The Executives spouse, Maria del Pilar Rivera (hereinafter Spouse), also appears and
executes this Agreement for the purposes stated herein.
WHEREAS, Executive has been employed by the Bank or a predecessor thereof, in an executive
employee position since June 1994. At the time of the execution of this Agreement Executive
occupies the position of Executive Vice President.
WHEREAS, at the time of the execution of this Agreement, the Executives employment is subject
to an Employment Agreement with the Bank, dated May 14, 1998 (hereinafter, Employment Agreement).
WHEREAS, the parties to this Agreement have agreed the Executives employment with the Bank
shall terminate effective on the date and hour of execution of this Agreement, (hereinafter
WHEREAS, Executive and Spouse have notified the Bank that as a result of events occurring
prior to and including the termination of Executives employment, both of them have suffered
significant emotional anguish.
WHEREAS, Executive and the Bank have successfully conferred personally for the purposes of
settling the aformentioned controversies and disputes between them concerning Executives
employment, the conclusion there from and the Employment Agreement.
WHEREAS, Executive and the Bank desire to provide for an orderly and appropriate conclusion of
Employees employment and the Executives future assistance to the Bank, as herein provided, in
connection with matters with which Executive may have dealt with during his employment.
WHEREAS, All parties recognize and agree that the execution of this Agreement in no manner
constitutes a recognition or admission of the breach of any contractual or other legal duty by any
WHEREAS, All parties recognize and acknowledge that they have been granted reasonable time to
have and review a copy of this Agreement prior to the signing of same and
have further consulted with their respective legal representatives, and have carefully read
and fully understand all of the provisions hereof; and are voluntarily entering into this
NOW, THEREFORE, in consideration of the premises and mutual promises herein contained, it is
agreed as follows:
FIRST: Executive agrees that Executives employment with the Bank will terminate on the
Separation Date; that Executive is not entitled to any further pay or compensation from the Bank
after the Separation Date, except as specifically stipulated in this Agreement.
SECOND: The Bank agrees that no later than five calendar days after Separation Date, the
following compensation will be granted to Executive and/or Spouse, as consideration for this
Agreement and the releases given and obligations assumed herein by Executive and/or Spouse and as
full, final and complete settlement of all claims Executive and/or Spouse may presently or in the
future have against the Bank, based on events occurring prior to or on the Separation Date as
further provided in this Agreement:
||A lump sum payment payable to the Executive, in the amount of SIX HUNDRED THOUSAND DOLLARS
($600,000.00), without any withholdings, as a termination payment, to cover any claim under
Puerto Ricos wrongful discharge law. (Act 80 of May 30, 1976)
||A lump sum payment to the Executive, in the amount of TWO HUNDRED THOUSAND DOLLARS
($200,000.00), without deductions, in settlement of Executives alleged personal, emotional,
moral and/or psychological injuries.
||A lump sum payment to Spouse, in the amount of ONE HUNDRED THOUSAND DOLLARS ($100,000.00),
without deductions, in settlement of the Spouses alleged personal, emotional, moral and/or
||A lump sum payment to the Executive in the amount of EIGHT HUNDRED FIFTY THOUSAND DOLLARS
($850,000.00), subject to a 7% withholding for purposes of Puerto Rico income taxes, as
provided for in Section 1142 of Puerto Ricos Internal Revenue Code, and also subject to any
withholding required for applicable social security (FICA) and/or medicare taxes, with regard
to all other claims or rights of the Executive under the Employment Agreement or under the
law, which may be considered taxable income.
||A lump sum payment to the Executive in the amount of FIFTY THOUSAND DOLLARS ($50,000.00),
corresponding to the year 2004 performance bonus, less applicable legal withholdings.
||The Bank will transfer to Executive, free of charges and liens, title of the company car in
the Executives possession prior to the execution of this Agreement, which has a present book
value of $13,542. This car is identified as follows: Model BMW-530i, year 2002.
||The Bank shall promptly transfer to the Executive title to the portable computer and printer
in his possession prior to the Separation Date, providing that the Executive shall
access to same by the Banks representatives, in order to remove all files, documents and
other information related to the Banks business and erase same from the computer memory.
