EMPLOYMENT AGREEMENT
EXHIBIT 99.3
EMPLOYMENT AGREEMENT between DORAL FINANCIAL CORPORATION, a corporation organized under the
laws of the Commonwealth of Puerto Rico (together with its successors and assigns, the “Company”),
and Xxxxxx X. Xxxxxxx (the “Executive”) dated as of March 16, 2009.
WHEREAS, the Board of Directors of the Company (the “Board”) has determined that it is in the
best interests of the Company to employ the Executive on the terms set forth herein;
WHEREAS, the Executive has agreed to be employed by the Company on the terms set forth herein;
WHEREAS, the Executive and the Company wish to set forth the terms and conditions of the
Executive’s employment in this Agreement;
NOW THEREFORE, in consideration of the mutual promises and covenants made herein and the
mutual benefits to be derived from this Agreement, the parties hereto agree as follows:
1. Employment Period. Subject to the terms of this Agreement, the Company hereby
agrees to employ the Executive, and the Executive hereby agrees to serve the Company and its
affiliates, for the period commencing on the Commencement Date (as defined herein) and ending on
the second anniversary of the Commencement Date; provided that the Executive’s employment by the
Company will automatically be extended by twelve (12) additional months on the second anniversary
of the Commencement Date and each annual anniversary thereafter unless either party provides
written notice to the other party no less than sixty (60) days prior to the date of any such
scheduled extension of its or his intention not to extend the term of the Executive’s employment
(the original employment term plus any extension thereof being referred to herein as the
“Employment Period”). For purposes hereof, the Commencement Date means the date the Executive
commences employment with the Company which in all events shall be no later than March 16, 2009.
Notwithstanding the foregoing, the Employment Period shall end on the date on which the Executive’s
employment is terminated by either party in accordance with the provisions of this Agreement.
2. Position and Duties.
(a) During the Employment Period, the Executive shall serve as Executive Vice President —
Chief Financial and Investment Officer at Doral Financial Corporation and shall have such duties
and responsibilities as are commensurate with such
positions. During the Employment Period, the Executive shall report directly to the Chief
Executive Officer of the Company or the Board. Notwithstanding the foregoing, until the Company’s
10K report for the fiscal year ending December 31, 2008 is filed, the Executive shall be Chief
Investment Officer of the Company. As soon as practical following the filingof such 10K report. The
Executive shall be appointed Chief Financial and Investment Officer of the Company.
(b) The Executive’s principal work location, subject to travel on Company business, shall be
the Company’s headquarters in Puerto Rico. Beginning no later than March 16, 2009, and at all
times thereafter during the Employment Period, the primary place of residence of the Executive and
his family shall be Puerto Rico. The Executive’s family will relocate to Puerto Rico by August,
2010.
(c) During the Employment Period, and excluding any periods of vacation and sick leave to
which the Executive is entitled, the Executive agrees to devote his full business attention and
time to the business and affairs of the Company, and to use his best efforts to perform faithfully
and efficiently such responsibilities. During the Employment Period, the Executive shall be
entitled to engage in charitable and educational activities and to manage his personal and family
investments, to the extent such activities are not competitive with the business of the Company or
its affiliates and do not interfere in any way, in the reasonable judgment of the Board (or a
committee thereof), with the performance of his duties for the Company and are otherwise consistent
with the Company’s governance policies.
3. Compensation
(a) Annual Base Salary. During the Employment Period, the Executive shall receive an
annual base salary (“Annual Base Salary”) at a rate of $450,000.00, payable in accordance with the
Company’s normal payroll policies. The Executive’s Annual Base Salary shall be prorated for 2009
and for any other partial year of employment during the Employment Period based upon the portion of
the year that the Executive is employed by the Company. The Executive’s Annual Base Salary shall
be subject to review for increase in the sole discretion of the Board (or a committee thereof).
Annual Base Salary, however, shall not be subject to reduction without the Executive’s prior
written consent.
(b) Annual Bonus. With respect to each fiscal year completed during the Employment
Period, the Executive shall have a target annual bonus opportunity determined by the Executive’s
performance and provided the Company’s financial results are met, equal to 65% of his Annual Base
Salary (“Target Bonus”). The Board shall establish, in its sole discretion, the performance and
payment conditions applicable to such annual bonuses. Any bonus payments due hereunder shall be
payable to the Executive no later than 2 1/2 months after the end of the Company’s taxable year or
the calendar year, whichever is later, in which the Executive is first vested in such bonus
payments for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the
“Internal Revenue Code”).
(c) Stock Options. The Executive shall be eligible to receive two hundred thousand
(200,000) grants of options to purchase shares of common stock of the Company in the sole
discretion of the Board or the compensation committee of the Board.
(d) Additional Compensation:
(i) Car Allowance: After the relocation benefit ends, during the Employment
Period, the Company will provide the Executive with a monthly car allowance under
the Company’s policy of $1,500.00 per month to be used to lease or purchase 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.
