AGREEMENT,  dated as of May 14, 1998, by and between  FIRSTBANK  PUERTO
RICO (the "Bank") and Luis M. Beauchamp (the "Executive").

         WHEREAS,  the Bank wishes to retain the services of the  Executive  and
the  retention of the  Executive's  services for and on behalf of the Bank is of
material  importance to the  preservation  and  enhancement  of the value of the
Bank's business;

         WHEREAS, the Board of Directors of the Bank has approved and authorized
the entry into this Agreement with the Executive to take effect immediately upon
execution of the same;

         WHEREAS , the parties desire to enter into this Agreement setting forth
the terms and  conditions  of the  employment  relationship  of the Bank and the

         NOW,  THEREFORE,  in  consideration  of the  foregoing  and the  mutual
covenants and agreements herein, the parties hereto agree as follows:

         1. Employment.  The Bank agrees to continue to employ the Executive and
the  Executive  agrees to continue in the  employment of the Bank for the period
stated in  Paragraph  4 hereof and upon the other  terms and  conditions  herein

         2. Position and  Responsibilities.  The Executive is employed as Senior
Executive  Vice  President,  and  shall  carry  out and  render to the Bank such
services as are customarily performed by persons situated in a similar executive
and professional  capacity.  The Executive shall also perform such other related
duties as he may from time to time be reasonably  directed,  including,  but not
limited to  performing  duties for the Bank or for any of its  present or future
subsidiaries.  The Executive  shall report to the President and Chief  Executive
Officer of the Bank, and/or to the Board of Directors of the Bank.

         3. Duties.  During the period of employment  hereunder,  and except for
illness, vacation periods, and reasonable leaves of absence, the Executive shall
devote  his  business  time,  attention,  skill,  and  efforts  to the  faithful
performance of his duties  hereunder as is customary for an executive  holding a
similar position in a financial institution of comparable size.

            The  Executive  agrees  that  during  the  term  of  his  employment
hereunder,  except with the express  consent of the Board of  Directors  he will
not,  directly or  indirectly,  engage or  participate,  become  director of, or
render  advisory  or other  services  for,  or in  connection  with,  or  become
interested  in,  or make any  financial  investment  in any  firm,  corporation,
business entity or business  enterprise  competitive  with or to any business of
the Bank; provided,  however,  that the Executive shall not thereby be precluded
or prohibited  from owning  passive  investments,  including  investments in the
securities of other financial  institutions,  so long as such ownership does not
require him to devote  substantial time to management or control of the business
or activities in which he has invested.

         4. Term. The initial term of employment  under this Agreement  shall be
for a period of four (4) years,  commencing  on the date hereof and  terminating
May 14, 2002. On each anniversary of the date of commencement of this Agreement,
the  term  of  employment  hereunder  shall  automatically  be  extended  for an
additional one (1) year period beyond the then effective expiration date, unless
either  party  receives  written  notice,  not  less  than 90 days  prior to the
anniversary  date,  advising  the other party that this  Agreement  shall not be
further extended.  Any such written notice shall not affect any prior extensions
of the term of employment hereunder.

         5.   Standards.   The   Executive   shall   perform   his   duties  and
responsibilities  under  this  Agreement  in  accordance  with  such  reasonable
standards as are established  from time to time by the Board of Directors and/or
management of the Bank. The  reasonableness  of such standards shall be measured
against standards for executive  performance generally prevailing in the banking

                  Notwithstanding  anything  to the  contrary,  nothing  in this
Agreement  will be  interpreted  in any  manner  which  would  tend to  limit or
interfere with the authority or oversight  duties and discretion of the Board of
Directors to establish adequate  guidelines for the effective  management of the

         6.       Compensation and Reimbursement of Expenses.

                  a)       Compensation

     The Bank agrees to pay the  Executive  during the term of this  Agreement a
base salary of not less than $265,000 per year. The performance of the Executive
shall be reviewed  annually by the Board of  Directors  and the salary  provided
herein  may  be  increased,   but  not   decreased,   in  accordance   with  the
recommendation of the Compensation  Committee.  The salary provided herein shall
not be paid less frequently than monthly.

