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                                                                    EXHIBIT 10.1

                              EUROBANCSHARES, INC.
                                STOCK OPTION PLAN

                           ADOPTED AS OF MAY 22, 2002

                            SCOPE AND PURPOSE OF PLAN

      This EuroBancshares, Inc. Stock Option Plan is intended to promote the
best interests of the EuroBancshares, Inc. (the "Company"), Eurobank (the
"Bank") and their respective shareholders, by (i) enabling the Company and the
Bank to attract and retain the best available individuals for positions of
substantial responsibility; (ii) providing additional incentive to such persons
by affording them an equity participation in the Company; (iii) rewarding those
directors, executive officers and employees for their contributions to the
Company and the Bank; and (iv) promoting the success of the Company's business
by aligning the financial interests of directors, executive officers and
employees providing personal services to the Company and the Bank with long-term
shareholder value.

PARAGRAPH 1. DEFINITIONS.

      1.1.  "ACT" shall mean the Securities Exchange Act of 1934, as amended or
any similar or superseding statute or statutes.

      1.2.  "ADOPTION DATE" shall mean the date that the Plan is adopted by the
Board of Directors to be effective.

      1.3.  "AFFILIATES" shall mean: (a) any corporation, other than the
Company, in an unbroken chain of corporations ending with the Company if each of
the corporations, other than the Company, owns stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of stock in one
of the other corporations in such chain; and (b) any corporation, other than the
Company, in an unbroken chain of corporations beginning with the Company, if
each of the corporations, other than the last corporation in the unbroken chain,
owns stock possessing fifty percent (50%) or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain,
and shall include the Bank.

      1.4.  "AGREEMENT" shall mean the written agreement between the Company and
an Optionee evidencing the Option granted by the Company.

      1.5.  "BANK" shall mean Eurobank, a commercial bank organized under the
laws of the Commonwealth of Puerto Rico.

      1.6.  "BENEFICIARY" shall mean the person or persons the Optionee
designates to receive his benefits under his Agreement(s) upon the death of the
Optionee. Each Optionee shall

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have the right to designate a Beneficiary on the form supplied to him by the
Committee. The last such designation form received by the Committee shall be
controlling, and no designation, or change or revocation of a designation shall
be effective, unless received by the Committee prior to the Optionee's death.
If: (i) no Beneficiary designation is in effect at the time of the Optionee's
death; (ii) if no Beneficiary survives the Optionee; or (iii) the otherwise
applicable Beneficiary designation conflicts with applicable law, the Optionee's
estate shall be the Beneficiary.

      1.7.  "BOARD OF DIRECTORS" shall mean the board of directors of the
Company.

      1.8.  "CAUSE" shall mean the occurrence of any of the following events:

            (a)   The determination by the Board of Directors in the exercise of
      its reasonable judgment, after consultation with its legal counsel, that
      an Optionee has committed an act or acts constituting (i) a felony or
      other crime, whether a felony or a misdemeanor, involving moral turpitude,
      dishonesty or theft, (ii) dishonesty or disloyalty with respect to the
      Company, or (iii) fraud;

            (b)   The determination by the Board of Directors in the exercise of
      its reasonable judgment, after consultation with its legal counsel, that
      an Optionee of the Company has committed a breach or violation of his or
      her employment agreement with the Company (if any), and fails to cure such
      breach or violation within the time specified in such employment
      agreement;

            (c)   The determination by the Board of Directors, after
      consultation with its legal counsel, that an Optionee has engaged in gross
      misconduct in the course and scope of his employment or service with the
      Company including indecency, immorality, gross insubordination,
      dishonesty, unlawful harassment or discrimination, or use of illegal
      drugs; or

            (d)   In the event an Optionee is prohibited from engaging in the
      business of banking by any governmental regulatory agency having
      jurisdiction over the Company.

      For the purpose of this Plan, no act, or failure to act, on the part of
the Optionee shall be deemed "intentional" unless done, or omitted to be done,
by the Optionee not in good faith and without reasonable belief that his action
or omission was in the best interest of the Bank or the Company. Notwithstanding
the foregoing, the Optionee shall not be deemed to have been terminated for
"Cause" hereunder unless and until there shall have been delivered to the
Optionee a copy of a resolution duly adopted by the affirmative vote of a
majority of the Board of Directors then in office (with the Optionee abstaining
if a member thereof) at a meeting of the Board of Directors called and held for
such purpose (after at least ten (10) days notice to the Optionee and an
opportunity for the Optionee, together with his counsel, to be heard before the
Board of Directors), finding that in the good faith opinion of the Board of
Directors the Optionee had committed an act set forth above and specifying the
particulars thereof in detail. The number of votes needed to constitute a
majority shall be determined based on the total number of

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members of the Board of Directors then serving, including any abstaining member.
Nothing herein shall limit the right of the Optionee or his beneficiary to
contest the validity or propriety of any such determination.

      1.9.  "CHANGE IN CONTROL" shall mean:

            (a)   a dissolution or liquidation of the Company or the Bank;

            (b)   a merger or consolidation (other than a merger effecting a
      re-incorporation of the Bank or the Company in another state or territory
      or any other merger or consolidation in which the shareholders of the
      surviving corporation and their proportionate interests therein
      immediately after the merger or consolidation are substantially identical
      to the shareholders of the Bank or the Company and their proportionate
      interests therein immediately prior to the merger or consolidation) in
      which the Bank or the Company is not the surviving corporation (or
      survives only as a subsidiary of another corporation in a transaction in
      which the shareholders of the parent of the Bank or the Company and their
      proportionate interests therein immediately after the transaction are not
      substantially identical to the shareholders of the Bank or the Company and
      their proportionate interests therein immediately prior to the
      transaction; provided, however, that the Board of Directors may at any
      time prior to such a merger or consolidation provide by resolution that
      there has been no Change in Control and that the foregoing provisions of
      this parenthetical shall not apply if a majority of the Board of Directors
      of such parent immediately after the transaction consists of individuals
      who constituted a majority of the Board of Directors immediately prior to
      the transaction); or

            (c)   a transaction in which any person or entity (other than a
      shareholder of the Bank or the Company on the date of the Optionee's
      Agreement) becomes the owner of fifty percent (50%) or more of the total
      combined voting power of all classes of stock of the Bank or the Company
      (provided, however, that the Board of Directors may at any time prior to
      such transaction provide by resolution that there has been no Change in
      Control and that this PARAGRAPH 1.9(c) shall not apply if such acquiring
      person is a corporation and a majority of the Board of Directors of the
      acquiring corporation immediately after the transaction consists of
      individuals who constituted a majority of the Board of Directors
      immediately prior to the acquisition of such fifty percent (50%) or more
      total combined voting power).

      1.10. "CODE" shall mean the Puerto Rico Internal Revenue Code of 1994, as
amended.

      1.11. "COMMITTEE" shall mean the committee appointed pursuant to PARAGRAPH
3 of the Plan by the Board of Directors to administer this Plan.

      1.12. "COMPANY" shall mean EuroBancshares, Inc., a corporation organized
and existing under the laws of the Commonwealth of Puerto Rico and domiciled in
Hato Rey, Puerto Rico.

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      1.13. "DIRECTOR(s)" shall mean one or more members of the Board of
Directors.

      1.14. "DISABILITY" shall mean a total and permanent disability as defined
in the Company's long term disability plan, or if the Company has no long term
disability plan in effect at the time of the Optionee's disability, the meaning
provided in section 22(e)(3) of the Code. Notwithstanding the preceding
sentence, for any Incentive Option, "Disability" shall have the meaning provided
in section 22(e)(3) of the Code.

      1.15. "ELIGIBLE INDIVIDUALS" shall mean the directors and all the
employees of the Company, the Bank, and their Affiliates. For purposes of this
Plan, the term "employee" means an individual employed by the Company, the Bank,
or their Affiliates whose income from the Company, the Bank, or their Affiliates
is subject to Federal Insurance Contributions Act ("FICA") withholding.
Notwithstanding the foregoing provisions of this PARAGRAPH 1,15, to ensure that
the requirements of PARAGRAPH 4.1 are satisfied, the Board of Directors may from
time to time specify individuals who shall not be eligible for the grant of
Options or options, stock appreciation rights or allocations of stock under any
plan of the Company (as such terms are used in subsection (d)(3) of Rule 16b-3
promulgated under the Act); provided, however, that the Board of Directors may
at any time determine that any individual who has been so excluded from
eligibility shall become eligible for grants of Options and grants of stock
appreciation rights or options not subject to this Plan, or allocations of stock
under any plans of the Company.

      1.16. "EXERCISE PRICE" shall mean the price per share of Stock as
established pursuant to PARAGRAPH 6.2.