(ii) The Executive will receive a one time signing bonus of $150,000.00 in a
lump sum payment upon his hiring date.
(iii) After the relocation benefit ends, the Company shall reimburse the
Executive for cost of housing in the amount of $3,000.00 per month, from
commencement date but in no event longer than twelve (12) months.
(e) Long-Term Incentive Plans. During the Employment Period, the Executive shall be
eligible to participate in the ongoing equity and other long-term awards and programs of the
Company as determined in the sole discretion of the Board or a committee thereof.
(f) Other Benefits and Perquisites. During the Employment Period, the Executive shall
be entitled to participate in the Company’s employee benefit plans, programs and arrangements
(including, without limitation, life, medical and dental insurance, 401(k), and disability
insurance, vacation and sick leave programs) and perquisite programs and arrangements, if any, in
each case, on the same basis as generally provided to other similarly-situated executives of the
Company. In all events, during the Employment Period, the Executive shall be entitled to twenty
(20) days of paid vacation per calendar year (pro-rated for any partial year of employment).
(g) Certain Expenses.
(i) During the Employment Period, the Company shall reimburse the
Executive for all appropriate business expenses in accordance with the terms
of the Company’s policies and procedures in effect from time to time.
(ii) The Company shall reimburse the Executive for the following
relocation expenses: (1) cost of moving household goods and autos from his
current residence to Puerto Rico, (2) cost of up two coach (2) trips from
current residence to Puerto Rico for the Executive and his wife to find
suitable housing, (3) cost of temporary living expenses in Puerto Rico until
the Executive finds suitable housing, but in no event longer than three (3)
months, (4) commissions, fees and closing costs on sale of primary
residence, (5) fees and expenses associated with purchase of home in Puerto
Rico, including mortgage points and other closing costs, and (6) any
federal, Puerto Rico and other taxes payable by Executive on the foregoing
or on the fees paid pursuant to subsection (iii) below.
(iii) Subject to review of time entries and other documentation, the
Company shall pay reasonable legal fees incurred by the Executive in
connection with the negotiation and documentation of this Agreement (and the
preceding term sheet) up to a maximum of $15,000.00.
4. Termination of Employment.
(a) Death or Disability. The Executive’s employment shall terminate automatically
upon the Executive’s death during the Employment Period. In the event of the Executive’s
Disability (as defined in Exhibit A attached hereto), the Company may provide the Executive with
written notice in accordance with Section 12(c) of this Agreement of its intention to terminate the
Executive’s employment due to Disability. In such event, the Executive’s employment with the
Company shall terminate effective on the date the Company sends such notice to the Executive (the
“Disability Commencement Date”); provided that the Executive’s employment hereunder shall
immediately terminate on the first date the Executive incurs a Disability as defined in clause (i)
of the definition of Disability set forth on Exhibit A.
(b) With or Without Cause. The Executive is an employee at will and the Company may
terminate the Executive’s employment either with or without Cause (as defined in Exhibit A attached
hereto). For purposes of this Agreement, a termination “without Cause” shall mean a termination by
the Company of the Executive’s employment other than due to Cause, death or Disability.
(c) With or Without Good Reason. The Executive’s employment may be terminated by the
Executive voluntarily with or without Good Reason (as defined in Exhibit A attached hereto).
(d) Notice of Termination. Any termination of the Executive’s employment by the
Company or the Executive (other than death) shall be communicated by Notice of Termination to the
other party hereto given in accordance with Section 12(c) of this Agreement. For purposes of this
Agreement, a “Notice of Termination” means a written
notice which (i) indicates the specific termination provision in this Agreement relied upon,
(ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive’s employment under the provision so indicated
and (iii) if necessary, specifies the Date of Termination consistent with this Agreement (which
date shall be not more than thirty (30) days after the giving of such notice). The failure by the
Executive or the Company to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the
Company, respectively, hereunder or preclude the Executive or the Company, respectively, from
asserting such fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder.
(e) Date of Termination. “Date of Termination” means (i) if the Executive’s
employment is terminated by the Company for Cause, the date of receipt of the Notice of Termination
or any later date specified therein within thirty (30) days of such notice, as the case may be;
provided that if the event giving rise to a termination for Cause is pursuant to clauses (i), (iv),
(v) or (vi) of the definition of Cause, the date on which there is delivered to the Executive
written notice of the requisite Chief Executive Officer notification as set forth in the definition
of “Cause” in Exhibit A, (ii) if the Executive’s employment is terminated by the Company
without Cause, the date of receipt of the Notice of Termination or any later date specified therein
within thirty (30) days of such notice, as the case may be, (iii) if the Executive’s employment is
terminated by the Executive for Good Reason, 30 days after the Company receives the Notice of
Termination unless the Company has cured the alleged grounds for such termination within 30 days
after such receipt or if the Executive’s employment is terminated by the Executive without Good
Reason, 30 days after the Company receives the Notice of Termination, provided however, in either
case the Company may accelerate the Date of Termination to an earlier date by providing the
Executive notice of such action, and (iv) if the Executive’s employment is terminated by reason of
death or Disability, the date of the Executive’s death or the Disability Commencement Date, as the
case may be.
