Document:

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                                                                    EXHIBIT 10.7

                                   AGREEMENT

                                    BETWEEN

                         ORIENTAL FINANCIAL GROUP INC.

                                      AND

                             JOSE ENRIQUE FERNANDEZ

      AGREEMENT made as of the 4th day of April, 2005, by and between ORIENTAL
FINANCIAL GROUP INC., a financial holding company which has its principal office
in San Juan, Puerto Rico (hereinafter referred to as the "Company") and JOSE
ENRIQUE FERNANDEZ (sometimes hereinafter referred to as the "Chairman").

                                   WITNESSETH:

      WHEREAS, Jose Enrique Fernandez has been the President, Chief Executive
Officer and Chairman of the Company since October, 1988 and the retention of his
services as non-executive Chairman of the Company's Board of Directors is of
material importance to the preservation and enhancement of the value of the
Company's business;

      WHEREAS, the Company and the Chairman wish to enter into this Agreement
and intend that this Agreement shall become effective as of January 1, 2005;

      NOW THEREFORE, in consideration of the mutual covenants set forth, the
Company and the Chairman do hereby agree as follows:

      1. TERM OF ENGAGEMENT

      1.1 The Company hereby retain the services of Mr. Jose Enrique Fernandez
as Chairman of its Board of Directors and the Chairman hereby accepts said
retention and agrees to render such

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                                      -2-

services to the Company on the terms and conditions set forth in this Agreement
for a term of three (3) years commencing on January 1st, 2005 (the "Effective
Date") and terminating on December 31, 2007, unless further extended or sooner
terminated in accordance with the terms and conditions hereinafter set forth.

      Not less than one hundred twenty (120) days in advance of the expiration
of the term of this Agreement the parties will determine whether to extend the
term and, if extended, under which terms and conditions.

      1.2 During the term of this Agreement, the Chairman shall devote his best
efforts to performing such services for the Company as may be consistent with
his title of non-executive Chairman of the Company's Board of Directors.

      1.3 The services of the Chairman to the Company shall be rendered
principally in the Commonwealth of Puerto Rico, but he shall do such traveling
on behalf of the Company as may be reasonably required by his duties.

      1.4 The Chairman shall continue to occupy his position as a Director of
the Company and of the Bank. Furthermore, during the term of this Agreement or
extension thereof and for any elections of Directors of the Company in which his
term as Director will expire, the Board of Directors shall nominate and
recommend to the stockholders the election of the Chairman as a Director and, if
elected, the Board of Directors of the Company and of the Bank shall,
respectively, name the Chairman to the position of Chairman of the Board of
Directors of the Company and of the Bank.

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                                      -3-

      2. COMPETITIVE ACTIVITIES:

      2.1 The Chairman agrees that during the term of this Agreement, except
with the express written consent of the Company's Board of Directors, he will
not, directly or indirectly, engage or participate in, become a director of, or
render advisory or other services for, or in connection with, or become
interested in, or make financial investment in any firm, corporation, business
entity or business enterprise competitive with or to any business of the
Company; provided, however, that the Chairman shall not thereby be precluded or
prohibited from owning passive investments including investments in the
securities of other financial institutions, so long as such ownership does not
require him to devote substantial time to the management or control of the
business or activities in which he has invested. The above notwithstanding, it
is specifically agreed by the parties hereto that the Chairman's investment and
active involvement in an international banking entity known as "Omega Overseas
Investment Corporation" shall be exempt from the provisions of this Section 2.

      2.2 The Chairman agrees and acknowledges that during the time that this
Agreement is in effect, he will maintain an intimate knowledge of the activities
and affairs of the Company including trade secrets and other confidential
matters. As a result, and also because of the special, unique, and extraordinary
services that the Chairman is capable of performing for the Company or one of
its competitors, the Chairman recognises that the services to be rendered by him
hereunder are of a character giving them a peculiar value, the loss of which
cannot be adequately or reasonably compensated for by damages. Therefore, if
during the time he is rendering services to the Company, the Chairman renders
services to a

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                                      -4-

competitor of the Company other than as authorized pursuant to Section 2.1
hereof, the Company shall be entitled to immediate injunctive or other equitable
relief to restrain the Chairman from rendering his services to the competitor of
the Company, in addition to any other remedies to which the Company may be
entitled under law; provided, however, that the right to such injunctive or
other equitable relief shall not survive the termination of this Agreement.

      3. COMPENSATION AND REIMBURSEMENT OF EXPENSES:

      3.1 COMPENSATION. The Company will compensate and pay for the Chairman's
services an annual base fee of $300,000 for the first year of the term of this
Agreement; $225,000 for the second year of the term of this Agreement; and
$150,000 for the third year of the term of this Agreement. The Chairman's annual
base fee for any extension of the term of this agreement shall be mutually
agreed by the Company and the Chairman.

      3.2 BONUS. The Chairman shall be paid an annual cash bonus of $200,000 for
each of the first and second year of the term of this Agreement and of $150,000
for the third year. The annual cash bonus shall be paid to the Chairman not
later than January 15, 2006, 2007 and 2008, respectively.

      3.3 CAR ALLOWANCE. The Company shall provide the Chairman a car allowance
in the sum of thirty thousand dollars ($30,000) for the first year of the term
of this Agreement and of twenty four thousand dollars ($24,000) for the second
and third year of the term of this Agreement. From such allowance the Chairman
shall pay all his car related expenses, such as car lease payment

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                                      -5-

insurance, repairs, maintenance, gasoline, chauffeur, and related equipment such
as a car installed cellular phone.

