EMPLOYMENT CONTRACT
Exhibit 10.10
EMPLOYMENT CONTRACT
This Employment Agreement (“Agreement”) is made and entered into as of this 7 day of November
2005, by and between DORAL FINANCIAL CORPORATION, a Puerto Rico corporation (which together with
any successor thereto, is hereinafter referred to as (the “Company”) and Xxxxxxxx Xxxxxx-Munich
(hereinafter referred to as (the “Employee”). The Company and the Employee are hereinafter
collectively referred to as (the ‘Parties”).
RECITALS
WHEREAS, the Board of Directors of the Company believes that it is in the best interest of
such entity to enter into this Agreement with the Employee in order to assure the services of an
executive with the experience and abilities of the Employee, and
WHEREAS, the Board of Directors of the Company has authorized the execution of this Agreement
with the Employee:
NOW THEREFORE, of the foregoing premises and the mutual covenants herein contained, and for
other good and valuable consideration, the Parties, intending to be legally bound, agree as
follows:
AGREEMENT
| 1. | Employment |
(a) The Employee is hereby employed as Executive Vice-President and General Counsel of the
Company with primary responsibility of managing the Legal Division and all legal matters. The
Employee shall be subject to the supervision of the Chief Executive Officers of the Company and
shall perform the duties proper to such position in an efficient, diligent and effective way. The
Employee will also assist the Company as President of Doral Insurance Agency. The Employee commits
himself to comply faithfully with all policies, norms, orders and duties of the Company and to
attain its administrative and business goals.
(b) The Employee acknowledges that this task requires his full attention and that he needs to
devote all his time, effort and attention to the business affairs of the Company and its
subsidiaries and affiliated companies.
| 2. | Competitive Activities |
(a) In consideration and for having entered into this Agreement, the Employee specifically
agrees that, during the term of his employment hereunder, except with the express consent of the
Board of Directors of the Company, he will not, directly of indirectly, engage or participate in,
become a director of, accept employment from, or render advisory or other services for, or in
connection with, or become interested in, or make any financial investment in any firm,
corporation, business entity or business enterprise competitive with any business of the Company or
any subsidiary or affiliate thereof; provided, however, that the Employee shall not
thereby be precluded or prohibited from owning passive investments, including investments in
the securities of other financial institutions, so long as ownership does not require the Employee
to devote substantial time to the management or control of the business or activities in which the
Employee has invested. The Employee agrees that, because damages for violating the agreements under
this Article are difficult to determine, hereto the Employee consents that a competent court issue
any remedy in equity through a restriction order, injunction, or other similar remedy, to implement
these clauses.
(b) The Employee agrees and acknowledges that, by virtue of the Employee’s employment
hereunder, the Employee will maintain an intimate knowledge of the activities and affairs of the
Company and its subsidiaries, including trade secrets and other confidential matters. As a result,
and also because of the special, unique and extraordinary services that the Employee is capable of
performing for the Company or its competitors, the Employee recognizes that the services to be
rendered by the Employee hereunder arc of a character giving them a peculiar value, the loss of
which cannot be adequately or reasonably compensated for by damages. The Employee therefore agrees
that if he fails to render to the Company any of the services required hereunder, the Company shall
be entitled to immediate injunctive or other equitable relief to restrain the Employee from failing
to render his services hereunder, in addition to any other remedies to which the Company may be
entitled under law: provided, however, that the right to such injunctive or other equitable relief
shall not survive the termination by the Company of the Employee’s employment.
| 3. | Compensation |
(a) Salary: During the term of this Agreement, the Employee shall be entitled to an annual
salary established by the Board of Directors. The annual salary hereunder as of the Commencement
Date (as defined in Section 5 hereof) shall be equal to FOUR HUNDRED THOUSAND DOLLARES ($400,000)
per year.
(b) Discretionary Year-End Bonus: The employee shall also be eligible to receive an annual
year-end bonus, the amount of which is to be fixed, at the discretion of the Board of Directors of
the Company, based on the Employee’s performance during the year as well as any specific goal
assigned to the Employee by the Board of Directors of the Company. For the year 2005 the bonus will
be ONE HUNDRED THOUSAND DOLLARS ($100,000).
