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

                            the tenns of this Agreement and will be forfeited by the occurrence of any of the events of forfeiture specified in Section 2.3 below. If no change of deferral percentage is notified to the Bank in the method herein provided, be that in writing prior to the commencement of the calendar or taxable year, the same deferral percentage used in the previous year shall apply.
                                      In addition to such current and deferred compensation, Executive shall be entitled to the following benefits unless any of these benefits has been included in the Executive's Deferred
                      I Compensation: (i) reimbursement for all reasonable expenses incurred in connection with the business of the Bank, (ii) receive all other benefits generally available to executive officers of the Bank from time to time and any specific benefits granted by the Bank to the Executive; (iii) participate in all pension, profit sharing, and similar plans of the Bank for the benefit of its executives; and (iv) if and when approved by the Board of Directors of the Bank, to such bonus
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                             or additional compensation as may from time deem to be warranted by his performance of services and the condition of the Bank. For purposes of determining the amount of the
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                            Christmas bonus and the annual compensation adjustment, if any, the base compensation is the sum of the current and basic deferred compensation, as adjusted annually.
                                      Section 2. Deferred Compensation Trust Account 2.1 Trust Account
     ~ The deferred portion of the total compensation will not be paid by the Bank to the )(!J Executive as it is earned by him. Instead, the Bank will pay the amounts of the deferred
     Y compensation specified in Section I above to the Deed of Trust designated as the Santander t!Y Puerto Rico Deferred Compensation Trust for the Benefit of Rafael F. Saldana Sola,
~ executed on March 25, 2003, and which was fonned exclusively for purposes of holding and investing the deferred compensation amounts until they become payable to the Executive pursuant to the provisions of this Agreement and the corresponding Deed of Trust. Said Deed of Trust shall be bound by the tenns and conditions of this Agreement.
          Jlt@./ The deferred compensation amount shall be paid by the Bank to the Trust on a monthly ~t basis as provided above.
                                      Except as may be provided herein and the Deed of Trust, the Trustee shall have full and complete power and authority over the trust, as fully and to the same extent as any individual might, could, or would have pwned similar property or securities. The Trustee shall not be liable
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                            for any error of judgment, mistake of fact or of law, or act, or omission, except for his own willful malfeasance or manifest negligence.
                                     The deferred compensation amounts and the investment income thereof accumulated by the Trust shall become payable to Executive in the manner provided in Section 2.2 below unless forfeited by the occurrence of any of the events of forfeiture specified in Section 2.3 below.
                                     At the time Executive is entitled to receive payments from the Deferred Compensation I Trust Account in accordance with the provisions of Section 2.2(b) below (representing
                           distributions of funds other than distributions of investment income funds), the Bank shall furnish to the Trustee a written statement instructing and authorizing him to pay to the Executive the corresponding amount of the deferred compensation trust account in the applicable manner descri~d in said Section 2.2(b). Such notification shall include a schedule (the "Payment
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                            Schedule") that indicates the amount payable to the Executive or that provides a formula or other instructions acceptable to the Trustee for determining the amounts so payable, the form in which
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                            such amount is to be paid (as provided for under this Agreement), and the time for commencement for payments of such amounts. Except as otherwise provided herein, Trustee shall pay Executive in accordance with such Payment Schedule. The Trustee shall provide for the reporting and withholding of any federal, estate or local taxes that may be required to be
  & withheld with respect to the payment of benefits pursuant to the Payment Schedule and the terms I \ \ r ; of the Agreement and shall pay amounts withheld to the appropriate taxing authorities, or
   '/ determine pursuant to the payment Schedule that such amounts have been reported, withheld and / rIi) paid by the Settlor. The Trustee shall thereafter immediately notify Executive in writing as to
~ the Bank's instructions, and Executive shall have thirty days from the date of such notification to object (in the manner indicated below) to the Payment Schedule. If no such objection is raised within said period of time, Trustee shall make the applicable distribution to Executive. With
       1l(!/ respect to the investment income, the Trustee shall distribute such income to Executive in J fl(. accordance with the provisions of Section 2.2(a) unless the Bank furnishes to the Trustee a
                           written statement providing that an event of default has occurred.