      3.4 MEMBERSHIPS. During the term of this Agreement and any extension
thereof, the Company shall provide and maintain at its expense membership in
such social and business clubs which in the judgement of the Chairman are
reasonably appropriate to the performance of his duties pursuant to this
Agreement. Such membership shall be maintained in the name of the Chairman and
he shall be reimbursed for all reasonable expenses and charges incurred by him
at such clubs in performing his company-related duties hereunder.

      3.5 REIMBURSEMENT OF EXPENSES. Not less frequently than monthly, the
Company shall pay for or reimburse the Chairman for all reasonable travel and
other expenses incurred by the Chairman in the performance of his duties under
this Agreement, including, without limiting the generality of the foregoing, the
allowance and reimbursable expenses provided for in Section 3.3 and 3.4 herein
above.

      3.6 OFFICE. The Company shall furnish the Chairman with private office
facilities to be known as the "Office of the Chairman", and provide all
necessary secretarial services and such other assistance and accommodations as
shall be suitable to the character of the Chairman's position and adequate for
the performance of his duties hereunder.

      3.7 LIFE INSURANCE. The Company shall provide a ten (10) year term life
insurance policy in the sum of two million dollars ($2,000,000) covering the
life of the Chairman and having as its beneficiary the Estate of Jose Enrique
Fernandez or any other

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                                      -6-

person or entity which the Chairman may designate from time to time. All
premiums and costs associated with such term life insurance policy shall be for
the account of the Company.

      3.8 VACATION. The Chairman shall be entitled to forty-five (45) days of
paid vacation each year during the term of this agreement.

      4. DISABILITY

      4.1 If the Chairman shall become disabled or incapacitated to the extent
that he is unable to perform his duties hereunder, and so long as such
disability continues, the Chairman shall continue to receive his full
compensation for a period not to exceed the remaining term of this Agreement.

      4.2 There shall be deducted from the amounts paid to the Chairman
hereunder during any period of disability or incapacitation, as described in
Section 4.1 hereof, any amounts actually paid to the Chairman pursuant to any
disability insurance or other similar such programs which the Company has
instituted or may institute on behalf of its employees for the purpose of
providing compensation in the event of disability.

      5. ADDITIONAL COMPENSATION AND BENEFITS

      5.1 During the term of this Agreement, the Chairman will be entitled to
participate and receive the benefits and privileges given to employees and
executives of the Company or its subsidiaries and affiliates which may now exist
or come into existence hereinafter, to the extent commensurate with his then
duties and responsibilities, as fixed by the Company's Board of Directors or its
Compensation Committee, and, to the extent that the Chairman is otherwise
eligible and qualifies, to so

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                                      -7-

participate in, and receive such benefits or privileges. Furthermore, as
additional consideration for the Chairman entering into this Agreement, the
Company agrees that during the Chairman's lifetime, the Chairman and his spouse
will be covered by all health, hospitalization and disability insurance and
benefits which may be in effect from time to time for the benefit of Company
employees and executives. The Company shall pay for all of the cost of providing
such insurance and benefits to the Chairman and his spouse during the Chairman's
lifetime. The Company shall not make any changes in such plans, benefits or
privileges which would adversely affect the Chairman's rights or benefits
thereunder, unless such change or changes are made pursuant to a program
applicable to all executives of the Company and does not result in a
proportionately greater adverse change in the rights of or benefits to the
Chairman as compared to any executive officer of the Company. Nothing paid to
the Chairman under any plan or arrangement presently in effect or made available
in the future shall be deemed in lieu of the base fee or bonus payable to the
Chairman pursuant to Sections 3.1 and 3.2 hereof.

      6. TERMINATION

      6.1 The Board of Directors shall have the right, at any time upon prior
written Notice of Termination satisfying the requirements of Section 6.8(b)
hereof, to terminate this Agreement, including termination for just cause. For
the purpose of this Agreement, "termination for just cause" shall mean
termination for the willful and continued failure of the Chairman to perform his
duties under this Agreement or the willful engaging by the Chairman in illegal
conduct or gross misconduct materially injurious to the Company, as determined
by a court of competent jurisdiction or a federal or state

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                                      -8-

regulatory agency having jurisdiction over the Company. For purposes of this
paragraph, no act, or failure to act, on the Chairman's part shall be considered
"willful" unless done, or omitted to be done, by him not in good faith and
without reasonable belief that his action or omission was in the best interest
of the Company; provided that any act or omission to act on the Chairman's
behalf in reliance upon an opinion of counsel to the Company or counsel to the
Chairman shall not be deemed to be willful.

      6.2 In the event this Agreement is terminated for just cause pursuant to
Section 6.1 hereof, the Chairman shall have no right to compensation or other
benefits for any period after such date of termination. If the Chairman is
terminated by the Company other than for just cause pursuant to Section 6.1
hereof and other than in connection with a change of control of the Company, as
defined in the Compensation Agreement, the Chairman's right to compensation and
other benefits under this Agreement shall be as set forth in Sections 6.8(c) and
(d) hereof.

      6.3 The Chairman shall have the right, upon prior written Notice of
Termination of not less than thirty (30)days satisfying the requirements of
Section 6.8(b) hereof, to terminate this Agreement. In such event, the Chairman
shall have the right as of the date of termination to receive all accrued
compensation and other benefits provided for in this Agreement. Provided,
however, that if the Chairman terminates this Agreement for "good reason"
pursuant to Section 6.8 (a) hereof he shall be entitled to receive the severance
payment provided for in Section 6.8 (c) hereof. If the Chairman provides a
Notice of Termination for good reason the date of Termination shall be the date
on which a Notice of Termination is given.