      1.17. "FAIR MARKET VALUE" shall mean:

            (a)   If shares of Stock of the same class are listed or admitted to
      unlisted trading privileges on any national or regional securities
      exchange at the date of determining the Fair Market Value, the last
      reported sale price on such exchange on the last business day prior to the
      date in question;

            (b)   If shares of Stock of the same class are not listed or
      admitted to unlisted trading privileges as provided in SUBPARAGRAPH
      1.17(a) and sales prices for such shares in the over-the-counter market
      are reported by the National Association of Securities Dealers,
      Incorporated Automated Quotations, Incorporated ("NASDAQ") National Market
      System at the date of determining the Fair Market Value, the last reported
      sale price so reported on the last business day prior to the date in
      question;

            (c)   If shares of Stock of the same class are not listed or
      admitted to unlisted trading privileges as provided in SUBPARAGRAPH
      1.17(a) and sales prices for such shares are not reported by the NASDAQ
      National Market System as provided in SUBPARAGRAPH 1.17(b), and bid and
      asked prices therefor in the over-the-counter market are reported by
      NASDAQ (or, if not so reported, by the National Quotation Bureau
      Incorporated or the OTC Bulletin Board) at the date of determining the
      Fair Market

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      Value, the average of the closing bid and asked prices on the last
      business day prior to the date in question; or

            (d)   If shares of Stock of the same class are not listed or
      admitted to unlisted trading privileges as provided in SUBPARAGRAPH
      1.17(a) and sales prices or bid and asked prices for such shares are not
      reported by NASDAQ (or the National Quotation Bureau Incorporated or the
      OTC Bulletin Board) as provided in SUBPARAGRAPH 1.17(b) or SUBPARAGRAPH
      1.17(c) at the date of determining the Fair Market Value, the value
      determined in good faith by the Board of Directors; provided, however,
      that with respect to Incentive Options, in no event shall the value be
      less than the book value per share determined according to the financial
      statements of the Company for the taxable year immediately prior to the
      date such Incentive Options are granted.

      1.18. "INCENTIVE OPTIONS" shall mean stock options that are intended to
satisfy the requirements of section 1046 of the Code.

      1.19. "NONSTATUTORY OPTIONS" shall mean stock options that do not satisfy
the requirements of section 1046 of the Code.

      1.20. "OPTIONEE" shall mean an Eligible Individual to whom an Option has
been granted.

      1.21. "OPTIONS" shall mean either Incentive Options or Nonstatutory
Options, or both.

      1.22. "PLAN" shall mean this EuroBancshares, Inc. Stock Option Plan.

      1.23. "SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
or any similar or superseding statute or statutes.

      1.24. "STOCK" shall mean the Company's authorized common stock, $0.01 par
value, together with any other securities that may be received upon the exercise
of Options granted under the Plan.

PARAGRAPH 2. STOCK AND MAXIMUM NUMBER OF SHARES SUBJECT TO THE PLAN.

      2.1.  DESCRIPTION OF STOCK AND MAXIMUM SHARES ALLOCATED.

            (a)   The Stock that may be issued upon the exercise of an Option
      may be either unissued or reacquired shares of Stock, as the Board of
      Directors may, in its sole and absolute discretion, from time to time,
      determine.

            (b)   Subject to the adjustments provided in PARAGRAPH 6.6, the
      aggregate number of shares of Stock to be issued pursuant to the exercise
      of all Options granted under the Plan may equal but shall not exceed
      677,850 shares.

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      2.2.  RESTORATION OF UNPURCHASED SHARES. If an Option granted under the
Plan expires or terminates for any reason during the term of this Plan and prior
to the exercise of the Option in full, the shares of Stock subject to, but not
issued under, such Option shall again be available for Options granted under the
Plan after such shares become available again.

PARAGRAPH 3. ADMINISTRATION OF THE PLAN.

      3.1.  COMMITTEE. The Plan shall be administered by the Committee. The
Committee shall consist of not less than three (3) individuals; provided,
however, that in the event a Committee is not appointed by the Board of
Directors, then the Board of Directors shall be the Committee. In the event that
the Stock is registered under section 12 of the Act, the Committee shall be
constituted so that all members of the Committee are "outside directors" and the
Plan, in all other applicable respects, and transactions related to the Plan,
will qualify for the exemptions from section 16(b) of the Act provided by Rule
16b-3. "Outside director" shall mean a member of the Board of Directors who
qualifies as an "outside director" under the regulations promulgated under
section 162 of the Code and as a "non-employee director" under Rule 16b-3
promulgated under the Act.

      3.2.  DURATION, REMOVAL, ETC. The members of the Committee shall serve at
the pleasure of the Board of Directors, which shall have the power, at any time
and from time to time, to remove members from the Committee or to add members to
the Committee. Vacancies on the Committee, however caused, shall be filled by
action of the Board of Directors.

      3.3.  MEETINGS AND ACTIONS OF COMMITTEE. The Committee shall elect one of
its members as its Chairman and shall hold its meetings at such times and places
as it may determine. All decisions and determinations of the Committee shall be
made by the majority vote or decision of all of its members present at a
meeting; provided, however, that any decision or determination reduced to
writing and signed by all of the members of the Committee shall be as fully
effective as if it had been made at a meeting duly called and held. The
Committee may make any rules and regulations for the conduct of its business
that are not inconsistent with the provisions of this Plan and with the bylaws
of the Company as it may deem advisable.

      3.4.  COMMITTEE'S POWERS. Subject to the express provisions of this Plan,
the Committee shall have the authority, in its sole and absolute discretion: (a)
to adopt, amend, and rescind administrative and interpretive rules and
regulations relating to the Plan; (b) to determine the terms and provisions of
the respective Agreements (which need not be identical), including provisions
defining or otherwise relating to: (i) subject to PARAGRAPH 6, the term and the
period or periods and extent of exercisability of the Options, (ii) the extent
to which the transferability of shares of Stock issued upon exercise of Options
is restricted, (iii) the effect of termination of employment upon the
exercisability of the Options, and (iv) the effect of approved leaves of absence
(consistent with any applicable regulations under the Code); (c) to accelerate
the time of exercisability of any Option that has been granted; (d) to construe
the terms of any Agreement and the Plan; and (e) to make all other
determinations and perform all other acts necessary or advisable for
administering the Plan, including the delegation of such ministerial acts and
responsibilities as the Committee deems appropriate. The Committee may correct
any defect or

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supply any omission or reconcile any inconsistency in the Plan or in any
Agreement in the manner and to the extent it shall deem expedient to carry it
into effect, and it shall be the sole and final judge of such expediency. The
Committee shall have full discretion to make all determinations on the matters
referred to in this PARAGRAPH and such determinations shall be final, binding
and conclusive.

PARAGRAPH 4. ELIGIBILITY AND PARTICIPATION.

      4.1.  ELIGIBLE INDIVIDUALS. Options may be granted under the Plan only to
persons who are Eligible Individuals at the time of grant.

      4.2.  NO RIGHT TO OPTION. The adoption of the Plan shall not be deemed to
give any person a right to be granted an Option.

PARAGRAPH 5. GRANT OF OPTIONS AND CERTAIN TERMS OF THE AGREEMENTS.

      5.1.  AWARD CRITERIA. Subject to the express provisions of this PARAGRAPH,
the Committee shall, in its sole discretion, determine which Eligible
Individuals shall be granted Options under the Plan. In making grants, the
Committee shall take into consideration the level of responsibility within the
organization and the contribution the potential Optionee has made or may make to
the success of the Company and such other considerations as the Board of
Directors may from time to time specify. The Committee shall also determine the
number of shares subject to each of such Options and shall authorize and cause
the Company to grant Options in accordance with such determinations.

      5.2.  GRANT. The date on which the Committee completes all action
constituting an offer of an Option to an individual, including the specification
of the Exercise Price and the number of shares of Stock to be subject to the
Option, shall be the date on which the Option covered by an Agreement is
granted, even though certain terms of the Agreement may not be at such time
determined and even though the Agreement may not be executed until a later time.
For purposes of the preceding sentence, an offer shall be deemed made if the
Committee has completed all such action except communication of the grant of the
Option to the potential Optionee. In no event, however, shall an Optionee gain
any rights in addition to those specified by the Committee in its grant,
regardless of the time that may pass between the grant of the Option and the
actual execution of the Agreement by the Company and the Optionee.

      Each Option granted under the Plan shall be evidenced by an Agreement,
executed by the Company and the Optionee to whom the Option is granted,
incorporating such terms as the Committee shall deem necessary or desirable.
More than one Option may be granted to the same Eligible Individual and be
outstanding concurrently. In the event an Eligible Individual is granted both
one or more Incentive Options and one or more Nonstatutory Options, such grants
shall be evidenced by separate Agreements, one for each of the Incentive Option
grants and one for each of the Nonstatutory Option grants.

