EXHIBIT 10.91
DORAL FINANCIAL CORPORATION
0000 X.X. Xxxxxxxxx Xxxxxx
Xxxxxx Xxxxx, Xxxxxx Xxxx 00000
As of March 5, 2002
Xxx. Xxxxx Xxxxx
0000 X.X. Xxxxxxxxx Xxxxxx
Xxxxxx Xxxxx, Xxxxxx Xxxx 00000
Dear Xxx. Xxxxx:
We are pleased to detail herein below the provisions of your
employment agreement with Doral Financial Corporation ("DFC").
1. TERMS OF EMPLOYMENT
The term of this Agreement shall be for a period commencing
on January 1, 2002 and ending on December 31, 2003, unless sooner terminated as
herein provided. With respect to any period after December 31, 2001, this
Agreement supersedes and cancels all prior employment, personal service or
similar agree ments between you and DFC and its subsidiaries, divisions and
ventures.
2. POSITION AND RESPONSIBILITIES
You will serve as President and Chief Operating Officer of
DFC. By your acceptance of this Agreement, you undertake to accept such
employment and to devote your full time and attention to DFC, and to use your
best efforts, ability and fidelity in the performance of the duties attaching
to such employment. During the term of your employment hereunder, you shall not
perform any services for any other company, which services conflict in any way
with your obligations under the two preceding sentences of this Section 2,
whether or not such company is competitive with the businesses of DFC,
provided, however, that nothing in this Agreement shall preclude you from
devoting reasonable periods required for
(i) serving as a director or member of a committee of
any organization involving no conflict or potential conflict of interest with
the interests of DFC;
(ii) delivering lectures, fulfilling speaking
engagements, teaching at educational institutions;
(iii) engaging in charitable and community activities; and
(iv) managing your personal and family investments,
provided that such activities do not interfere with the regular performance of
your duties and responsibilities under this Agreement.
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Page 2
You shall, at all times during the term hereof, be subject to
the supervision and direction of the Chairman of the Board and Chief Executive
Officer and the Board of Directors of DFC with respect to your duties,
responsibilities and the exercise of your powers.
3. COMPENSATION
(a) During the term of this Agreement you shall receive
an annual salary of $750,000 annually, payable no less often than monthly in
accordance with corporate policy.
(b) (i) During the term of this Agreement, you shall
also be entitled to receive an annual incentive bonus
(commencing with the year ending December 31, 2002) equal to
5% of the amount of Adjusted Net Income in excess of a 15%
Return on Equity Capital (as hereinafter defined); provided,
however, that the total salary and incentive compensation
payable to you pursuant to this Agreement shall not exceed
$1,500,000 per annum; and
(ii) The incentive bonus shall be payable
annually by DFC within 30 days following the date on which
its Annual Report on Form 10-K for the fiscal year ended the
prior December 31 shall have been filed with the United
States Securities and Exchange Commission; provided that
except as provided in Section 6(c)(ii) hereof such amount
shall only be payable if you shall have served as President
to DFC pursuant to this Agreement for the entire fiscal year
to which such payments relate. As used in this Section 3,
"Adjusted Net Income" means the annual consolidated net
income by DFC and its subsidiaries after all taxes (including
net income from equity interests held by DFC in any other
venture and net income of any successor of DFC which may be
formed by merger, consolidation or sale of substantially all
of the assets of DFC) during the calendar year preceding the
payment as determined in accordance with generally accepted
accounting principles applied on a consistent basis
throughout the periods involved and as shown by DFC's
published consolidated financial statements audited by its
independent accountants (hereinafter referred to as "GAAP"),
such net income to be adjusted (A) by adding back to such net
income any payments made pursuant to Section 3(b)(i) hereof
and payments of similar incentive compensation to other
executive officers of DFC, (B) by adding back to such net
income dividends on shares of preferred stock that are
excluded from the definition of "Equity Capital" set forth
below and (c) by adjusting such net income for any
extraordinary items of income and expense such as merger
related expenses. As used in this Section 3, (1) "Equity
Capital" means DFC's consolidated Stockholders Equity
(excluding preferred stock or other similar instruments that
are not convertible into shares of Common Stock) at the
December 31 immediately preceding the beginning of the fiscal
year for which the calculation is being made, determined in
accordance with GAAP and (2) "Return on Equity Capital" for
any fiscal year means the percentage determined by dividing
DFC's consolidated net income after all taxes determined in
accordance with GAAP for such fiscal year by Equity Capital
for such preceding December 31; provided that such
calculation shall be adjusted as set forth in the immediately
succeeding sentence. If DFC sells securities constituting
Equity Capital during the fiscal year, Equity Capital shall
be increased by the net proceeds to DFC (after expenses) of
such sale multiplied by a fraction the numerator of which
shall be the number of days in such fiscal year which had
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Page 3
elapsed from the date of the closing of such sale to the end
of such fiscal year and the denominator of which shall be
365.