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                                      -9-

      6.4 If the Chairman is suspended from office and/or temporarily prohibited
from participating in the conduct of the Company's affairs pursuant to a notice
served under the Federal Deposit Insurance Act ("FDIA") or under the Federal
Reserve Act ("FRA"), the Company's obligations under this Agreement shall be
suspended as of the date of service unless stayed by appropriate proceedings. If
the charges in the notice are dismissed, the Company shall: (i) pay the Chairman
all the compensation withheld while contract obligations were suspended, and,
(ii) reinstate (in whole or in part) any of its obligations which were
suspended.

      6.5 If the Chairman is removed from office and/or permanently prohibited
from participating in the conduct of the Company's affairs by an order issued
under the FDIA or the FRA, all obligations of the Company under this Agreement
shall terminate, as of the effective date of the order, but the rights of the
Chairman to compensation earned as of the date of termination shall not be
affected.

      6.6 If the Company is in default, as defined to mean an adjudication or
other official determination of a court of competent jurisdiction or other
public authority pursuant to which a conservator, receiver or other legal
custodian is appointed for the Company for the purpose of liquidation, all
obligations under this Agreement shall terminate as of the date of default, but
the rights of the Chairman to compensation and benefits accrued as of the date
of termination shall not be affected.

      6.7 In the event that this Agreement is terminated in a manner which
violates the provisions of Section 6.1, as

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                                      -10-

determined by a court of competent jurisdiction, the Chairman shall be entitled
to reimbursement for all reasonable costs, including attorneys' fees in
challenging such termination. Such reimbursement shall be in addition to all
rights to which the Chairman is otherwise entitled under this Agreement.

      6.8 (a) The Chairman may terminate this Agreement for good reason. For
purposes of this Agreement, "good reason" shall mean (i) a failure by the
Company to comply with any material provision of this Agreement, which failure
has not been cured within ten (10) days after a notice of such noncompliance has
been given by the Chairman to the Company, or (ii) any purported termination of
this Agreement which is not effected pursuant to a Notice of Termination
satisfying the requirements of paragraph (b) hereof (and for purposes of this
Agreement no such purported termination shall be effective).

            (b) Any termination of the Chairman's employment by the Company or
by the Chairman shall be communicated by a written Notice of Termination to the
other party hereto. For purposes of this Agreement, a "Notice of Termination"
shall mean a dated notice which shall (i) indicate the specific termination
provision in the Agreement relied upon; (ii) set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of this
Agreement under the provision so indicated; (iii) specify a date of termination,
which shall be not less than thirty (30) nor more than ninety (90) days after
such Notice of Termination is given except in the case of the Company's
termination of this Agreement for Just cause pursuant to Section 6.1 hereof, in
which case the Notice of Termination may specify a date of termination as of the
date such

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Notice of Termination is given; and (iv) be given in the manner specified in
Section, 9.1 hereof.

            (c) In the event that: (i) the Chairman shall terminate this
Agreement for good reason as defined in subparts (i) or (ii) of Section 6.8 (a)
hereof, or (ii) if this Agreement is terminated by the Company for other than
just cause pursuant to Section 6.1 hereof and other than in connection with a
change in control of the Company, as defined in the Compensation Agreement, then
in lieu of any further fee payments to the Chairman for periods subsequent to
the date of termination, the Company shall pay as a termination payment to the
Chairman an amount equal to the product of (A) the aggregate annual compensation
paid to or payable by the Company and any of its subsidiaries to the Chairman,
which amount shall include the Chairman's base fee, bonus (equal to the highest
cash bonus paid to the Chairman in any of the two fiscal years prior to the date
of termination of this Agreement, car allowance and the value of any other
benefits provided to the Chairman, during the year in which the termination of
this Agreement occurs, multiplied by (B) 2.00, such payment to be made in a lump
sum on or before the fifth day following the date of termination.

            (d) Unless this Agreement is terminated for just cause pursuant to
Section 6.1 hereof or pursuant to Section 6.5 hereof, the Company shall maintain
in full force and effect, for the continued benefit of the Chairman for the
balance of the term of this Agreement (as such term may have been extended or
provided herein), all benefit plans and programs in which the Chairman was
entitled to participate immediately prior to the date of termination, provided
that the Chairman's continued participation

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is possible under the general terms and provisions of such plans and programs.

            (e) The Chairman shall not be required to mitigate the amount of any
payment provided for in paragraphs (c) and (d) of this Section 6.8 by seeking
other sources of income or otherwise.

      7. INDEMNIFICATION

      7.1 The Company shall indemnify the Chairman, to the fullest extent
authorized by applicable federal and Commonwealth of Puerto Rico laws and
regulations, with respect to any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the Company) that the Chairman is a party
or is threatened to made a party by reason of the fact that he was the President
and Chief Executive Officer of the Company or that he is or was a Director and
Chairman of the Company's Board of Directors, or is or was serving at the
written request of the Company as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against costs and expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a matter
he reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful, provided that the Company
shall not be liable for any amounts which may be due to the Chairman in
connection with a settlement of any action, suit or proceeding effected without
its prior written consent or any action, suit or proceeding initiated by the
Chairman seeking indemnification

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hereunder without its prior written consent. The provisions of this Section 7.1
shall survive the termination of this Agreement.