(f) Resignation. Upon termination of the Executive’s employment for any reason, the
Executive agrees to resign, effective as of the Date of Termination, from any positions that the
Executive holds with the Company and its affiliates, the Board (and any committees thereof) and the
board of directors (and any committees thereof) of any of the Company’s affiliates. The Executive
hereby agrees to execute any and all documentation of such resignations upon request by the
Company, but he shall be treated for all purposes as having so resigned upon termination of his
employment, regardless of when or whether he executes any such documentation, or Executive is
terminated due to his death or Disability.
5. Obligations of the Company upon Termination of Employment.
(a) Good Reason; Without Cause. If, during the Employment Period, the Company
terminates the Executive’s employment without Cause, or the Executive terminates his employment for
Good Reason, or if the Company fails to renew or extend
this Agreement upon expiration of the Employment Period, the Company shall have no further
obligations to the Executive under this Agreement or otherwise other than to pay or provide to the
Executive the following amounts and benefits (provided the Executive has executed, delivered to the
Company and not revoked a general release of claims against the Company in a form satisfactory to
the Company (the “Release”) and subject to Section 8(h) hereof):
(i) An amount equal to Executive’s unpaid Annual Base Salary for
services through the Date of Termination;
(ii) an amount equal to one (1) time his Annual base salary and bonus
actually earned in respect of the preceding year;
(b) Death or Disability. If the Executive’s employment is terminated by reason of the
Executive’s death or Disability during the Employment Period, the Company shall have no further
obligations to the Executive or his legal representatives, as applicable, under this Agreement or
otherwise other than for the payment of the amounts and provision of the benefits set forth below:
(i) payment of Annual Base Salary through the end of the month in which
the Executive’s Date of Termination occurs;
(ii) payment of other amounts, entitlements or benefits, if any, in
accordance with applicable plans, programs, arrangements or other agreements
of the Company.
(c) Cause or Voluntary Resignation Without Good Reason. If the Executive’s employment
shall be terminated by the Company for Cause or by the Executive for any reason other than Good
Reason at any time during the Employment Period, the Company shall have no further obligations to
the Executive under this Agreement or otherwise other than for the payment of the amounts and
provision of the benefits set forth below:
(i) an amount equal to the Executive’s unpaid Annual Base Salary for
services through the Date of Termination;
(ii) for a voluntary resignation (without Good Reason), continued
exercisability for 30 days following the Date of Termination for the portion
of the Stock Option Award or any other equity awards, if any, that was
vested and outstanding as of the Date of Termination (but in no event beyond
the expiration of the original term of the award);
(iii) for a termination for Cause, forfeiture and cancellation of the
Stock Option Award and any other equity awards (whether vested or unvested)
as of the Date of Termination;
(iv) forfeiture and cancellation of the unvested portion of the Stock
Option Award and any other equity awards as of the Date of Termination; and
(v) payment of other amounts, entitlements or benefits, if any, in
accordance with applicable plans, programs, arrangements or other agreements
of the Company.
6. Change in Control Protections.
(a) In the event, during the Employment Period, the Company terminates the Executive’s
employment without Cause or the Executive terminates his employment for Good Reason, in both cases
upon or within two (2) years immediately following a Change in Control, the Company shall have no
further obligations to the Executive under the terms of this Agreement or otherwise other than to
pay or provide to the Executive the following amounts and benefits (provided the Executive has
executed, delivered to the Company and not revoked a general release of claims against the Company
in a form satisfactory to the Company (the “Release) and subject to Section 8(h) hereof):
(i) payment of Annual Base Salary through the end of the month in which
the Executive’s Date of Termination occurs;
(ii) payment of the Severance Payment provided in Section (5)(a)(i)(ii)
above;
(iii) except as may be provided in the Employe Stock Option Agreement
or the Employee Stock Option Plan, full vesting as of the Date of
Termination of the Stock Option Award (as defined in Section 3(c) hereof),
and any other equity awards granted to Executive, with continued
exercisability of the outstanding options for twelve (12) months following
the Date of Termination (but in no event beyond the end of the original term
of the options);
(iv) in all Company medical and dental plans in which the Executive and
his eligible dependents were participating immediately prior to the Date of
Termination until the earlier of (i) the second anniversary of the Date of
Termination and (ii) the date such Executive is or becomes eligible for
comparable coverage under health plans of another employer; and
(v) as long as the Executive uses such services prior to the first
anniversary of the Date of Termination, up to $25,000 in outplacement
services; and
(vi) payments of other amounts, entitlements or benefits, if any, in
accordance with applicable plans, programs, arrangements or other agreements
of the Company.
