

  (a)   Subject to paragraphs (b) and (c), the maximum total amount of loans
available to the Borrowers under this agreement is the Facility Limit.     (b)  
Within the Facility Limit:

  (i)   the maximum total amount of loans available to Santander BanCorp is the
Santander BanCorp Facility Limit; and     (ii)   the maximum total amount of
loans available to Santander FS is the Santander FS Facility Limit.

  (c)   To avoid doubt:

  (i)   no part of the Santander BanCorp Facility Limit is available to be
borrowed by Santander FS; and     (ii)   no part of the Santander FS Facility
Limit is available to be borrowed by Santander BanCorp.

2.3   Liability of the Borrowers

The Borrowers’ obligation to pay principal and interest in connection with the
Facilities is several and not joint (“mancomunada”). Therefore:

  (a)   a Drawing by Santander BanCorp under the Santander BanCorp Facility, all
amounts of interest (including default interest) in connection with that
Drawing, and amounts payable under clause 6.2 in connection with any payment by
Santander BanCorp, are repayable or payable (as the case may be) by Santander
BanCorp and not by Santander FS; and     (b)   a Drawing by Santander FS under
the Santander FS Facility, all amounts of interest (including default interest)
in connection with that Drawing, and amounts payable under clause 6.2 in
connection with any payment by Santander FS, are repayable or payable (as the
case may be) by Santander FS and not by Santander BanCorp.

Subject only to clause 2.3 above, the Borrowers are jointly and severally liable
to pay all other amounts payable under the Transaction Documents (including
amounts payable under indemnities to the extent they do not comprise amounts in
the nature of those described in paragraphs (a) or (b)).

2.4   Purpose

Drawings under the Facilities may only be used to refinance short-term
borrowings incurred under a loan agreement dated September 24, 2008, with the
Bank and for general corporate purposes, and for no other purpose.

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3   Using the Facility

3.1   Drawing down       The Borrowers need not use the Facility. However, if a
Borrower wants to use a Facility, a Borrower may do so by a single drawdown. The
undrawn part of a Facility is automatically cancelled after the Drawing is made.
  3.2   Requesting a drawdown       If a Borrower wants a drawdown, it agrees to
give a Drawdown Notice to the Bank by 11:00 a.m. on the Business Day next
preceding the day it wants the drawdown. Each Borrower must provide its own
Drawdown Notice.   3.3   Effect of a Drawdown Notice       A Drawdown Notice is
effective when the Bank actually receives it in legible form. An effective
Drawdown Notice is irrevocable.   3.4   Conditions to drawdown       Neither
Borrower may request a drawdown until the Bank has received every item listed in
Schedule 1 (“Conditions precedent”) in form and substance satisfactory to the
Bank. Any item required to be certified must be certified by authorized officers
of the applicable Borrower as being true and complete as at a date no earlier
than the date of this agreement. The Bank agrees to notify the applicable
Borrower as soon as practicable after the Bank receives the final item.   3.5  
Conditions to all drawdowns

The Bank need not provide any loans unless:

  (a)   it is to be provided during the Availability Period; and     (b)   it is
satisfied that the loan is to be used solely for the purposes described in
clause 2.4; and     (c)   the Bank has received a Drawdown Notice in respect of
it; and     (d)   the Bank is satisfied that the representations and warranties
in clause 10 (“Representations and warranties”) and in the Drawdown Notice, and
the statements in the Drawdown Notice, are correct and not misleading at the
date of the Drawdown Notice and at the date the loan is provided; and     (e)  
the Bank is satisfied that no Event of Default or Potential Event of Default is
continuing, or would result from the loan being provided; and     (f)   the Bank
has received all other documents and other information it reasonably requests.

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3.6   Benefit of conditions       Each condition to drawdown is for the sole
benefit of the Bank and may be waived by it.   4   Interest   4.1   Interest
charges

Each Borrower agrees to pay interest on the Drawing until the Maturity Date at
the Interest Rate. Interest:

  (a)   accrues daily from and including the Drawdown Date but excluding the
Maturity Date; and     (b)   is payable on the Interest Payment Date; and    
(c)   is calculated on actual days elapsed and a year of 360 days.