                  b)       Performance Bonus

     In addition to the salary set forth above, the performance of the Executive
and of the Bank during each year of  employment  shall be evaluated on the basis
of the Bank's achievement of the predetermined  business objectives contained in
the Bank's  annual  business  plan.  The  contribution  of the  Executive to the
achievement of the Bank's annual business objectives and his performance in such
other functions as may be reasonably put under his charge,  will be evaluated by
the President and Chief Executive  Officer who may recommend to the Compensation
Committee  payment of a  performance  bonus in an amount which the  Compensation
Committee may determine at its discretion.

                  c)       Stock Options

     The Executive  will be entitled to  participate in and receive the benefits
of any stock option,  profit  sharing,  or other plans,  benefits and privileges
given to employees and executives of the Bank or its subsidiaries and affiliates
which now exist or may come into existence hereafter, to the extent commensurate
with  his  then  duties  and  responsibilities,  as  fixed  by the  Compensation
Committee  and approved by the Board of Directors.  The terms and  conditions of
such stock options will be within the parameters set forth in the employee stock
option plan of the Bank or other similar plan under which a benefit or privilege
is made available.

                  d)       Automobile Expenses.

     (i) The Bank shall provide the Executive  with a company owned  automobile.
Such  automobile  will  be  furnished  in  accordance  with  existing  executive
automobile policy as approved by the Board of Directors. All expenses, including
but not  limited to  insurance,  maintenance,  repairs,  fuel,  and  lubrication
services, shall be provided by the Bank.

     (ii)  Monthly  or not more than  thirty  (30) days after the  expenses  are
incurred,  the Bank shall pay or reimburse the  Executive for any gasoline,  oil
and  maintenance or repair  expenses which the Executive  incurs directly in the
operation of the automobile provided hereunder.

                  e)       Reimbursement of Expenses.

     Not less  frequently  than  monthly,  the Bank shall pay or  reimburse  the
Executive for all reasonable travel and other expenses incurred by the Executive
in the performance of his duties under this Agreement.

                  f)       Office.

     The Bank shall  furnish  the  Executive  with a private  office,  a private
secretary and such other assistance and  accommodations  as shall be suitable to
the  character of the  Executive's  position  with the Bank and adequate for the
performance of his duties hereunder.

         7.  Participation in Benefit Plans. The payments and benefits  provided
hereunder are in addition to any payment and benefits to which  Executive may be
or may become entitled under any other present or future group employee  benefit
plan or program of the Bank for which  executives are or shall become  eligible,
and the Executive shall be eligible to receive all benefits and entitlements for
which the executives are eligible under every such plan or program.

         8. Voluntary Absences; Vacations and Sick Leave. The Executive shall be
entitled,  without loss of pay, to absent  himself  voluntarily  for  reasonable
periods of time from the  performance of his duties and  responsibilities  under
this Agreement.  All such voluntary absences shall count either as paid vacation
time or sick leave,  unless  otherwise  provided by the Board of Directors.  The
Executive  shall be entitled to an annual paid  vacation of 21 working  days per
year,  or such  longer  periods as the Board of  Directors  may  approve,  which
vacations  shall be scheduled by the  Executive  with the prior  approval of the
President  and Chief  Executive  Officer,  taking into  account the needs of the
Bank. The Executive may  accumulate  unused paid vacation time from one calendar
year to the next;  provided,  that such accumulation shall not exceed 36 working
days of unused  vacation time from prior years.  The Executive shall be entitled
to up to 15  non-cumulative  working  days of paid  sick  leave per year or such
longer period as the Board of Directors may approve.

