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EXHIBIT 10.65
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
this 25th day of February, 1998, by and among DORAL FINANCIAL CORPORATION, a
Puerto Rico corporation (which, together with any successor thereto, is
hereinafter referred to as the "Company") and XXXXXXXXX X. XXXX (the
"Employee").
WHEREAS, the Board of Directors of the Company believes that it is in
the best interests of each such entity to enter into this Agreement with the
Employee in order to assure the services of an executive with the experience and
abilities of the Employee; and
WHEREAS, the Board of Directors of the Company has authorized the
execution of this Agreement with the Employee;
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein contained, it is agreed as
follows:
1. Employment. (a) The Employee is hereby employed as an Executive Vice
President of the Company with primary responsibility for supervising banking
operations, relations with holding company and banking regulators and strategic
expansion of such operations within and outside Puerto Rico. The Employee shall
also assist the Company as directed by the Chief Executive Officer of the
Company, with capital raising initiatives, maintaining relationships with
shareholders, lenders, investors and government sponsored mortgage agencies as
well as with helping oversee the implementation of corporate-wide programs to
address year 2000 issues. The Employee shall have such other powers and duties
as may from time to time may be prescribed by the Board of Directors of the
Company. In the performance of such duties the Employee shall report to the
Chairman of the Board and Chief Executive Officer of the Company.
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(b) To the extent requested to do so by the Board of Directors
of Doral Bank (the "Bank"), the Employee also agrees to serve as an officer
and/or directors of the Bank and to serve on the Asset and Liability,
Management, Compliance, Credit, Electronic Data Processing and CRA Committees of
the Bank and to otherwise, provide assistance on regulatory matters and
strategic planning.
(c) The Employee shall devote his best efforts and
substantially all business time and attention to the business and affairs of the
Company and its subsidiaries and affiliated companies.
2. Competitive Activities.
(a) The Employee agrees that during the term of his employment
hereunder, except with the express consent of the Board of Directors of the
Company, he will not, directly or indirectly, engage or participate in, become a
director of, accept employment from, 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 any business of the Company (which for purposes of this Section 2 includes
any subsidiaries of the Company) or the Bank; provided, however, that the
Employee 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 the management or control of the business or activities in
which he has invested.
(b) The Employee agrees and acknowledges that, by virtue of
his employment hereunder, he will maintain an intimate knowledge of the
activities and affairs of the Company and its subsidiaries, including trade
secrets and other confidential matters. As a result, and also because of the
special, unique and extraordinary
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services that the Employee is capable of performing for the Company and the Bank
or their competitors, the Employee recognizes that the services to be rendered
by him hereunder are of a character giving them a peculiar value, the loss of
which cannot be adequately or reasonably compensated for by damages. The
Employee therefore agrees that if he fails to render to the Company any of the
services required hereunder, the Company shall be entitled to immediate
injunctive or other equitable relief to restrain the Employee from failing to
render his services hereunder, in addition to any other remedies to which the
Company may be entitled under law; provided, however, that the right to such
injunctive or other equitable relief shall not survive the termination by the
Company of the Employee's employment.
3. Compensation.
(a) Salary. During the term of this Agreement, the Employee
shall be entitled to an annual salary established by the Board of Directors. The
annual salary hereunder as of the Commencement Date (as defined in Section 5
hereof) shall be equal to $120,000. The Employee's salary shall be payable not
less frequently than bi-weekly. Any adjustments in salary or other compensation
shall in no way limit or reduce any other obligation of the Company hereunder.
The Employee's salary in effect hereunder from time to time shall not thereafter
be reduced.
(b) Discretionary year-end Bonus. The Employee shall also be
eligible an receive to annual year-end bonus, the amount of which is to be
fixed, at the discretion of the Board of Directors of the Company, based on the
goals assigned to the Employee by the Board of Directors of the Company. The
bonus, if any to be payable within 30 days of the filing by the Company of its
Annual Report on Form 10-K with the Securities and Exchange Commission.
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(c) Automobile. The Company will provide the Employee with a
monthly car allowance of $750.00 to be used to lease an automobile for use in
the affairs and business of the Company and to cover related gasoline and
insurance expenses related to the use of such automobile.
(d) Expenses. During the term of his employment hereunder, the
Employee shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by him in performing services hereunder, provided that the
Employee properly accounts therefor in accordance with the then existing policy
of the Company. Nothing contained herein shall authorize the Employee 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, kick-back or otherwise an improper
payment or contribution under existing law or under the Company's policy or
practice and no portion of the compensation payable hereunder is for such
purpose.
(e) Withholding. Payments of any compensation under this
Agreement shall be subject to reduction by the amount of any applicable federal,
Commonwealth of Puerto Rico, 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.