(c) Expenses: During the term of the Employee’s employment hereunder, the Employee shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by him in performing
services hereunder, provided that the Employee properly accounts therefore in accordance with the
then existing policy of the Company. Nothing contained herein shall authorize the Employee to make
any political contributions, including but not limited to payments for dinners and advertising in
any political party program or any other payment to any person, which might be deemed a bribe, kick
back or otherwise an improper payment or contribution under existing law or under the Company’s
policy or practice and no portion of the compensation payable hereunder is for such purpose.
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(d) Withholding: Payments of any compensation under this Agreement shall be subject to
reduction by the amount of any applicable federal, Commonwealth of Puerto Rico, state or municipal
income withholding, social security, state disability insurance or similar or other taxes or other
items which may be required or authorized to be deducted by law or custom.
(e) No Additional Compensation: No additional compensation shall be due to the Employee for
services performed of offices held in any other subsidiary, division, affiliate, or venture of the
Company, including, but not limited to, the banking subsidiaries.
(f) Retention Bonus: The Company will grant a Retention Bonus to the Employee upon the
completion of a two (2) year period commencing on October 1, 2005 and concluding on September 30,
2007. The retention bonus will be equal to $50,000 for each year of service rendered, payable in a
lump sum bonus at the end of the two year period. This retention bonus will be paid in addition to
any other incentive or performance bonus that maybe granted to the Employee as a result of his
performance as a key executive of the Company. Shall the employee leave the Company for any reason
before the conclusion of the period herein stated, this retention bonus will not be paid.
| 4. | Benefits |
(a) Participation in Retirement and Employee Benefit Plan:
The Employee shall be entitled while employed hereunder to participate in and received
benefits under, all plans relating to pension, thrift, profit sharing, group life insurance,
education, cash or stock bonuses, and other retirement or employee benefits or combinations
thereof, that are maintained for the benefit of the Company’s executive employees or for its
employees.
(b) Fringe Benefits:
The Employee shall be eligible while employed hereunder to participate in, and receive
benefits under, any other fringe benefits programs which are or may become applicable to the
Company’s executive employees or to its employees.
(c) Medical Coverage:
During the term of this Agreement, the Company shall provide coverage to the Employee under
its medical insurance plan in accordance with its Health Plan policy.
(d) Disability:
If the Employee shall become disabled as defined in the Company’s then current disability plan
or if the Employee shall be otherwise physically unable to serve, the Employee shall be entitled to
receive group and other disability income benefits of the type then provided by the Company for
other executive employees of the Company. However, the Company shall be obligated to pay the
Employee’s compensation pursuant to Section 3(a) and
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(b) hereof only to the extent the Employee’s salary would exceed the short term disability
income benefits received pursuant to this Section. In addition, the Company shall have the right,
upon resolution of its Board of Directors, to discontinue paying cash compensation pursuant to
Section 3(a) and (b) beginning six months following a determination that the Employee qualifies for
the long term disability income benefits.
| 5. | Duration of the Contract |
This Agreement shall remain in force for two (2) consecutive years commencing on October 1,
2005 (the “Commencing Date”) and concluding on September 30, 2007, subject to earlier termination
as provided herein. Unless a sixty (60) day prior notice is given by either party in accordance
with Section 12 of this Agreement, the duration of the contract will be automatically renewed for a
one (1) year period, provided, however, that during this extension the retention bonus provision of
this Agreement will not be in effect.
By mutual agreement, both parties may extend the Agreement hereinafter on a monthly basis.
Proposal for this extension by an interested party should be submitted during the first thirty (30)
of the last sixty (60) days of the duration of this Agreement and, if the other party is in
agreement, a written agreement must be signed extending the Agreement before the expiration date.
| 6. | Right to Resolve the Agreement before its Normal Expiration Date: |
(a) The Employee may resolve this Agreement at any moment before its normal expiration date,
giving the Company a sixty (60) day prior written notification.
(b) The Company may resolve this Agreement at any time before the normal expiration date with
or without just cause. However, any termination by the Company other than termination for cause,
shall not prejudice the Employee’s right to compensation or other benefits under this Agreement.
That is, if the Employee’s employment is involuntarily terminated other than for cause, the Company
shall pay the Employee salary (but shall not be obligated to pay any bonus) and provide the
Employee the same insurance benefits as the Employee was receiving before the date of termination
through the remaining term of this Agreement.
(c) The terms “termination” or “involuntary termination” in this Agreement shall refer to the
termination of the employment of Employee without the Employee’s express written consent.
(d) In case of termination of the Employee’s employment for cause and/or for just cause as
defined herein, the Company shall pay the Employee his salary through the date of termination and
the Company shall have no further obligation to the Employee under this Agreement.
