EXHIBIT 10.92
DORAL FINANCIAL CORPORATION
0000 X.X. Xxxxxxxxx Xxxxxx
Xxxxxx Xxxxx, Xxxxxx Xxxx 00000
As of March 5, 2002
Xx. Xxxxxxx X. Xxxxxx
000 Xxxx Xxxxxx Xxxxx
Xxx Xxxx, XX 00000
Dear Xx. Xxxxxx:
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 to 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 agreements between you and DFC and its subsidiaries, divisions and
ventures.
2. POSITION AND RESPONSIBILITIES
You will serve as Senior Executive Vice President, Secretary
and Chief Financial 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.
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 President of DFC with respect to your duties, responsibilities
and the exercise of your powers.
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Page 2
3. COMPENSATION
(a) During the term of this Agreement you shall receive
an annual salary of $400,000 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 (as hereinafter
defined) in excess of a 15% Return on Equity Capital (as
hereinafter defined); provided, however, that total salary
and incentive compensation payable to you pursuant to this
Agreement shall not exceed $625,000 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 such
amount shall only be payable if you shall have served as
Senior Executive Vice 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 deducting from such net income dividends on
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 instrument
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 equity securities 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 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.
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(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 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, except that DFC agrees to pays you as
amount equal to $30,000 per year in lieu of granting you participation in a
company pension plan. This $30,000 payment to be reduced by any matching
contribution made by DFC under any 401-K or profit-sharing plan maintained for
DFC's U.S. based employees. 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"), 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 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, Doral 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 mortgage banking business 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 two
years 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 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
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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 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.
You agree that this Section 6 shall create no additional
rights in you to direct the operations of DFC.
7. MEMBERSHIP ON BOARD OF DIRECTORS. DFC agrees to nominate or
cause you to be nominated for election to DFC's Board of Directors.
8. 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.
9. 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.
10. ARBITRATION
Any dispute arising under this Agreement shall be submitted
to arbitration in New York, New York under the rules of the American
Arbitration Association.
11. 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.
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12. GOVERNING LAW
This Agreement shall be construed in accordance with the laws
of the Commonwealth of Puerto Rico.
13. 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/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