7. No Duplication; No Mitigation. In no event shall the Executive be entitled to
duplicate payments or benefits under different provisions of this Agreement or pursuant to the
terms of any other plan, program or arrangement of the Company or its affiliates. In the event of
any termination of the Executive’s employment, the Executive shall be under no obligation to seek
other employment, and, there shall be no offset against amounts due the Executive under this
Agreement on account of any remuneration attributable to any subsequent employment except with
respect to the continuation of benefits as provided under Sections 5(a)(iv) and Section 6(b)(iv),
which require termination immediately upon obtaining comparable coverage from another employer.
8. Restrictive Covenants.
(a) Confidentiality. During the Employment Period and thereafter, other than in the
ordinary course of performing his duties for the Company, the Executive agrees that he shall not
disclose to anyone or make use of any trade secret or proprietary or confidential information of
the Company or any affiliate of the Company, including such trade secret or proprietary or
confidential information of any customer or other entity to which the Company owes an obligation
not to disclose such information, which he acquires during the course of his employment, including,
but not limited to, records kept in the ordinary course of business, except when required to do so
by a court of law, by any governmental agency having supervisory authority over the business of the
Company or by any administrative or legislative body (including a committee thereof) with apparent
or actual jurisdiction to order him to divulge, disclose or make accessible such information. In
the event the Executive is requested to disclose information as contemplated in the preceding
sentence, the Executive agrees, unless otherwise prohibited by law, to use his best efforts to give
the Company’s General Counsel prompt written notice of any request for disclosure in advance of the
Executive making such disclosure in order to permit the Company a reasonable opportunity to
challenge such disclosure. The foregoing shall not apply to information that (i) was known to the
public prior to its disclosure by the Executive, or (ii) becomes known to the public through no
wrongful disclosure by or act of the Executive or any representative of the Executive.
(b) Property Rights. Whether during the Employment Period or thereafter, the
Executive agrees to hereby sell, assign and transfer to the Company all of his right, title and
interest in and to all inventions, discoveries, improvements and copyrightable subject matter (the
“Rights”) which during the period of his employment are made or
conceived by him, alone or with others, and which are within or arise out of any general field
of the Company’s business or arise out of any work he performs, or information he receives
regarding the business of the Company, while employed by the Company. The Executive shall fully
disclose to the Company as promptly as available all information known or possessed by him
concerning any Rights, and upon request by the Company and without any further remuneration in any
form to him by the Company, but at the expense of the Company, execute all applications for patents
and for copyright registration, assignments thereof and other instruments and do all things which
the Company may deem necessary to vest and maintain in it the entire right, title and interest in
and to all such Rights. The Executive agrees that at the time of the termination of employment,
whether at the instance of the Executive or the Company, and regardless of the reasons therefor, he
will promptly deliver to the Company’s General Counsel, and not keep or deliver to anyone else, any
and all of the following which is in his possession or control: (i) Company property (including,
without limitation, credit cards, computers, communication devices, home office equipment and other
Company tangible property) and (ii) notes, files, memoranda, papers and, in general, any and all
physical matter and computer files containing confidential or proprietary information of the
Company or any of its affiliates, including any and all documents relating to the conduct of the
business of the Company or any of its affiliates and any and all documents containing confidential
or proprietary information of the customers of the Company or any of its affiliates, except for (x)
any documents for which the Company’s General Counsel has given written consent to removal at the
time of termination of the Executive’s employment and (y) any information necessary for the
Executive to retain for his tax purposes.
(c) Non-Competition. The Executive acknowledges that in his capacity in management
the Executive has had or will have a great deal of exposure and access of the Company’s trade
secrets and confidential and proprietary information. Therefore, during the Executive’s employment
and for twelve (12) months following termination of such employment (whether during the Employment
Period or thereafter) (the “Restricted Period”) (i) the Executive shall protect the Company’s trade
secrets and other confidential and proprietary information, and (ii) the Executive agrees that he
shall not, other than in the ordinary course of performing his duties hereunder or as agreed by the
Company in writing, engage in a “Competitive Business,” directly or indirectly, as an individual,
partner, shareholder, director, officer, principal, agent, employee, trustee, consultant, or in any
relationship or capacity. The Executive shall not be deemed to be in violation of this Section
9(c) by reason of the fact that he owns or acquires, solely as an investment, two percent (2%) or
less of the outstanding equity securities (measured by value) of any publicly traded company.
“Competitive Business” shall mean (x) the Executive’s participation in any unsolicited offer to
purchase the stock or assets of the Company or its affiliates or (y) any financial institution with
a substantial presence in the mortgage origination business in Puerto Rico. Notwithstanding the
foregoing, if the Company provides the Executive with notice that it is not renewing the Employment
Period in accordance with Section 1 hereof, the provisions of this Section 9(c) shall no longer be
effective upon the expiration of the Employment Period.