         9. Benefits  Payable Upon  Disability or Death.  The Bank shall, at all
times,  maintain  in effect  disability  and death  benefits  insurance  for the
benefit of the  Executive  in an amount at least  equal to that  maintained  for
executives  of similar rank and which will not be less than that  maintained  by
the Bank for all officers and employees. Provided that the Bank may increase but
never decrease the benefits  which the Executive  and/or the  Executive's  heirs
would be entitled to thereunder.

         10.      Disability.

                  (a) If the Executive  shall become  disabled or  incapacitated
for a number of  consecutive  days  exceeding  those to which he is  entitled as
sick-leave,  and it is determined that he will continue to temporarily be unable
to perform his duties under this Agreement,  he shall  nevertheless  continue to
receive  60% of his  compensation,  exclusive  of any  benefits  which may be in
effect for Bank  employees  under  Paragraph 7 hereof  until such time as he may
rejoin active  employment.  Upon returning to active duty, the Executive's  full
compensation  as set forth in this Agreement  shall be reinstated.  In the event
that the Executive returns to active employment on other than a full-time basis,
then his  compensation  (as set forth in Paragraph 6 of this Agreement) shall be
reduced in proportion to the time spent in said employment.

                  (b) For purposes of this  Agreement,  the  Executive  shall be
deemed to be permanently  disabled or  incapacitated  if the  Executive,  due to
physical or mental illness, shall have been absent from his duties with the Bank
on a full-time basis for three  consecutive  months.  In such case, the Board of
Directors  may remove  the  Executive  from  employment  and may employ  another
executive in such  capacity;  provided,  that, if the Executive  shall not agree
with a determination to remove him/her because of disability or incapacity,  the
question of the Executive's  ability to continue in active  employment  shall be
submitted to an impartial and reputable physician selected by the parties hereto
and such  physician's  determination on the question of disability or incapacity
shall  be  binding.  If it is  determined  that  the  Executive  is  permanently
disabled,  he shall nevertheless continue to receive 60% of his compensation for
the  remaining  term of this  Agreement.

     (c)  There  shall  be  deducted  from  the  amounts  paid to the  Executive
hereunder during any period of disability or incapacitation as described herein,
any amounts actually paid to the Executive pursuant to any disability  insurance
or other similar such program, as provided in Paragraph 9 hereof, which the Bank
has  instituted  or may  institute on behalf of its employees for the purpose of
compensating the Executive in the event of disability.

         11.      Termination of Employment.

                  (a) Without cause.  The Board of Directors may, without cause,
terminate  this  Agreement at any time, by giving 90 days written  notice to the
Executive. In such event, the Executive, if requested by the Board of Directors,
shall  continue to render his services,  and shall be paid his regular salary up
to the date of  termination.  In addition,  the Executive shall be paid from the
date of termination a severance  payment of four (4) years base salary (less all
amounts  required  to be  withheld  and  deducted),  such  payment to be made in
substantially  equal semimonthly  installments on the fifteenth and last days of
each month,  or if these days are nonbusiness  days, the  immediately  preceding
business day,  commencing with the month in which the date of termination occurs
and continuing for 24 consecutive semimonthly payment dates.

                  The Executive may,  without cause,  terminate the Agreement by
giving 90 days  written  notice to the Board of  Directors.  In such event,  the
Executive  shall  continue to render his  services and shall be paid his regular
salary  up to the date of  termination,  but  shall not  receive  any  severance
payment. In the event that the Executive terminates his agreement without cause,
the Bank shall be  entitled  to enjoin the  employment  of the  Executive  as an
officer or employee of any  significant  competitor  of the Bank for a period of
one year. The term "significant competitor" shall mean any bank, savings bank or
savings  and  loan  association  which  at the  date  of its  employment  of the
Executive  has total assets of one billion  dollars or more and a home or branch
office in any city in Puerto Rico. In  consideration  of the Executive  entering
into this non-competition agreement, he shall receive an amount of $50,000 which
amount is for  purposes of this  Agreement  included as part of the  Executive's
base salary.