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      5.3.  TRANSFERABILITY RESTRICTIONS. Each Agreement may contain or
otherwise provide for conditions giving rise to the forfeiture of the Stock
acquired pursuant to an Option granted under the Plan and for such restrictions
on the transferability of shares of the Stock acquired pursuant to an Option as
the Committee, in its sole and absolute discretion, shall deem proper or
advisable. Such conditions giving rise to forfeiture may include, but need not
be limited to, the requirement that the Optionee render substantial services to
the Company for a specified period of time. Such restrictions on transferability
may include, but need not be limited to, options and rights of first refusal in
favor of the Company and shareholders of the Company other than an Optionee who
is a party to the particular Agreement or a subsequent person who is bound by
such Agreement.

PARAGRAPH 6. TERMS AND CONDITIONS OF OPTIONS.

      All Options granted under the Plan shall comply with, be deemed to
include, and shall be subject to the following terms and conditions:

      6.1.  NUMBER OF SHARES. Each Agreement shall state the number of shares of
Stock to which it relates.

      6.2.  EXERCISE PRICE. Each Agreement shall state the Exercise Price per
share of Stock.

            (a)   Nonstatutory Options: The Exercise Price per share of Stock
      subject to a Nonstatutory Option shall be determined by the Committee upon
      the granting of the Nonstatutory Option.

            (b)   Incentive Options: Except as provided in PARAGRAPH 4.1, the
      Exercise Price per share of Stock subject to any Incentive Option under
      this Plan shall not be less than the greater of: (i) the par value per
      share of the Stock; or (ii) one hundred percent (100%) of the Fair Market
      Value per share of the Stock on the date of the grant of the Incentive
      Option.

      6.3.  MEDIUM AND TIME OF PAYMENT, METHOD OF EXERCISE, AND WITHHOLDING
TAXES.

            (a)   The Exercise Price of an Option shall be payable upon the
      exercise of the Option in cash or cash equivalent funds.

            (b)   Exercise of an Option shall not be effective until the Company
      has received written notice of exercise. Such notice must specify the
      number of whole shares to be purchased and be accompanied by payment in
      full of the aggregate Exercise Price of the number of shares purchased in
      cash (as set forth above). The Company shall not in any case be required
      to sell, issue, or deliver a fractional share of Stock with respect to any
      Option.

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            (c)   The Committee may, in its discretion, require an Optionee to
      pay to the Company at the time of exercise of an Option (or portion of an
      Option) the amount that the Company deems necessary to satisfy its
      obligation to withhold federal, state, local or Puerto Rico income or
      other taxes incurred by reason of the exercise. If the exercise of an
      Option does not give rise to an obligation to withhold federal income or
      other taxes on the date of exercise, the Company may, in its discretion,
      require an Optionee to place shares of Stock purchased under the Option in
      escrow for the benefit of the Company until such time as federal income or
      other tax withholding is no longer required with respect to such shares or
      until such withholding is required on amounts included in the gross income
      of the Optionee as a result of the exercise of an Option or the
      disposition of shares of Stock acquired pursuant to the exercise. At such
      later time, the Company, in its discretion, may require an Optionee to pay
      to the Company the amount that the Company deems necessary to satisfy its
      obligation to withhold federal, state, local or Puerto Rico income or
      other taxes incurred by reason of the exercise of the Option or the
      disposition of shares of Stock. Upon receipt of such payment by the
      Company, such shares of Stock shall be released from escrow to the
      Optionee.

      6.4.  TERM, TIME OF EXERCISE AND TRANSFERABILITY OF OPTIONS.

            (a)   In addition to such other terms and conditions as may be
      included in a particular Agreement granting an Option, an Option shall be
      exercisable during an Optionee's lifetime only by the Optionee or by the
      Optionee's guardian or legal representative. An Option shall not be
      transferrable. Notwithstanding any other provision of this Plan, no Option
      shall be exercisable after the expiration of five (5) years from the date
      it is granted.

            (b)   The provisions of this PARAGRAPH 6.4(b) shall apply to the
      extent an Optionee's Agreement does not expressly provide otherwise. If an
      Optionee ceases to be an Eligible Individual for any reason (other than
      death or Disability), any Option exercisable in whole or in part by
      Optionee at the time the Optionee ceases to be an Eligible Individual
      shall remain exercisable for a period of ninety (90) day thereafter and as
      set forth in the Optionee's Agreement after such period the Option shall
      terminate and cease to be exercisable; and provided, further, that if an
      Optionee ceases to be an Eligible Individual by reason of death or
      Disability, the Optionee or the Optionee's Beneficiary shall have the
      right for twelve (12) months after the date of death or Disability to
      exercise an Option to the extent such Option is otherwise exercisable on
      such date. At the end of such twelve (12) month period, the Option shall
      terminate and cease to be exercisable. Except as provided herein, the
      portion of the Option that is not exercisable on the date the Optionee
      ceases to be an Eligible Individual shall terminate and be forfeited to
      the Company on the date of such cessation.

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            (c)   Notwithstanding anything in this Agreement to the contrary, in
      the event an Optionee ceases to be an Eligible Individual because such
      Optionee is terminated or removed for Cause by the Company, the Option
      shall terminate immediately and any unexpired Options shall be forfeited.

            (d)   With respect to an Option, the Committee may, in its sole
      discretion, determine that any Optionee who is on leave of absence for any
      reason will be considered to still be in the employ of the Company, as
      applicable, for any or all purposes of the Plan and the Agreement of such
      Optionee.

            (e)   The Committee shall have the authority to prescribe in any
      Agreement that the Option evidenced by such Agreement may be exercised in
      full or in part as to any number of shares subject to the Option at any
      time or from time to time during the term of the Option, or in such
      installments at such times during said term as the Committee may
      prescribe. Unless otherwise provided in any Agreement, an Option may be
      exercised at any time or from time to time during the term of the Option.
      Such exercise may be as to any or all whole (but no fractional) shares
      that have become purchasable under the Option.

            (f)   Within a reasonable time (or such time as may be permitted by
      law) after the Company receives written notice that the Optionee has
      elected to exercise all or a portion of an Option, such notice to be
      accompanied by payment in full of the aggregate Exercise Price of the
      Option of the number of shares of Stock purchased, the Company shall issue
      and deliver a certificate representing the shares acquired in consequence
      of the exercise and any other amounts payable in consequence of such
      exercise. In the event that an Optionee exercises both an Incentive
      Option, or portion of one, and a Nonstatutory Option, or a portion of one,
      separate Stock certificates shall be issued, one for the Stock subject to
      the Incentive Option and one for the Stock subject to the Nonstatutory
      Option. The number of the shares of Stock transferrable due to an exercise
      of an Option under this Plan shall not be increased due to the passage of
      time, except as may be provided in an Agreement; provided, however, that
      the number of such shares of Stock which are transferrable may increase
      due to the occurrence of certain events which are fully described in
      PARAGRAPH 6.6.

            (g)   Nothing in the Plan or in any Option granted under the Plan
      shall require the Company to issue any shares upon exercise of any Option
      if such issuance would, in the reasonable judgment of the Committee based
      upon the advice of counsel for the Company, constitute a violation of the
      Securities Act, or any other applicable statute or regulation, as then in
      effect. At the time of any exercise of an Option, the Company may, as a
      condition precedent to the exercise of such Option, require from the
      Optionee (or in the event of his death, his Beneficiary, his legal
      representatives, heirs, legatees, or distributees) such written
      representations, if any, concerning his intentions with regard to the
      retention or disposition of the shares being acquired by exercise of such
      Option and such written covenants and agreements, if any, as to the manner
      of disposal of such shares as, in the opinion of counsel to the Company,
      may be necessary to ensure that any disposition by such Optionee (or in
      the event of his death, his Beneficiary, his legal

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      representatives, heirs, legatees, or distributees), will not involve a
      violation of the Securities Act or any other applicable state or federal
      statute or regulation, as then in effect. Certificates for shares of
      Stock, when issued, may have the following or similar legend, or
      statements of other applicable restrictions, endorsed on them, and may not
      be immediately transferable:

            THE SHARES OF STOCK EVIDENCED BY THIS CERTIFICATE HAVE BEEN ISSUED
            TO THE REGISTERED OWNER IN RELIANCE UPON WRITTEN REPRESENTATIONS
            THAT THESE SHARES HAVE BEEN PURCHASED FOR INVESTMENT. THESE SHARES
            HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
            AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, IN RELIANCE UPON
            AN EXEMPTION FROM REGISTRATION. WITHOUT SUCH REGISTRATION, THESE
            SHARES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED
            OF UNLESS, IN THE OPINION OF EUROBANCSHARES, INC. AND ITS LEGAL
            COUNSEL, SUCH SALE, TRANSFER, ASSIGNMENT OR DISPOSITION WILL NOT BE
            IN VIOLATION OF THE SECURITIES ACT OF 1933, AS AMENDED, APPLICABLE
            RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION, AND
            ANY APPLICABLE STATE SECURITIES LAWS.

