Document:

EX-10.7 EMPLOYMENT CONTRACT - BARTOLOME VELEZ

 

Exhibit 10.7

Employment Terms and Conditions

for the Position of

President of Santander Financial Services

The present Employment Agreement for the position of President of Santander Financial Services
is effective March 1, 2006. The parties in this Agreement or Contract are Santander Financial
Services in Puerto Rico, (subsequently referred to as Santander Financial Services) and Mr.
Bartolomé Vélez (subsequently referred to as the President).

	1.	 	Terms and Conditions

	 	1.1.	 	The President shall dedicate all his efforts and the necessary time toward the
attainment of the goals as established by Santander Financial Services and will perform the
duties inherent to the position. These duties may change as dictated by the person to whom
the President reports to, in accordance with Santander Financial Services operational and
business needs. The President must meet said objectives and goals or be subject to
progressive disciplinary actions related to the efficiency and performance of his work.
	 
	 	1.2.	 	The President agrees to fully comply with Santander Financial Services and Santander
Financial Services norms, procedures and policies. The President understands that
noncompliance with the norms, procedures and policies of Santander Financial Services and
Santander Financial Services, are considered just cause for the termination of this
Agreement.
	 
	 	1.3.	 	Santander Financial Services trusts the veracity of the information provided by the
President in his Employment Application and other documents provided and he can be
terminated at any given time if the information is proven to be false or incomplete.
	 
	 	1.4.	 	Santander Financial Services reserves the right to modify the responsibilities, terms
and conditions of employment here defined, as the company needs dictate. These changes will
be notified in writing to the President in order for him to meet the new requirements.

	2.	 	Compensation and Benefits

	 	2.1.	 	Effective as of the date of this Contract Santander Financial Services will compensate
the President with an annual salary of $300,000.00. He will also participate in the
Variable Compensation Program, established for the position, conditioned to the attainment
of the objectives and goals established and he is an active employee at the moment of the
accreditation.
	 
	 	2.2.	 	Corporate Membership will be paid to the Bankers Club and Río Mar Country Club.
	 
	 	2.3.	 	The concession of a Corporate Credit Card subject to the existing policy.
	 
	 	2.4.	 	A company car will be provided subject to Santander Financial Services policies.
	 
	 	2.5.	 	In addition to the compensation and benefits mentioned the President shall be eligible
to the same benefits established for the employees of Santander Financial Services subject
to the requirements of each one.
	 
	 	2.6.	 	The payments mentioned under the section Compensation and Benefits are subject to the
legal deduction requirements under the federal and local applicable laws.

	3.	 	Business Secrets

	 	3.1.	 	During the time of employment the President will have access to confidential documents;
client lists information, feasible clients, marketing strategies, and other related
policies and material which constitute confidential information for Santander Financial
Services and its business. Confidential information related to Santander Financial Services
is property of the Corporation. The President can not disclose directly or indirectly said
information, unless so required by business needs, as required by a

Page 1 of 3

 

Employment Terms and Conditions

for the Position of

President of Santander Financial Services

	 	 	 	court or competent authority, in which case he must first notify the Board of Directors of
Santander Financial Services.
	 
	 	3.2.	 	If the President resigns or terminates employment he is required to observe absolute
protection of confidential and privileged business information, including restraining from
disclosing or using the same for personal benefit, his new employer or third persons.
	 
	 	3.3.	 	This information includes but is not limited to; business secrets, information property
of Santander Financial Services, affiliates and corporate company (Santander BanCorp),
confidential issues, operational methodologies, list of current and potential clients,
business contacts, bank products, strategies, tactics, business plans, data bases,
development of computer programs, financial information, status reports, account balances,
gain margins, stock options, economic studies, marketing studies, marketing strategies and
others of similar nature.
	 
	 	3.4.	 	If the President violates one of the dispositions stated above, of non disclosure or
use of confidential information, Santander Financial Services, will have the right to
request an injunction (permanent or preliminary) so that the Presidents stops and desists
from such practice and refrain from incurring in said conduct. Given this situation
Santander Financial Services can invoke as a remedy, contract violation as well as
reimbursement of torts.

	4.	 	Termination

	 	4.1.	 	The President will be subject to the local and federal regulations that govern employee
termination in Puerto Rico.
	 