(d) Non-Interference. The Executive acknowledges that information regarding the
Company’s business and financial relations with its vendors and customers is Confidential
Information and proprietary to the Company and that any interference with such relations based
directly or indirectly on the use of such information would cause irreparable damage to the
Company. The Executive acknowledges that by virtue of his employment with the Company, he has
gained or may gain knowledge of such information concerning the Company’s vendors and customers
(respectively “Vendor Information” or “Customer Information”), and that he would inevitably have to
draw on this Vendor Information and Customer Information and on other Confidential Information if
he were to solicit or service the Company’s vendors or customers on behalf of a competing business
enterprise. Accordingly, and subject to the immediately following sentence, the Executive agrees
that, other than in the ordinary course of performing his duties for the Company, during the
Restricted Period, the Executive will not, on behalf of himself or any other person or entity,
directly or indirectly seek to encourage or induce any vendor or customer of the Company to cease
doing business with, or lessen its business with, the Company, or otherwise interfere with or
damage (or attempt to interfere with or damage) any of the Company’s relationships with its vendors
and customers. No action by another person or entity shall be deemed to be a breach of this
provision unless the Executive directly or indirectly assisted, encouraged or otherwise counseled
such person or entity to engage in such activity.
(e) No Hire; Non-Solicitation. The Executive agrees that, during the Restricted
Period (other than in the ordinary course of performing his duties for the Company), he will not,
without the prior written consent of the Company, directly or indirectly, (i) hire any employee of
the Company or any of its affiliates who is then an employee of the Company or such affiliate or
was an employee during the prior twelve (12) months period, or (ii) solicit or encourage any such
employee to leave the employ of the Company or such affiliate, as the case may be. No action by
another person or entity shall be deemed to be a breach of this provision unless the Executive
directly or indirectly assisted, encouraged or otherwise counseled such person or entity to engage
in such activity.
(f) Public Comment. Following the Employment Period, the Executive shall not at any
time (i) make any public derogatory comment concerning the Company or its affiliates or anyone whom
the Executive knows to be a current or former director, officer, stockholder or employee of the
Company or (ii) without the prior written consent of the Company, which consent shall not be
unreasonably withheld, publish or produce any information or write any book, article, screenplay,
teleplay or similar type of publication relating to the Company or its affiliates or anyone whom
the Executive knows to be a current or former director, officer, stockholder or employee; provided
that no such consent shall be necessary for an academic work relating to Executive’s employment
with the Company. Following the Employment Period, the Company shall not at any time make any
public derogatory comment concerning the Executive. Notwithstanding the foregoing, nothing in this
Section 8(f) shall prohibit any person from (x) responding publicly to incorrect, disparaging or
derogatory public statements about
the Company or the Executive relating to his employment with the Company, (y) providing
truthful testimony in any judicial or administrative matter, or (z) making truthful statements
required by law, by any regulatory authority or organization, or in connection with any public
filing required by the Securities and Exchange Commission or any other regulatory authority.
(g) Blue Penciling. If any restrictions on competitive or other activities contained
in this Section 8 shall for any reason be held by a court of competent jurisdiction to be
excessively broad as to duration, geographical scope, activity or subject, such restrictions shall
be construed so as thereafter to be limited or reduced to be enforceable to the extent compatible
with the applicable law; it being understood that by the execution of this Agreement, (i) the
parties hereto regard such restrictions as reasonable and compatible with their respective rights
and (ii) the Executive acknowledges and agrees that the restrictions will not prevent him from
obtaining gainful employment subsequent to the termination of his employment.
(h) Remedies; Injunctive Relief.
(i) The Executive acknowledges and agrees that the covenants and
obligations of the Executive set forth in this Section 8 relate to special,
unique and extraordinary services rendered by the Executive to the Company
and that a violation of any of the terms of such covenants and obligations
will cause the Company irreparable injury for which adequate remedies are
not available at law. Therefore, the Executive agrees that the Company
shall be entitled to seek an injunction, restraining order or other
temporary or permanent equitable relief (without the requirement to post
bond) restraining the Executive from committing any violation of the
covenants and obligations contained herein. These injunctive remedies are
cumulative and are in addition to any other rights and remedies the Company
may have at law or in equity. The existence of any claim or cause of action
by the Executive against the Company shall not constitute a defense to the
enforcement by the Company of the foregoing restrictive covenants, but such
claim or cause of action shall be determined separately.
(ii) If at any time the Executive materially breaches any of the
covenants in Section 8, and fails to cure such breach within ten (10) days
after receipt of written notice from the Company, then (x) the Company shall
have the right to cease to pay or provide to the Executive any payment,
benefit or entitlement due (or accrued) under this Agreement and (y) the
Executive shall be required to repay to the Company the net after-tax amount
(such after-tax amount to be determined after taking into account tax
deductions, tax credits, and the like attributable to the repayment)
of any severance paid to the Executive under this Agreement. Such
repayment to be made within 15 days after written notice from the Company to
the Executive requesting such repayment.