                  (b) With  Cause.  The  Board of  Directors  may,  at any time,
terminate this Agreement for cause.  In such event,  the Executive  shall not be
entitled  to  receive  any  further  compensation  from  the date of  notice  of
termination.  For the purpose of this Agreement,  "termination  for cause" shall
include any act or omission on the part of the Executive which involves personal
dishonesty,  willful misconduct,  breach of fiduciary duty, a material violation
of any law,  rule or regulation  relating to the banking  industry or a material
breach of any  provision of this  Agreement,  such as the willful and  continued
failure of the  Executive  to perform  the  duties  herein set forth.  No act or
failure to act on the  Executive's  part shall be  considered  "willful"  unless
done, or omitted to be done, by him/her not in good faith and without reasonable
belief that his action or  omission  was in the best  interest of the Bank.  For
purposes  of this  paragraph,  any  act or  omission  to act on the  part of the
Executive in reliance upon an opinion of counsel to the Bank or to the Executive
shall not be deemed to be willful or without  reasonable  belief that the act or
omission to act was in the best interest of the Bank.

                  The Executive may, with cause,  terminate this Agreement.  For
purposes of this paragraph,  termination  with cause shall mean a failure of the
Bank to comply with any material provision of this Agreement,  which failure has
not been cured within 15 days of receipt of a written notice by the Executive of
such noncompliance by the Bank.

                  (c) If the  Executive  is  suspended  and/or  prohibited  from
participating  in the conduct of the Bank's  affairs by a notice or order served
under Sections  8(e)(3),  (e)(4) or (g)(1) of the Federal Deposit  Insurance Act
[12 USC 1818(e)(3),  (e)(4) and (g)(1)], or any other similar provision of state
or federal law now in place or enacted in future,  the Bank's  obligations under
this  Agreement  shall be  suspended  as of the  date of  service,  unless  such
prohibition and/or suspension is stayed by appropriate  proceedings.  If after a
hearing is held and upon judicial review,  the notice or order suspending and/or
prohibiting  the  Executive  from  participating  in the  affairs of the Bank is
confirmed, then this Agreement shall be terminated with cause. If the charges in
the notice or order are dismissed, the Bank shall: (i) pay the Executive all the
compensation withheld while the contractual  obligations were suspended and (ii)
reinstate, in whole or in part, any of the obligations which were suspended.

                  (d)  If  the  Bank  is in  default,  as  defined  to  mean  an
adjudication   or  other  official   determination   of  a  court  of  competent
jurisdiction,  the appropriate  Federal banking agency or other public authority
pursuant to which a conservator,  receiver or other legal custodian is appointed
for the  Bank  for the  purpose  of  liquidation,  all  obligations  under  this
Agreement shall terminate as of the date of default, but rights of the Executive
to compensation earned as of the date of termination shall not be affected.

                  (e) In the  event  that  the  Executive  is  terminated  or he
terminates  this  Agreement,  in a manner which  violates the provisions of this
Paragraph 11, as determined by the arbitration  procedure  provided in Paragraph
21,  the  Executive  or the  Bank,  as the case may be,  shall  be  entitled  to
reimbursement for all reasonable costs,  including  attorney's fees, incurred by
the Executive or the Bank, as the case may be, in challenging such termination.

         12.      Change in Control.

                  (a) If during the term of this Agreement there is a "change in
control" of the Bank, as such term is defined in  sub-paragraph  (c)  hereunder,
the Executive shall be entitled to receive from the Bank a severance  payment in
consideration  of having  bound  himself  to  employment  by the Bank and having
foregone other business or professional opportunities,  actual or potential. The
severance  payment  shall be a lump sum cash payment equal to four (4) times the
Executive's total compensation,  as the term is defined in Section 12(b) of this
Agreement, to be made on or before the fifth day following the date on which the
change in control occurs.

