**DEFERRED COMPENSATION AGREEMENT                                   ** This Agreement executed this 25th day of March of2003, and becoming effective as of today, by and between Banco Santander Puerto 'Rico (hereinafter referred to as the "Bank") and Rafael F. Saldana Sola (hereinafter referred to as the "Executive").                                                                               **WITNESSETH:                                   ** WHEREAS, the Bank is a commercial bank engaged inbusiness in Puerto Rico;                    I                                   WHEREAS, Executive is employed bythe Bank as Branches Director;                                   NOW, THEREFORE, in consideration of the mutual covenantsand agreements herein contained, the parties agree as follows:                                    **Section 1. Compensation                                  ** ..                                  .Commencing on the effective date of this Agreement, the Bankwill compensate the Executive for his services in the form of both current and deferred compensation.                                    The Bank agrees to pay the Executive, **cttd**the Executive agrees to accept as his compensation for the services to be rendered during taxable year 2003, a total current annual compensation (the "Annual Compensation"), which will be payable in twenty six (26) bi-weekly installments. From the currentcompensation provided for above, the Bank agrees to pay the Executive and the Executive agrees to accept as Deferred Compensation fifty percent (50%) of I:;r;r{ such Annual Compensation for 2003. In addition to the Annual Compensation, the Bank agrees t ( ~ ) to pay the Executive and the Executive agrees to accept as Deferred Compensation fifty percent                          year 2003. For subsequent taxable years, the Bank has agreed to pay the Executive and the Executive has agreedto accept as Deferred Compensation ten percent (10%) of the applicable annual compensation and Christmas and production bonuses to which he may be entitled        ? .     ~ thereafter.*.t* In case the Puerto Rico Department of the Treasury disputes any deferral of income                          pursuant to this Agreement, Mr. Saldana will be solely responsible for any tax liability which may result fromsuch action.                                    The percentage to be deferred from annualcompensatio~ and Christmas and production bonuses may be changed for the subsequent taxable years. Such change must be notified to the Bank in writing on the month prior to the commencement of the calendar or taxable year to which such percentage of withholding willapply. All deferred amounts shall be controlled by

                            the tenns of this Agreement and will be forfeited by theoccurrence of any of the events of forfeiture specified in Section 2.3 below. If no change of deferral percentage is notified to the Bank in the method herein provided, be that in writing prior to the commencement of the calendar or taxable year, the same deferralpercentage used in the previous year shall apply.                                      In addition to such current anddeferred compensation, Executive shall be entitled to the following benefits unless any of these benefits has been included in the Executive's Deferred                      I Compensation: (i) reimbursement for all reasonable expenses incurred in connection with the business of the Bank, (ii) receive allother benefits generally available to executive officers of the Bank from time to time and any specific benefits granted by the Bank to the Executive; (iii) participate in all pension, profit sharing, and similar plans of the Bank for the benefit of its executives;and (iv) if and when approved by the Board of Directors of the Bank, to such bonus                                     .                            or additional compensation as may from time deem to be warranted by hisperformance of services and the condition of the Bank. For purposes of determining the amount of the                                                                                                  ~,                             Christmas bonus and the annual compensation adjustment, if any, the base compensation is the sumof the current and basic deferred compensation, as adjusted annually.                                      Section 2. Deferred CompensationTrust Account 2.1 Trust Account     ~ The deferred portion of the total compensation will not be paid by the Bank to the *)(!J* Executive as it is earned by him. Instead, the Bank will pay the amounts of the deferred     *Y* compensation specified in Section I above to the Deed of Trust designated as the Santander *t!Y* Puerto Rico Deferred Compensation Trust for the Benefit of Rafael F. Saldana Sola,~ executed on March 25, 2003, and which was fonned exclusively for purposes of holding and investing the deferred compensation amounts until they become payable to the Executive pursuant to the provisions of this Agreement and the corresponding Deed of Trust. SaidDeed of Trust shall be bound by the tenns and conditions of this Agreement.          *Jlt@./* The deferred compensation amount shall be paid by the Bank to the Trust on a monthly ~t basis as provided above.                                      Except as may be provided herein andthe Deed of Trust, the Trustee shall have full and complete power and authority over the trust, as fully and to the same extent as any individual might, could, or would have pwned similar property or securities. The Trustee shall not be liable                                                                                               ~

