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EXHIBIT 10.70
FIRST FINANCIAL CARIBBEAN CORPORATION
0000 X.X. Xxxxxxxxx Xxxxxx
Xxxxxx Xxxxx, Xxxxxx Xxxx 00000
As of July 1, 1996
Xx. Xxxxx X. Xxxxx
1159 X.X. Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxxxxx Xxxx 00000
Dear Xx. Xxxxx:
We are pleased to detail herein below the provisions of your employment
agreement with First Financial Caribbean Corporation ("FFCC").
1. TERMS OF EMPLOYMENT
The term of this Agreement shall be for a period commencing
retroactively to January 1, 1996 and ending December 31, 1997, unless sooner
terminated as herein provided. This Agreement supersedes and cancels all prior
employment, personal service or similar agreements between you and FFCC and its
subsidiaries, divisions and ventures.
2. POSITION AND RESPONSIBILITIES
You will serve as Executive Vice President and Treasurer of FFCC.
By your acceptance of this Agreement, you undertake to accept such employment
and to devote your full time and attention to FFCC, 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 FFCC,
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 FFCC;
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 of the President of FFCC with respect to your duties,
responsibilities and the exercise of your powers.
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3. COMPENSATION
(a) During the term of this Agreement you shall receive an annual
salary of $275,000 annually, payable in equal monthly payments in accordance
with corporate policy; provided that for calendar year 1996 any amounts paid to
you prior to the execution of this Agreement in excess of such monthly payments
will be deducted from the incentive compensation payable to you pursuant to
Section 3(b) below.
(b) (i) During the term of this Agreement, you shall also be
entitled to receive an annual incentive bonus equal to the sum
of the following:
(1) $275,000 to the extent FFCC earns at least
$10.0 million of Adjusted Net Income (as hereinafter
defined);
(2) 2 1/2% of Adjusted Net Income in excess of
$10.0 million and up to $20.0 million to the extent such
Adjusted Net Income exceeds an amount equal to a 15%
Return on Equity (as hereinafter defined); and
(3) 4% of Adjusted Net Income in excess of $20.0
million, to the extent such Adjusted Net Income exceeds
an amount equal to a 15% Return on Equity Capital;
provided, however, that total salary and incentive compensation payable to you
pursuant to this Agreement shall not exceed $1.2 million per annum.
(ii) The incentive bonus shall be payable annually by
FFCC 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 Executive
Vice President and Treasurer to FFCC 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 FFCC and its
subsidiaries after all taxes (including net income from equity
interests held by FFCC in any other venture and net income of
any successor of FFCC which may be formed by merger,
consolidation or sale of substantially all of the assets of
FFCC) 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 FFCC's published consolidated
financial statements audited by its independent accountants
(hereinafter referred to as "GAAP"), such net income to be
adjusted (A) by reducing from such net income any payments
made pursuant to Section 3(b)(i) hereof and payments of
similar incentive compensation to the Chairman of the Board
and Chief Executive Officer, the President, Senior
Executive Vice President and any other Executive Vice
President of FFCC, and (B) by adding back to such net income
any extraordinary items of income and expense such as merger
related expenses. As used in this Section 3, (1) "Equity
Capital" means FFCC's consolidated Stockholders Equity
including preferred 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 FFCC'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 FFCC sells
its equity securities during the fiscal year, Equity Capital
shall be increased by the net proceeds to FFCC (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 on the date of the closing of such sale and the
denominator of which shall be 365.
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(iii) At the option of FFCC and subject to any
requirements of the National Association of Securities
Dealers or any stock exchange on which FFCC Common Stock
may be listed, up to 50% of the amount payable under
Section 3(b)(i) may be in the form of shares of FFCC
Common Stock. For purposes of computing the number of
shares to be issued, the shares of Common Stock will be
assigned a value equal to the average of last sales
prices of the Common Stock as reported on the NASDAQ
National Market System for the five trading dates
immediately preceding the date of issuance;
(c) You shall be entitled to participate in the other benefit
plans of FFCC upon the terms and conditions on which such benefits are made
available to other officers of FFCC. Nothing herein shall obligate FFCC to
continue any existing benefit plan or to establish any replacement benefit
plan.
(d) You shall be entitled to reimbursement for reasonable travel
and entertainment expenses incurred in connection with the rendering of your
services hereunder. 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.
(e) 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.