5   Repaying and prepaying   5.1   Repayment       Each Borrower agrees to repay
the Drawing in full on the Maturity Date.   5.2   Prepayment       A Borrower
may prepay the Drawing in full or in part by notifying the proposed prepayment
to the Bank by 11:00 a.m. on the second Business Day before the prepayment (once
given, a notice of prepayment is irrevocable and the Borrower is obliged to
prepay in accordance with the notice). If a Borrower prepays, it may be liable
for break costs — see clause 13.2 (“Indemnity”).   5.3   Prepayments not
available for redrawing       Amounts prepaid or repaid, as the case may be, may
not be redrawn.   6   Payments   6.1   Manner of payment       Unless a
provision of a Transaction Document expressly states otherwise, each Borrower
agrees to make payments (including payments by way of reimbursement) under each
Transaction Document:

  (a)   on the due date (or, if that is not a Business Day, on the previous
Business Day); and     (b)   not later than 11:00 a.m.; and     (c)   in United
States dollars in immediately available funds; and

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  (d)   to the Bank by payment into the following account, or as the Bank
otherwise directs:

         
Bank:
  Deutsche Bank
 
       
ABA:
  021001033
 
       
For account of:
  Banco Santander Puerto Rico
 
       
Account No.:
  0401408  

If the Bank directs a Borrower to pay a particular party or in a particular
manner, a Borrower is taken to have satisfied its obligation to the Bank by
paying in accordance with the direction from the Bank.
A Borrower satisfies a payment obligation only when the Bank or the person to
whom it has directed payment receives the amount.

6.2   No Withholding

All payments to be made by a Borrower must be made without set-off or
counter-claim, and be free and clear of any withholding or deduction for Taxes
unless prohibited by law. If any deduction is required by law, the relevant
Borrower will make the deduction, pay any Taxes, and pay to the Bank further
amount(s) sufficient to ensure that the Bank receives the same net amount as it
would have received if no deduction had been made.

7   Cancellation       Before a Drawing is made, a Borrower may cancel an
undrawn Facility in whole or in part by notifying the Bank on or before the
second Business Day before the cancellation is to take effect. A partial
cancellation must be at least $1,000,000 and a whole multiple of $1,000,000.
Once given, the notice is irrevocable. The relevant Limits will be reduced by
the amount of any cancellation.   8   Increased costs   8.1   Compensation      
Each Borrower agrees to compensate the Bank on demand if the Bank determines
that:

  (a)   a Directive or change in Directive, in either case applying for the
first time after the date of this agreement; or     (b)   a change in a
Directive’s interpretation or administration by an authority after the date of
this agreement; or     (c)   compliance by the Bank or any of its Related
Entities with any such Directive, changed Directive or changed interpretation or
administration

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directly or indirectly:

  (i)   increases the cost of the Facility to the Bank or any of its Related
Entities; or     (ii)   reduces any amount received or receivable by the Bank,
or the effective return to, the Bank or any of its Related Entities, in
connection with the Facility; or     (iii)   reduces the return on capital
allocated to the Facility.

In this clause 8.1, a reference to a Directive does not include a Directive
imposing or changing the basis of a tax on the overall net income of the Bank.
The Bank shall notify the Borrowers of any event occurring after the date of
this agreement entitling the Bank to compensation under this clause 8.1 as
promptly as practicable, but in any event within two days after the Bank obtains
actual knowledge thereof, provided that if the Bank fails to give such notice to
the Borrowers within two days after it obtains actual knowledge of such event,
the Bank shall only be entitled to payment under clause 8.1 for costs or other
amounts incurred or payable from and after the date that is two days prior to
the date of actual notice to the Borrowers.
Compensation need not be in the form of a lump sum and may be demanded as a
series of payments.

8.2   Possible minimization       Each Borrower agrees to compensate the Bank
whether or not the increase or reduction could have been avoided. However, if a
Borrower asks, the Bank agrees to consider ways of minimizing any increase or
reduction.   9   Illegality or impossibility   9.1   Bank’s right to suspend or
cancel       This clause 9 applies if the Bank determines that:

  (a)   a change in a Directive; or     (b)   a change in the interpretation or
administration of a Directive by an authority; or     (c)   a Directive,

applying for the first time after the date of this agreement, makes it (or will
make it) illegal or impossible in practice for the Bank to fund, provide, or
continue to fund or provide, a loan under the Transaction Documents. In these
circumstances, the Bank, by giving a notice to the Borrowers, may suspend or
cancel some or all of the Bank’s obligations under this agreement as indicated
in the notice.