                       II ..II                           for any error of judgment, mistake of fact or of law, or act, or omission,except for his own willful malfeasance or manifest negligence.                                     The deferred compensation amounts and theinvestment income thereof accumulated by the Trust shall become payable to Executive in the manner provided in Section 2.2 below unless forfeited by the occurrence of any of the events of forfeiture specified in Section 2.3 below.                                     At the time Executive is entitled to receivepayments from the Deferred Compensation I Trust Account in accordance with the provisions of Section 2.2(b) below (representing                           distributions of funds other than distributions of investment income funds), the Bank shall furnish tothe Trustee a written statement instructing and authorizing him to pay to the Executive the corresponding amount of the deferred compensation trust account in the applicable manner descri~d in said Section 2.2(b). Such notification shall include a schedule (the"Payment                                   .                           Schedule") that indicates the amount payable to the Executive or that provides aformula or other instructions acceptable to the Trustee for determining the amounts so payable, the form in which                                                                                                 ~.i                           such amount is to be paid (as provided for under this Agreement), and the time forcommencement for payments of such amounts. Except as otherwise provided herein, Trustee shall pay Executive in accordance with such Payment Schedule. The Trustee shall provide for the reporting and withholding of any federal, estate or local taxes that may berequired to be  & withheld with respect to the payment of benefits pursuant to the Payment Schedule and the terms I \ \ r ; of the Agreement and shall pay amounts withheld to the appropriate taxing authorities, or   '/ determine pursuant to the payment Schedule that such amounts have been reported, withheld and / *rIi)* paid by the Settlor. The Trustee shall thereafter immediately notify Executive in writing as to~ the Bank's instructions, and Executive shall have thirty days from the date of such notification to object (in the manner indicated below) to the Payment Schedule. If no such objection is raised within said period of time, Trustee shall make the applicabledistribution to Executive. With       1l(!/ respect to the investment income, the Trustee shall distribute such income to Executive in *J fl(.* accordance with the provisions of Section 2.2(a) unless the Bank furnishes to the Trustee a                           written statement providing that an event of default has occurred.                                     In the event the Bank considers that an eventof forfeiture has occurred (either with respect to distributions of investment income funds or of funds other than distributions of investment income funds), t~e Bank shall be required to so notify it in writing to the Trustee and to the Executive indicating thereasons for such determination. In the event Executive disagrees

                      II II                          with the detennination made by the Bank as to the occurrence of an event offorfeiture, said issue shall be arbitrated before an individual selected by mutual consent of the parties. In the event the parties cannot agree as to the appointment of an Arbitrator, then the arbitration proceedings shall take place in San Juan, Puerto Rico, inaccordance with the rules of the American Arbitration Association. The decision of the Arbitrator shall be final and binding upon all parties and shall be enforceable in any court having jurisdiction thereof. Any amount of the deferred                    I compensation trust account which is considered to have been forfeited shall be paid (in cash or in kind) by the Trustee to the Bank within thenext 30 days following such detennination.                                    Section 2.2 Payment of Deferred Compensation                                    Section 2.2 (a) Distribution of InvestmentIncome                                  ,..The trust's investment income, including net capital gains,will be paid by Trustee to                                  .                         Executive or to his beneficiaries or estate within the next five business days after suchincome is received by Trustee. The current distribution of the trust's investment income will commence                                                                                               "                          immediately after the receipt by the trust of such investment income and will continuethereafter until the trust is tenninated.                                    The amount of the deferred portion of the totalcompensation accumulated by the Trust will be distributed in the manner described below unless forfeited by the occurrence of any of the events of forfeiture specified in Section 2.3 below.        \ The Trustee shall have the power to decide what will constitute income of the Trust that *V* will be currently distributed and what will constitute corpus of the trust, and such decision shall*J*be final and binding upon all parties.                                    Section 2.2 (b) Distribution of DeferredCompensation .Section 2.2 (b)(l) Termination for any Reason other than Death                                    In the event that the Executives services shall betenninated by reason of disability,          / retirement, voluntary tennination by either party, or for any other reason other than his death, the --JY value of his deferred compensation trust account maintained by the Trustee as of the date in                          which the first installment is payable to Executive shall be paid by Trustee to the Executive in                          the following manner, unless forfeited by the occurrence of any of the events of forfeiture specified inSection 2.3 below:                                    -if the value o.f his deferred compensation trustaccount does not                                              exceedthe sum of $100,000, then, said value thereof shall be paid