            (h)   In the event that the capital of the Company falls below the
      minimum requirements as determined by the Company's primary federal
      regulator, such regulator may direct the Company to require Optionees to
      exercise or forfeit any Options granted pursuant to the Plan.

      6.5.  LIMITATION ON AGGREGATE VALUE OF SHARES THAT MAY BECOME FIRST
EXERCISABLE DURING ANY CALENDAR YEAR UNDER AN INCENTIVE OPTION. Except as is
otherwise provided in PARAGRAPH 6.6, with respect to any Incentive Option
granted under this Plan, the sum of (a) and (b) below may not (with respect to
any Optionee) exceed $100,000, with such Fair Market Value to be determined as
of the date the Incentive Option or such other incentive stock option is
granted, where:

            (a)   is the aggregate Fair Market Value of shares of Stock subject
      to such Incentive Option that first become purchasable in a calendar year
      under such Incentive Option; and

            (b)   is the aggregate Fair Market Value of shares of Stock or stock
      of any Affiliate (or a predecessor of the Company or an Affiliate) subject
      to the Incentive Option or any other incentive stock option (within the
      meaning of section 1046 of the Code) of the Company or its Affiliates that
      first become purchasable in a calendar year under such Incentive Option.

                                       11
<PAGE>

      6.6.  ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGER, ETC. AND CHANGE
IN CONTROL.

            (a)   Notwithstanding any other provision in the Plan to the
      contrary, in the event of any change in the number of outstanding shares
      of Stock:

                  (i)   effected without receipt of consideration by the Company
            by reason of a stock dividend, stock split, combination, exchange of
            shares, merger, consolidation, reorganization or other
            recapitalization, in which the Company is the surviving corporation;
            or

                  (ii)  by reason of a spin-off of a part of the Company into a
            separate entity, or assumptions and conversions of outstanding
            grants due to an acquisition by the Company of a separate entity,

      (1) the aggregate number and class of the reserved shares, (2) the number
      and class of shares subject to each outstanding Option, and (3) the
      Exercise Price of each outstanding Option shall be adjusted automatically
      to accurately and equitably reflect the effect of such change; provided,
      however, that any or all such adjustments shall not occur with respect to
      an Incentive Option, unless:

            (A)   the excess of the aggregate Fair Market Value of the shares
      subject to the Incentive Option immediately after any such adjustment over
      the aggregate Exercise Price of such shares is not more than the excess of
      the aggregate Fair Market Value of all shares subject to the Incentive
      Option immediately before such adjustment over the aggregate Exercise
      Price of all such shares subject to the Incentive Option; and

            (B)   the new or adjusted Incentive Option does not give the
      Optionee additional benefits which such Optionee did not have under the
      old Incentive Option (collectively these SUBPARAGRAPHS (A) AND (B) are the
      "Restrictions").

      In the event of a dispute concerning such adjustment, the Committee has
      full discretion to determine the resolution of the dispute. Such
      determination shall be final, binding and conclusive. The number of
      reserved shares or the number of shares subject to any outstanding Option
      shall be reduced automatically to the extent necessary to eliminate any
      fractional shares.

            (b)   The following provisions of this PARAGRAPH 6.6(b) shall apply
      unless an Optionee's Agreement provides otherwise. In the event of a
      Change in Control, all Options shall become fully vested and exercisable
      and the Board of Directors shall have the right, in its sole discretion,
      as of the effective date of such Change in Control transaction, if (and
      only if) such Options have not at that time expired or been terminated, to
      change the number and kind of shares of Stock (including substitution of
      shares of another corporation) and Exercise Price in the manner it deems
      appropriate; provided, however, that in no event may any change be made
      under this PARAGRAPH 6.6(b) to an Incentive Option which would constitute
      a violation of the Restrictions.

                                       12
<PAGE>

      6.7.  RIGHTS AS A SHAREHOLDER. An Optionee shall have no right as a
shareholder with respect to any shares covered by his Option until a certificate
representing such shares is issued to him. No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash or other property) or
distributions or other rights for which the record date is prior to the date
such certificate is issued, except as provided in PARAGRAPH 6.6.

      6.8.  MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Subject to the terms
and conditions of, and within the limitations of, the Plan, the Committee may
modify, extend or renew outstanding Options granted under the Plan or accept the
surrender of Options outstanding under the Plan (to the extent not previously
exercised) and authorize the granting of substitute Options (to the extent not
previously exercised). Except as provided in PARAGRAPH 6.6, no modification of
an Option granted under the Plan shall, without the consent of the Optionee,
alter or impair any rights or obligations under any Option previously granted
under the Plan to such Optionee under the Plan, except as may be necessary, with
respect to Incentive Options, to satisfy the requirements of section 1046 of the
Code.

      6.9.  FURNISH INFORMATION. Each Optionee shall furnish to the Company all
information requested by the Company to enable it to comply with any reporting
or other requirement imposed upon the Company by or under any applicable statute
or regulation.

      6.10. OBLIGATION TO EXERCISE: TERMINATION OF EMPLOYMENT. The granting of
an Option under the Plan shall impose no obligation upon the Optionee to
exercise it or any part of it. In the event of an Optionee's termination of
employment with the Company, the unexercised portion of an Option granted under
the Plan shall terminate in accordance with PARAGRAPH 6.4.

      6.11. AGREEMENT PROVISIONS. The Agreements authorized under the Plan shall
contain such provisions in addition to those required by the Plan (including,
without limitation, restrictions or the removal of restrictions upon the
exercise of the Option and the retention or transfer of shares thereby acquired)
as the Committee shall deem advisable.

      Each Agreement shall identify the Option it evidences as an Incentive
Option or a Nonstatutory Option, as the case may be, and no Agreement shall
cover both an Incentive Option and a Nonstatutory Option. Each Agreement
relating to an Incentive Option granted under this Plan shall contain such
limitations and restrictions upon the exercise of the Incentive Option to which
it relates as shall be necessary for the Incentive Option to which such
Agreement relates to constitute an incentive stock option, as defined in section
1046 of the Code.

                                       13
<PAGE>

PARAGRAPH 7. REMEDIES AND SPECIFIC PERFORMANCE.

      7.1.  REMEDIES. The Company shall be entitled to recover from an Optionee
reasonable attorneys' fees incurred in connection with the enforcement of the
terms and provisions of the Plan and any Agreement, whether by an action to
enforce specific performance, or an action for damages for its breach or
otherwise.

      7.2.  SPECIFIC PERFORMANCE. The Company shall be entitled to enforce the
terms and provisions of this Paragraph, including the remedy of specific
performance, in Hato Rey, Puerto Rico.

PARAGRAPH 8. DURATION OF PLAN.

      The Plan is effective on the Adoption Date. Options may not be granted
under the Plan more than ten (10) years after the Adoption Date.

PARAGRAPH 9. AMENDMENT AND TERMINATION OF PLAN.

      The Board of Directors may at any time terminate or from time to time
amend or suspend the Plan; provided, however, that no such amendment shall,
without approval of the shareholders of the Company, except as provided in
PARAGRAPH 6, (a) increase the aggregate number of shares of Stock as to which
Options may be granted under the Plan; (b) increase the maximum period during
which Options may be exercised; or (c) extend the effective period of the Plan.
No Option may be granted during any suspension of the Plan or after the Plan has
been terminated, and no amendment, suspension or termination shall, without an
Optionee's consent, alter or impair, other than as provided in the Plan and the
Optionee's Agreement, any of the rights or obligations under any Option
previously granted to such Optionee under the Plan.

PARAGRAPH 10. GENERAL.

      10.1. APPLICATION OF FUNDS. The proceeds received by the Company from the
sale of shares pursuant to Options shall be used for general corporate purposes.

      10.2. RIGHT OF THE COMPANY TO TERMINATE EMPLOYMENT. Nothing contained in
the Plan, or in any Agreement, shall confer upon any Optionee the right to
continue in the employ of the Company, or interfere in any way with the rights
of the Company to terminate his employment any time.