(iii) If at any time following the Restricted Period but prior to the
second anniversary of the termination of the Executive’s employment, the
Executive takes any action or engages in any conduct that would have
constituted a material breach of Section 8(d) or 8(e) if it had occurred
during the Restricted Period, then clauses (x) and (y) of Section 8(h)(ii)
— as limited by Section 8(h)(ii) — shall apply as if such material breach
had occurred during the Restricted Period.
(i) Survival. The provisions of this Section 8 shall remain in full force and effect
until the expiration of the periods specified herein notwithstanding the earlier termination of the
Executive’s employment hereunder or the expiration of the Employment Period. For purposes of this
Section 8, “Company” shall mean the Company and any affiliate of the Company or any successor
thereto.
9. Mandatory Arbitration. Except to the extent necessary to enforce the provisions of
Section 8 hereof in accordance with Section 8(g) or 8(h), the Executive (on behalf of himself and
his beneficiaries) and the Company agree that any controversy or claim arising out of, or relating
to this Agreement, or the breach thereof, or the Executive’s employment with the Company or any
affiliate, or any termination of such employment, shall be settled by confidential arbitration in
Puerto Rico in accordance with the Commercial Arbitration Rules of the American Arbitration
Association. Any award entered shall be final, binding and nonreviewable except on such limited
grounds for review of arbitration awards as may be permitted by applicable law. Judgment upon the
award rendered by the arbitrator(s) may be entered into any court having jurisdiction thereof.
10. Successors.
(a) This Agreement is personal to the Executive and without the prior written consent of the
Company shall not be assignable by the Executive. This Agreement shall inure to the benefit of and
be enforceable by the Executive’s legal representatives, heirs or legatees.
(b) This Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns. No rights or obligations of the Company under this Agreement may be
assigned or transferred by the Company without the Executive’s prior written consent except that
such rights or obligations may be assigned or transferred pursuant to a merger or consolidation in
which the Company is not the continuing entity, or a sale, liquidation or other disposition of all
or substantially all of the assets of the Company, provided that the assignee or transferee is the
successor to all or substantially all of the assets of the Company and assumes the liabilities,
obligations
and duties of the Company under this Agreement, either contractually or as a matter of law.
11. Miscellaneous.
(a) The Executive represents and warrants that he has the free and unfettered right to enter
into this Agreement and to perform his obligations under it and that he knows of no agreement
between him and any other person, firm or organization, or any law or regulation, that would be
violated by the performance of his obligations under this Agreement. The Executive agrees that he
will not use or disclose any confidential or proprietary information of any prior employer in the
course of performing his duties for the Company or any of its affiliates.
(b) This Agreement shall be governed by and construed in accordance with its express terms,
and otherwise in accordance with the laws of the Commonwealth of Puerto Rico, without reference to
principles of conflict of laws. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise
than by a written agreement executed by the parties hereto or their respective successors and legal
representatives. In the event of any conflict or inconsistency between the provisions of this
Agreement and any other Company plan, program, policy or agreement, the provisions of this
Agreement shall control.
(c) All notices and other communications hereunder shall be in writing and shall be given (i)
when delivered personally (provided that a written acknowledgement of receipt is obtained), (ii)
three (3) days after being sent by certified or registered mail, postage prepaid, return receipt
requested or (iii) two (2) days after being sent by overnight courier (provided that a written
acknowledgement of receipt is obtained by the overnight courier), with any such notice duly
addressed to the party concerned at the address indicated below:
If to the Executive:
|
At the most recent address on file at the Company |
|
If to the Company:
|
At the address of its principal executive offices Attention: General Counsel |
or to such other address as either party shall have furnished to the other in writing in
accordance herewith.
(d) The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement.
(e) The Company may withhold from any amounts payable under this Agreement such federal,
Puerto Rico, state, local or foreign taxes as shall be required to be withheld pursuant to any
applicable law or regulation. In addition, this Agreement is intended to comply with the
requirements of Section 409A of the Code and the regulations promulgated thereunder (“Section
409A”) so as not to subject the Executive to the payment of interest or any additional tax under
Section 409A. In furtherance thereof, if payment or provision of any amount or benefit hereunder
at the time specified in this Agreement would subject such amount or benefit to any additional tax
under Section 409A, the payment or provision of such amount or benefit shall be postponed to the
earliest commencement date on which the payment or the provision of such amount or benefit could be
made without incurring such additional tax (including paying any severance that is delayed in a
lump sum upon the earliest possible payment date which is consistent with Section 409A).
(f) Following the Executive’s termination of employment for any reason (whether during or
after the expiration of the Employment Period), upon reasonable request of the Company, the
Executive shall cooperate with the Company or any of its affiliates with respect to any legal or
investigatory proceeding, including any government or regulatory investigation, or any litigation
or other dispute relating to matters in which he was involved or had knowledge (or reasonably
should have had knowledge) during his employment with the Company, subject to his reasonable
personal and business schedules. The Company shall reimburse the Executive for all reasonable
out-of-pocket travel and meal expenses associated with any cooperation provided hereunder.