(f) No additional compensation shall be due to you for services
performed or offices held in any subsidiary, division, affiliate, or venture of
FFCC.
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 FFCC as to its
business, affairs, earnings or assets, or as to the tax status of the incentive
compensation or the tax consequences of any payment thereof, or otherwise. You
further agree that any action at any time taken by or on behalf of FFCC 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 FFCC, any subsidiary or affiliate of
FFCC 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.
(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 FFCC or any Committee
appointed to consider such matters, or, in the event FFCC 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
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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) FFCC 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 FFCC, (y) conversion to you of an FFCC opportunity, or (z) a
violation of FFCC's conflict of interest policy, in each case as determined in
the sole discretion of the Board of Directors, and (2) in the event FFCC 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 FFCC 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 FFCC or an affiliate of FFCC, you will not,
without the prior written consent of FFCC, (a) accept employment or render
service to any person, firm or corporation, directly or indirectly, in
competition with FFCC, 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 FFCC or any affiliate of FFCC
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 FFCC or any affiliate of FFCC 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 FFCC.
(b) At any time following a "Change in Control" of FFCC, this
Agreement may be terminated by FFCC or you on 30 days' written notice to you or
FFCC, 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 more than 50% of the voting power of
FFCC's voting stock, or (ii) FFCC 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 FFCC 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 FFCC.
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7. REGISTRATION RIGHTS
(a) Upon your written request or requests that FFCC effect a
registration on Form S-3 and any related qualification or compliance with
respect to all or a part of the securities granted to you pursuant to Section
3(b)(iii) hereof (the "Registrable Securities") and other senior executives of
FFCC holding similar registration rights (individually a "Holder" and
collectively, the "Holders"), FFCC will:
(i) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders;
(ii) as soon as practicable, effect such registration and all
such qualifications and compliances as may be so requested and as would permit
or facilitate the sale and distribution of all or such portion of such Holder's
or Holders' Registrable Securities as are specified in such request, together
with all or such portion of the Registrable Securities of any other Holder or
Holders joining in such request as are specified in a written request given
within 15 days after receipt of such written notice from FFCC; provided,
however, that FFCC shall not be obligated to effect any such registration,
qualification or compliance, pursuant to this Section 7: a) if Form S-3 is not
available for such offering by the Holders; b) if the Holders, together with
the holders of any other securities of FFCC entitled to inclusion in such
registration, propose to sell Registrable Securities and such other securities
(if any) at an aggregate price to the public (net of any underwriters'
discounts or commissions) of less than $250,000; c) if FFCC shall furnish to
the Holders a certificate signed by an officer of FFCC stating that in the good
faith judgment of the Board of Directors of FFCC, it would be seriously
detrimental to FFCC and its shareholders for such Form S-3 registration
statement to be filed, in which event FFCC shall have the right to defer the
filing of the Form S-3 Registration Statement for a period of not more than 120
days after receipt of the request of the Holder or Holders under this Section
7; d) if FFCC has, within the 12-month period preceding the date of such
request, already effected two registrations on Form S-3 for the Holders
pursuant to this Section 7; e) if FFCC shall have effected any registration
(other than on S-3 or any successor Form) within the six month period preceding
the date of such request; or f) in any particular jurisdiction in which FFCC
would be required to qualify to do business or to execute a general consent to
service of process in effecting such registration, qualification or compliance;
and
(iii) Subject to the foregoing, FFCC shall file a registration
statement covering the Registrable Securities and other securities so requested
to be registered as soon as practicable after receipt of the request or
requests of the Holders. All expenses incurred in connection with a
registration requested pursuant to this Section 7, including (without
limitation) all registration, filing, qualification, printer's and accounting
fees and the reasonable fees and disbursements of counsel for the selling
Holder or Holders and counsel for FFCC, but excluding any underwriters'
discounts or commissions associated with Registrable Securities, shall be borne
pro rata by the Holder or Holders selling securities pursuant to Form S-3
Registration.
(b) The rights to cause FFCC to register Registrable Securities
pursuant to this Section 7 may not be assigned or transferred in any fashion.
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.
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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 FFCC shall be
addressed to the attention of its Board of Directors.
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
FFCC. 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 FFCC, kindly endorse your acceptance and agreement therewith
in the space below provided, whereupon this shall become a binding agreement.
Very truly yours,
FIRST FINANCIAL CARIBBEAN 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 X. Xxxxx
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Xxxxx X. Xxxxx