            .II II                                           to Executive over a five (5) year period in five (5) annual I installments commencing on January 1st of the year following                                           terminationof services and continuing on January 1st of the                                           subsequentfour (4) years, or                                 -if such value exceeds the sum of $100,000, then said valuethereof                                           shall bepaid to Executive, over a ten (10) year period in ten (10)                 I annual installments commencing on January 1st of the year                                           followingtermination of services and continuing on each January                                           1 st ofthe subsequent nine (9) years.                                 As provided above, during the pay-out period, the trust's income,including net capital                      gains, will be paid by Trustee to Executive as such income is received by Trustee.                                ,                                The amount of each installment shall be determinedby dividing: (1) the value of the deferred compensation trust account at the date the first installment is payable by, (ii) the total                                                                                            ,.                        number of installments payable. Any increment in the value of the installments in the deferred compensation trustaccount during the pay-out period shall increase the amount of the last installment due and any reduction in the value of investments shall reduce the amount of each installment in reverse order of maturity.                                 The Executive may, however, prior to the date of termination ofservices for the reasons indicated above, file a written document with the Bank and Trustee electing:                                 -to receive the unpaid value of his deferred compensation trust                                           accountover a longer period of time,                                 -and/or that the annual installments commence at a later dateother                                           than thesubsequent January 1st after the date of retirement but no                                            laterthan his attainment of age sixty (60).    *.I* For purposes of this Section, the Executive shall be deemed to be disabled if he is unable' */iJ2/* to effectively carryon his normal duties for a period of more than 120 consecutive working days                       or for more than 120 working days during any 12-month period.                                 The Bank shall notify in writing to the Trustee the manner of paymentselected by the Executive.                                                             .

                                     Section 2.2 (b )(2) Termination ofServices by Death                                     In the event that the Executive's servicesare tenninated by death, or in the event of Executive's death after termination of services, without the occurrence, in either case, of any of the events of forfeiture specified in Section 2.3 below, the unpaid value of his Deferred compensation Trust Account shallbe paid by Trustee in a lump sum within thirty (30) days after                     I his death to his Estate, or to his designated heirs or beneficiaries thereof as may be provided by law or by a valid will executed by theExecutive, unless Executive notifies the Bank and Trustee in writing at any time that such unpaid value be paid in a lump sum at a designated time within the five (5) year period following the death of the Executive or in ratable annual installments                                    ,..                           over a five (5) year period or a speci fied longer period not to exceed ten (10)years.                                     Section 2.2(3) Hardship                                     Upon a showing of financial hardship and~vided that none of the events of forfeiture specified in Section 2.3 below has occurred, the Bank may, in its sole discretion, direct the Trustee to pay the Executive (or, in the event of death, to the Executive's Beneficiaries) in one lump sum a portion or all ofthe unpaid value of such Executive's deferred compensation trust account to the extent necessary to alleviate the hardship. A hardship is an emergency beyond the control of the Executive and his beneficiaries.          *rz* Section 2.3 Forfeiture of Benefit Payments    .unpaid value of the deferred compensation trust account (including investment income thereof) shall be made and all the rights of the Executive under this Agreement and the Deed of Trust, his designated beneficiaries, executors, oradministrators, or any other person, to receive payments                          "1hereof shall be forfeited in any of the following events occur:                                                (i)The Executive, while in the service of the Bank,                                                          shallengage in:       W (1) a material breach of the covenants~ *I,{)* established in Section 3 of this Agreement; and/or                                                          (2)..be convicted in a court of competent jurisdiction for theft of Bank's property or embezzlement,