                  (b) For purposes of this section,  the term total compensation
shall mean the Executive's base salary plus the highest cash  Performance  Bonus
paid to the  Executive  in any of the four (4) fiscal years prior to the date of
the  change in  control,  and the value of any other  benefits  provided  to the
Executive during the year in which the change in control occurs which are listed
and attached hereto as Exhibit A, as it may be amended from time to time.

     (c) The term  "change in  control"  shall be deemed to have taken place if:
(i) a third  person,  including a "group" as defined in Section  13(d)(3) of the
Securities  Exchange Act of 1934,  becomes the beneficial owner of shares of the
Bank  having 25% or more of the total  number of votes which may be cast for the
election of directors of the Bank or which, by cumulative  voting,  if permitted
by the Banks  charter or bylaws,  would enable such third person to elect 25% or
more of the  directors of the Bank;  or (ii) as the result of, or in  connection
with,  any  cash  tender  or  exchange  offer,  merger  or  any  other  business
combination,  sales of assets or contested  election,  or any combination of the
foregoing  transactions,  the persons who were directors of the Bank before such
transaction shall cease to constitute a majority of the Board of the Bank or any
successor  institution.  Notwithstanding  the  provisions of this  paragraph,  a
change in control of the Bank shall not be deemed to have  occurred in the event
the Bank undertakes a reorganization to form a bank holding company.

         (d) Any payments made to the Executive  pursuant to this  Agreement are
subject to and  conditioned  upon their  compliance  with 12 USC 1828(k) and any
regulations promulgated thereunder. The Bank shall in good faith seek to obtain,
if necessary or required,  any consents or approvals  from the FDIC or any other
applicable  regulatory  agency and any  successors  thereto  with respect to any
payments to be made or any benefits to be provided to the Executive  pursuant to
the terms of this Agreement.

         13. Confidentiality;  Injunctive Relief. Recognizing that the knowledge
and  information  about,  or  relationships   with,  the  business   associates,
customers,  clients, and agents of the Bank and its affiliated companies and the
business methods, systems, plans, and policies of the Bank and of its affiliated
companies which Executive has heretofore and shall hereafter receive, obtain, or
establish as an employee of the Bank or otherwise are valuable and unique assets
of the Bank, the Executive agrees that, during the continuance of this Agreement
and thereafter,  he shall not (otherwise than pursuant to his duties  hereunder)
disclose  without the written  consent of the Bank, any material or substantial,
confidential,  or proprietary know-how,  data, or information  pertaining to the
Bank, or its business, personnel, or plans, to any person, firm, corporation, or
other entity, for any reason or purpose whatsoever.  Executive  acknowledges and
agrees that all memoranda,  notes, records, and other documents made or compiled
by Executive or made available to Executive concerning the Bank's business shall
be the Bank's exclusive property and shall be delivered by Executive to the Bank
upon  expiration or  termination of this Agreement or at any other time upon the
request of the Company.

                  The   provisions  of  this  Paragraph  13  shall  survive  the
expiration or termination of this Agreement or any part thereof,  without regard
to the reason therefor.

                  Executive hereby acknowledges that the services to be rendered
by  him/her  are  of  special,  unique,  and  extraordinary  character  and,  in
connection with such services,  he will have access to confidential  information
concerning the Bank's business. By reason of this, Executive consents and agrees
that if he violates  any of the  provisions  of this  Agreement  with respect to
confidentiality,  the Bank would sustain  irreparable  harm and,  therefore,  in
addition to any other  remedies  which the Bank may have under this Agreement or
otherwise,  the Bank will be entitled to an injunction to be issued by any court
of  competent   jurisdiction   restraining  the  Executive  from  committing  or
continuing  any  such  violation  of  this  Agreement.  The  term  "Confidential
Information"  means:  (1)  proprietary  information of the Bank; (2) information
marked or designated by the Bank as confidential;  (3)  information,  whether or
not in written  form and whether or not  designated  as  confidential,  which is
known  to the  Executive  as  treated  by the  Bank  as  confidential;  and  (4)
information provided to the Bank by third parties which the Bank is obligated to
keep confidential,  specifically  including Bank customer lists and information.
Confidential  Information  does not include  any  information  now or  hereafter
voluntarily  disseminated by the Bank to the public,  or which otherwise becomes
part of the public domain through lawful means.