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9.2   Extent and duration       The suspension or cancellation:

  (a)   must apply only to the extent necessary to avoid the illegality or
impossibility; and     (b)   in the case of suspension, may continue only for so
long as the illegality or impossibility continues.

9.3   Notice requiring prepayment       If the illegality or impossibility
relates to the Drawing, the Bank, by giving a notice to the Borrowers, may
require prepayment of all or part of the Drawing and interest accrued on that
part. Each Borrower agrees to repay the amount specified within two Business
Days after receiving the notice (or, if earlier, on the date the illegality or
impossibility arises).   10   Representations and warranties   10.1  
Representations and warranties       Each Borrower represents and warrants in
respect of itself that:

  (a)   (incorporation and existence) it has been incorporated in accordance
with the laws of the Commonwealth of Puerto Rico, is validly existing under
those laws and has power and authority to carry on its business as it is now
being conducted; and     (b)   (power) it has power to enter into the
Transaction Documents to which it is a party and comply with its obligations
under them; and     (c)   (no contravention or exceeding power) the Transaction
Documents and the transactions under them which involve it do not contravene its
organizational documents or any law or obligation by which it is bound or to
which any of its assets are subject, where such contravention has or is likely
to have a Material Adverse Effect, or cause a limitation on its powers or the
powers of its directors to be exceeded; and     (d)   (authorizations) it has in
full force and effect the authorizations necessary for it to enter into the
Transaction Documents to which it is a party, to comply with its obligations and
exercise its rights under them and to allow them to be enforced; and     (e)  
(validity of obligations) its obligations under the Transaction Documents are
valid and binding and are enforceable against it in accordance with their terms;
and     (f)   (benefit) it benefits by entering into the Transaction Documents
to which it is a party; and     (g)   (accounts) its most recent Financial
Report given to the Bank complies with the requirements of any applicable laws
and:

13

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  (i)   complies with any applicable accounting standards; and     (ii)   gives
a true and fair view of its financial position and performance or, if it is
required to prepare consolidated financial statements, a true and fair view of
the financial position and performance of the consolidated entity constituted by
it and the entities it is required to include in the consolidated financial
statements; and

  (h)   (solvency) there are no reasonable grounds to suspect that it is unable
to pay its debts as and when they become due and payable; and     (i)   (not a
trustee) unless stated in the Details, it does not enter into any Transaction
Document as trustee; and     (j)   (litigation) there is no pending or
threatened proceeding affecting it or any of its assets before a court,
authority, commission or arbitrator in which a decision against it (either alone
or together with other decisions) is likely to have a Material Adverse Effect;
and     (k)   (Event of Default) no Event of Default or Potential Event of
Default is continuing; and     (l)   (default under law — Material Adverse
Effect) it is not in breach of a law or obligation affecting it or its assets in
a way which has had, or is likely to have, a Material Adverse Effect; and    
(m)   (full disclosure) all information provided by it to the Bank (whether
following a request from the Bank or otherwise) and which is used by the Bank in
its assessment of the nature and amount of the risk undertaken by the Bank in
entering into the Transaction Documents, and doing anything in connection with
them, is complete and accurate as of the time such information is provided to
the Bank; and     (n)   (no immunity) it has no immunity from the jurisdiction
of a court or from legal process; and     (o)   (residency) the Borrower is a
company resident in Puerto Rico for taxation purposes and is not resident for
taxation purposes in any other jurisdiction.

10.2   Repetition of representations and warranties       The representations
and warranties in this clause 10 are taken to be also repeated (by reference to
the then current circumstances) on the Drawdown Date.   10.3   Reliance      
Each Borrower acknowledges that the Bank has entered into the Transaction
Documents in reliance on the representations and warranties in this clause 10.

14

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11   Undertakings   11.1   General undertakings       Each Borrower undertakes:

  (a)   (accounting records) to keep proper accounting records; and     (b)  
(conduct of business) to conduct its business (including collecting debts owed
to it) in the ordinary course consistent with its customary practices as at the
date of this agreement; and     (c)   (no cessation of business) not, without
the Bank’s consent, (which shall not be unreasonably withheld) significantly
change the general character of any business it conducts; and     (d)  
(information) to give the Bank any document or other information that the Bank
reasonably requests from time to time; and     (e)   (status certificates) on
request from the Bank, to give the Bank a certificate signed by two of its
Authorized Officers which states whether an Event of Default or Potential Event
of Default is continuing; and     (f)   (maintain authorizations) to obtain,
renew on time and comply with the terms of each authorization necessary for it
to enter into the Transaction Documents to which it is a party, to comply with
its obligations and exercise its rights under them and to allow them to be
enforced.