      10.3. LIABILITY OF THE COMPANY. Neither the Company, its Directors,
officers or employees nor any member of the Committee shall be liable for any
act, omission, or determination taken or made in good faith with respect to the
Plan or any Option granted under it, and members of the Board of Directors and
the Committee shall be entitled to indemnification and reimbursement by the
Company in respect of any claim, loss, damage, or expense (including attorneys'
fees, the costs of settling any suit, provided such settlement is approved by

                                       14
<PAGE>

independent legal counsel selected by the Company, and amounts paid in
satisfaction of a judgment, except a judgment based on a finding of bad faith)
arising from such claim, loss, etc. to the full extent permitted by law and
under any directors' and officers' liability or similar insurance coverage that
may from time to time be in effect. In addition, neither the Company, its
Directors, officers or employees shall be liable to any Optionee or other person
if it is determined for any reason by the Puerto Rico Department of the Treasury
(or any court having jurisdiction) that any Incentive Options granted hereunder
do not qualify for tax treatment as incentive stock options under section 1046
of the Code.

      10.4. INFORMATION CONFIDENTIAL. As partial consideration for the granting
of each Option under the Plan, the Agreement may, in the Committee's sole and
absolute discretion, provide that the Optionee shall agree with the Company that
he will keep confidential all information and knowledge that he has relating to
the manner and amount of his participation in the Plan; provided, however, that
such information may be disclosed as required by law and may be given in
confidence to the Optionee's spouse, tax and financial advisors, or to a
financial institution to the extent that such information is necessary to secure
a loan. In the event any breach of this promise comes to the attention of the
Committee, it shall take into consideration such breach, in determining whether
to recommend the grant of any future Option to such Optionee, as a factor
militating against the advisability of granting any such future Option to such
individual.

      10.5. OTHER BENEFITS. Participation in the Plan shall not preclude the
Optionee from eligibility in any other stock option plan of the Company or any
old age benefit, insurance, pension, profit sharing, retirement, bonus, or other
extra compensation plans which the Company has adopted, or may, at any time,
adopt for the benefit of its employees.

      10.6. EXECUTION OF RECEIPTS AND RELEASES. Any payment of cash or any
issuance or transfer of shares of Stock to the Optionee, or to his legal
representative, heir, legatee, or distributee, in accordance with the provisions
of the Plan, shall, to the extent thereof, be in full satisfaction of all claims
of such persons under the Plan. The Committee may require any Optionee, legal
representative, heir, legatee, or distributee, as a condition precedent to such
payment, to execute a release and receipt for such payment in such form as it
shall determine.

      10.7. NO GUARANTEE OF INTERESTS. Neither the Committee nor the Company
guarantees the Stock from loss or depreciation.

      10.8. PAYMENT OF EXPENSES. All expenses incident to the administration,
termination, or protection of the Plan, including, but not limited to, legal and
accounting fees, shall be paid by the Company; provided, however, the Company
may recover any and all damages, fees, expenses and costs arising out of any
actions taken by the Company to enforce its rights under the Plan.

      10.9. COMPANY RECORDS. Records of the Company regarding the Optionee's
period of employment, termination of employment and the reason for such
termination, leaves of absence, re-employment, and other matters shall be
conclusive for all purposes under the Plan, unless determined by the Committee
to be incorrect.

                                       15
<PAGE>

      10.10. INFORMATION. The Company shall, upon request or as may be
specifically required under the Plan, furnish or cause to be furnished all of
the information or documentation that is necessary or required by the Committee
to perform its duties and functions under the Plan.

      10.11. COMPANY ACTION. Any action required of the Company relating to the
Plan shall be by resolution of its Board of Directors or by a person authorized
to act by resolution of the Board of Directors.

      10.12. SEVERABILITY. If any provision of this Plan is held to be illegal
or invalid for any reason, the illegality or invalidity shall not affect the
remaining provisions of the Plan, but such provision shall be fully severable,
and the Plan shall be construed and enforced as if the illegal or invalid
provision had never been included in the Plan.

      10.13. NOTICES. Whenever any notice is required or permitted under the
Plan or any Agreement, such notice must be in writing and personally delivered,
telecopied (if confirmed), or sent by mail or by a nationally recognized courier
service. Any notice required or permitted to be delivered under this Plan or any
Agreement shall be deemed to be delivered on the date on which it is personally
delivered, or, if mailed, whether actually received or not, on the third
business day after it is deposited in the United States mail, certified or
registered, postage prepaid, addressed to the person who is to receive it at the
address which such person has previously specified by written notice delivered
in accordance with this PARAGRAPH 10.13 or, if by courier, twenty-four (24)
hours after it is sent, addressed as described in this PARAGRAPH 10.13. The
Company or an Optionee may change, at any time and from time to time, by written
notice to the other, the address which it or he had previously specified for
receiving notices. Until changed in accordance with the Plan, the Company and
each Optionee shall specify as its and his address for receiving notices the
address set forth in the Agreement pertaining to the shares to which such notice
relates.

      10.14. WAIVER OF NOTICE. Any person entitled to notice under the Plan may
waive such notice.

      10.15. SUCCESSORS. The Plan shall be binding upon the Optionee, his legal
representatives, heirs, legatees, distributees, and transferees (if applicable)
and upon the Company, its successors, and assigns, and upon the Committee, and
its successors.

      10.16. HEADINGS. The titles and headings of Paragraphs are included for
convenience of reference only and are not to be considered in construction of
the Plan's provisions.

      10.17. GOVERNING LAW. All questions arising with respect to the provisions
of the Plan shall be determined by application of the laws of the Commonwealth
of Puerto Rico except to the extent Puerto Rico law is preempted by federal law.
Questions arising with respect to the provisions of an Agreement that are
matters of contract law shall be governed by the laws of the state or territory
specified in the Agreement, except to the extent preempted by federal law and
except to the extent that Puerto Rico corporate law conflicts with the contract
law of such state or territory, in which event Puerto Rico corporate law shall
govern. The obligation of the Company

                                       16
<PAGE>

to sell and deliver Stock under the Plan is subject to applicable laws and
to the approval of any governmental authority required in connection with
the authorization, issuance, sale, or delivery of such Stock.

      10.18. WORD USAGE. Words used in the masculine shall apply to the feminine
where applicable, and wherever the context of this Plan dictates, the plural
shall be read as the singular and the singular as the plural.

PARAGRAPH 11. APPROVAL OF SHAREHOLDERS FOR INCENTIVE OPTIONS.

      The Plan shall take effect on the Adoption Date.

      If this Plan is not approved by the holders of a majority of the votes
entitled to be voted at a meeting of holders of outstanding shares of equity
securities of the Company no later than one year from the Adoption Date, the
portion of the Plan relating to Incentive Options shall be severed pursuant to
PARAGRAPH 10.12 and the Incentive Options granted under the Plan (if any) shall
be deemed to be Nonstatutory Options unless the Agreement to which the Options
relate provides otherwise.

                            [SIGNATURE PAGE FOLLOWS]

                                       17
<PAGE>

           [SIGNATURE PAGE TO EUROBANCSHARES, INC. STOCK OPTION PLAN]

      IN WITNESS WHEREOF, EuroBancshares, Inc., acting by and through its duly
authorized officer, has executed this Plan on this the 22nd day of May, 2002.

                                    EUROBANCSHARES, INC.

                                    By: /s/ Rafael Arrillaga Torrens, Jr.
                                       ----------------------------------------
                                       Rafael Arrillaga Torrens, Jr., President

                                       18<PAGE>

                                                                    EXHIBIT 10.2

                                                                    NO. 00-_____

                              EUROBANCSHARES, INC.
                     INCENTIVE STOCK OPTION AWARD AGREEMENT

                                     PART I

OPTIONEE: _____________________________________________________________

GRANT DATE: ___________________________________________________________

AGGREGATE NUMBER OF OPTION SHARES: ____________________________________

EXERCISE PRICE PER SHARE: __________________

VESTING SCHEDULE: __________________________       ___% per year (______ Shares)
                                                   commencing one year from the
                                                   Grant Date

  Part II of this Agreement is attached hereto and incorporated herein for all
                                   purposes.

         EXECUTED to be effective as of the Grant Date set forth above.

                                            EUROBANCSHARES, INC.

                                            By: ________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                            OPTIONEE
                                            ____________________________________

                                            Address:

                                            ____________________________________

                                            ____________________________________

                                  PART I-Page 1
<PAGE>

                                     PART II

      This INCENTIVE STOCK OPTION AWARD AGREEMENT (this "AGREEMENT") is made and
entered into by and between the EUROBANCSHARES, INC., a corporation organized
under the laws of the Commonwealth of Puerto Rico (the "COMPANY"), and the
OPTIONEE named on Part I (the "OPTIONEE"), as of the date set forth on Part I
(the "GRANT DATE").

                                    RECITALS:

      The Company has adopted the EuroBancshares, Inc. Stock Option Plan dated
May ___, 2002 (the "PLAN") to provide an incentive for key employees of the
Company to remain in the service of the Company, to extend to them the
opportunity to acquire a proprietary interest in the Company so that they will
apply their best efforts for the benefit of the Company, and to aid the Company
in attracting able persons to enter the service of the Company; and

      The Board of Directors of the Company (or the Committee of the Company, if
one has been authorized to administer the Plan by the Company's Board of
Directors (the "COMMITTEE")), believes that the granting of the stock options
herein described to the Optionee is consistent with the purposes for which the
Plan was adopted.