Executive represents that he has not copied or retained or provided, in any form, to a third
party such information and data, except as required in the normal course of business in the
performance of his duties.
||Should the Executive elect to continue participation in the Banks group health coverage as
provided for under COBRA, the Bank will pay the coverage premiums corresponding to the first
twelve (12) months of COBRA coverage. It is understood that the maximum period of group
health coverage will be for the period established under COBRA legislation and subject to all
applicable restrictions; that Executive will receive the applicable COBRA notice; and that the
Banks only obligation will be limited to undertaking the premium payments during the
||Hereinafter, all the payments and benefits paid under this paragraph of the Agreement will be
referred to as the Payments.
THIRD: For all bookkeeping and filing purposes, the Bank shall treat as non-taxable income
all payments made pursuant to Subparagraphs A, B and C of Paragraph SECOND of this Agreement and
shall not adopt a position inconsistent with such treatment. Executive and Spouse assume all tax
responsibilities, if any, which may arise from all the payments under Paragraph SECOND. Executive
and Spouse acknowledge that they have not received any orientation or representation by the Bank as
to tax matters. The Bank denies having caused damages to Executive and/or spouse.
FOURTH: In consideration of the payments and transfers mentioned in Paragraph SECOND,
Executive, Spouse and the conjugal partnership composed between them agree:
That Executive, Spouse and their conjugal partnership, their heirs, executors, assignees or
agents do not have, and if they have they waive, any claim of any type, and the remedies, under any
federal, state or Puerto Rico law, including those related to or that may be alleged as arising
from the employment relationship with the Bank, or the termination of same, and grant the most
complete release for any claim or cause of action and the remedies they have or may have or had,
known or unknown, whether in law or in equity, in contract, or torts, against the Bank, its parent,
subsidiaries, affiliates or predecessors corporations (hereinafter the Corporations), the 1165
(e) Savings Plan for salaried employees and the 1997 Employee Stock Option Plan (The Plans) as
well as Trustees, Administrators and members of the Plans Committees; and their respective
directors, officers, employees, agents, representatives, insurance carriers, bonding agents or
guarantors (hereinafter its Representatives). The claims or causes of action and the remedies
that Executive, Spouse and their conjugal partnership waive and grant a release for include, but
are not limited to: reprisals; for breach of contract or quasi-contract or promise or
representation; for breaching the Employment Agreement; for violation of a public policy; for
whistle-blowing, for torts; for invasion of privacy; for violation of any regulations, norms,
practices or policies of the Bank; for unjustified termination (Act 80 of May 30, 1976); or for
discriminatory or illegal termination or treatment or harassment barred under the Constitution
of Puerto Rico or the United States, or by any Puerto Rico, State or Federal law, including for
color, age, national origin, sex, disability, condition as veteran of the Vietnam War Era,
marriage and others including, but not limited to the Age Discrimination in Employment Act of 1970,
the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Civil Rights Act of 1866, Act 100
of June 30, 1959, the Americans with Disabilities Act (ADA), Rehabilitation Act of 1973, the
Persons with Physical or Mental Disability Discrimination Act (21 L.P.R.A. 501 et seq), Older
Workers Act, Uniformed Services Employment and Re-employment Rights Act (USERRA); Act 69 of July 6,
1985 (Discrimination by Sex) ; Act 17 of May 22, 1988 (Sexual Harassment); Act 116 of December 20,
1991 (Discrimination by Marriage); Act 139 of June 26, 1968 (SINOT); Act 45 of April 18, 1935
(State Insurance Fund); the Employee Retirement Income Security Act of 1974 (ERISA); the Workers
Adjustment Retraining and Notification Act (WARN); the Consolidated Omnibus Budget Reconciliation
Act of 1985 (COBRA); the Federal Bankruptcy Act; Act 115 of December 20, 1991 (Reprisals); the
Insurance and the Civil Codes of Puerto Rico; and the Family and Medical Leave Act of 1993; as
amended and any other cause of action under any law providing Executive, Spouse or their conjugal
partnership any remedy, including but not limited to damages, punitive damages, liquid or
compensatory damages, attorneys fees, interests, costs or re-employment. They also waive claims
and remedies under any other law or regulation either federal, state or of Puerto Rico regulating
employment, employment conditions or termination from employment, or intellectual property rights;
or under any other law that may impose civil liability.