                                     In the event the Bank considers that an event of forfeiture has occurred (either with respect to distributions of investment income funds or of funds other than distributions of investment income funds), t~e Bank shall be required to so notify it in writing to the Trustee and to the Executive indicating the reasons for such determination. In the event Executive disagrees

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

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                                            to Executive over a five (5) year period in five (5) annual I installments commencing on January 1st of the year following
                                           termination of services and continuing on January 1st of the
                                           subsequent four (4) years, or
                                 -if such value exceeds the sum of $100,000, then said value thereof
                                           shall be paid to Executive, over a ten (10) year period in ten (10)
                 I annual installments commencing on January 1st of the year
                                           following termination of services and continuing on each January
                                           1 st of the subsequent nine (9) years.
                                 As provided above, during the pay-out period, the trust's income, including net capital
                      gains, will be paid by Trustee to Executive as such income is received by Trustee.
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                                 The amount of each installment shall be determined by dividing: (1) the value of the deferred compensation trust account at the date the first installment is payable by, (ii) the total
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                        number of installments payable. Any increment in the value of the installments in the deferred compensation trust account during the pay-out period shall increase the amount of the last installment due and any reduction in the value of investments shall reduce the amount of each installment in reverse order of maturity.
                                 The Executive may, however, prior to the date of termination of services for the reasons indicated above, file a written document with the Bank and Trustee electing:
                                 -to receive the unpaid value of his deferred compensation trust
                                           account over a longer period of time,
                                 -and/or that the annual installments commence at a later date other
                                           than the subsequent January 1st after the date of retirement but no
                                            later than his attainment of age sixty (60).
    .I For purposes of this Section, the Executive shall be deemed to be disabled if he is unable
' /iJ2/ to effectively carryon his normal duties for a period of more than 120 consecutive working days
                       or for more than 120 working days during any 12-month period.
                                 The Bank shall notify in writing to the Trustee the manner of payment selected by the Executive.
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                                     Section 2.2 (b )(2) Termination of Services by Death
                                     In the event that the Executive's services are tenninated by death, or in the event of Executive's death after termination of services, without the occurrence, in either case, of any of the events of forfeiture specified in Section 2.3 below, the unpaid value of his Deferred compensation Trust Account shall be paid by Trustee in a lump sum within thirty (30) days after
                     I his death to his Estate, or to his designated heirs or beneficiaries thereof as may be provided by law or by a valid will executed by the Executive, unless Executive notifies the Bank and Trustee in writing at any time that such unpaid value be paid in a lump sum at a designated time within the five (5) year period following the death of the Executive or in ratable annual installments
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                            over a five (5) year period or a speci fied longer period not to exceed ten (10) years.
                                     Section 2.2(3) Hardship
                                     Upon a showing of financial hardship and ~vided that none of the events of forfeiture specified in Section 2.3 below has occurred, the Bank may, in its sole discretion, direct the Trustee to pay the Executive (or, in the event of death, to the Executive's Beneficiaries) in one lump sum a portion or all of the unpaid value of such Executive's deferred compensation trust account to the extent necessary to alleviate the hardship. A hardship is an emergency beyond the control of the Executive and his beneficiaries.