(c) You shall be entitled to receive stock options to
acquire 150,000 shares of DFC's Common Stock subject to the terms and
conditions of DFC's 1997 Employee Stock Option Plan and the stock option awards
made on the date hereof by DFC's Compensation Committee.
(d) You shall be entitled to participate in the other
benefit plans of DFC upon the terms and conditions on which such benefits are
made available to other officers of DFC. Nothing herein shall obligate DFC to
continue any existing benefit plan or to establish any replacement benefit
plan.
(e) You shall be entitled to reimbursement for
reasonable travel and entertainment expenses incurred in connection with the
rendering of your services hereunder in compliance with DFC policy. Nothing
contained herein shall authorize you to make any political contributions,
including but not limited to payments for dinners and advertising in any
political party program or any other payment to any person which might be
deemed a bribe, kickback or otherwise and improper payment under corporate
policy or practice and no portion of the compensation payable hereunder is for
any such purpose.
(f) Payments under this Agreement shall be subject to
reduction by the amount of any applicable federal, Commonwealth, state or
municipal income, withholding, social security, state disability insurance, or
similar or other taxes or other items which may be required or authorized to be
deducted by law or custom.
(g) No additional compensation shall be due to you for
services performed or offices held in any subsidiary, division, affiliate, or
venture of DFC.
4. MISCELLANEOUS PROVISIONS RELATING TO THE BONUS AND OTHER
MATTERS
(a) Your acceptance of this Agreement will confirm that
you understand and agree that the granting of the incentive compensation
referred to in Section 3(b) (the "incentive compensation") or the stock options
referred in Section 3(c), and any action thereunder, does not involve any
statement or representation of any kind by DFC as to its business, affairs,
earnings or assets, or as to the tax status of the incentive compensation or
the stock options or the tax consequences of any payment or exercise thereof,
or otherwise. You further agree that any action at any time taken by or on
behalf of DFC or by its directors or any committee thereof, which might or
shall at any time adversely affect you or the incentive compensation, may be
freely taken notwithstanding any such adverse effect without your being thereby
or otherwise entitled to any right or claim against DFC or any other person or
party by reason thereof.
(b) The incentive compensation is personal to you and,
except as provided as contemplated in Section 3(b) above, in the event of your
death or incapacity, is not transferable or assignable either by your act or by
operation of law, and no assignee, trustee in bankruptcy, receiver or other
party whosoever shall have any right to demand any incentive compensation or
any other right with respect to it. If, in the event of your death or
incapacity, your legal representative shall be entitled to demand the incentive
compensation under any of the provisions hereof then, unless otherwise
indicated by the context or otherwise required by any term hereof, references
to "you" shall apply to said representative.
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(c) If and when questions arise from time to time as to
the intent, meaning or application of any one or more of the provisions hereof
such questions will be decided by the Board of Directors of DFC or any
Committee appointed to consider such matters, or, in the event DFC is merged
into or consolidated with any other corporation, by the Board of Directors (or
a Committee appointed by it) of the surviving or resulting corporation, and the
decision of such Board of Directors or Committee, as the case may be, as to
what is a fair and equitable settlement of each such question or as to what is
a fair and proper interpretation of any provision hereof or thereof, whatever
the effect of such a decision may be, beneficial or adverse, upon the incentive
compensation, shall be conclusive and binding and you hereby agree that the
incentive compensation is granted to and accepted by you subject to such
condition and understanding. You understand that the incentive compensation is
not held or set aside in trust and (1) DFC may seek to retain, offset, attach
or similarly place a lien on such funds in circumstances where you have been
discharged for cause and shall be entitled to do so for (x) malfeasance
damaging to DFC, (y) conversion to you of an DFC opportunity, or (z) a
violation of DFC's conflict of interest policy, in each case as determined in
the sole discretion of the Board of Directors, and (2) in the event DFC is
unable to make any payment under this Agreement because of insolvency,
bankruptcy or similar status or proceedings, you will be treated as a general
unsecured creditor of DFC and may be entitled to no priority under applicable
law with respect to such payments.