         14. No  assignments.  This Agreement is personal to each of the parties
hereto.  Neither  party  may  assign  or  delegate  any of his or its  rights or
obligations  hereunder  without first obtaining the written consent of the other
party.  However,  in the event of the death of the  Executive  all his rights to
receive payments hereunder shall become rights of his estate.

     15. Benefits. Any benefits due or provided hereunder to the Executive shall
be in  addition  to,  and not in  substitution  of,  any  benefit  to which  the
Executive is otherwise entitled to without regard to the Agreement.

         16.  Mitigation.  The  Executive  shall not be  obligated to seek other
employment in mitigation of the amounts payable or  arrangements  made under any
provision of this  Agreement,  and the  obtaining  of any such other  employment
shall in no event  effect any  reduction  of the Bank's  obligation  to make the
payments and arrangements required to be made under this Agreement.

     17.  Notices.  All notices  required by this  Agreement  to be given by one
party to the  other  shall  be in  writing  and  shall be  deemed  to have  been
delivered either:

     (a) When personally delivered to the Office of the Secretary of the Bank at
his regular corporate office, or the Executive in person; or

     (b) Five days after depositing such notice in the United
States mails,  certified mail with return receipt requested and postage prepaid,
                           (i)      the Bank:
                                    c/o Office of the Secretary of the Bank
                                    FirstBank Puerto Rico
                                    PO Box 9146
                                    Santurce, PR 00908-0146

                           (ii)     the Executive:

                                    Mr. Luis M. Beauchamp
                                    1678 Calle Geranio
                                    Urb. San Francisco
                                    Rio Piedras, PR  00927

or to such other address as either party may designate to the other by notice in
writing in accordance with the terms hereof.

         18.  Amendments  or  Additions;   Action  by  Board  of  Directors.  No
amendments or additions to this Agreement shall be binding unless in writing and
signed by both parties.  The prior approval by a two-thirds  affirmative vote of
the full Board of  Directors of the Bank shall be required in order for the Bank
to authorize any amendments or additions to this Agreement, to give any consents
or waivers of  provisions of this  Agreement,  or to take any other action under
this Agreement including any termination of the employment of the Executive with
or without cause under Paragraph 10 hereof.

         19. Section Headings. The Paragraph headings used in this Agreement are
included solely for  convenience and shall not affect,  or be used in connection
with, the interpretation of this Agreement.

     20.  Severability.  The  provisions  of  this  Agreement  shall  be  deemed
severable and the  invalidity  or  unenforceability  of any provision  shall not
affect the validity or enforceability of the other provisions hereof.

         21.  Governing Law. This Agreement shall be governed by the laws of the
Commonwealth  of Puerto Rico.  Venue for the  litigation  of any and all matters
arising  under or in  connection  with this  Agreement  shall be in the Superior
Court for the  Commonwealth  of Puerto Rico,  in San Juan,  in the case of state
court jurisdiction, when clause 21 of this Agreement is not legally applicable.

         22.  Arbitration.  Any  controversy  as to the  interpretation  of this
contract  must be  submitted  before  three  arbitrators  to be appointed by the
American  Arbitration  Association ("AAA"). The rules and regulations of the AAA
shall  govern the  procedures  of said  arbitration.  The award of a majority of
arbitrators shall be binding and final on the parties.

                                                          FIRSTBANK PUERTO RICO

                                                  /S/ German Malaret    

ATTEST:/s/ Antonio Escriba    
- - ---------------------------

                                                 EXECUTIVE:/s/Luis Beauchamp