12   Default   12.1   Events of Default       Each of the following is an Event
of Default:

  (a)   (non-payment — Transaction Document) a Borrower does not pay on time any
amount payable by it under any Transaction Document in the manner required under
it; or     (b)   (cross default) any present or future monetary obligations of a
Borrower for amounts totaling more than $3,000,000 (or equivalent) are not
satisfied on time (or at the end of their period of grace) or become prematurely
payable as a result of a default of a Borrower.         (In this clause 12.1(b),
a “monetary obligation” means a monetary obligation in connection with:

  (i)   money borrowed or raised; or

15

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  (ii)   any hiring arrangement, redeemable preferred share, letter of credit or
financial markets transaction (including a swap, option or futures contract),
performance bond or guarantee facility; or     (iii)   a guarantee or indemnity
in connection with anything referred to in clauses 12.1(b)(i) or 12.1(b)(ii));
or

  (c)   (enforcement against assets) distress is levied or a judgment, order or
encumbrance is enforced, or becomes enforceable, against any property of a
Borrower having a value of more than $3,000,000 (or equivalent); or     (d)  
(incorrect representation or warranty) a representation or warranty made, or
taken by clause 10.2 to be repeated, by or for a Borrower in this agreement or
by Santander in the Security Agreement, Pledge and Assignment is found to have
been incorrect or misleading when made or so taken to be repeated; or     (e)  
(Insolvency) a Borrower becomes Insolvent; or     (f)   (ceasing business) a
Borrower or Santander stops payment on any of its material obligations, ceases
to carry on its business or a material part of it, or threatens to do either of
those things except to merge or consolidate while solvent on terms approved in
writing by the Bank; or     (g)   (voidable Transaction Document) a Transaction
Document or a transaction in connection with it is or becomes (or is claimed to
be) wholly or partly void, voidable or unenforceable or does not have (or is
claimed not to have) the priority the Bank intended it to have, in each case, as
a result of events not due to the acts or omissions of the Bank (“claimed” in
this paragraph means claimed by a Borrower or any of its Related Entities or
anyone on behalf of any of them); or     (h)   (appointment of manager) a person
is appointed under legislation to manage any part of the affairs of a Borrower
or Santander; or     (i)   (Material Adverse Effect) an event occurs which has,
or is likely to have (or a series of events occur which, together, have, or are
likely to have), a Material Adverse Effect;     (j)   (collateral) the value of
any cash collateral deposited with the Bank and provided as security for the
Facility under the Security Agreement, Pledge and Assignment ceases to be at
least equal in amount to any amount that may be required under Section 23A of
the Federal Reserve Act and Regulation W promulgated thereunder; or     (k)  
(non-compliance with other obligations) a Borrower or Santander does not comply
with any other obligation under any Transaction Document and, if the
non-compliance can be remedied, does not remedy the non-compliance within ten
days.

16

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12.2   Consequences of default       If an Event of Default is continuing, then
the Bank may declare at any time by notice to the Borrowers that:

  (a)   subject to clause 2.3, an amount equal to the Amount Owing is either:

  (i)   payable on demand; or     (ii)   immediately due for payment;

  (b)   the Bank’s obligations specified in the notice are terminated.

    The Bank may make either or both of these declarations. The making of either
of them gives immediate effect to its provisions.   12.3   Investigation of
default       If the Bank reasonably believes that an Event of Default is, or
may be, continuing, the Bank may appoint a person to investigate this. Each
Borrower agrees to cooperate with the person and comply with every reasonable
request they make. If there is or was an Event of Default, the Borrowers agree
to pay all Costs in connection with the investigation.   13   Costs and
indemnities   13.1   What the Borrowers agree to pay       The Borrowers agree
to pay or reimburse the Bank for:

  (a)   all its reasonable Costs in drafting and negotiating a Transaction
Document; and     (b)   enforcing a Transaction Document,

    including, but not limited to, legal Costs.       The Borrowers must pay all
internal revenue stamps in connection with a Transaction Document.   13.2  
Indemnity       The Borrowers shall indemnify the Bank against any liability or
loss arising from, and any Costs incurred in connection with:

  (a)   loans requested under a Transaction Document not being provided in
accordance with the request for any reason except default of the Bank; or    
(b)   a loan under a Transaction Document being repaid, discharged or made
payable other than at its maturity or as otherwise allowed under the terms of a
Transaction Document; or

17

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  (c)   the Bank acting in connection with a Transaction Document in good faith
on fax, telephone, email or written instructions purporting to originate from
the offices of a Borrower or to be given by an Authorized Officer of a Borrower;
or     (d)   an Event of Default; or     (e)   the Bank exercising or attempting
to exercise a right or remedy in connection with a Transaction Document after an
Event of Default; or     (f)   any indemnity the Bank gives a trustee in
bankruptcy or administrator of the Borrowers.

    The Borrowers agree to pay amounts due under this indemnity on demand from
the Bank.   14   Interest on overdue amounts   14.1   Obligation to pay       If
a Borrower does not pay any amount under this agreement on the due date for
payment, the relevant Borrower agrees to pay interest on any such amount at the
Default Rate. The interest accrues daily from (and including) the due date to
(but excluding) the date of actual payment and is calculated on actual days
elapsed and a year of 360 days.       The relevant Borrower agrees to pay
interest under this clause on demand from the Bank.   14.2   Compounding      
To the extent permitted by applicable law, any interest payable under clause
14.1 which is not paid when due for payment may be added to the overdue amount
by the Bank. Interest is payable on the increased overdue amount at the Default
Rate in the manner set out in clause 14.1.   14.3   Interest following judgment
      If a liability becomes merged in a judgment, the relevant Borrower agrees
to pay interest on the amount of that liability as an independent obligation.
This interest:

  (a)   accrues daily from (and including) the date the liability becomes due
for payment both before and after the judgment up to (but excluding) the date
the liability is paid; and     (b)   is calculated at the judgment rate or the
Default Rate (whichever is higher).

The relevant Borrower agrees to pay interest under this clause on demand from
the Bank.

18

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15   Application of payments       Subject to clause 2.3, the Bank may apply
amounts paid by the Borrowers towards satisfaction of the Borrowers’ obligations
under the Transaction Documents in the manner it sees fit, unless the
Transaction Documents expressly provide otherwise. This appropriation overrides
any purported appropriation by a Borrower or any other person.   16   Dealing
with interests   16.1   No dealing by Borrowers       The Borrowers may not
assign or otherwise deal with their rights under any Transaction Document or
allow any interest in them to arise or be varied, in each case, without the
Bank’s consent.   16.2   Dealings by Bank       The Bank may assign or otherwise
deal with its rights under the Transaction Documents (including by assignment or
participation) without the consent of any person.   17   Notices and other
communications   17.1   Form — all communications       Unless expressly stated
otherwise in the Transaction Documents, all notices, certificates, consents,
approvals, waivers and other communications in connection with a Transaction
Document must be in writing, signed by the sender (if an individual) or an
Authorized Officer of the sender and marked for the attention of the person
identified in the Details or, if the recipient has notified otherwise, then
marked for attention in the way last notified.   17.2   Form — communications
sent by email       Communications sent by email need not be marked for
attention in the way stated in clause 17.1 (“Form — all communications”).
However, the email must state the first and last name of the sender.      
Communications sent by email are taken to be signed by the named sender.   17.3
  Delivery       Communications must be:

  (a)   Hand delivered at the address set out or referred to in the Details; or
    (b)   sent by prepaid ordinary mail to the address set out or referred to in
the Details; or     (c)   sent by fax to the fax number set out or referred to
in the Details; or

19

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  (d)   sent by email to the address set out or referred to in the Details.

    However, if the intended recipient has notified a changed address or fax
number, then communications must be to that address or number.   17.4   When
effective       Communications take effect from the time they are received or
taken to be received under clause 17.5 (“When taken to be received”) (whichever
happens first) unless a later time is specified.   17.5   When taken to be
received       Communications are taken to be received:

  (a)   if sent by mail, three days after posting; or     (b)   if sent by fax,
at the time shown in the transmission report as the time that the whole fax was
sent; or     (c)   if sent by email:

  (i)   when the sender receives an automated message confirming delivery; or  
  (ii)   four hours after the time sent (as recorded on the device from which
the sender sent the email) unless the sender receives an automated message that
the email has not been delivered,     whichever happens first.