(g) No waiver shall be valid unless in writing signed by the party against whom the waiver is
being enforced (that is, by the Executive or an authorized officer of the Company, as the case may
be).
(h) This Agreement contains the entire agreement between the parties concerning the subject
matter hereof and supersedes all prior agreements, understandings, discussions, negotiations and
undertakings, whether written or oral, between the parties with respect thereto (including, without
limitation, the term sheet previously negotiated by the parties). In the event of any
inconsistency between the provisions of this Agreement and the provisions of any other agreement or
plan relating to the Stock Option Award or any other equity award granted to Executive, the
provisions of this Agreement shall control. Any provision of this Agreement, to the extent
necessary to carry out the intent of such provision, shall survive after the expiration of the
Employment Period.
(i) The Executive shall be entitled to indemnification in connection with any litigation or
proceeding arising out of the Executive’s acting as President of the Company’s Consumer Banking
Division and of Doral Bank or as an employee, officer or director of the Company, to the fullest
extent permitted under the Company’s charter and by-laws and by applicable law. In addition, the
Executive shall, during the Employment Period and for ten (10) years thereafter, be entitled to
liability insurance coverage pursuant to a Company-purchased directors’ and officers’ liability
insurance
policy on the same basis as other directors and officers of the Company to whom such coverage
(if any) is then provided.
(j) Notwithstanding any other provision of this Agreement or otherwise, the Company will make
no payment pursuant to this Agreement or otherwise which would be prohibited by 12 USC Section
1828(k) or any implementing regulations thereunder.
(k) This Agreement may be executed in one or more counterparts, each of which shall be deemed
to be an original but all of which together shall constitute one and the same instrument.
Signatures delivered by facsimile shall be effective for all purposes.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day
and year first above written.
| DORAL FINANCIAL CORPORATION |
||||
| By: | /s/ Xxxxxx Xxxxxx | |||
| Name: | Xxxxxx Xxxxxx | |||
| Title: | Executive Vice President | |||
| /s/ Xxxxxx X. Xxxxxxx | ||||
| Xxxxxx X. Xxxxxxx | ||||
EXHIBIT A
For all purposes of this Agreement, the following terms shall have the meanings set forth
below:
“Affiliate” of a person or other entity shall mean a person or other entity controlled by,
controlling or under common control with the person or other entity specified.
“Disability” shall mean (i) the Executive becomes eligible for full benefits under a long-term
disability policy provided by the Company or (ii) the Executive has been unable, due to physical or
mental illness or incapacity, to substantially perform the essential duties of his employment with
reasonable accommodation for a continuous period of ninety (90) days or an aggregate of one-hundred
eighty (180) days during any consecutive twelve (12)-month period.
“Cause” shall mean:
(i) the Executive’s refusal of or demonstration of an unwillingness to
reasonably cooperate in good faith with any Company or government
investigation or provide testimony therein (other than such failure
resulting from Executive’s disability);
(ii) willfully violated his fiduciary duty or his duty of loyalty to
the Company or the Company’s Code of Ethical Business Conduct in any
material respect;
(iii) willful and continued failure to perform his material duties with
respect to the Company or its subsidiaries as provided hereunder which
continues beyond ten (10) days after a written demand for substantial
performance is delivered to Executive by the Company.
(iv) the Executive’s act of fraud, misappropriation, or embezzlement or
other illegal conduct with respect to the Company or any material affiliate;
(v) the Executive’s indictment for, conviction of, or plea of guilty or
no contest to any felony (other than a minor traffic violation) or any
misdemeanor that would preclude employment under the Company’s hiring
policy;
(vi) the Executive’s admission of liability of, or a finding by a court
or the applicable regulatory agency or body of liability for, the violation
of any “Securities Laws” (but excluding any technical violations of any
Securities Laws which are not criminal in nature) or the violation of any
“Banking Laws” (but excluding any
technical violations of any Banking Laws which are not criminal in
nature); as used herein, the term “Securities Laws” means any federal or
state law, rule or regulation governing the issuance or exchange of
securities, including without limitation the Securities Act of 1933, the
Securities Exchange Act of 1934 and the rules and regulations promulgated
thereunder and “Banking Laws” means any federal or state banking law, rule
or regulation governing the Company or its affiliates;
(vii) the Executive engages in conduct that constitutes willful gross
neglect or willful misconduct, in either case, that is likely to or does
result in significant harm to the Company’s or its affiliates’ business or
reputation;
(viii) the Executive’s intentional failure after reasonable prior
written notice from the Company to comply with any valid and legal directive
of the Board; or
(ix) the Executive’s material breach of any covenant set forth in
Section 8 of this Agreement.