      8. SUCCESSORS OF THE PARTIES

      8.1 This Agreement shall inure to the benefit of and be binding upon the
Chairman, and, to the extent applicable, his assigns, executors, and personal
representatives and the Company, its successors, and assigns, including, without
limitation, any person, partnership, or corporation which may acquire all or
substantially all of the Company's assets and business, or with or into which
the Company may be consolidated or merged, and this provision shall apply in the
event of any subsequent merger, consolidation, or transfer.

      8.2 This Agreement is personal to each of the parties hereto and neither
party may assign or delegate any of his or its rights or obligations hereunder
without first obtaining the written consent of the other party.

      9. NOTICES

      9.1 All notices required by this Agreement to be given by one party to the
other shall be in writing and shall be deemed to have been delivered either:

      (a) When personally delivered to the office of the Secretary of the
Company at his regular corporate office, or the Chairman in person; or

      (b) Five days after depositing such notice in the United States mails,
certified mail with return receipt requested and postage prepaid to:

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            (i)   Jose E. Fernandez
                  1717 Lila Street
                  San Francisco
                  San Juan, Puerto Rico 00927

            (ii)  Oriental Financial Group Inc.
                  P.O. Box 195115
                  San Juan, Puerto Rico 00919-5115

or such other address as either party may designate to the other by notice in
writing in accordance with the terms hereof.

      10. AMENDMENTS OR ADDITIONS

      10.1 No amendments or additions to this Agreement shall be binding unless
in writing and signed by both parties. The prior approval by a two-thirds
affirmative vote of the full Board of Directors of the Company shall be required
in order for the Company to authorize any amendments or additions to this
Agreement, to give any consent or waivers of provisions of this Agreement, or to
take any other action under this Agreement including any termination of this
Agreement with or without just cause under Section 6.1 hereof,

      11. MISCELLANEOUS

      11.1 No course of conduct between the Company and Chairman to exercise any
right or power given under this Agreement shall: (i) impair the subsequent
exercise of any right or power, or (ii) be construed to be a waiver of any
default or any acquiescence in or consent to the curing of any default while any
other default shall continue to exist, or be construed to be a waiver of such
continuing default or of any other right or power that shall theretofore have
arisen; and, every power and remedy granted by law and by this Agreement to any
party hereto may be exercised from time to time, and as often as may be deemed
expedient. All

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such rights and powers shall be cumulative to the fullest extent permitted by
law.

      11.2 The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.

      11.3 This Agreement shall be governed in all respects and be interpreted
by and under the laws of the Commonwealth of Puerto Rico, except to the extent
that such law may be preempted by applicable Federal law, including regulations,
opinions or orders duly issued by the FDIC and the ("Federal Law"), in
which event this Agreement shall be governed and be interpreted by and under
Federal Law. Venue for the litigation of any and all matters arising under or in
connection with this Agreement shall be laid in the United States District Court
for the District of Puerto Rico, at San Juan, in the case of federal
jurisdiction, and in the Superior Court of the Commonwealth of Puerto Rico in
San Juan, in the case of state court jurisdiction.

      11.4 Notwithstanding anything to the contrary herein contained, the
payment or obligation to pay any monies or granting of any rights or privileges
to the Chairman as provided in this Agreement shall not be in lieu or derogation
of the rights and privileges that the Chairman now has under any plan or benefit
presently outstanding.

      11.5 As used herein the term "Company" shall include all of the Companys
subsidiaries and affiliates.

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      At San Juan, Puerto Rico as of this 4th day of April, 2005, ORIENTAL

                                              FINANCIAL GROUP INC.

By: /s/ Jose Enrique Fernandez               By:  /s/  Julian Inclin
    ---------------------------                   ---------------------------
JOSE ENRIQUE FERNANDEZ                              Julian Inclin
      Chairman                                         Director

                                              _________________________________
                                                  Maricarmen Aponte
                                                      Director

                                              /s/ Alberto Richa
                                              ---------------------------
                                                 Alberto Richa
                                                     Director

                                              /s/ Emilio Rodriguez, Jr.
                                              ------------------------
                                              Emilio Rodriguez,
                                                 Jr. Director<PAGE>

                                                                    EXHIBIT 10.8

                              EMPLOYMENT AGREEMENT
                                     BETWEEN
                         ORIENTAL FINANCIAL GROUP INC.
                                       AND
                             JOSE RAFAEL FERNANDEZ

      AGREEMENT made on the 4th day of April, 2005, by and between ORIENTAL
FINANCIAL GROUP INC., a financial bank holding company which has its principal
office in San Juan, Puerto Rico (sometimes hereinafter referred to as the
"Company") and JOSE RAFAEL FERNANDEZ (sometimes hereinafter referred to as the
"President").

                                   WITNESSETH:

      WHEREAS, Jose Rafael Fernandez has been an executive officer of the
Company since June, 1991, is presently its Senior Executive Vice President and
Chief Operating Officer, has been appointed as the Company's President and Chief
Executive Officer effective January 1, 2005 and the retention of his services
for and on behalf of the Company is of material importance to the preservation
and enhancement of the value of the Company's business;

      WHEREAS, the Company and the President wish to enter into this Agreement
and intend that this Agreement shall become effective on January 1, 2005 and
replace the Employment Agreement, dated as of February 16, 2001 between the
President and the Company, now in effect;

      NOW THEREFORE, in consideration of the mutual covenants set forth, the
Company and the President do hereby agree as follows:

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                                      -2-

      1. TERM OF EMPLOYMENT

      1.1 The Company hereby employs Jose Rafael Fernandez as President and
Chief Executive Officer as hereinafter provided, and the President hereby
accepts said employment and agrees to render such services to the Company on the
terms and conditions set forth in this Agreement for a term of three (3) years
commencing on January 1st, 2005 (the "Effective Date") and terminating on
December 31, 2007, unless further extended or sooner terminated in accordance
with the terms and conditions hereinafter set forth.