(e) Termination for “cause” or for ‘lust cause” in this Agreement shall include, but shall not
be limited to, personal dishonesty; incompetence; willful misconduct; breach of a fiduciary duty;
conflict of interest; insubordination; failure to perform stated duties;
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willful violation of any state or federal law, rule, or regulation (other than traffic
violations or similar minor offenses) or final cease and desist order; violation of the Company’s
norms, policies and directives; or when some action or omission by the Employee adversely affects
the good and normal operation of the Company.
(f) The Employee may terminate his employment upon a failure of the Company to comply with any
material provision of this Agreement which has not been cured within ten (10) days after a notice
as established herein of such non compliance has been given to the Company by the Employee.
(g) Change in Control of the Company: The Employee may terminate his employment hereunder if a
“change in control” occurs with respect to the Company and shall be entitled to receive as
severance pay an amount equal to the amount of annual salary provided in Section 3(a) herein for
the remaining term of the Agreement which will include an amount equal to the average of the
performance bonuses for the last three (3) years; provided, however, that this amount shall not be
lesser than twelve months of salary. Such payment is to be made in a lump sum on or before the 15th
day following the date of termination.
(h) A “change of control of the Company” shall be deemed to have occurred if:
1. A third party becomes owner of TWENTY-FIVE PERCENT (25%) or more of the
total votes that may be casted in or for the election of the Company’s
directors or, if allowed by the Articles of Incorporation or the Company’s
By-Laws, such a third person can elect and/or elects twenty-five percent
(25%) or more of the Company’s directors; or
2. As a result of, or in connection with, any cash tender or exchange offer,
an offer to buy, a consolidation or merger or other business combination,
sale of assets or contested election, or any combination of the
aforementioned transactions, the persons who were the Company’s directors
before such transaction shall cease to constitute a majority of the
Company’s or its successor’s Board of Directors.
3. A corporate reorganization shall not be deemed a change of control for
purposes of this Agreement.
(i) In the event of the death of the Employee during the term of employment under this
Agreement and prior to any termination hereunder, the Employee’s estate, or such person as the
Employee may have previously designated in writing, shall be entitled to receive from the Company
the salary of the Employee through the last day of the calendar month in which his death shall have
occurred, and the term of employment under this Agreement shall end on such last day of the month.
(j) If the Employee is suspended from office and/or temporarily prohibited from participating
in the conduct of the Company’s or the Bank’s affairs by a notice served
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under Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act (“FDIA”), 12 U.S.C. §
1818(e)(3); (g)(1), the Company’s obligation under this Agreement shall be suspended as of the date
of service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed,
the Company may in its discretion (1) pay the Employee all or part of the compensation withheld
while its obligations under this Agreement were suspended and (2) reinstate in whole or in part any
of its obligations which were suspended.
(k) If the Employee is removed from office and/or permanently prohibited from participating in
the conduct of the Company’s or its banking subsidiaries affairs by an order issued under Section
8(e)(4) or (g)(1) of the FDIA, 12 U.S.C. § l8l8(e)(4) or (g)(1), all obligations of the Company
under this Agreement shall terminate as of the effective date of the order, but vested rights of
the contracting parties hereto shall not be affected.
| 6. | Vacations: |
The Employee shall be entitled, without loss of pay, to absent himself voluntarily from the
performance of his employment under this Agreement, all such voluntary absences to count as
vacation time, provided that:
(a) During the term of employment under this Agreement, the Employee shall be entitled to paid
vacation at least equivalent to 18 working days per year to be taken in accordance with the plans,
policies, programs or practices of the Company as in effect from time to time; and,
(b) The timing of vacations shall be scheduled in a reasonable manner by the Employee subject
to approval by the Chief Executive Officer of the Company.
| 7. | Return of Property |
Upon termination of this Contract, regardless of whether it be for just cause or without just
cause or by decision of any of the parties, the Employee shall return to the Company all Company
property that the Employee may be using to render his services or that may be in his possession,
custody or control.
| 8. | Confidentiality |
The Employee acknowledges that due to the essentially confidential nature and the work and
duties that he shall perform under this Agreement, he shall come to obtain knowledge of data,
issues, plans, strategies and methodologies and other secret and confidential information of the
Company and/or its affiliated companies, in addition to financial information of the Company and/or
the Company’s clients. For those reasons, the Employee commits himself to maintain said information
in the most absolute confidentiality and discretion, and not to reveal or use it for any purpose
during or after the term of this Agreement.