(f) No additional Compensation. No additional compensation
shall be due to Employee for services performed of offices held in any other
subsidiary, division, affiliate, or venture of the Company, including, but not
limited to, the Bank.
4. Benefits.
(a) Participation in Retirement and Employee Benefit Plans.
The Employee shall be entitled while employed hereunder to
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participate in, and receive benefits under, all plans relating to pension,
thrift, profit-sharing, group life insurance, education, cash or stock bonuses,
and other retirement or employee benefits or combinations thereof, that are
maintained for the benefit of the Company's executive employees or for its
employees generally and that are made available to employees located in the
continental United States.
(b) Fringe Benefits. The Employee shall be eligible while
employed hereunder to participate in, and receive benefits under, any other
fringe benefits programs which are or may become applicable to the Company's
executive employees or to its employees generally and that are made available to
employees located in the Continental United States.
(c) Medical Coverage. During the term of this Agreement, the
Company shall provide coverage to the Employee under the Company's existing
medical insurance plan.
5. Term. The term of employment under this Agreement shall be a
period of twenty-four months commencing on February 25, 1998 (the "Commencement
Date") and ending on February 25, 2000, subject to earlier termination as
provided herein.
6. Vacations. The Employee shall be entitled, without loss of
pay, to absent himself voluntarily from the performance of his employment under
this Agreement, all such voluntary absences to count as vacation time, provided
that:
(a) During the term of employment under this Agreement, the
Employee shall be entitled to paid vacation equivalent to 18 working days to be
taken in accordance with the plans, policies, programs or practices of the
Company as in effect from time to time; and
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(b) The timing of vacations shall be scheduled in a reasonable
manner by the Employee subject to approval by the Chief Executive Officer of the
Company.
7. Termination of Employment; Death.
(a) The Company may terminate the Employee's employment at any
time, but any termination by the Company other than termination for cause, shall
not prejudice the Employee's right to compensation or other benefits under this
Agreement. If the employment of the Employee is involuntarily terminated, other
than for "cause" as provided in this Section 7(a) or by reason of death or
disability as provided in Sections 7(c) or 8, the Company shall pay the Employee
his salary (but shall not be obligated to pay any bonus) and provide to the
Employee the same insurance benefits as he was receiving before the date of
termination through the remaining term of this Agreement.
The terms "termination" or "involuntarily terminated" in this
Agreement shall refer to the termination of the employment of Employee without
his express written consent.
In case of termination of the Employee's employment for cause,
the Company shall pay the Employee his salary through the date of termination,
and the Company shall have no further obligation to the Employee under this
Agreement. For purposes of this Agreement, termination for "cause" shall include
termination for personal dishonesty, incompetence, willful misconduct, breach of
a fiduciary duty, insubordination, failure to perform stated duties, willful
violation of any law, rule, or regulation (other than traffic violations or
similar minor offenses) or final cease-and-desist order, or material breach of
any provision of this Agreement.
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(b) (i) The Employee's employment may be terminated by the
Employee upon a failure of the Company to comply with any material provision of
this Agreement, which failure has not been cured within ten (10) days after a
notice pursuant to Section 10 of such non-compliance has been given by the
Employee to the Company.
(ii) The Employee may terminate his employment hereunder if a
"change in control" occurs with respect to the Company.
For purposes of this Agreement, a "change in control of the
Company" shall be deemed to have occurred if (i) any "person" (as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") or successor provisions to such sections in the event such
sections have been superseded), becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing more than 50% of the combined voting power of the Company's
then outstanding securities, or (ii) as a result of, or in connection with, any
cash tender or exchange offer, merger or other business combination, sale of
assets or contested election, or any combination of the foregoing transactions
(a "Transaction"), the persons who were directors of the Company before the
Transaction shall cease to constitute a majority of the Board of Directors of
the Company or any successor of the Company.
If the Employee shall terminate his employment pursuant to
this subsection 7(b)(ii) following a change of control of the Company, the
Company shall pay as severance to Employee an amount equal to the amount of
annual salary provided in Section 3(a) hereof for the remaining term of the
Agreement; such payment to be made in a lump sum on or before the 15th day
following the date of termination.
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(c) In the event of the death of the Employee during the term
of employment under this Agreement and prior to any termination hereunder, the
Employee's estate, or such person as the Employee may have previously designated
in writing, shall be entitled to receive from the Company the salary of the
Employee through the last day of the calendar month in which his death shall
have occurred, and the term of employment under this Agreement shall end on such
last day of the month.