The waivers and releases previously mentioned include any damage occurred after the signature
of this document as a result of the continuous effect of any act or omission that occurred before
the signature of this document.
The waiver of rights and claims made by Executive and Spouse in this document do not include
those causes of action that may arise after the signature of the same.
The rights and obligations of the parties arising under any deferred compensation plan,
savings or retirement (401K/165e) plan, if any exist, are expressly excluded from this Agreement
and release, and shall be governed by the provisions therein.
FIFTH: Executive recognizes having received full compensation from the Bank and the
Corporations under its norms, policies, practices and regulations and the Employment Agreement and
all applicable laws and that nothing is owed in salaries, vacation, nor for any other concept and
that all of his compensation has been duly paid.
SIXTH: Executive and Spouse represent and agree that they have kept and will keep this
Separation Agreement and its terms, amount and fact of this Separation Agreement and General
completely confidential, and that they have not and will not hereafter disclose any
information concerning this Agreement to anyone, other than their legal counsel, accountants and
tax or financial consultants, including, but by no means limited to, any past, present, or
prospective employee or applicant for employment with the Bank. Executive and Spouse further agree
to require in writing to their counsel, accountants and tax or financial consultants to maintain
this same confidentiality, as an essential requirement of their professional services, and
will provide the Bank with copies of such letters.
SEVENTH: The parties agree that nothing in this document nor the payments mentioned in
paragraph SECOND of the same should be interpreted as an admission by the Bank, or by the
Corporations, The Plans, or the Representatives of an illegal, tortious or discriminatory act
or omission. The Bank denies having incurred in or having responsibility for any event occurring
prior to the signing of this agreement which would make the Bank liable to Executive and Spouse, or
of having knowledge of any damages suffered by the Executive or Spouse.
EIGHTH: Executive agrees to provide the Bank, upon request, with assistance, cooperation and
truthful testimony in connection with any investigation, litigation or matters arising and or
within Executives knowledge and related to Executives employment with the Bank. Such requests
will not be made unreasonably by the Bank, and Executive shall be reimbursed for any reasonable out
pocket expense he may incur. The Executives time dedicated to assistance under this paragraph
which is in excess of thirty hours shall be compensated at a rate to be determined by mutual
agreement, unless Executive is a party to such litigation or investigation, in which case Executive
shall receive no compensation.
NINTH: Executive and Spouse accept and agree to not do or give any written or oral derogatory
criticisms or information regarding the Banks business, products, executives, services or clients.
Nothing in this paragraph shall be interpreted as barring Executive and Spouse from being totally
and factually truthful as required in any legal proceeding, provided the statements are made on the
basis of facts personally known to Executive or Spouse. The Bank agrees to refrain from giving any
written or oral derogatory criticisms or information regarding the Executive by disapproving any
such statements by any Bank director or executive when and if requested in writing by Executive,
unless required in a legal proceeding and is factually correct.
TENTH: The Executive and the Bank agree to coordinate and agree to the contents with regard to
any public statement pertaining to their past or future relationship, that becomes necessary or
convenient to make. The Bank further agrees to distribute to all its employees copy of the
announcement attached hereto concerning Executives resignation and place a copy of said memorandum
in the Executives personnel file. This Agreement shall not be placed in the personnel file. The
Bank will also place in the Executives personnel file, a memorandum stating as follows:
In the event that we receive an inquiry from anyone outside the Bank concerning Fernando L.
Batlles employment, upon prior written authorization from Mr. Batlle, such individual will be
informed of the employees date of hire, compensation, last position, and that the employee
resigned effective April 28, 2005.