	 	4.2.	 	In accordance with Law 80 of May 30, 1976, as amended, employees who do not meet the
objectives and goals, non compliance with quotas, inefficiency or any other violation
included in Santander Financial Services Business and Work Conduct Manual will be subject
to the disciplinary measures set forth in the same. Upon just cause for the termination of
this contract, the President will only receive his salary as of the date of the termination
and his vacation balance.
	 
	 	4.3.	 	The parties agree that this contract may be terminated by either one. On the part of
Santander Financial Services it may terminate this contract without cause. In this case, it
will exclusively pay the amount established by Law 80 of May 30, 1976, as amended, or the
amount of one (1) year salary whichever is greater. The parties understand and agree that
this amount will be considered as a total indemnification compensation which will release
Santander Financial Services from all claims or cause of action.
	 
	 	4.4.	 	Just cause will be deemed upon non compliance by the President’s with the terms and
conditions of this contract, including but not limited to, that the President does not
diligently and efficiently comply with the norms, policies, directives and objectives of
Santander Financial Services; negligent actions, violation of the law, dishonesty;
incompetence; violation of fiduciary responsibilities; undisciplined; reasons of similar
severity or nature; or any other reason or circumstance contained within the concept of
just cause, as defined by Law 80 of May 30, 1976, as amended; or when the determination
responds to an ruling from a federal or competent local authority.

Page 2 of 3

 

Employment Terms and Conditions

for the Position of

President of Santander Financial Services

	 	4.5.	 	Th employee may terminate this contract by verbal and written notification to the Board
of Directors of Santander Financial Services, with at least 30 days in anticipation to his
last day of work as established in the written notification.

	5.	 	Applicable Law

	 	5.1.	 	The present contract is governed by the laws of the Puerto Rico Commonwealth.

	6.	 	Separation

	 	6.1.	 	In the event that any part, condition or disposition of this contract, will declared
null or inefficient in law by any competent court, said determination will not effect the
validity of the other dispositions of this contract, which will remain in full effect. In
the same manner the parties agree to the modification, altering, revision or interpretation
of any part of this contract tainted with nullity so as to the elimination of said part by
a competent court.

	7.	 	Acceptance

	 	7.1.	 	The parties agree that the present contract contains all the agreements between them
and proceed to sign it freely and voluntarily.

	 	 	Given in San Juan, Puerto Rico in March 1, 2006.

	 	 	 
	/S/:Jose R. González, Chief Executive Officer

	 	/S/:Bartolomé Vélez
	Santander Financial Services, Inc.
	 	 
	 
	 	 
	/S/:Ivonna J. Pacheco
	 	 
	Human Resources Director
	 	 

Page 3 of 3EX-10.18 AGREEMENT OF BENEFITS COVERAGE

 

EXHIBIT 10.18

AGREEMENT OF BENEFITS COVERAGE

AGREED WITH OFFICERS OF GRUPO SANTANDER

     This Agreement (the “Agreement”) is made and entered into as of March 28, 2007, by and between
___, a corporation organized and existing under the laws of the
Commonwealth of Puerto Rico (hereinafter “Affiliate”), represented by José Ramón González, in his
capacity as President, and María Calero Padrón, in her capacity as Executive Vice-President, and
Banco Santander Central Hispano, S.A., a bank organized and existing under the laws of Spain
(hereinafter “Santander”), represented by Manuel Arias de la Cruz and Juan Carlos Díez Zapatero.

Both parties acknowledge they have sufficient authority to execute this Agreement and hereby
agree as follows:

I. — As part of the Human Resources policy regarding management compensation, Santander has
designed a compensation plan linked to the performance and earnings per share of Santander’s stock.

II. — The above mentioned Plan, which is referenced to the 2003-2006 period and whose continued
existence shall not be assumed, has been structured, in the Affiliate’s case, by means of a
contract executed between the Affiliate and its Officers, in which management is granted an
economic benefit contingent on the occurrence of certain conditions specified in the above
mentioned agreement of which the most relevant is the performance and earnings per share of
Santander’s stock.

III. — In accordance with paragraph II above, the Affiliate will assume the obligation to make
certain payments to a group of Officers to the extent that the agreed upon conditions are
satisfied; provided, that the Affiliate is able to cover any related payment risk to the extent
that the Officers exercise their rights to the economic benefits pursuant to the above mentioned
agreements, which may be exercised within a one year period commencing on January 15, 2008.

IV. — Under these conditions, Santander has offered to assume the payment risk of the economic
benefits granted to the Affiliate’s Officers in exchange for the receipt of the premium set forth
in paragraph SECOND of this Agreement.

