EMPLOYMENT AGREEMENT
AGREEMENT, dated as of May 14, 1998, by and between FIRSTBANK PUERTO
RICO (the "Bank") and Xxxx X. Xxxxxxxxx (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
Executive;
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
provided.
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
industry.
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
Bank.
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,
to:
(i) the Bank:
c/o Office of the Secretary of the Bank
FirstBank Puerto Rico
XX Xxx 0000
Xxxxxxxx, XX 00000-0000
(ii) the Executive:
Xx. Xxxx X. Xxxxxxxxx
1678 Xxxxx Xxxxxxx
Xxx. Xxx Xxxxxxxxx
Xxx Xxxxxxx, XX 00000
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 Xxxx, 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 Xxxxxxx
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Chairman
ATTEST:/s/ Xxxxxxx Xxxxxxx
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EXECUTIVE:/s/Xxxx Xxxxxxxxx
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