17.6   Receipt outside business hours       Despite clauses 17.4 (“When
effective”) and 17.5 (“When taken to be received”), if communications are
received or taken to be received under clause 17.5 after 5:00 p.m. in the place
of receipt or on a non-Business Day, they are taken to be received at 9:00 a.m.
on the next Business Day and take effect from that time unless a later time is
specified.   17.7   Waiver of notice period       The Bank may waive a period of
notice required to be given by a Borrower under this agreement.   18   General  
18.1   Application to Transaction Documents       If anything in this clause 18
(“General”) is inconsistent with a provision in another Transaction Document,
then the provision in the other Transaction Document prevails for the purposes
of that Transaction Document.

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18.2   Prompt performance       Subject to clause 18.15 (“Time of the essence”):

  (a)   if a Transaction Document specifies when a Borrower agrees to perform an
obligation, the Borrower agrees to perform it by the time specified; and     (b)
  the Borrowers agree to perform all other obligations promptly.

18.3   Consents       The Borrowers agree to comply with all conditions in any
consent the Bank gives in connection with a Transaction Document.   18.4  
Certificates       The Bank may give the Borrowers a certificate about an amount
payable or other matter in connection with a Transaction Document. The
certificate is sufficient evidence of the amount or matter, unless it is proved
to be incorrect.   18.5   Set-off       If an Event of Default is continuing,
the Bank may, in its absolute discretion, set off any amount owing by the Bank
to a Borrower (whether or not due for payment) against any amount due for
payment by a Borrower to the Bank under a Transaction Document.       The Bank
may do anything necessary to effect any set-off under this clause in accordance
with applicable law. This clause applies despite any other agreement between a
Borrower and the Bank.   18.6   Discretion in exercising rights       The Bank
may exercise a right or remedy or give or refuse its consent under a Transaction
Document in any way it considers appropriate (including by imposing conditions).
  18.7   Partial exercising of rights; no waiver       If the Bank does not
exercise a right or remedy under a Transaction Document fully or at a given
time, the Bank may still exercise it later.   18.8   No liability for loss      
The Bank is not liable for loss caused by the exercise or attempted exercise of,
failure to exercise, or delay in exercising, a right or remedy under a
Transaction Document.   18.9   Conflict of interest       The Bank’s rights and
remedies under any Transaction Document may be exercised even if this involves a
conflict of duty or the Bank has a personal interest in their exercise, subject
to applicable laws.

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18.10   Remedies cumulative       The rights and remedies of the Bank under any
Transaction Document are in addition to other rights and remedies given by law
independently of the Transaction Document.   18.11   Indemnities       Any
indemnity in a Transaction Document is a continuing obligation, independent of
the Borrowers’ other obligations under that Transaction Document and survives
the termination of the Transaction Document. It is not necessary for the Bank to
incur expense or make payment before enforcing a right of indemnity under a
Transaction Document.   18.12   Rights and obligations are unaffected      
Rights given to the Bank under a Transaction Document and the Borrowers’
liabilities under it are not affected by anything which might otherwise affect
them at law.   18.13   Inconsistent law       To the extent permitted by law,
each Transaction Document prevails to the extent it is inconsistent with any
law.   18.14   Supervening legislation       Any present or future legislation
which operates to vary the obligations of the Borrowers in connection with a
Transaction Document with the result that the Bank’s rights, powers or remedies
are adversely affected (including by way of delay or postponement) is excluded
except to the extent that its exclusion is prohibited or rendered ineffective by
law.   18.15   Time of the essence       Time is of the essence in any
Transaction Document in respect of an obligation of a Borrower to pay money.  
18.16   Variation and waiver       A provision of a Transaction Document, or
right created under it, may not be waived or varied except in writing signed by
the party or parties to be bound.   18.17   Further steps       The Borrowers
agree to do anything the Bank may request (such as obtaining consents, signing
and producing documents and getting documents completed and signed):

  (a)   to bind the Borrowers and any other person intended to be bound under
the Transaction Documents;     (b)   to show whether the Borrowers are complying
with this agreement.

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18.18   Counterparts       This agreement may consist of a number of copies,
each signed by one or more parties to the agreement. If so, the signed copies
are treated as making up the one document.   18.19   Governing law       Each
Transaction Document is governed by the laws of the Commonwealth of Puerto Rico.