Terms & Conditions

FIRST:

Santander, duly represented, agrees to pay to the Affiliate, at its request, an amount equal to the
amounts the Affiliate has agreed to pay its Officers in the respective agreements executed between
the Affiliate and each of its Officers, as well as in any agreements that modify the terms of the
above mentioned agreements.

A list of the Officers entitled to the economic benefit agreed to with the Affiliate, which also
indicates the amounts of the pecuniary benefits corresponding to each officer based on the above

 

 

mentioned agreements, is included as Exhibit A to this Agreement. It is hereby established that
the amounts of the pecuniary benefit will be determined in accordance with the following formula:

MB — [(PE-PI)* PERSONAL FACTOR] — IRPF

MB: is equal to the difference between the price of Santander’s stock when the option is exercised
pursuant to the terms set forth herein and its weighted average price for the first 15 sessions of
the Madrid Stock Exchange for the year 2005, multiplied by a multiple determined as a function of
the total amount of options granted to the Officer in cash minus the applicable personal income
tax.

PE: is the price of the stock when the option is exercised.

PI: is the weighted average price of the first 15 sessions of the Madrid Stock Exchange for the
year 2005.

Personal Factor: is the cash equivalent of the total amount of options granted.

IRPF: is the quantity equal to income for personal income tax purposes (or its equivalent in the
country of fiscal residence of the Officer at the time of its exercise).

SECOND:

The premium that Santander will receive for every unit of pecuniary benefit that is granted under
this Agreement will be € 0,575 EUR.

THIRD:

Santander’s payment to the Affiliate will be subject to the exercise by one or more Officers of the
right to the economic benefit agreed with them in their respective agreements, and the satisfaction
of the assumptions explained below with regards to the value and earnings of Santander’s stock.

A. — The revaluation of one share of Santander — taking as the initial price the weighted average
of the first 15 sessions of the Madrid Stock Exchange for the year 2005 and as the final price the
weighted average of the first 15 sessions of the same market for the year 2007 — shall be greater
than the corresponding revaluations of at least 20 of the 29 stocks of international financial
entities included in paragraph Third.C of this Agreement, considered in the same terms. In order to
determine the aforementioned revaluation, the gross amount of dividends and other distributions
produced by each stock will be deemed re-invested at the stock’s closing price on the date in which
such dividends or other distributions are paid. Therefore, the following formula will be used to
compute a revaluation:

REV = (PF — PI)  x NAR

PI

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In which:

REV = Revaluation

	 	 	PF = weighted average price of the first 15 sessions in each entity’s principal
stock market for the year 2007.

	 	 	PI = weighted average price of the first 15 sessions in each entity’s principal
stock market for the year 2005.

	 	 	NAR = 1 + D1 / P1 + D2 / P2 +
D3 / P3 +...............+ Dn / Pn

Where:

D1 = the first gross dividend (or any other distribution received by virtue
of ownership of the 1st stock)

D2 = the second gross dividend (or any other distribution received by
virtue of ownership of the 1st stock)

Dn = any other future gross dividend (or any other distribution received by
virtue of ownership of the 1st stock), whose payment date is prior to
January 1, 2007

P1 = closing price of the stock in its principal stock market corresponding
to the day of payment of D1

P2 = closing price of the stock in its principal stock market corresponding
to the day of payment of D2

Pn = closing price of the stock in its principal stock market corresponding
to the day of payment of Dn

To determine the effect of the revaluation of each stock, the reference price will be the price
corresponding to each entity’s stock at its principal stock market. The revaluation will be
measured in the currency in which each entity publishes its results.

B. — The growth of the Santander’s Earnings Per Share (EPS) — calculated as the Result attributed
to Grupo Santander at any given moment divided by the average number of shares issued during the
same — shall be greater than the growth of the earnings per share corresponding to 20 of the 29
international financial entities included in paragraph Third.C of this Agreement, considered in the
same terms.

With regards to Santander, the result attributed to Grupo Santander shall be the result that
reflects its profits and losses in the audited and consolidated annual financial statements
of

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Santander and the companies that comprise Grupo Santander; for other entities, the reference
will be results derived from equivalent legal documentation.

To determine the growth of EPS, reference will be made to the corresponding 2003 exercise
(in the case of Santander of € 0,55) and the corresponding 2006 exercise. The growth of the
EPS of each entity shall be measured in the currency in which each entity publishes its
results.