      Not less than one hundred twenty (120) days in advance of the expiration
of the term of this Agreement the parties will determine whether to extend the
term and, if extended, under which terms and conditions.

      1.2 During the term of this Agreement, the President shall devote his best
efforts to performing such services for the Company as may be consistent with
his title of President and Chief Executive Officer and those which from time to
time may be assigned to him by the Company's Board of Directors.

      1.3 The services of the President to the Company shall be rendered
principally in the Commonwealth of Puerto Rico, but he shall do such traveling
on behalf of the Company as may be reasonably required by his duties.

      1.4 The President shall have sole, full and complete authority to make all
determinations concerning hiring, dismissal and compensation for all classes of
employees of the Company, which determinations shall be in accordance with the
policies for such hiring, dismissal and compensation established by the

<PAGE>

                                     -3-

Compensation Committee of the Board of Directors from time to time and in
accordance with applicable laws and, the rules and regulations of the Federal
Deposit Insurance Corporation (the "FDIC") and the Federal Reserve Board (the
"FRB").

      1.5 The President shall continue to occupy his position as a Director on
the Board of Directors of the Company. Furthermore, during the term of this
Agreement or extension thereof and for any elections of Directors in which his
term as Director will expire, the Board of Directors shall nominate and
recommend to the stockholders the election of the President to the Board of
Directors of the Company.

      2. COMPETITIVE ACTIVITIES:

      2.1 The President agrees that during the term of this Agreement, except
with the express written consent of the Board of Directors, he will not,
directly or indirectly, engage or participate in, become a director of, or
render advisory or other services for, or in connection with, or become
interested in, or make financial investment in any firm, corporation, business
entity or business enterprise; provided, however, that the President shall not
thereby be precluded or prohibited from owning passive investments including
investments in the securities of other financial institutions, so long as such
ownership does not require him to devote substantial time to management or
control of the business or activities in which he has invested.

      2.2 The President agrees and acknowledges that during the time that he is
employed by the Company, he will maintain an intimate knowledge of the
activities and affairs of the Company including trade secrets and other
confidential matters. As a

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                                      -4-

result, and also because of the special, unique, and extraordinary services that
the President is capable of performing for the Company or one of its
competitors, the President recognizes that the services to be rendered by him
hereunder are of a character giving them a peculiar value, the loss of which
cannot be adequately or reasonably compensated for by damages. Therefore, if
during the time he is employed by the Company, the President renders services to
a competitor of the Company other than as authorized pursuant to Section 2.1
hereof, the Company shall be entitled to immediate injunctive or other equitable
relief to restrain the President from rendering his services to the competitor
of the Company, in addition to any other remedies to which the Company may be
entitled under law; provided, however, that the right to such injunctive or
other equitable relief shall not survive the termination of the President's
employment with the Company.

      3. COMPENSATION AND REIMBURSEMENT OF EXPENSES:

      3.1 COMPENSATION. The Company will compensate and pay for the President's
services during the term of this Agreement (i) an annual base salary of three
hundred twenty-five thousand dollars ($325,000) equivalent to twenty-seven
thousand eighty-three dollars with thirty-three cents ($27,083.33) per month
from January 1 to June 30, 2005; (ii) an annual base salary of three hundred
fifty thousand dollars ($350,000) equivalent to twenty-nine thousand one hundred
sixty-six dollars with sixty-six cents ($29,166.66) per month from July 1, 2005
to June 30, 2006; (iii) an annual base salary of four hundred thousand dollars
($400,000) equivalent to thirty-three thousand three hundred thirty-three
dollars ($33,333.33) per month from July 1, 2006 to June 30, 2007; and (iv)
thirty seven thousand five hundred dollars ($37,500) per month equivalent to an
annualized annual base salary of four

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                                      -5-

hundred fifty thousand dollars ($450,000) from July 1 to December 31, 2007. The
President's base salary for any extension of the term, of this Agreement shall
be mutually agreed by the Compensation Committee of the Board of Directors and
the President, provided, however, that at no time shall such base salary be
reduced below the amount set forth above for the second year of the term of this
Agreement.

      3.2 BONUS. The Company shall pay the President a bonus of up to 50% of the
President's annual base salary as may be earned by him under the Company's "Pay
for Performance" compensation plan (the "Plan") for the first year of the term
of this Agreement and of up to 55% of the President's annual base salary as may
be earned by him under the Plan for each subsequent year of the term of this
Agreement.

      3.3 CAR ALLOWANCE. During the term of this Agreement and any extension
thereof, the Company shall provide the President an annual car allowance in the
amount of thirty thousand dollars ($30,000.00) from which the President shall
pay all his car related expenses, such as car lease payment insurance, repairs,
maintenance, gasoline, chauffeur, and related equipment such as a car installed
cellular phone.