      NOW, THEREFORE, in consideration of the mutual covenants and conditions
set forth in this Agreement and for other good and valuable consideration, the
Company and the Optionee agree as follows:

      1.    Grant of the Option. The Company hereby grants to the Optionee the
right and option (the "OPTION") to purchase the aggregate number of shares set
forth in Part I (such number being subject to adjustment as provided herein) of
common stock, $0.01 par value per share, of the Company (the "SHARES") on the
terms and conditions set forth in this Agreement. The Option awarded under this
Agreement may be exercised in whole or in part and from time to time, subject to
the terms and conditions of this Agreement and of the Plan. The Option granted
under this Agreement is intended to qualify as an "incentive stock option" under
Section 1046 of the Code and shall be so construed.

      2.    Exercise Price. The price at which the Optionee shall be entitled to
purchase the Shares covered by the Option shall be the price per Share set forth
in Part I subject to adjustment as provided in Paragraph 9 of this Agreement
(the "EXERCISE PRICE").

      3.    Vesting and Term of the Option.

            (a)   General. The right to exercise the Option shall vest in the
hands of the Optionee in accordance with the provisions of Part I. Shares which
have vested shall be referred to as "VESTED SHARES." Shares which have not
vested shall be referred to as "NONVESTED SHARES." The respective numbers of
Vested and Nonvested Shares shall adjust proportionately in accordance with any
adjustments to the number of Shares pursuant to Paragraph 9 of this

                                PART II - Page 1

<PAGE>

Agreement. In addition, Shares may become Vested Shares in accordance with
Paragraph 7 of this Agreement or Paragraphs 6.4 and 6.6 of the Plan. In general,
Nonvested Shares may become Vested Shares in accordance with the vesting
schedule but only if the Optionee has been continuously employed as a full-time
employee of the Company from the Grant Date to and including the last date of
the month with respect to which such Shares may vest pursuant to Part I.

            (b)   Exercisable for Vested Shares Only. Subject to the relevant
provisions and limitations contained herein, the Optionee may exercise the
Option to purchase some or all of whole Vested Shares. In no event shall the
Optionee be entitled to exercise the Option with respect to Nonvested Shares or
a fraction of a Vested Share.

            (c)   Expiration. Notwithstanding any other provision contained
herein to the contrary, the unexercised portion of the Option, if any, will
automatically and without notice terminate upon the earlier of: (i) ten (10)
years following the Grant Date (provided, however, that any portion of the
Option which shall not become exercisable until the tenth anniversary of the
Grant Date may be exercisable for a period of thirty (30) days preceding the
tenth anniversary of the Grant Date); or (ii) the date determined pursuant to
Paragraph 7 of this Agreement. The Option will cease to be exercisable with
respect to a Share when the Optionee purchases the Share.

            (d)   Change in Control. Upon a Change in Control (as defined in the
Plan), all remaining Nonvested Shares shall become Vested Shares and shall
become subject to the provisions of Paragraph 6.6 of the Plan.

      4.    Method of Exercising Option. The Optionee may exercise the Option at
any time prior to the termination of the Option with respect to all or any part
of the Vested Shares. Subject to the terms and conditions of this Agreement, the
Option may be exercised by timely delivery to the Company of a written notice in
the form attached hereto as Exhibit A (the "EXERCISE NOTICE"), which Exercise
Notice shall be effective, subject to the requirements of this Agreement and of
the Plan, on the date received by the Company. The Exercise Notice shall state
the Optionee's election to exercise the Option, the number of Vested Shares in
respect of which an election to exercise has been made, the method of payment
elected (see Paragraph 5), the exact name or names in which the Vested Shares
then being purchased will be registered and the social security number of the
Optionee. The Exercise Notice must be signed by the Optionee and must be
accompanied by payment of the aggregate Exercise Price of the Vested Shares then
being purchased, determined in accordance with Paragraph 2 of this Agreement. If
the Option must be exercised by a person or persons other than the Optionee
pursuant to Paragraph 7, the Exercise Notice must be signed by such other person
or persons and must be accompanied by proof acceptable to the Company of the
legal right of such person or persons to exercise the Option. If the Option is
exercised by a person other than the Optionee, the Vested Shares issued upon
such exercise shall be subject to the limitations applicable to such Vested
Shares in the hands of the Optionee. All Vested Shares delivered by the Company
upon exercise of the Option as provided in this Agreement shall be fully paid
and nonassessable upon delivery. Unless the Vested Shares issued upon the
exercise of the Option are then the subject of a registration statement
effective under the Securities Act (and, if required, there is available for
delivery a

                                PART II - Page 2
<PAGE>

prospectus meeting the requirements of Section 10(a)(3) of the Securities Act),
the delivery of the Exercise Notice shall be deemed to be the making by the
person delivering such Exercise Notice of the representations, acknowledgments
and agreements which would be contained in the Investment Letter referred to in
Paragraph 10.

      5.    Method of Payment for Options. Unless otherwise permitted by the
Board of Directors or the Committee in accordance with the Plan, the full
Exercise Price for the Vested Shares purchased upon the exercise of the Option
(i.e., the number of Vested Shares being purchased multiplied by the Exercise
Price per Share) must be made in cash or cash equivalent funds. The Company will
accept payment by cashier's check or by personal check, provided that if such
personal check is returned for insufficient funds, payment for the Shares and
for any applicable taxes required to be withheld shall be deemed not to have
occurred. In addition, the Option shall not be deemed to be exercised until the
Optionee has provided payment for any withholding taxes which may be due with
respect to such exercise.

      6.    Delivery of Shares. No Shares shall be delivered to the Optionee
upon exercise of the Option until: (i) the Exercise Price for such Shares being
purchased is paid in full in the manner provided in this Agreement and required
under applicable law; (ii) all the applicable taxes required to be withheld have
been paid or withheld in full; (iii) approval of any governmental authority
(together with the expiration of any mandatory waiting periods) required in
connection with the Option, or the issuance of Shares pursuant to this Agreement
has been received by the Company; and (iv) if required by the Committee, the
Optionee has delivered to the Committee an Investment Letter in form and content
satisfactory to the Company as provided in Paragraph 10 of this Agreement.

      7.    Termination of Employment. If the Optionee's employment relationship
with the Company is terminated for any reason other than: (a) the Optionee's
death; (b) the Optionee's Disability (as defined in Paragraph 1.13 of the Plan),
or (c) Cause (as defined in Paragraph 1.08 of the Plan), then any and all
Options held pursuant to this Agreement as of the date of the termination that
are not yet exercisable shall become null and void as of the date of such
termination; provided, however, that the portion, if any, of such Options that
are exercisable as of the date of termination shall be exercisable for a period
of the lesser of: (a) the remainder of the term of the Option; or (b) the date
that is ninety (90) days after the date of termination. Any portion of an Option
not exercised upon the expiration of the lesser of the periods specified above
shall be null and void unless the Optionee dies during such period, in which
case the provisions of Paragraph 7(a) below shall govern.

            (a)   Death. Upon the death of the Optionee, any and all Options
held by the Optionee pursuant to this Agreement that are not yet exercisable as
of the date of the Optionee's death shall become exercisable as provided below
as of the date of death; provided, however, that the Options held by the
Optionee as of the date of death shall be exercisable by that Optionee's legal
representatives, heirs, legatees, or distributees (including, without
limitation, trusts established by the Optionee) for a period of twelve (12)
months following the date of the Optionee's death. Any portion of an Option not
exercised upon the expiration of such period shall be null and void. Except as
expressly provided in this paragraph, no Option held by an Optionee shall be
exercisable after the death of that Optionee.

                                PART II - Page 3
<PAGE>

            (b)   Disability. If the Optionee's employment relationship is
terminated by reason of the Optionee's Disability, then the portion, if any, of
any and all Options held by the Optionee that are not yet exercisable as of the
date of that termination for Disability shall become exercisable as provided
below as of the date of termination; provided, however, that the Options held by
the Optionee as of the date of that termination shall be exercisable by the
Optionee, his guardian or his legal representative for a period of twelve (12)
months following the date of such termination. Any portion of an Option not
exercised upon the expiration of such period shall be null and void unless the
Optionee dies during such period, in which event the provisions of Paragraph
7(a) shall govern.

            (c)   Cause. In the event an Optionee is terminated or removed by
the Company for Cause, the Option granted hereunder shall terminate immediately
and any unexpired Options shall be forfeited.