5. RESTRICTIONS ON COMPETITION
During the term of this Agreement and for a period of one
year after you cease to be an employee of DFC or an affiliate of DFC, you will
not, without the prior written consent of DFC, (a) accept employment or render
service to any person, firm or corporation, directly or indirectly, in
competition with DFC, or any affiliate thereof for any purpose which would be
competitive with the business of DFC and its affiliates within the Commonwealth
of Puerto Rico or any other geographic area in which DFC or any affiliate of
DFC by which you were employed, conducted operations (the "Restricted Area") or
any business as to which studies or preparations relating to the entry into
which were made by DFC or any affiliate of DFC by which you were employed
within one year prior thereto (collectively, the "Restricted Businesses") or
(b) directly or indirectly, enter into or in any manner take part in or lend
your name, counsel or assistance to any venture, enterprise, business or
endeavor, whether as proprietor, principal, investor, partner, director,
officer, employee, consultant, adviser, agent, independent contractor or in any
other capacity whatsoever for any purpose which would be competitive with the
Restricted Businesses in the Restricted Area. An investment not exceeding 5% of
the outstanding stock in any corporation regularly traded on any national
securities exchange or in the over-the-counter market shall not be deemed to
violate this provision, provided that you shall not render any services for
such corporation.
6.TERMINATION OF EMPLOYMENT
(a) Your employment hereunder may be terminated for
dishonesty, death, incapacity, or inability to perform the duties of your
employment on a daily basis, resulting from physical or mental disability
caused by illness, accident or otherwise or refusal to perform the duties and
responsibilities of you employment hereunder, or breach of fidelity to DFC.
(b) At any time following a "Change in Control" of DFC,
this Agreement may be terminated by DFC or you on 30 days' written notice to
you or DFC, as the case may be, such termination to be effective
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as of the end of the calendar year during which such notice is given. As used
herein, a "Change in Control" shall be deemed to have occurred at such time as
(i) any person or group becomes the beneficial owner of more than 50% of the
voting power of DFC's voting stock, or (ii) DFC consolidates with or merges
into any other corporation or conveys or otherwise disposes of all or
substantially all of its assets to any person.
(c) If at any time you shall voluntarily terminate your
employment, then this Agreement, except for Section 5 hereof, shall terminate
and all further obligations of DFC hereunder shall cease, provided that (i) in
any termination pursuant to subsection (b) of this Section 6 you shall be
entitled to receive all compensation due to pursuant to Section 3 hereof for
the calendar year in which such date of termination occurs, or (ii) should you
decide to voluntarily terminate your employment after June 30, 2003, you shall
be entitled to receive a pro-rata share of the incentive bonus payable to you
pursuant to subsection (b) of Section 3 herein for calendar year 2003 with the
Adjusted Net Income computed on the basis of financial results for the period
ending on the quarter next succeeding the date of termination and on the number
of days actually worked over the number days in the period used to compute the
Adjusted Net Income.
You agree that this Section 6 shall create no additional
rights in you to direct the operations of DFC.
7. WAIVERS AND MODIFICATIONS
No waiver by either party of any breach by the other of any
provisions hereof shall be deemed to be a waiver of any later or other breach
thereof, or as a waiver of any such or other provision of this Agreement. This
Agreement sets forth all of the terms of the understandings between the parties
with reference to the subject matter set forth herein and may not be waived,
changed, discharged or terminated orally or by any course of dealing between
the parties, but only by an instrument in writing signed by the party against
whom any waiver, change, discharge or termination is sought.
8. SEVERABILITY
Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective under applicable law. In the
event that any provision, or any portion of any provision, of this Agreement
shall be held to be void and unenforceable, the remaining provisions of this
Agreement, and the remaining portion of any provision found void or
unenforceable in part only, shall continue in full force and effect.
9. ARBITRATION
Any dispute arising under this Agreement shall be submitted
to arbitration in San Xxxx, Puerto Rico under the rules of the American
Arbitration Association.
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10. NOTICES
Any notice or communication required or permitted to be given
hereunder shall be deemed duly given if delivered personally or sent by
registered or certified mail, return receipt requested, to the address of the
intended recipient as herein set forth or to such other address as a party may
theretofore have specified in writing to the other by delivering or mailing in
a similar manner. Any notice or communication intended for DFC shall be
addressed to the attention of its Board of Directors.
11. GOVERNING LAW
This Agreement shall be construed in accordance with the laws
of the Commonwealth of Puerto Rico.
12. MISCELLANEOUS
This Agreement shall be binding upon the successors and
assigns of DFC. This Agreement is personal to you, and you therefore may not
assign your duties under this Agreement. The headings of the Sections of this
Agreement are inserted for convenience only and shall not be deemed to
constitute a part thereof or to affect the meaning hereof.
If the foregoing terms and conditions correctly embody your
mutual understanding with DFC, kindly endorse your acceptance and agreement
therewith in the space below provided, whereupon this shall become a binding
agreement.
Very truly yours,
DORAL FINANCIAL CORPORATION
By: /s/ Xxxxxxx Xxxxx
----------------------------------------
Name: Xxxxxxx Xxxxx
Title: Chairman of the Board and
Chief Executive Officer
Accepted and Agreed to
as of the date first
above set forth:
/s/ Xxxxx Xxxxx
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Xxxxx Xxxxx