The parties realize that the Bank has numerous employees, that not all employees may be aware
of said memorandum, and that therefore the only commitments of contractual significance contained
in this Paragraph are to distribute the announcement and place the memorandum in the personnel file
as above indicated and not induce employees of the Bank not to comply with the
directions set forth in such memorandum.
ELEVENTH: Executive recognizes 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 hereafter received, obtained, or established as an
employee of the Bank or otherwise are valuable and unique assets of the Bank. The Executive agrees
that, he shall not use for his own benefit or benefit of third party, nor 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 Banks business are the Banks exclusive property.
Executive further represents he has returned all records, documents, files, lists, equipment,
property or materials of any kind, which contain information related to the Bank (including, but
not limited to computer data, printouts, files, notes, proposals, promotional and marketing plans,
financial information, and market research), or which may have been received or prepared by the
Executive in connection with his employment, and that the Executive will not retain any copies or
reproductions of said materials and has not given access or copies to third parties, except in the
normal course of business and in the performance of his employment duties.
Executive hereby acknowledges that the services rendered by him are of special, unique, and
extraordinary character and, in connection with such services, he had access to confidential
information concerning the Banks 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 is 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.
TWELFTH: The provisions of any Officers & Directors or other insurances, indemnification
agreements, provisions and policies, applicable to events occurring prior to the Separation Date,
shall continue to apply, and subject to any terms, limitations, conditions or provisions therein.
THIRTEENTH: Executive represents that Executive has not filed any complaints or
charges against the Bank with the Equal Employment Opportunity Commission, the Puerto Rico
Department of Labor and Human Resources, or with any other local, state or federal agency or
that Executive will not do so at any time hereafter, and that if any such agency or court assumes
jurisdiction of any complaint or charge against the Bank on behalf of Executive, Executive will
request such agency or court to withdraw from the matter and will waive any remedies sought or
FOURTEENTH: This Separation Agreement and General Release
shall be binding upon the Executive
and Spouse, their heirs, successors and assigns, and shall inure to the benefit of Releases and
each of them, and to their spouses, heirs, administrators, representatives, executors, successors,
and assigns. This Agreement shall be binding upon any successor or assign of the Bank.
SIXTEENTH: Executive agrees that should he apply for employment with the Bank or the
Corporations, the Corporations are hereby granted by Executive the absolute right to refuse to hire
him and Executive hereby agrees that no cause of action mill ensue, and if it does, he hereby
waives any cause of action due to said refusal. Nothing in this paragraph will be interpreted to
mean that the Bank or the Corporations are barred from employing Executive should they, in their
absolute discretion, desire to do so.
SEVENTEENTH: If the Executive or Spouse breaches any of their obligations under this
Agreement, the Bank may sue him and/or her for breach of contract. In addition, if the breach is
that he or her have filed a claim for any right or cause of action for which they have given
waivers and releases in this Agreement, he and/or she shall be obligated to return the payments
received under paragraph SECOND, to the extent this is permissible by law.
EIGHTEENTH: Executive and Spouse shall defend and make whole the Bank, Corporations,
Representatives and Plans, against any action or claim by their children, parents, in-laws,
brothers and sisters, based on Executives employment with the Bank or termination of employment
with the Bank or based on any act or omission concerning Executive or Spouse.
NINETEENTH: This Separation Agreement and General Release
sets forth the entire agreement
between the parties hereto, and except as specifically provided herein, supersedes any and all
prior agreements or understandings, between the parties hereto pertaining to the subject matter
hereof, including but not limited to the Employment Agreement.
TWENTIETH: This Agreement and Release shall in all respects be interpreted, enforced and
governed under the laws of the Commonwealth of Puerto Rico. The language of all parts of this
Agreement and Release shall in all cases be construed as a whole, according to its fair meaning,
and not strictly for or against any of the parties.
TWENTY-FIRST: Should the Bank be found to be in breach of any of its obligations
Agreement, Executive may sue for said breach of contract, but the waivers and obligations of
Executive and Spouse shall continue to be binding, unless the breach by the Bank is the non-payment
of the payments provided in paragraph SECOND.
on the Effective Date and hour of the Resignation, in Puerto Rico,
this 28th day of