EXHIBIT 10.2
March 23, 2005
Mr. Carlos Garcia
Santander BanCorp
Puerto Rico
Dear Mr. Garcia:
We hereby confirm the terms and conditions with regards to your ratification as
Senior Executive Vice President and Chief Operating Officer of Santander BanCorp
and Banco Santander Puerto Rico (hereafter "the Group"):
1. As agreed upon, we have agreed to terminate your employment
agreement dated October 14, 2002 and the February 3, 2003 between
you and Santander Securities, and which shall be replaced in
accordance with the terms and conditions set forth herein, which
shall be effective from January 1, 2005, without recourse amongst
the parties.
2. In your position you will be responsible for and will supervise all
business operations of the Group in Puerto Rico.
3. The conditions set forth herein shall be in full force and effect
for two years commencing January 1, 2005 and ending, therefore, on
January 1, 2007.
4. During the period whereby these conditions are in full force and
effect, the Group may terminate your employment if there is just
cause, without any compensation whatsoever. The Group may also
terminate your employment without just cause. In this latter case,
you shall receive as indemnity the greater of the following amounts:
a. The pending gross amount due from the time of
termination of employment until the date of expiration
of this Agreement (January 1, 2007) in accordance to the
annual salary set forth in Section 5; or
b. $1,000,000 gross
If by the term of expiration of this Agreement the parties
have not renewed the same, the Group shall pay, unless you
have been offered an extension to this Agreement under the
same terms and conditions hereby established and the extension
was rejected by you, in which case a payment of $1,000,000
shall be made as the final
Carlos M. Garcia
March 23, 2005
Page 2
compensation for your separation from the Group, as so thereby
liberating you from any additional responsibility under this
Agreement, with exception to the temporary non-competition
clause under Section 7.
In the event of a change in control of the Group in Puerto
Rico, the Group shall compensate you the gross amount of
$1,000,000 if the Group does not maintain you in your present
position and classification, or if there is a separation from
your position, or if any of the terms set forth herein shall
not occur. Consequently this indemnity shall not be
cumulative. As to the effects of this Agreement, "change in
control" shall be defined as any circumstance that will cause
Banco Santander Central Hispano, S.A. to decrease its
beneficial ownership to less than 50% of the common stock in
circulation.
5. Your gross annual salary for the year 2005 shall be $525,000.00. For
the year 2006 this annual gross salary shall be $550,000.00. This
salary shall be distributed in the payment installments that the
Group has established.
You will remain under the bonus policy of the Group. In that regard
this policy will be determined with each bonus period that will take
place under the following terms:
a. Three quarters ( 3/4) of its amount shall be determined
by reaching the annual budget of the Group and the
conditions established by the Group's Compensation
Committee.
b. The remaining one-quarter will be based on the Santander
BanCorp stock in regard to other competitors of
reference in accordance to the agreed schedule, of which
the Santander BanCorp Compensation Committee shall
inform you.
Also, you may be eligible to participate in other compensation
schemes that may be established by the Compensation Committee.
6. The remainder of conditions and benefits shall be governed in
accordance to the applicable policies for officers and employees of
your position at the Bank and other terms and conditions agreed upon
by you and so established in your October 14, 2002 and the February
3, 2003 contracts.
7. You acknowledge that the functions and duties that you will perform
under this agreement are of an essentially confidential nature, and
as so you will privy of facts, matters, plans and strategies, as
well as confidential financial information of the Group and its
clients. Therefore, you agree to maintain in absolute
confidentiality and abstain to disclose this information during and
after the term of this agreement.
In the supposed termination given under the circumstances
contemplated under the before to last paragraph of the fourth
section, in consideration of the benefits granted hereunder and the
specific compensation recognized under such section, you shall
refrain from performing similar services to those performed or that
will perform for the Group nor for
Carlos M. Garcia
March 23, 2005
Page 3
any of its direct competitors of the Group within the jurisdiction
of Puerto Rico until six months have elapsed from your date of last
employment from the Group.
8. Should any dispute arise with regards to the interpretation,
validity, compliance, or early termination of this agreement that
shall not be solved by the parties, you hereby agree to submit to
compulsory arbitration in the City of San Juan, Puerto Rico, in
accordance to the American Arbitration Association rules. The party
that requests the arbitration must notify the other party, no later
than ten (10) days. The Bank shall pay the arbitration costs,
including the arbiter fees. Each party shall be responsible for its
own attorney's fees as well as the preparation and presentation of
evidence.
Please execute this agreement as a sign of your approval. I take the
opportunity to wish you great success in your functions.
Sincerely,
By: /s/ Maria Calero
Executive Vice President
Signature of approval:
By: /s/ Carlos M. Garcia