          rz Section 2.3 Forfeiture of Benefit Payments
    .unpaid value of the deferred compensation trust account (including investment income thereof) shall be made and all the rights of the Executive under this Agreement and the Deed of Trust, his designated beneficiaries, executors, or administrators, or any other person, to receive payments
                          "1hereof shall be forfeited in any of the following events occur:
                                                (i) The Executive, while in the service of the Bank,
                                                          shall engage in:
       W (1) a material breach of the covenants
~ I,{) established in Section 3 of this Agreement; and/or
                                                          (2) .be convicted in a court of competent jurisdiction for theft of Bank's property or embezzlement,

                                                              terminating this Agreement as
                                                              described in Section 4 hereof;
                                          (ii) The Executive, after ceasing to be engaged as an
                                                    Executive and until the time of receiving the final
                                                    installment payment or distribution from the
                                                    deferred compensation trust account, shall engage
                I in any of the following:
                                                    (1) a material breach of the covenants
                                                              established in Section 3 of this
                                                              Agreement, and/or
                               ..(2) refuses to make himself available
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                                                               upon request at reasonable times and upon a reasonable basis to consult
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                                                               with, supply information to, and otherwise cooperate with the Bank
It1J with respect to any matter that was I _handled by his while he was in the '/ service of the Bank.
                                Except in the case of engaging in any of the activities or actions mentioned above, the Executive shall be entitled to receive the full amount accumulated in his deferred compensation trust account in the manner provided above irrespective of whether this Agreement or Executive's employment with the Bank be terminated for reasons other than those provided herein.
                                 Section 2.4 Deferred Compensation not Salary for Pension Plan Purposes
   J~ V Any deferred compensation payable under this Agreement shall not be deemed salary or ../ I~ other compensation to the Executive for the purpose of computing benefits to which he may be
                      entitled under any pension plan or retirement plan.
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                         conflicts with the business of the Bank; provided, however, that he may continue to own or may hereafter acquire any securities or a class of any publicly owned or privately held company.
                                  Executive shall treat as confidential and keep secret the affairs of the Bank and shall not at any time during the term of this Agreement or thereafter, without the prior written consent of the Bank, divulge, furnish or make known or accessible to, or use for the benefit of, anyone other than the Bank and its affiliates any information or a confidential nature relating in any way to the
                   I business of the Bank or its affiliates or their clients and obtained by his in the course of his services hereunder.
                                   All records, papers, and documents kept or made by the Executive relating to the business of the Bank or its affiliates of their clients shall be and remain as property of the Bank.
                                  ,section 4. Termination
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                                   The Bank and the Executive individually shall have the right to terminate this agreement as well as Executive's Employment with the Bank at any time by giving the other party 3D-day
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                          advance notice. Upon termination of this agreement and/or Executive's Employment with the Bank, the Bank will not be liable to the Executive, except for any compensation (including deferred compensation), accrued, but unpaid. Except in the case of the occurrence of any of the events of forfeiture described in Section 2.3 above, the Executive shall have a vested right to receive, in the manner provided in Section 2.2(b)(1), the total value of the deferred compensation trust account as of the above-mentioned date of termination of his services.
                                   Section 5. Assi2nment
                                    This Agreement shall be binding upon and enure to the benefit of the successors and assigns of the Bank. Neither this Agreement nor any right hereunder (including the rights of the Executive or any other person to the payment of deferred compensation) shall be assigned, transferred, pledged, or encumbered by Executive, except an assignment or transfer of the
      JIJ/ deferred compensation by will or by the laws ,of descend and distribution.
Jill Section 6. Term of the A2reement
                                     This Agreement shall be in effect from the date of this contract and thereafter until such
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                                      The executive agrees to acknowledge the nature of his employment with the Bank as having no determined or fixed period of time, and as such subject to the provisions of Section 4 of this Agreement.
                                     Section 7. Aereement Entire
                                      This Agreement constitutes the entire understanding between the Bank and the Executive (117 -' concerning his deferred compensation. This Agreement may not be changed orally.
    {( ry I Section 8. Applicable La\v .,
   Y This Agreement shall be governed by and construed ill accordance with the laws of Puerto Rico.
                                                              Z .-;tf~.<- -d&"".--
       J: / Mr. Rafael Saldana Sola r:s. Maria Calero Padron
.-./ P BANCO SANTANDER PUERTO RICO
                                                                                                                                       v
                                                                                                                       checo Perez
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