      3.4 MEMBERSHIPS AND PROFESSIONAL EXPENSES. During the term of this
Agreement and any extension thereof, the Company shall provide the President
with an annual allowance in the sum of eighteen thousand dollars ($18,000). From
such allowance the Executive Officer shall pay the membership expenses for such
social and business clubs and professional or training expenses which in his
judgement are reasonably appropriate to the performance of his duties as
President pursuant to this

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                                      -6-

Agreement. Such membership(s) shall be maintained in the name of the President.

      3.5 REIMBURSEMENT OF EXPENSES. Not less frequently than, monthly, the
 Company shall pay for or reimburse the President for-all reasonable travel and
 other expenses incurred by the President in the performance of his duties under
 this Agreement, including, without limiting the generality of the foregoing,
 the allowance and reimbursable expenses provided for in Section 3.3 and 3.4
 herein above.

      3.6 OFFICE. The Company shall furnish the President with a private
 office, all necessary secretarial services and such other assistance and
 accommodations as shall be suitable to the character of the President's
 position with the Company and adequate for the performance of his duties
 hereunder.

          3.7 LIFE INSURANCE. The Company shall provide a ten (10) year
term life insurance policy in the sum of three million dollars (53,000,000)
covering the life of the President and having as its beneficiary the Estate of
Jose Rafael Fernandez or any other person or entity which the President
may designate from time to time. The President authorises the Company to obtain
a ten million dollars ($10,000,000) key man term life insurance policy covering
his life and having the Company as its beneficiary. For as long as the President
is employed by the Company, all premiums and costs associated with such term
life insurance policies described above shall be for the account of the Company.

<PAGE>
                                      -7-

      3.8 VACATION. The President shall be entitled to twenty-two (22) days of
paid vacation each year during the term of this agreement.

      4. DISABILITY

      4.1 if the President shall become disabled or incapacitated to the extent
that he is unable to perform his duties hereunder, and so long as such
disability continues, the President shall, subject to the provisions of Section
6.2 and 6.3 hereof, continue to receive his full compensation for a period not
to exceed the remaining term of this Agreement.

      4.2 There shall be deducted from the amounts paid to the President
hereunder during any period of disability or incapacitation, as described in
Section 4.1 hereof, any amounts actually paid to the President pursuant to any
disability insurance or other similar such programs which the Company has
instituted or may institute on behalf of its employees for the purpose of
providing compensation in the event of disability.

      5. ADDITIONAL COMPENSATION AND BENEFITS

      5.1 During the term of this Agreement, the President will be entitled to
participate in, and receive the benefits of, any stock option plan, profit
sharing plan or other plans, benefits and privileges given to employees and
executives of the Company or its subsidiaries and affiliates which may now exist
or come into existence hereinafter, to the extent commensurate with his then
duties and responsibilities, as fixed by the Compensation Committee of the Board
of Directors, and, to the extent that the President is otherwise eligible and
qualifies, to so participate in, and receive such benefits or privileges. The
Company shall not make any changes in such plans, benefits or privileges which

<PAGE>
                                      -8-

would adversely affect the President's rights or benefits thereunder, unless
such change or changes are made pursuant to a program applicable to all
executives of the Company and does not result in a proportionately greater
adverse change in the rights of or benefits to the President as compared to any
executive officer of the Company. Nothing paid to the President under any plan
or arrangement presently in effect or made available in the future shall be
deemed in lieu of the base salary or bonus payable to the President pursuant to
Sections 3.1 and 3.2 hereof.

      5.2 (a) On November 29, 2004 the Compensation Committee of the Board of
Directors of the Company, in contemplation of the execution of this Agreement,
granted the President an option to purchase 20,000 shares of the common stock of
the Company. The option granted shall be subject to the conditions described in
subsections (c) and (d) below except that the exercised period for the option
shall commence after the second and end on the tenth anniversary of the date of
the grant;

            (b) The President shall be granted options to purchase shares of the
common stock of the Company as follows: 40,000 shares effective on July 1, 2005,
20,000 shares effective on January 1, 2006 and 20,000 shares effective on
January 1, 2007. The options granted to the President pursuant to subsections
(a) and (b) of this Section 5.2 shall be referred to as the "Options".The
Options shall be entitled to all of the rights, benefits and privileges to which
stock options issued under the Company's Incentive Stock Options Plans are
entitled including, without limiting the generality of the foregoing, their
adjustment to take into account the dilution effect of stock dividends and stock
splits.

<PAGE>
                                      -9-

            (c) Up to twenty percent (20%) of the Options may be exercised by
the President each year during a period commencing after the second and ending
on the tenth anniversary of this Agreement, provided that the Options will
become fully vested and exercisable in the event of a change of control of the
Company as such term is defined in the "Change of Control Compensation
Agreement" between the President and the Company dated December 15, 2004, or if
the President becomes disabled, dies or retires from employment with the
Company; and

            (d) The Options shall survive one (1) year after termination of this
Agreement, unless said termination is pursuant to Sections 6.1, 6.5 or 6,6
hereto.

      6. TERMINATION

      6.1 The Board of Directors shall have the right, at any time upon prior
written Notice of Termination satisfying the requirements of Section 6.8(b)
hereof, to terminate the President's employment hereunder, including termination
for just cause. For the purpose of this Agreement, "termination for just cause"
shall mean termination for the willful and continued failure of the President to
perform his duties under this Agreement or the willful engaging by the President
in illegal conduct or gross misconduct materially injurious to the Company, as
determined by a court of competent jurisdiction or a federal or state regulatory
agency having jurisdiction over the Company. For purposes of this paragraph, no
act, or failure to act, on the President's part shall be considered "willful"
unless done, or omitted to be done, by him not in good faith and

<PAGE>
                                      -10-

without reasonable belief that his action or omission was in the best interest
of the Company; provided that any act or omission to act on the President's
behalf in reliance upon an opinion of counsel to the Company or counsel to the
President shall not be deemed to be willful.