      8.    Nontransferability. The Option granted by this Agreement shall be
exercisable only during the period specified in Paragraph 3 and, except as
provided in Paragraph 7, only by the Optionee during his or her lifetime and
while an employee of the Company. No Option granted by this Agreement is
transferable by the Optionee other than by testament or pursuant to applicable
laws of descent and distribution. The Option, and any rights and privileges in
connection therewith, cannot be transferred, assigned, pledged or hypothecated
by the Optionee, or by any other person or persons, in any way, whether by
operation of law, or otherwise, and may not be subject to execution, attachment,
garnishment or similar process. In the event of any such occurrence, this
Agreement and the Options granted hereunder will automatically terminate and
will thereafter be null and void.

      9.    Adjustments. If there is any change in the capital structure of the
Company through merger, consolidation, reorganization, recapitalization, stock
dividend, stock split, combination of shares or similar event ("RESTRUCTURING")
or by reason of a spin-off of a part of the Company into a separate entity, or
due to an acquisition by the Company of a separate entity, the rights of the
Optionee shall be adjusted as provided in Paragraph 6.6 of the Plan. Nothing in
this Agreement or in the Plan shall affect in any way the right or power of the
Company to make or authorize any Restructuring.

      10.   Securities Act. The Company will not be required to deliver any
Shares pursuant to the exercise of all or any part of the Option if, in the
opinion of counsel for the Company, such issuance would violate the Securities
Act or any other applicable federal or state securities laws or regulations. The
Committee may require that the Optionee, prior to the issuance of any such
Shares pursuant to exercise of the Option, sign and deliver to the Company a
written statement (an "INVESTMENT LETTER") stating that: (a) the Optionee is
purchasing the Shares for his own account and not with a view to, or for sale in
connection with, any distribution thereof, he has no present or contemplated
agreement, undertaking, arrangement, obligation, indebtedness or commitment
providing for the disposition thereof and he does not currently have any reason
to anticipate a change in the foregoing; (b) the Optionee understands that the
Shares have not been registered under the Securities Act or any applicable state
securities laws or regulations and, therefore, cannot be offered or resold
unless the Shares are so registered or an applicable

                                PART II - Page 4
<PAGE>

exemption from registration is available; and (c) the Optionee agrees that the
certificates representing the Shares may bear a legend to the effect set forth
in clause (b) above. The Investment Letter must be in form and substance
acceptable to the Committee in its sole discretion.

      11.   Notice. All notices required or permitted under this Agreement,
including an Exercise Notice, must be in writing and personally delivered or
sent by mail and shall be deemed to be delivered on the date on which actually
received by the Company properly addressed to the person who is to receive it.
An Exercise Notice shall be effective when actually received by the Company, in
writing and in conformance with this Agreement and the Plan. Until changed in
accordance herewith, the Company and the Optionee specify their respective
addresses as set forth below:

                  Company:         EuroBancshares, Inc.
                                   270 Munoz Rivera Avenue
                                   Hato Rey, Puerto Rico 00918
                                   Attention:  President

                  Optionee:        As indicated on Part I hereto.

      12.   Information Confidential. As partial consideration for the granting
of this Option, the Optionee agrees that he will keep confidential all
information and knowledge that he or she has relating to the manner and amount
of his participation in the Plan; provided, however, that such information may
be disclosed as required by law and may be given in confidence to the Optionee's
spouse, tax and financial advisors, or a financial institution to the extent
that such information is necessary to obtain a loan.

      13.   Definitions; Copy of Plan. To the extent not specifically provided
in this Agreement or otherwise required by context, all capitalized terms used
in this Agreement but not defined herein shall have the same meanings ascribed
to them in the Plan. By the execution of this Agreement, the Optionee
acknowledges that he has received and reviewed a copy of the Plan.

      14.   Administration. This Agreement is subject to the terms and
conditions of the Plan. The Plan will be administered by the Board of Directors
and by the Committee in accordance with its terms. The Committee has sole and
complete discretion with respect to all matters reserved to it by the Board of
Directors of the Company and by the Plan, and decisions of the Board of
Directors and of the Committee with respect to the Plan and this Agreement shall
be final and binding upon the Optionee. If a conflict between the terms and
conditions of this Agreement and the Plan exists, the provisions of the Plan
shall control.

      15.   Arbitration. Any legal or equitable claims or disputes arising out
of or in connection with the Plan and this Agreement (other than a suit for
injunctive relief) will be resolved exclusively by binding arbitration.

                                PART II - Page 5
<PAGE>

      The arbitration proceedings shall be conducted in Hato Rey, Puerto Rico in
accordance with the Employment Dispute Resolution Rules ("EDR RULES") of the
American Arbitration Association ("AAA") in effect at the time a demand for
arbitration is made. Optionee is entitled to representation by an attorney
throughout the proceedings at his own expense; however, the Company agrees not
to use an attorney in the arbitration hearing if the Optionee agrees to the
same.

      One arbitrator shall be used and shall be chosen by mutual agreement of
the parties. If, within 30 days after the Optionee notifies the Company of an
arbitrable dispute, no arbitrator has been chosen, an arbitrator shall be chosen
from a list or lists of proposed arbitrators submitted by the AAA pursuant to
its EDR Rules, except that (i) the number of preemptory strikes shall not be
limited, and (ii) if the parties fail to select an arbitrator from one or more
lists, AAA shall not have the power to appoint the arbitrator but shall continue
to submit lists until the arbitrator has been selected. The arbitrator shall
coordinate, and limit as appropriate, all pre-arbitral discovery, which shall
include document production, information requests, and depositions. The
arbitrator shall issue a written decision and award stating the reasons
therefor. The decision and award shall be final and binding on both parties,
their heirs, executors, administrators, successors, and assigns. The costs and
expenses of the arbitration shall be borne evenly by the parties.

      16.   Continuation of Employment. This Agreement shall not be construed to
confer upon the Optionee any right to continue in the employ of the Company and
shall not limit the right of the Company, in their sole discretion, to terminate
the employment of the Optionee at any time, with or without cause.

      17.   No Obligation to Exercise. The Optionee shall have no obligation to
exercise any Option granted by this Agreement.

      18.   Governing Law; Construction. THIS AGREEMENT SHALL BE GOVERNED BY THE
LAWS OF THE COMMONWEALTH OF PUERTO RICO WITHOUT REGARD TO CHOICE OF LAW AND
CONFLICTS OF LAW PRINCIPLES. Titles and headings are for case of reference only
and shall not be considered in construing this Agreement. Pronouns shall be
deemed to include the masculine, feminine, neuter, singular and plural as the
context may require. References to paragraphs and exhibits are to Paragraphs and
Exhibits of this Agreement unless otherwise indicated. All such Exhibits are
incorporated in this Agreement by reference and are a part hereof.

      19.   Amendments. This Agreement may be amended only by a written
agreement executed by the Company and the Optionee.

      20.   Proprietary Information. In consideration of the Company's grant of
this Option and the Company's agreement to provide Optionee with confidential
information of the Company, Optionee agrees to keep confidential and not to use
or to disclose to others at any time during the term of this Agreement or after
its termination, except as expressly consented to in writing by the Company or
required by law, any secrets or confidential technology or proprietary
information of the Company, including, without limitation, any customer list,
marketing plans or materials, or other trade secrets of the Company, or any
matter or thing ascertained by Optionee through Optionee's affiliation with the
Company, the use or disclosure of which matter or thing

                                PART II - Page 6
<PAGE>

might reasonably be construed to be contrary to the best interests of the
Company or to give any other party a competitive advantage to the Company.
Optionee further agrees that should Optionee leave the employment of the
Company, Optionee will neither take nor retain, without prior written
authorization from the Company, any documents pertaining to the Company (other
than paycheck stubs, benefit information, offer letters, or other materials
pertaining to his salary or benefits with the Company). Without limiting the
generality of the foregoing, Optionee agrees that he will not retain, use or
disclose any papers, customer lists, marketing materials or information, books,
records, files, or other documents, copies thereof, or notes or other materials
derived therefrom, or other confidential information of any kind belonging to
the Company pertaining to the Company's business, sales, financial condition, or
products. Without limiting other possible remedies to the Company for the breach
of this covenant, Optionee agrees that injunctive or other equitable relief
shall be available to enforce this covenant, such relief to be without the
necessity of posting a bond, cash, or otherwise. Optionee further agrees that if
any restriction contained in this paragraph is held by any court to be
unenforceable or unreasonable, a lesser restriction shall be enforced in its
place and remaining restrictions contained herein shall be enforced
independently of each other. Optionee's obligations under this Paragraph apply
to all confidential information of the Company.

