EMPLOYMENT AGREEMENT
EXHIBIT 10.1
AGREEMENT dated May 06, 2009 and effective May 11, 2009 by and between FIRST BANCORP (the
“Company”) and Xxxxxxx Xxxxxx-Xxxxxxxx (or “X. Xxxxxx”).
WHEREAS, the Company wishes to retain the services of X. Xxxxxx and the retention of X.
Xxxxxx’ services for and on behalf of the Company and FirstBank Puerto Rico (the “Bank”) is of
material importance to the preservation and enhancement of the value of the Company’s and the
Bank’s business;
WHEREAS, the Board of Directors of the Company has approved and authorized the execution of
this Agreement with X. Xxxxxx to take effect as of the date above written.
WHEREAS, the parties desire to enter into this Agreement setting forth the terms and
conditions of the employment relationship of the Company, the Bank and X. Xxxxxx;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements
herein, the parties agree as follows:
1. Employment. The Company agrees to employ X. Xxxxxx and X. Xxxxxx agrees to the employment
by the Company for the period stated in Paragraph 4 hereof and subject to the other terms and
conditions herein provided.
2. Position and Responsibilities. The Company hereby employs X. Xxxxxx as Executive Vice
President and shall carry out and render to the Company and to the Bank such services as are
customarily performed by persons holding a similar corporate title. X. Xxxxxx shall also perform
such other related duties as he may from time to time be reasonably directed in writing, including,
but not limited to performing duties for the Company, the Bank and other subsidiaries of the
Company. X. Xxxxxx shall report to the Chief Executive Officer of the Company. In the absence of
the Chief Executive Officer, X. Xxxxxx shall report to the Chief Operating Officer or any other
officer designated by the Board of Directors. Notwithstanding the foregoing, the Board of
Directors of the Company or the Bank may delegate or assign specific tasks to X. Xxxxxx, provided
that the assignment clearly sets for the priority of the task, and whether it takes precedence over
other duties and obligations of X. Xxxxxx.
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3. Duties. During the period of employment hereunder, and except for illness, vacation
periods, and leaves of absence, X. Xxxxxx shall devote his business time, attention, skill, and
efforts to the faithful performance of his duties as provided herein as is customary for an
executive holding a similar position in a financial institution of comparable size.
X. Xxxxxx agrees that, during the term of his employment hereunder, 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 that directly competes with the Company or its
subsidiaries in Puerto Rico; provided, however, that X. Xxxxxx 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 of any such firm, corporation, business
entity or enterprise.
4. Term. The initial term of employment under this Agreement shall be for a period of three
(3) years, commencing on May 11, 2009 and terminating on May 11, 2012. On each anniversary of the
date of commencement of this Agreement, the term of the 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. X. Xxxxxx shall perform his duties and responsibilities under this Agreement,
in accordance with such reasonable standards as established from time to time by the Board of
Directors and/or management of the Company and conveyed in writing to X. Xxxxxx. The
reasonableness of such standards shall be measured against standards for executive performance
generally prevailing in the financial 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
Company.
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6. Compensation and Reimbursement of Expenses.
a) Compensation
The Company agrees to pay X. Xxxxxx during the term of this Agreement a base salary of not
less than $600,000 a year.
b) Performance Bonus
In addition to the base salary set forth above, X. Xxxxxx shall be entitled to a performance
bonus determined on the basis of his achievement of the predetermined business objectives contained
in the Company’s annual business plan in connection with the areas of endeavor assigned to X.
Xxxxxx. The contribution of X. Xxxxxx to the achievement of the Company’s annual business
objectives and his performance in such other functions, as may be reasonably assigned under his
charge, will be evaluated by the Chief Executive Officer who will recommend to the Compensation and
Benefits Committee (the “Compensation Committee”) payment of a performance bonus in an amount which
the Compensation Committee, and ultimately the Board of Directors, may determine at their
discretion.
c) Long-Term Incentive Compensation Benefits
X. Xxxxxx shall be entitled to participate in and receive the benefits of any stock-based
award, or other benefits and privileges granted to employees and executives of the Company or its
subsidiaries and affiliates which now exist or may come into existence hereafter, to the extend
commensurate with his then assigned duties and responsibilities, as recommended by the Compensation
Committee and approved by the Board of Directors. The terms and conditions of such benefit will be
within the parameters set forth in the now existing 2008 First BanCorp Omnibus Incentive Plan or
any other similar plan which may come into existence hereafter under which a benefit or privilege
is made available to X. Xxxxxx.
d) Automobile Expenses
The Company shall provide X. Xxxxxx with a company owned automobile. Such automobile will be
furnished in accordance with the existing executive automobile policy as approved by the Board of
Directors, provided however that the approved initial vehicle cost shall be no greater than
$65,000. All expenses, including but not limited to insurance, maintenance, repairs, fuel, and
lubrication services, shall be provided by the Bank.