[SIGNATURE PAGE FOLLOWS]

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Loan Agreement
Schedule 1 — Conditions precedent (clause 3.4)
Conditions to first drawdown

•   Each item must be in form and substance satisfactory to the Bank.   •   The
Bank may also require other documents and information (see clause 3.5(f))   •  
Certification is to be by the secretary or other authorized officer of the
applicable Borrower, that the item is true and complete as at a date no earlier
than the date of this agreement.

                      Item   Form   Required for      
1
  Extract of minutes of a meeting of the Borrowers’ board of directors which
evidences the resolutions:   Certified copy   Each Borrower    
 
               
 
 
(a)   authorizing the signing and delivery of the Transaction Documents to which
the entity is a party and the observance of obligations under those documents;
and
           
 
               
 
 
(b)   appointing Authorized Officers of the entity.
           
 
               
2
  Specimen signature of   Certified copy   Each Borrower    
 
               
 
 
(a)    each Authorized Officer of the entity; and
           
 
               
 
 
(b)   each other person who is authorized to sign a Transaction Document for the
Borrowers.
           
 
               
3
  This agreement fully signed.   Original   Each Borrower    
 
               
4
  A certificate of deposit opened by Santander with the Bank in the aggregate
amount of the Facility to be provided as security for the Facility under the
Security Agreement, Pledge and Assignment.   Original   Santander and each
Borrower    
 
               
5
  The Security Agreement, Pledge and Assignment fully signed.   Original  
Santander    

Sch. 1 - 1

 

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Schedule 2 — Drawdown Notice (clause 3)

     
To:
  Banco Santander Puerto Rico
 
  207 Ponce de León Avenue
 
  San Juan, Puerto Rico 00917
 
   
Attention:
  [•]
 
   
[Date]
   

Drawdown Notice — Loan Agreement between Santander BanCorp, Santander Financial
Services, Inc. and Banco Santander Puerto Rico, dated January 22, 2010 (“Loan
Agreement”)
Under clause 3.2 (“Requesting a drawdown”) of the Loan Agreement, the Borrower
gives notice as follows.1
The Borrower wants to borrow under the Facility.

•   The requested Drawdown Date is [         ]2.   •   The amount of the
proposed drawdown is US$[         ].   •   The proposed drawdown is to be paid
to:

         
 
  Account number:   [                    ]
 
  Account name:   [                    ]
 
  Correspondent Bank:   [                    ]
 
  Swift:   [                    ]
 
  Beneficiary Bank:   [                    ]
 
  Swift:   [                    ]
 
  Beneficiary:   [                    ]

The Borrower represents and warrants that the representations and warranties in
the Loan Agreement are correct and not misleading on the date of this notice and
that each will be correct and not misleading on the Drawdown Date.
Clause 1 of the Loan Agreement applies to this notice as if it was fully set out
in this notice.
                                                                   
[Name of person] being
an Authorized Officer of
[Name of Borrower]
Instructions for completion

1   All items must be completed.   2   Must be a Business Day within the
Availability Period.

Sch. 2 - 1

 

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Signature page
DATED: January 22, 2010

                     
SIGNED for and on behalf of
    )              
SANTANDER BANCORP
    )              
 
    )              
 
    )              
/s/ Juan Moreno
    )         /s/ María Calero    
 
Signature
    )        
 
Signature    

    )            
 
    )              
Name: Juan Moreno
    )         Name: María Calero    
 
    )              
Title: President
    )         Title: SEVP    
 
                   
SIGNED for and on behalf of
    )              
SANTANDER FINANCIAL
    )              
SERVICES, INC.
    )              
 
    )              
 
    )              
/s/ Mario E. Delgado
    )         /s/ Roberto Jara    
 
Signature     )        
 
Signature    

    )            
 
    )              
Name: Mario E. Delgado
    )         Name: Roberto Jara    
 
    )              
Title: President
    )
)         Title: Authorized Representative    
 
                   
SIGNED for and on behalf of
    )              
BANCO SANTANDER PUERTO
    )              
RICO
    )              
 
    )              
 
    )              
/s/ Justo Muñoz
    )         /s/ Rafael S. Bonilla    
 
Signature     )        
 
Signature    

    )            
 
    )              
Name: Justo Muñoz
    )         Name: Rafael S. Bonilla    
 
    )              
Title: EVP
              Title: Senior Vice President    

S-1