      21.   Right to Repurchase. The receipt by Optionee of Shares upon his
exercise of Options shall be subject to the following terms and conditions:

            (a)   Restriction on Transfer. Optionee shall not sell, exchange,
transfer, assign, encumber, or otherwise dispose of any of the Shares to any
person, corporation, partnership, joint venture, trust or other entity without
the prior written consent of the Board of Directors of the Company. Any
transferee shall take the Shares subject to the terms and provisions of this
Paragraph 21, and shall, as a condition to the transfer of the Shares, sign a
Joinder Agreement attached as Exhibit B agreeing to be bound by the provisions
of this Paragraph 21.

            (b)   Grant of Repurchase Right. The Company (or its assigns) is
hereby granted the right (the "REPURCHASE RIGHT"), exercisable upon the death,
total physical or mental disability of Optionee, or upon the termination of
Optionee's employment with the Company, to repurchase at the Purchase Price (as
hereinafter defined) all or any portion of the Shares.

                  (i)   Exercise of Repurchase Right. The Repurchase Right shall
be exercisable by written notice delivered by the Company (or its assigns) to
the Owner (as defined in Paragraph 21(c)) prior to the expiration of the sixty
(60) day period commencing on the death, total physical or mental disability of
Optionee or the termination of Optionee's employment with the Company, provided,
however, in the event that Optionee has not exercised any Options granted
hereunder prior to the death, Disability of Optionee or the termination of
Optionee's employment with the Company, then the Repurchase Right shall be
exercisable by written notice delivered by the Company (or its assigns) to the
Owner (as defined in Paragraph 21(c)) prior to the expiration of the sixty (60)
day period commencing on the date such options are exercised pursuant to Section
7 of this Agreement. The notice shall indicate the number of Shares to be
repurchased and the date on which the repurchase is to be effected, such date to
be not more than thirty (30) days after the receipt of any and all necessary
approvals from any governmental

                                PART II - Page 7
<PAGE>

authority (together with the expiration of any mandatory waiting periods)
required in connection with the exercise of the Repurchase Right by the Company.
To the extent one or more certificates representing Shares may have been
previously delivered to the Owner, then Owner shall, prior to the close of
business on the date specified for the repurchase, deliver to the Secretary of
the Company the certificates representing the Shares to be repurchased, each
certificate to be properly endorsed for transfer. The Company (or its assigns)
shall, concurrently with the receipt of such stock certificates, pay to Owner in
cash or cash equivalents (including the cancellation of any purchase-money
indebtedness), an amount equal to the Purchase Price.

                  (ii)  Termination of Repurchase Right. The Repurchase Right
shall terminate automatically with respect to any Shares for which the
Repurchase Right is not timely exercised under Paragraph 21(b)(i). In addition,
the Repurchase Right shall terminate on the consummation by the Company of an
underwritten initial public offering of its common stock, registered under the
Securities Act.

            (c)   Definition of Owner. For purposes this Paragraph 21 of this
Agreement, the term "Owner" shall include the Optionee and all subsequent
holders of the Shares who derive their chain of ownership through a permitted
transfer from the Optionee in accordance with Paragraph 21(a).

            (d)   Agreement Applicable to Community Interests. Any right or
interest of a spouse as an Owner in Shares, whether such right or interest is
created by law (including community property laws) or otherwise, shall for all
purposes hereof be included in, deemed a part of and bound by the same terms
hereof as the Shares to which such right or interest relates or appertains, and
any action taken, offer made or purchase right exercisable hereunder with
reference to Shares owned by an Owner shall be applicable to any right or
interest which the spouse of such Owner may have or be entitled to have therein.

            (e)   Purchase of Spouse's Interest in Shares. In the event of the
death of an Owner's spouse, or the divorce of an Owner and his or her spouse,
such Owner shall have the right to purchase all or any part of the Shares to
which such spouse (or the estate of such spouse) is or may be entitled at a
purchase price equal to the Purchase Price. Such purchase shall be effected on
the following terms and conditions:

                  (i)   The Owner's right to purchase his or her spouse's
interest in the Shares shall continue for a period of thirty (30) days from the
date of entry of the divorce decree or from the date of qualification of the
personal representative of the spouse in the event of death, as the case may be,
and shall be considered exercised by such Owner when written notice of such
exercise has been delivered or mailed, properly addressed, to such spouse or the
personal representative of such spouse.

                  (ii)  If the Owner shall fail to exercise his or her right in
its entirety in the manner and time prescribed, then the spouse or the personal
representative of the spouse, as the case may be, shall so notify the Company in
writing, which notice shall state the address of such spouse or personal
representative and the number of Shares owned by such spouse or the estate of
such spouse. Thereupon the Company shall have the right to purchase all Shares
not

                                PART II - Page 8
<PAGE>

purchased by such Owner for a period of sixty (60) days following the receipt by
the Company of such notice. The purchase right shall be exercisable by the
Company in the manner set forth in Paragraph 21(b) of this Agreement.

                  (iii) The purchase right set forth in this Paragraph 21(e)
shall terminate with respect to any Shares for which the purchase right is not
timely exercised under paragraph 21(e)(i) and (ii). In addition, the purchase
right shall terminate on the consummation by the Company of an underwritten
initial public offering of its Common Stock, registered under the Securities
Act.

            (f)   Definition of Purchase Price. The "PURCHASE PRICE" as used
herein shall refer to the Fair Market Value of the Shares.

      22.   Termination. The Company may terminate the Plan at any time;
however, such termination will not modify the terms and conditions of the Option
awarded under this Agreement without the Optionee's consent.

      23.   No Rights as a Shareholder. Optionee shall not by virtue of this
Agreement, have any rights as a shareholder until the date of the issuance to
the Optionee of Shares pursuant to a valid Exercise Notice.

                                    * * * * *

                                PART II - Page 9

<PAGE>

                                    EXHIBIT A

                                 EXERCISE NOTICE

      Notice is hereby given to the Company of Optionee's election to exercise
Options as follows:

Name of Optionee (please print): __________________________________

Optionee's Social Security Number: ________________________________

A.         Number of Vested Shares to be exercised:

B.         Exercise Price per Share:                                       $

C.         Cash Payment from Optionee                                      $

D.         Exercise Price tendered herewith:  (A x B)                      $

E.         Market Price per share on date of Exercise:                     $

F.         Difference Between Market Price and Exercise Price
           (E - D):                                                        $

G.         Total Difference (F x A):                                       $

H.         Withholding Tax:                                                ____*

I.         Amount of Tax withholding tendered herewith (G x H):            $

J.         Total Amount Due on Exercise (D + I):                           $

*Upon exercise of Options, the Company is required to collect a withholding tax
determined in accordance with the tables or computational procedures prescribed
by the Puerto Rico Secretary of the Treasury.

                                PART II - Page 10
<PAGE>

Exact name(s) for Share certificate(s):

_______________________________________________________________________________

_______________________________________________________________________________

Date: _______________________________________

                                                _______________________________
                                                Signature of Optionee

             PLEASE COMPLETE AND SIGN THIS NOTICE AND RETURN IT TO:

                  EuroBancshares, Inc.
                  270 Munoz Rivera Avenue
                  Hato Rey, Puerto Rico 00918
                  Attn: President

                                PART II - Page 11
<PAGE>

                                    EXHIBIT B

                                JOINDER AGREEMENT

      For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the undersigned, by execution of this Joinder
Agreement, agrees to become a party to the Incentive Stock Option Award
Agreement dated as of ________________, 20___, by and between EuroBancshares,
Inc. ), a corporation organized under the laws of the Commonwealth of Puerto
Rico (the "COMPANY"), and ____________________________, Optionee thereunder (the
"AGREEMENT"), a copy of which is attached hereto as Exhibit A to the extent and
as provided by this Joinder Agreement. The undersigned acknowledges that by his
execution of this Joinder Agreement he will become a party to the Agreement for
purposes of Paragraph 22 (and only with respect to such paragraph), such
paragraph providing for the Company's repurchase right with respect to Shares
issued on exercise of Options granted in the Agreement. The undersigned
represents and warrants that he has read and consents to, agrees to be bound by,
the repurchase right provisions of the Agreement.

      EXECUTED to be effective the _____ day of __________________, 20___.

                                        ________________________________________
                                        Name: __________________________________

                                 SPOUSAL CONSENT

      I, spouse of __________________, have read and am aware of, understand and
fully consent and agree to the provisions of the Agreement attached hereto and
its binding effect upon any interest, community or otherwise, I may own now or
hereafter in any Shares, and agree that the termination of my marriage to
________________ for any reason shall not have the effect of removing any Shares
otherwise subject to the Agreement from the coverage thereof. I hereby evidence
such awareness, understanding, consent and agreement by joining in the Agreement
and by executing this Joinder Agreement below.

                                        ________________________________________
                                                  Signature of Spouse

                                        Printed Name: __________________________

                                        Address:
                                        ________________________________________

                                        ________________________________________

                                PART II - Page 12

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