Anything notwithstanding to the contrary, the Executive’s employment shall not be terminated
for “Cause” within the meaning of clauses (i), (iv), (v) or (vi) above, unless the Executive has
been given written notice by the Chief Executive Officer stating the basis for such termination and
he is given fifteen (15) days to cure the neglect or conduct that is the basis of any such claim
and he fails to cure such conduct.
“Good Reason” shall mean the occurrence of any of the following without the Executive’s
written consent:
(i) a reduction in the Executive’s then current Annual Base
Salary or target bonus opportunity;
(ii) a material diminution in the Executive’s positions,
including, without limitation, removing the Executive from such
positions (and for the avoidance of doubt, (a) in the event of any
Change in Control of the Company in which the Company becomes a
wholly-owned subsidiary of an entity whose assets prior to such
Change in Control have a fair value that is five (5) times or
greater than the fair value of the assets of the Company prior to
such Change in Control, no material diminution of any of the
foregoing shall be deemed to occur so long as the Executive
continues to be responsible for the same business matters at the
Company for which the Executive was responsible immediately prior to
such Change in Control and (b) no
material diminution of any of the foregoing shall be deemed to
occur solely as a result of a Change in Control);
(iii) Executive’s principal work location is moved more than
twenty-five (25) miles from San Xxxx, Puerto Rico;
(iv) a change in reporting structure so that the Executive
reports to someone other than the Chief Executive Officer of the
Company or the Board; or
(v) the failure of any successor to all or substantially all of
the Company’s assets to assume this Agreement, whether in writing or
by operation of law.
Anything notwithstanding to the contrary, the Executive may only terminate his employment for
“Good Reason” upon thirty (30) days’ written notice to the Company (provided the Company does not
cure the event or events giving rise to Good Reason prior to the expiration of such thirty (30)-day
notice period).
“Change in Control” will be deemed to have taken place if:
(1) all or substantially all of the assets of the Company, Doral
Holdings Delaware, LLC, a Delaware limited liability company (the “Sponsor”)
or Doral Holdings, L.P., a Cayman Islands limited partnership (the “Limited
Partnership”) are sold, liquidated or distributed to a “Person” (within the
meaning of Section 3(a)(9) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), including any group (within the meaning of
Rule 13d-5(b) under the Exchange Act), but excluding any of the Company, any
subsidiary or any employee benefit plan sponsored or maintained by the
Company or any subsidiary) that is not controlled, directly or indirectly,
by the entities (or their affiliates that control such entities) of Bear
Xxxxxxx Merchant Banking III AIV (Cayman), Ltd., Perry Capital, LLC,
Marathon Special Opportunity Master Fund, Ltd., X.X. Xxxx Laminar
Portfolios, L.L.C. and Xxxxxxxxxx Opportunities Partners V, LP
(collectively, the “Sponsoring Entities”); or
(2) there occurs a reorganization, merger, consolidation or other
corporate transaction (a “Transaction”) involving (i) the Company, in each
case, resulting in fifty percent (50%) or more of the common stock of the
Company held by the Sponsor, directly or indirectly, determined on a fully
diluted basis, on the date hereof, being held by a person that is not
controlled, directly or indirectly, by the Sponsoring Entities, (ii) the
Sponsor, in each case, resulting in fifty percent (50%) or more of the
equity interest of the Sponsor,
directly or indirectly, immediately subsequent to the Transaction,
being held by a person that is not controlled, directly or indirectly, by
the Sponsoring Entities or (iii) the Limited Partnership, in each case,
resulting in fifty percent (50%) or more of the equity interest of the
Limited Partnership, directly or indirectly, immediately subsequent to the
Transaction, being held by a person that is not controlled, directly or
indirectly, by the Sponsoring Entities;
if and only if any event listed in (1) or (2) above results in (x) the
inability of the Sponsoring Entities to (directly or indirectly) appoint
and/or elect in combination a majority of the Board of Directors of the
Company or the board of directors of the resulting entity, or (y) Doral GP
Ltd. ceasing to be controlled, directly or indirectly, by the Sponsoring
Entities. Notwithstanding the foregoing, if, in one transaction or a series
of transactions, Sponsor sells 80% or more of the Common Stock held by the
Sponsor on the Effective Date, the Limited Partnership sells 80% or more of
its interests in the Sponsor held by the Limited Partnership on the
Effective Date, or the Sponsoring Entities sell 80% or more of their
interest in the Limited Partnership held by the Sponsoring Entities on the
Effective Date, then a Change in Control shall be deemed to have occurred.
In addition, in the event that any sales of Common Stock by the Sponsor,
sales of interests in the Sponsor by the Limited Partnership, and sales of
interests in the Limited Partnership by the Sponsoring Entities, in the
aggregate, equal or exceed 80% of all such equity interests determined in
relationship to the Common Stock held by the applicable foregoing entities
on the Effective Date, then a Change in Control shall also be deemed to have
occurred.