(d) If the Employee is suspended from office and/or
temporarily prohibited from participating in the conduct of the Company's or the
Bank's affairs by a notice served under Section 8(e)(3) or (g)(1) of the Federal
Deposit Insurance Act ("FDIA"), 12 U.S.C. ?1818(e)(3); (g)(1), the Company's
obligations under this Agreement shall be suspended as of the date of service,
unless stayed by appropriate proceedings. If the charges in the notice are
dismissed, the Company may in its discretion (i) pay the Employee all or part of
the compensation withheld while its obligations under this Agreement were
suspended and (ii) reinstate in whole or in part any of its obligations which
were suspended.
(e) If the Employee is removed from office and/or permanently
prohibited from participating in the conduct of the Company's or the Bank's
affairs by an order issued under Section 8(e)(4) or (g)(1) of the FDIA, 12
U.S.C. ?1818(e)(4) or (g)(1), all obligations of the Company under this
Agreement shall terminate, as of the effective date of the order, but vested
rights of the contracting parties hereto shall not be affected.
8. Disability. If the Employee shall become disabled as
defined in the Company's then current disability plan or if the Employee shall
be otherwise physically unable to serve, the Employee shall be entitled to
receive group and other disability income benefits of the type then provided by
the Company for other
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executive employees, of the Company. However, the Company shall be obligated to
pay the Employee compensation pursuant to Sections 3(a) and (b) hereof only to
the extent the Employee's salary would exceed the disability income benefits
received pursuant to this Section. In addition, the Company shall have the
right, upon resolution of its Board of Directors, to discontinue paying cash
compensation pursuant to Sections 3(a) and (b) beginning six months following a
determination that the Employee qualifies for the foregoing disability income
benefits.
9. No Assignments. (a) This Agreement is personal to each of
the parties hereof, and neither party may assign or delegate any of its rights
or obligations hereunder without first obtaining the written consent of the
other party; provided, however, that if the Company merges or consolidates into
another entity controlled by it or any affiliate of any of the Company, or
enters into a reorganization transaction in which the shareholder of the Company
immediately prior to any such transaction become the shareholders of the
resulting entity, then this Agreement maybe transferred to such resulting
entity.
(b) This Agreement and all rights of the Employee hereunder
shall inure to the benefit of and be enforceable by the Employee's personal and
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Employee should die while any
amounts would still be payable to the Employee hereunder if the Employee had
continued to live, all such amounts (including that portion of the 1996 bonus
which was earned but defined pursuant to Section 3(c)(ii) hereof), unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Employee's devisee, legatee or other designee or if there is no
such designee, to the Employee's estate.
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10. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered or sent by certified
mail, return receipt requested, postage prepaid, addressed to the last known
respective address of the party hereto (provided that all notices to the Company
shall be directed to the attention of the Chief Executive Officer of the Company
with a copy to the Secretary of such entity), or to such other address as either
party may have furnished to the other in writing in accordance herewith.
11. Amendments. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties, except as herein otherwise
provided.
12. Paragraph Headings. The paragraph headings used in this Agreement
are included solely for convenience of reference and shall not affect, or be
used in connection with, the interpretation of this Agreement.
13. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or unenforceability of the other provisions hereof.
14. Governing Law. This Agreement shall be governed by the laws of the
Commonwealth of Puerto Rico.
15. Other Matters. (a) Except as provided in Section 9(b), any amounts
payable hereunder are personal to the Employee and are not transferable or
assignable either by the Employee's act or by operation of law, and no assignee,
trustee in bankruptcy, receiver or other party whomsoever shall have any right
to demand any such amounts or any other right with respect thereto.
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(b) 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 the Company or any
committee appointed to consider such matters, or, in the event the Company 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 shall be conclusive and binding up. The Employee understands that
payment of any amounts hereunder, including any bonus, is not held or set aside
in trust and that (1) the Company may seek to retain, offset, attach or
similarly place a lien on such funds in circumstances where the Employee has
been discharged for cause and, in addition, shall be entitled to do so for (x)
malfeasance damaging to the Company, (y) conversion by the Employee of an
opportunity of the Company, or (z) a violation of the Company's conflict of
interest policy, in each case as determined in the sole discretion of the
Company's Board of Directors and (2) in the event the Company is unable to make
any payment under this Agreement because of receivership, insolvency, bankruptcy
or similar status or proceedings, the Employee will be treated as a general
unsecured creditor of the Company and may be entitled to no priority under
applicable law with respect to such payments.
16. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
San Xxxx, Puerto Rico, in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award in
any court having jurisdiction.
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17. Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
SECTION 16 OF THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION
WHICH MAY BE ENFORCED BY THE PARTIES.
DORAL FINANCIAL CORPORATION
By: /S/ Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx
Chairman of the Board and
Chief Executive Officer
/S/ Xxxxxxxxx X. Xxxx
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Xxxxxxxxx X. Xxxx