      6.2 In the event employment is terminated for just cause pursuant to
Section 6.1 hereof, the President shall have no right to compensation or other
benefits for any period after such date of termination. If the President is
terminated by the Company other than for just cause pursuant to Section 6.1
hereof and other than in connection with a change of control of the Company, as
defined in the Compensation Agreement, the President's right to compensation and
other benefits under this Agreement shall be as set forth in Sections 6,8(c) and
(d) hereof.

      6.3 The President shall have the right, upon prior written Notice of
Termination of not less than thirty (30)days satisfying the requirements of
Section 6.8(b) hereof, to terminate his employment hereunder. In such event, the
President shall have the right as of the date of termination to receive all
accrued compensation and other benefits provided for in this Agreement.
Provided, however, that if the President terminates his employment hereunder for
"good reason" pursuant to Section 6.8(a) hereof he shall be entitled to receive
the severance payment provided for in Section 6.8 (c) hereof. If the President
provides a Notice of Termination for good reason the date

<PAGE>
                                      -11-

of Termination shall be the date on which a Notice of Termination is given,

      6.4 If the President is suspended from office and/or temporarily
prohibited from participating in the conduct of the Company's affairs pursuant
to a notice served under the Federal Deposit Insurance Act ("FDIA") or under the
Federal Reserve Act ("FRA"), the Company's obligations under this Agreement
shall be suspended as of the date of service unless stayed by appropriate
proceedings. If the charges in the notice are dismissed, the Company shall: (i)
pay the President all the compensation withheld while contract obligations were
suspended, and, (ii) reinstate (in whole or in part) any of its obligations
which were suspended.

      6.5 If the President is removed from office and/or permanently prohibited
from participating in the conduct of the Company's affairs by an order issued
under the FDIA or the FRA, all obligations of the Company under this Agreement
shall terminate, as of the effective date of the order, but the rights of the
President to compensation earned as of the date of termination shall not be
affected.

      6.6 If the Company is in default, as defined to mean an adjudication or
other official determination of a court of competent jurisdiction or other
public authority pursuant to which a conservator, receiver or other legal
custodian is appointed for the Company for the purpose of liquidation, all

<PAGE>
                                      -12-

obligations under this Agreement shall terminate as of the date of default, but
the rights of the President to compensation and benefits accrued as of the date
of termination shall not be affected.

      6.7 In the event that the President is terminated in a manner which
violates the provisions of Section 6.1, as determined by a court of competent
jurisdiction, the President shall be entitled to reimbursement for all
reasonable costs, including attorneys' fees in challenging such termination.
Such reimbursement shall be in addition to all rights to which the President is
otherwise entitled under this Agreement.

      6.8 (a) The President may terminate his employment hereunder for good
reason. For purposes of this Agreement, "good reason" shall mean (i) a failure
by the Company to comply with any material provision of this Agreement, which
failure has not been cured within ten (10) days after a notice of such
noncompliance has been given by the President to the Company, or (ii) any
purported termination of the President's employment hereunder which is not
effected pursuant to a Notice of Termination satisfying the requirements of
paragraph (b) hereof (and for purposes of this Agreement no such purported
termination shall be effective).

          (b) Any termination of the President's employment by the Company or
by the President shall be communicated by a written Notice of Termination to the
other party hereto. For

<PAGE>
                                      -13-

purposes of this Agreement, a "Notice of Termination" shall mean a dated notice
which shall (i) indicate the specific termination provision in the Agreement
relied upon; (ii) set forth in reasonable detail, the facts and circumstances
claimed to provide a basis for termination of the President's employment under
the provision so indicated; (iii) specify a date of termination, which shall be
not less than thirty (30) nor more than ninety (90) days after such Notice of
Termination is given, except in the case of the Company's termination of the
President's employment for just cause pursuant to Section 6.1 hereof, in which
case the Notice of Termination may specify a date of termination as of the date
such Notice of Termination is given; and (iv) be given in the manner specified
in Section 9.1 hereof.

            (c) In the event that: (i) the President shall terminate his
employment for good reason as defined in subparts (i) or (ii) of Section 6.8(a)
hereof, or (ii) if the President is terminated by the Company for other than
just cause pursuant to Section 6.1 hereof and other than in connection with a
change in control of the Company, as defined in the Compensation Agreement,
then in lieu of any further salary payments to the President for periods
subsequent to the date of termination, the Company shall pay as severance to the
President an amount equal to the product of (A) the aggregate annual
compensation paid to or payable by the Company and any of its subsidiaries to
the President, which amount shall include the President's base salary, bonus
(equal to the highest cash bonus paid to the

<PAGE>
                                      -14-

President in any of the two fiscal years prior to the date of termination of
employment, car allowance and the value of any other benefits provided to the
President, during the year in which the termination of the President's
employment occurs, multiplied by (B) 2.00, such payment to be made in a lump sum
on or before the fifth day following the date of termination.

            (d) Unless the President's employment is terminated for just cause
pursuant to Section 6.1 hereof or pursuant to Sections 6.5 and 6.6 hereof, the
Company shall maintain in full force and effect, for the continued benefit of
the President for the balance of the term of this Agreement (as such term may
have been extended or provided herein), all employee benefit plans and programs
in which the President was entitled to participate immediately prior to the date
of termination, provided that the President's continued participation is
possible under the general terms and provisions of such plans and programs.