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e) Reimbursement of Expenses
Not less frequently than monthly, the Company shall pay or reimburse X. Xxxxxx for all
reasonable travel and other expenses incurred by X. Xxxxxx in the performance of his duties under
this Agreement.
f) Club Membership
The Company will pay for the initiation fees and annual dues of a club membership to be
designated by X. Xxxxxx during the term of this Agreement or any renewal thereof.
g) Office
The Company shall furnish X. Xxxxxx with a private office, a private secretary and such other
assistance and accommodations as shall be suitable to the character of X. Xxxxxx’ position with the
Company and adequate for the performance of his duties hereunder.
7. Participation in Benefit Plans. The payment and benefits provided in this Agreement are
independent and separate of any payment and benefits to which X. Xxxxxx may be or may become
entitled to under any other present or future group employee benefit plan or insurance programs of
the Company for which executives of the Company and or its subsidiaries are or shall become
eligible, and X. Xxxxxx shall be eligible to receive all benefits and entitlements for which said
executives are eligible under every such plan or program.
8. Voluntary Absences; Vacations and Sick Leave. X. Xxxxxx 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 voluntarily absences shall count either
as paid vacation time or sick leave, unless otherwise provided by the Board of Directors. X.
Xxxxxx shall be entitled to an annual paid vacation of eighteen (18) working days per every twelve
(12) month period, or such longer periods as the Board of Directors may approve, which vacations
shall be scheduled by X. Xxxxxx with the prior approval of the Chief Executive Officer, taking into
account the needs of the Company. X. Xxxxxx may accumulate unused paid vacation time from twelve
(12) month period to the next; provided that such accumulation shall not exceed eighteen (18)
working days of unused vacation time from prior twelve (12) month periods. X. Xxxxxx shall be
entitled to up to fifteen (15) non-cumulative working days of paid sick leave for each twelve (12)
month period or such longer non-cumulative working days as the Board of
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Directors may approve. Upon termination of employment with or without cause, or for any reason,
the Company shall pay all accrued and unused vacation days, at the highest rate of salary earned by
X. Xxxxxx, during his tenure.
9. Benefits Payable Upon Disability or Death. The Company shall, at all times, maintain in
effect disability and death benefits insurance for the benefit of X. Xxxxxx 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 Company for all officers and employees. Provided that the Company may increase,
but never decrease the benefits which X. Xxxxxx and/or X. Xxxxxx’ heirs would be entitled to
thereunder.
10. Termination of Employment.
(a) Without cause. The Board of Directors may, without cause, terminate this
Agreement at any time, by giving ninety (90) days written notice to X. Xxxxxx. In such event, X.
Xxxxxx, 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, X. Xxxxxx shall be paid on the
date of termination a severance payment equal to the annual base compensation amount to which X.
Xxxxxx would be entitled to under this Agreement prorated to cover the remaining balance of the
three (3) year term.
X. Xxxxxx may, without cause, terminate the Agreement by giving ninety (90) days written
notice to the Board of Directors. In such event, X. Xxxxxx 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.
(b) With Cause: The Board of Directors may, at any time, terminate this Agreement for
cause. In such event, X. Xxxxxx shall not be entitled to receive any further compensation from the
date of notice of termination. The notice of termination shall be in writing, shall set forth the
date of delivery to X. Xxxxxx, and the effect of termination shall not be retroactive to a date
prior to delivery of such notice. For the purpose of this Agreement, “termination for cause” shall
include any act or omission on the part of X. Xxxxxx which involves personal dishonesty, willful
misconduct, material 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 X. Xxxxxx to perform the duties herein set forth. No act or
failure to act on X. Xxxxxx part shall be considered “willful” unless done, or omitted to be
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done, not in good faith and without reasonable belief that his action or omission was in the best
interest of the Company. For purposes of this paragraph, any act or omission to act on the part of
X. Xxxxxx in reliance upon an opinion of counsel, outside auditor or advisor to the Company or to
X. Xxxxxx 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 Company.
X. Xxxxxx may, with cause, terminate this Agreement. For purposes of this section, termination
with cause shall mean a failure of the Company to comply with any material provision of this
Agreement, which failure has not been cured within fifteen (15) days of receipt of a written notice
by X. Xxxxxx of such noncompliance by the Company.
Either party may submit for arbitration, as provided in Section 21 of this Agreement, among
other matters, any controversy that may arise with regard to the cause for termination that is set
forth in the written notice of termination provided by the Board of Directors or X. Xxxxxx, as the
case may be.