To determine the effect on the revaluation of the stock, as well as the growth of EPS, those
entities that are acquired by others or disappear as a result of a merger or any other cause, will
be considered to be surpassed.

C.— The entities and/or stocks referred to in this document are the following:

	 	 	 	 	 
	 

	 	— CITIGROUP
	 	— UBS
	 

	 	— BANK OF AMERICA
	 	— CREDIT SUISSE FIRST BOSTON
	 

	 	— JP MORGAN CHASE
	 	— BNP PARIBAS
	 

	 	— WELLS FARGO
	 	— SOCIETE GENERALE
	 

	 	— WACHOVIA
	 	— CREDIT AGRICOLE
	 

	 	— US BANCORP
	 	— DEXIA
	 

	 	— FIFTH THIRD BANCORP
	 	— BBVA
	 

	 	— HSBC
	 	— DEUTSCHE BANK
	 

	 	— ROYAL BANK OF SCOTLAND
	 	— ABN AMRO
	 

	 	— BARCLAYS
	 	— UNICREDITO
	 

	 	— HBOS
	 	— BANCA INTESA
	 

	 	— LLOYDS TSB
	 	— SANPAOLO IMI
	 

	 	— ROYAL BANK OF CANADA
	 	— NORDEA BANK AB
	 

	 	— BANK OF NOVA SCOTIA	 	 
	 

	 	— NATIONAL AUSTRALIA BANK	 	 
	 

	 	— COMMONWEALTH BANK OF AUSTRALIA	 	 

D.— The agreed pecuniary benefits shall not be exercised by the Officers before January 15, 2008
(Exclusion Period).

The agreed pecuniary benefits shall be exercised within the period of 12 months commencing as of
the end of the Exclusion Period, that is to say, from January 15, 2008 until January 15, 2009,
inclusive (Exercise Period).

As soon as the Exclusion Period has transpired, the Officer shall be able to exercise, during the
entire Exercise Period, the rights recognized in the agreement executed between the Officer and the
Affiliate.

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After the last day of the Exercise Period, the pecuniary benefits granted but not exercised shall
not be exercisable and will lose their validity, and the Officer will lose the rights corresponding
to such pecuniary benefits.

E.—In case the stock shall be diluted due to a stock split during the period between the date of
this Agreement and the last day of the Exercise Period, Santander agrees, with regards to the
unexercised pecuniary benefits, to adjust them according to the decrease or increase, as
applicable, in the corresponding theoretical value.

F.—The dilutive effects resulting from capital increases that are associated with concurrent and
previous capital reductions effected to restore the capital balance derived from losses are
excluded from the guarantee established in the previous paragraph.

G.—The pecuniary benefits are not transferable to third parties, except in case of death of the
Officer, in which case they will be transmitted to the Officer’s legal heirs.

H.—The pecuniary benefits agreed to with the Officers will terminate for the following
circumstances:

	a)	 	By the entire exercise in the fixed period.
	 
	b)	 	Upon termination of the Exercise Period if the officers or his/her heirs have not exercised
the benefit.
	 
	c)	 	By express decision of the Corporate Committee of Assessment and Bonus of Grupo Santander
when:

	 	—	 	The individual assessment of the Officer, in two intermediate exercises for 2005 and
2006 in the course of the Plan, results in a “Performance May Improve” classification, or
when
	 
	 	—	 	The Unit, Area or Country for which the Officer renders his or her services achieves,
in the exercises for 2005 and 2006, results lower than 80% of the budgeted results.

	d)	 	By termination of the labor relation, except for certain assumptions excepted in the
Agreement to be executed between the Officer and the Affiliate.
	 
	e)	 	For the general causes of termination of obligations.

FOURTH.—GOVERNING LAW. 

     This Agreement shall be construed, interpreted and governed in all respects in accordance with
the laws of Spain and any dispute resulting from this Agreement shall be submitted to the
jurisdiction of the Madrid Courts.

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     IN WITNESS WHEREOF, this Agreement is executed as of the date and place set forth above.

	 	 	 
	 	 	
BANCO SANTANDER

CENTRAL HISPANO, S.A.
	By:/s/ José R. González

Name:  José R. González

Title:  President	 	
By:/s/Manuel Arias de la Cruz

Name:  Manuel Arias de la Cruz

Title:
	 	 	 
	By:/s/María Calero

Name:  María Calero

Title:  Executive Vice president	 	
By:/s/Juan Carlos Díez Zapatero

Name:  Juan Carlos Díez Zapatero

Title:

6

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