            (e) The President shall not be required to mitigate the amount of
any payment provided for in paragraphs (c) and (d) of this Section 6.8 by
seeking other employment or otherwise.

      7. INDEMNIFICATION

      7.1 The Company shall indemnify the President, to the fullest extent
authorized by applicable federal and Commonwealth of Puerto Rico laws and
regulations, with respect to any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative (other

<PAGE>
                                      -15-

than an action by or in the right of the Company) that the President is a party
or is threatened to made a party by reason of the fact that he is or was the
President and Chief Executive Officer of the Company or that he is or was a
member of the Company's Board of Directors, or is or was serving at the written
request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
costs and expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him in connection with
such action, suit or proceeding if he acted in good faith and in a matter he
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful, provided that the Company
shall not be liable for any amounts which may be due to the President in
connection with a settlement of any action, suit or proceeding effected without
its prior written consent or any action, suit or proceeding initiated by the
President seeking indemnification hereunder without its prior written consent.
The provisions of this Section 7.1 shall also extend the conjugal partnership of
the President and his spouse and to the President's spouse, when applicable, and
shall survive the termination of this Agreement.

      8. SUCCESSORS OF THE PARTIES

      8.1 This Agreement shall inure to the benefit of and be binding upon the
President, and, to the extent applicable, his assigns, executors, and personal
representatives and the Company,

<PAGE>
                                      -16-

its successors, and assigns, including, without limitation, any person,
partnership, or corporation which may acquire all or substantially all of the
Company's assets and business, or with or into which the Company may be
consolidated or merged, and this provision shall apply in the event of any
subsequent merger, consolidation, or transfer,

      8.2 This Agreement is personal to each of the parties hereto and neither
party may assign or delegate any of his or its rights or obligations hereunder
without first obtaining the written consent of the other party.

      9. NOTICES

      9.1 All notices required by this Agreement to be given by one party to the
other shall be in writing and shall be deemed to have been delivered either:

      (a) When personally delivered to the office of the Secretary of the
Company at his regular corporate office, or the President in person; or

      (b) Five days after depositing such notice in the United States mails,
certified mail with return receipt requested and postage prepaid to:

            (i)   Jose R. Fernandez
                  Narciso 1893
                  Urb. Santa Maria
                  Rio Piedras, PR 00927

<PAGE>
                                      -17-

            (ii)  Oriental Financial Group Inc.
                  P.O. Box 195115
                  San Juan, Puerto Rico 00919-5115

or such other address as either party may designate to the other by notice in
writing in accordance with the terms hereof.

      10. AMENDMENTS OR ADDITIONS

      10.1 No amendments or additions to this Agreement shall be binding unless
in writing and signed by both parties. The prior approval by a two-thirds
affirmative vote of the full Board of Directors of the Company shall be required
in order for the Company to authorize any amendments or additions to this
Agreement, to give any consent or waivers of provisions of this Agreement, or to
take any other action under this Agreement including any termination of the
employment of the President with or without just cause under Section 6.1 hereof.

      11. MISCELLANEOUS

      11.1 No course of conduct between the Company and President to exercise
any right or power given under this Agreement shall: (i) impair the subsequent
exercise of any right or power, or (ii) be construed to be a waiver of any
default or any acquiescence in or consent to the curing of any default while any
other default shall continue to exist, or be construed to be a waiver of such
continuing default or of any other right or power that shall theretofore have
arisen; and, every power and remedy granted by law and by this Agreement to any
party hereto may be exercised from time to time, and as often as may be deemed
expedient. All such rights and powers shall be cumulative to the fullest extent
permitted by law.

<PAGE>
                                      -18-

      11.2 The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.

      11.3 This Agreement shall be governed in all respects and be interpreted
by and under the laws of the Commonwealth of Puerto Rico, except to the extent
that such law may be preempted by applicable Federal law, including regulations,
opinions or orders duly issued by the FDIC and the FRB("Federal Law"), in which
event this Agreement shall be governed and be interpreted by and under Federal
Law. Venue for the litigation of any and all matters arising under or in
connection with this Agreement shall be laid in the United States District Court
for the District of Puerto Rico, at San Juan, in the case of federal
jurisdiction, and in the Superior Court of the Commonwealth of Puerto Rico in
San Juan, in the case of state court jurisdiction.

      11.4 Notwithstanding anything to the contrary herein contained, the
payment or obligation to pay any monies or granting of any rights or privileges
to the President as provided in this Agreement shall not be in lieu or
derogation of the rights and privileges that the President now has under any
plan or benefit presently outstanding.

      11.5 As used herein the term "Company" shall include all of the Company's
subsidiaries and affiliates.

<PAGE>
                                      -19-

At San Juan Puerto Rico this 4th day of April, 2005.

                                    ORIENTAL FINANCIAL GROUP INC.

/s/ Jose Rafael Fernandez           By: /s/ Julian Inclan
-------------------------               -------------------------
JOSE RAFAEL FERNANDEZ                   Julian Inclan
                                           Director

                                        __________________________________
                                            Maricarmen Aponte
                                               Director

                                        /s/ Alberto Richa
                                        -------------------------
                                            Alberto Richa
                                               Director

                                        /s/ Emilio Rodriguez, Jr.
                                        ----------------------------------
                                            Emilio Rodriguez, Jr.
                                                  Director

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