(c) If X. Xxxxxx is suspended and/or prohibited from participating in the conduct of the
Company’s affairs by a notice or order served under Section 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 the future, the Company’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 X. Xxxxxx from participating in the affairs of the
Company is confirmed, then this Agreement shall be terminated with cause. If the charges in the
notice or order are dismissed, the Company shall: (i) pay X. Xxxxxx 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) In the event that X. Xxxxxx is terminated or he terminates this Agreement, in a manner
which violates the provisions of this Section 10, as determined by the arbitration procedure
provided in Section 21, X. Xxxxxx or the Company, as the case may be, shall be entitled to
reimbursement for all reasonable costs, including attorney’s fees, incurred by X. Xxxxxx or the
Company, as the case may be, in challenging such termination.
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11. Change in Control:
(a) In the event, within two years following a “change in control” of the Company, as such
term is defined in Sub-section (b) hereunder, the executives employment is terminated by the
Company without cause or there is a construct of termination without cause, X. Xxxxxx shall be
entitled to receive from the Company a severance payment in consideration of having bound himself
to employment by the Company and having foregone other business or professional opportunities,
actual or potential. The severance payment shall be a lump sum cash payment equal to three (3)
times the base annual compensation, plus three (3) times the highest cash Performance Bonus paid
to X. Xxxxxx in any of the three (3) fiscal years prior to the date of the change in control, and
(ii) the value of any other benefits provided to X. Xxxxxx during the year in which the termination
without cause occurs. Payment of the amounts set forth in this section 11(a) shall be made on or
before the fifth day following the date on which the executive is terminated without cause. If the
change of control occurs during the course of the first year and the performance bonus has not been
paid, the payment hereunder shall be three (3) times the base annual compensation plus three (3)
times $100,000 and the value of any other benefits provided to X. Xxxxxx during the year in which
the termination without cause occurs.
(b) 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 Company having 25% or more of the total number of votes which
may be cast for the election of directors of the Company or which, by cumulative voting, if
permitted by the Company’s charter or bylaws, would enable such third person to elect 50% or more
of the directors of the Company; 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 person who were directors of the Company
before such transaction shall cease to constitute a majority of the Board of the Company or any
successor institution.
(c) Any payment made to X. Xxxxxx pursuant to this Agreement are subject to and conditioned
upon their compliance with 12 USC 1828(k) and any regulations promulgated thereunder. The Company
through 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 X. Xxxxxx pursuant to the
terms of this Agreement.
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12. Confidentiality; Injunctive Relief: Recognizing that the knowledge and information
about, or relationships with, the business associates, customers, clients, and agents of the
Company and its affiliated companies and the business methods, systems, plans, and policies of the
Company and of its affiliated companies which X. Xxxxxx will receive, obtain, or establish as an
employee of the Company or otherwise are valuable and unique assets of the Company, X. Xxxxxx
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 Company, any material
or substantial, confidential, or proprietary know-how, data, or information pertaining to the
Company, or its business, personnel, or plans, to any person, firm, corporation, or other entity,
for any reason or purpose whatsoever. X. Xxxxxx acknowledges and agrees that all memoranda, notes,
records, and other documents made or complied by X. Xxxxxx or made available to X. Xxxxxx
concerning the Company’s business shall be the Company’s exclusive property and shall be delivered
by X. Xxxxxx to the Company upon expiration or termination of this Agreement or at any other time
upon the request of the Company.
The provision of this Section 13 shall survive the expiration or termination of this Agreement
or any part thereof, without regard to the reason therefore.
X. Xxxxxx hereby acknowledges that the services to be rendered by him are of special,
unique, and extraordinary character and, in connection with such services he will have access to
confidential information concerning the Company’s business. By reason of this, X. Xxxxxx consents
and agrees that if he violates any of the provisions of this Agreement with respect to
confidentiality, the Company would sustain irreparable harm and, therefore, in addition to any
other remedies which the Company may have under this Agreement or otherwise, the Company will be
entitled to an injunction to be issued by any court of competent jurisdiction restraining X. Xxxxxx
from committing or continuing any such violation of this Agreement. The term “Confidential
Information” means: (i) proprietary information of the Company; (2) information marked or
designated by the Company as confidential; (3) information, whether or not in written form and
whether or not designated as confidential, which is known to X. Xxxxxx as treated by the
Company as confidential; and (4) information provided to the Company by third parties which the
Company is obligated to keep confidential, specifically including customer lists and information.
Confidential
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information does not include any information now or hereafter voluntarily disseminated
by the Company to the public, or which otherwise becomes part of the public domain through lawful
means.
13. 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 X. Xxxxxx all his
rights to receive payments hereunder shall become rights of his estate.
14. Benefits. Any benefits due or provided hereunder to X. Xxxxxx shall be in addition to,
and not in substitution of, any benefit to which X. Xxxxxx is otherwise entitled to without regard
to the Agreement.
15. Mitigation. X. Xxxxxx 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 Company’s obligation to
make the payments and arrangements required to be made under this Agreement.