                                                              terminatingthis Agreement as                                                              describedin Section 4 hereof;                                          (ii) TheExecutive, after ceasing to be engaged as an                                                    Executiveand until the time of receiving the final                                                    installmentpayment or distribution from the                                                    deferredcompensation trust account, shall engage                I in any of the following:                                                    (1)a material breach of the covenants                                                              establishedin Section 3 of this                                                              Agreement,and/or                               ..(2) refuses to make himself available                               .                                                              upon request at reasonable times and upon a reasonable basis to consult                                                                                            ,.                                                              with, supply information to, and otherwise cooperate with the BankIt1Jwith respect to any matter that wasI_handled by his while he was in the '/ service of the Bank.                                Except in the case of engaging in any of the activities or actionsmentioned above, the Executive shall be entitled to receive the full amount accumulated in his deferred compensation trust account in the manner provided above irrespective of whether this Agreement or Executive's employment with the Bank be terminated for reasonsother than those provided herein.                                 Section 2.4 Deferred Compensation not Salary for Pension PlanPurposes   *J~ V* Any deferred compensation payable under this Agreement shall not be deemed salary or ../ *I~* other compensation to the Executive for the purpose of computing benefits to which he may be                      entitled under any pension plan or retirement plan.                                 ~n,.t:, '2 (""n~, fC'

       ,                        conflicts with the business *of* the Bank; provided, however, that he may continue to own ormay hereafter acquire any securities or a class *of* any publicly owned or privately held company.                                  Executive shall treat as confidential and keep secret theaffairs *of* the Bank and shall not at any time during the term *of* this Agreement or thereafter, without the prior written consent *of* the Bank, divulge, furnish or make known or accessible to, or use for the benefit *of,* anyone other than theBank and its affiliates any information or a confidential nature relating in any way to the                   I business *of* the Bank or its affiliates or their clients and obtained by his in the course *of* his services hereunder.                                   All records, papers, and documents kept or made by theExecutive relating to the business *of* the Bank or its affiliates *of* their clients shall be and remain as property *of* the Bank.                                  ,section 4. Termination                                  .                                  The Bank and the Executive individuallyshall have the right to terminate this agreement as well as Executive's Employment with the Bank at any time by giving the other party 3D-day                                                                                               ,.                         advance notice. Upon termination *of* this agreement and/or Executive's Employment withthe Bank, the Bank will not be liable to the Executive, except for any compensation (including deferred compensation), accrued, but unpaid. Except in the case *of* the occurrence *of* any *of* the events *of* forfeiture described in Section 2.3above, the Executive shall have a vested right to receive, in the manner provided in Section 2.2(b)(1), the total value *of* the deferred compensation trust account as *of* the above-mentioned date *of* termination *of* his services.                                   Section 5. Assi2nment                                    This Agreement shall be binding upon and enure tothe benefit *of* the successors and assigns *of* the Bank. Neither this Agreement nor any right hereunder (including the rights *of* the Executive or any other person to the payment *of* deferred compensation) shall be assigned, transferred,pledged, or encumbered by Executive, except an assignment or transfer *of* the      *JIJ/* deferred compensation by will or by the laws ,of descend and distribution.*Jill*Section 6. Term of the A2reement                                     This Agreement shall be in effect from thedate *of* this contract and thereafter until such                          ~... .(',' .,'.1,:- ,-,1 ~~ 1.~.._:.. .~.-~,.;,.1~,.1 1\T,., M"rt ,.,ft1,;""f"rrPPnlr-,-,t

          .                                     The executive agreesto acknowledge the nature of his employment with the Bank as having no determined or fixed period of time, and as such subject to the provisions of Section 4 of this Agreement.                                     Section 7. Aereement Entire                                      This Agreement constitutes the entireunderstanding between the Bank and the Executive *(117* -' concerning his deferred compensation. This Agreement may not be changed orally.    {( *ry* I Section 8. Applicable La\v .,   *Y* This Agreement shall be governed by and construed ill accordance with the laws of Puerto Rico.                                                             *Z .-;tf~.<-*-d&"".--      *J:*/ Mr. Rafael Saldana Sola r:s. Maria Calero Padron.-./ P BANCO SANTANDER PUERTO RICO                                                                                                                                      *v                                                                                                                      *checo Perez                                                                   .