CHANGE IN CONTROL AGREEMENT

This Agreement, effective as of the date the agreement is entered into, by and between EuroBancshares, Inc. (the “Company”), a registered bank holding company which is the sole shareholder of Eurobank, a Puerto Rico banking corporation, with main offices in San Juan, Puerto Rico (the “Bank”), and Rafael Arrillaga, a key employee and officer of the Bank and the Company, and a resident of San Juan, Puerto Rico (the “Executive”), provides as follows:

WHEREAS, Executive is currently the Chairman, CEO and President of the Bank, serving at the pleasure of the Board of Directors of the Bank; and

WHEREAS, the Company desires to provide an incentive to the Executive to continue his employment with the Bank; and

WHEREAS, the Company recognizes that at some point in the future the possibility of a Change in Control (as hereinafter defined) may exist, and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders; and

WHEREAS, Executive is willing to continue to serve the Bank but desires assurance that in the event of any Change in Control of the Company or the Bank, he will continue to have the responsibility and stature he has earned within the Bank, or in the alternative, if terminated that he be adequately compensated as herein provided; and

WHEREAS, the Company desires to provide certain benefits to the Executive in the event there is a Change in Control of the Company or the Bank; and

WHEREAS, the Company and the Executive now desire to enter into this Agreement to establish the terms and conditions upon which such payments will be made.

NOW, THEREFORE, in consideration of the mutual undertakings set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Executive agree as follows:

1.   “Bank Board” shall mean the Board of Directors of the Bank.

2.   “Beneficiary” shall mean the person(s) described in Article Four of this Agreement.

3.   “Board” shall mean the Board of Directors of the Company.

4.   “Change in Control” shall mean and shall be deemed to have occurred for purposes of this Agreement if and when:

(A)   any entity, person or group of persons acting in concert (other than the current members of the Board of Directors of the Company or any of their descendants) becomes beneficial owner (within the meaning of Section 13(d) of the Securities and Exchange Act of 1934), directly or indirectly, of securities of the Company representing more than twenty-five percent (25%) of the combined voting power of the Company or any successor corporation;

(B)   any entity, person or group of persons acting in concert (other than the current members of the Board of Directors of the Company or any of their descendants) becomes beneficial owner (within the meaning of Section 13(d) of the Securities and Exchange Act of 1934), directly or indirectly, of securities of the Bank representing more than twenty-five percent (25%) of the combined voting power of the Bank or any successor;

(C)   the effective date of a merger or consolidation of the Company or the Bank with one or more other corporations or banks, as a result of which the holders of the outstanding voting stock of the Company immediately prior to the merger hold less than sixty-six percent (66%) of the combined voting power of the surviving or resulting corporation or bank; or

(D)   the effective date of a transfer of all or substantially all of the property of the Company or the Bank other than to an entity of which the Company or the Bank owns at least eighty (80%) of the combined voting power.

Notwithstanding the above, no Change in Control shall be deemed to occur for purposes of this Agreement as a result of any transaction or series of transactions involving only the Company, the Bank, any affiliate (within the meaning of Section 23A of the Federal Reserve Act of 1913, as amended), or any of them or their successors.

5.   “Compensation” shall mean the Executive’s base annual salary (which is intended to be total base salary without proration for actual months worked), plus the highest performance or incentive based remuneration, (herein the “Performance Compensation”), as reported by the Bank on 499-R2/W-2 Form (or its equivalent) in any of the four fiscal years prior to the termination of employment.

6.   “Constructive Termination” shall mean that the Executive resigns from his position(s) with the Company or the Bank as a result of any of the following:

(A)   Without his express written consent, the detrimental assignment to the Executive of any duties inconsistent with his positions, duties, responsibilities and status with the Bank or the Company as in effect immediately before a Change in Control or any removal of the Executive from or any failures to re-elect the Executive to any of such positions, except in connection with the termination of his employment for Cause or as a result of his Disability or death; provided, however that a change in title alone will not constitute a “constructive termination” for purposes of this provision;

(B)   A reduction of the Executive’s Compensation without the prior written consent of the Executive, which is not remedied within thirty (30) calendar days after receipt by the Company of written notice from the Executive of such reduction;

(C)   A determination by the Executive made in good faith that as a result of a Change in Control, he has been rendered unable to carry out, or has been hindered in the performance of, any of the authorities, powers, functions, responsibilities or duties attached to his position with the successors of the Company or the Bank, which situation is not remedied within thirty (30) calendar days after receipt by the Company of written notice from the Executive of such determination;

(D)   The Bank shall relocate its principal executive offices or require Executive to have as his principal location of work any location which is outside the Commonwealth of Puerto Rico or to travel away from his office in the course of discharging his responsibilities or duties hereunder more than thirty (30) consecutive calendar days or an aggregate of more than ninety (90) calendar days in any consecutive three hundred sixty-five (365) calendar-day period without, in either, case his prior written consent; or

(E)   Failure by the Company to require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance satisfactory to the Executive, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.

7.   “Director” or “Directors” shall mean any member, or members, of either the Board or the Bank Board, as applicable.

8.   “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

9.   “Termination for Cause” shall mean that the Executive is involuntarily terminated from employment based upon his commission of any of the following:

(A)   a felony;  

(B)   an intentional act of fraud, embezzlement or theft in connection with his duties or in the course of his employment with the Company or the Bank;

(C)   the removal of Executive from the performance of his duties by any bank regulatory authority;

(D)   the assessment of civil money penalties against Executive by any bank regulatory authority as a result of a violation of any rule, regulation or statute other than laws focused primarily upon consumer lending;

(E)   intentional breach of fiduciary duty owed to the Bank or to the Company, as applicable, involving personal profit by Executive; and

(F)   appointment of a conservator or receiver for the Bank by applicable bank regulatory authorities, unless the cause of such appointment is fraud committed upon the Bank by a person or person(s) other than Executive.

For the purpose of this Agreement, no act, or failure to act, on the part of the Executive shall be deemed “intentional” unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that his action or omission was in the best interest of the Company or the Bank. Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for “Cause” hereunder unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of a majority of the Directors then in office at a meeting of either the Board or the Bank Board, as applicable, called and held for such purpose (after at least ten (10) days’ notice to the Executive and an opportunity for the Executive, together with his counsel, to be heard before such board), finding that in the good faith opinion of either the Board or the Bank Board, as applicable, the Executive 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 Directors then serving, including any abstaining Director. Nothing herein shall lim