16. 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 Company at his regular
corporate office, or X. Xxxxxx in person; or
(b) Five days after depositing such notice in the United States mails, certified mail with
return receipt requested and postage prepaid at:
| i. | the Company: C/O Office of the Secretary of the Company First BanCorp Puerto Rico XX Xxx 0000 Xxxxxxxx, XX 00000-0000 |
||
| ii. | Xxxxxxx Xxxxxx-Xxxxxxxx XX XXX 000000 Xxx Xxxx XX, 00000-0000 |
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or to such other address as either party may designate to the other by notice in writing in
accordance with the terms hereof.
17. 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 Company shall be required in
order for the Company to authorize any amendments or additions to this Agreement, to give any
consent or waivers of provisions of this Agreement, or to take any other action under this
Agreement including any termination of the employment of X. Xxxxxx with or without cause under
Section 10 hereof.
18. Sections Headings. The Section 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.
19. 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 hereto.
20. 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 Court of First Instance, San Xxxx Superior Part for the Commonwealth of
Puerto Rico, in the case of state court jurisdiction, or in the U.S. District Court for the
District of Puerto Rico, in the case of federal court jurisdiction.
21. Arbitration. Any controversy as to the interpretation of this Agreement 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.
22. Reimbursement of Legal Expenses. The Company agrees to reimburse X. Xxxxxx for all
reasonable legal fees incurred by him in connection with the negotiation, drafting and execution of
this Agreement.
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23. Miscellaneous.
(a) The Company has entered into agreements with the U.S. Department of the Treasury (the
“Treasury”) under which the Company issued preferred shares (“Preferred Shares”) and other
securities to the Treasury as part of the Troubled Assets Relief Program Capital Purchase Program
(“CPP”) established under the Emergency Economic Stabilization Act of 2008 (“EESA”). Pursuant to
the Company’s participation in the CPP, the Company is also subject to certain provision of the
America Reinvestment and Recovery Act of 2009 (“ARRA”).
(b) EESA and ARRA impose certain restrictions on employment agreements, severance,
bonus and incentive compensation, stock awards, and other compensation and benefit plans and
arrangements (the “Plans”) maintained by the Company, the Bank and other subsidiaries of the
Company and requires that such restrictions remain in place for so long as the Treasury holds any
debt or equity securities issued by the Company. The parties hereby agree that all Plans providing
benefits to X. Xxxxxx shall be construed and interpreted at all times that the Treasury maintains
any debt or equity investment in the Company in a manner consistent with EESA and ARRA, and all
such Plans shall be deemed to have been amended as determined by the Company so as to comply with
the restrictions imposed by EESA and ARRA. Notwithstanding any other terms of this Agreement or any
other Plan providing benefits to X. Xxxxxx, to the extent that any provision of this Agreement or
any other Plan is determined by the Company, to be subject to and not in compliance with EESA and
ARRA, including the timing, amount or entitlement of X. Xxxxxx to any payment of severance, bonus
or any other amounts, such provisions shall be interpreted and deemed to have been amended to
comply with the terms of EESA, ARRA and the rules and regulations thereunder. The parties hereto
further agree that (i) X. Xxxxxx shall at no time be entitled to receive any compensation based
upon incentives that encourage X. Xxxxxx to take unnecessary and excessive risks on behalf of Bank
or the Company; (ii) the Bank shall recover from X. Xxxxxx any bonus or incentive compensation paid
to X. Xxxxxx based on statements of earnings, gains, or other criteria that are later proven to be
materially inaccurate; (iii) the limitations imposed herein under paragraph (b) shall apply during
the period that the Treasury holds an equity or debt position in the Company pursuant to the
provision of Section 101(a) of the Emergency Economic Stabilization Act of 2008.
(c) Any severance from employment or golden parachute payment not paid to X. Xxxxxx as a
result of the provisions of paragraph (b) above shall be paid to X. Xxxxxx within a period no
longer than ten (10) business days following the date upon which the Treasury no longer holds an
equity or
debt position in the Company or any applicable legislation has been subsequently amended to
otherwise
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permit these payments (the “Deferred Payment Date”) irrespective of X. Xxxxxx being an
employee of the Company on the Deferred Payment Date.
| FIRST BANCORP PUERTO RICO |
||||
| By: | /s/ Xxxx X. Xxxxxxxxx | |||
| Xxxx X. Xxxxxxxxx, | ||||
| President & Chief Executive Officer | ||||
ATTEST :
|
/s/ Xxxxxxxx Xxxxx | |||
| Xxxxxxxx Xxxxx |
| EXECUTIVE |
||||
| By: | /s/ Xxxxxxx Xxxxxx- Xxxxxxxx | |||
| Xxxxxxx Xxxxxx-Xxxxxxxx | ||||
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