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| 9. | Intellectual Property |
Any task, study, document, idea, design, organizational or operational plan or any other
recommendation or advice offered or performed by the Employee to the Company:
(a) shall not bind the Company but may be adopted or implemented by the Company at its entire
discretion; and
(b) shall constitute and become exclusive property of the Company regardless of whether or not
it is adopted or implemented, free of any copyrights. The Employee, through this document transfers
and cedes to the Company any copyrights regarding said tasks, studies, documents, ideas, designs,
plans, recommendations or advices.
| 10. | Conflict of Interests |
The Employee agrees to notify the Company regarding any circumstance of its businesses or
investments or in his personal life that may create a conflict of interests with the Company. In
the event of a conflict of interest, this shall be construed as just cause for the Company to
cancel this Agreement without ulterior responsibility.
| 11. | No Assignments |
(a) This Agreement is personal to each of the parties hereof;, and neither party may assign or
delegate any of its rights or obligations hereunder without first obtaining the written consent of
the other party: provided, however, that if the Company merges or consolidates into another entity
controlled by it or any affiliate of any of the Company, or enters into a reorganization
transaction in which the shareholders of the Company immediately prior to any such transaction
become the shareholders of the resulting entity, then this Agreement may be transferred to such
resulting entity.
(b) This Agreement and all rights of the Employee hereunder shall inure to the benefit of and
be enforceable by the Employee’s personal and legal representatives, executors, administrators,
successors, heirs, distributes, devisees, and legatees. If the Employee should die while any
amounts would still be payable to the Employee hereunder if the Employee had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Employee’s devisee, legatee or other designee or if there is no such designee, to
the Employee’s state.
| 12. | Notice |
For the purposes of this Agreement, notices and all other communications provided for in the
Agreement shall be in writing and shall be deemed to have been duly given when personally delivered
or sent by certified mail, return receipt requested, postage prepaid, addressed to the last known
respective address of the party hereto (provided that all notices to the Company shall be directed
to the attention of the Chief Executive Officer of the Company with a
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copy to the Secretary of such entity), or to such other address as either party may have
furnished to the other in writing in accordance herewith.
| 13. | Amendments |
No amendments or additions to this Agreement shall be binding unless in writing and signed by
both parties, except as herein otherwise provided.
| 14. | Paragraphs Heading |
The paragraph headings used in this Agreement are included solely for convenience of reference
and shall not affect, or be used in connections with, the interpretation of this Agreement.
| 15. | Severability |
The provisions of this Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity or unenforceability of the other
provisions hereof.
| 16. | Governing Law: |
This Agreement shall be governed by the laws of the Commonwealth of Puerto Rico.
| 17. | Other Matters: |
(a) Any amounts payable hereunder are personal to the Employee and are not transferable or
assignable either by the Employee’s act or by operation of law, and no assignee, trustee in
bankruptcy, receiver or other party whomsoever shall have any right to demand any such amounts or
any other right with respect thereto.
(b) If and when questions arise from time to time as to the intent, meaning or application or
any one or more of the provisions hereof, such questions will be decided by the Board of Directors
of the Company or any committee appointed to consider such matters, or, in the event the Company is
merged into or consolidated with any other corporation, by the Board of Directors (or a committee
appointed by it) of the surviving or resulting corporation, and the decision of such Board of
Directors or committee, as the case maybe, as to what is a fair and proper interpretation of any
provision hereof or thereof shall be conclusive and binding. The Employee understands that payment
of any amounts hereunder, including any bonus, is not held or set aside in trust and that (1) the
Company may seek to retain, offset, attach, or similarly place a lien on such funds in
circumstances where the Employee has been discharged for cause and, in addition, shall be entitled
to do so for (x) malfeasance damaging to the Company, (y) conversion by the Employee of an
opportunity of the Company or (z) a violation of the Company’s conflict of interest policy, in each
case as determined in the sole discretion of the Company’s Board of Directors and (2) in the event
the Company is unable to make any payment under this Agreement
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because of receivership, insolvency, bankruptcy or similar status or proceedings, the Employee
will be treated as a general unsecured creditor of the Company and may be entitled to no priority
under applicable law with respect to such payments.
| 18. | Arbitration |
(a) Any dispute or controversy arising under or in connection with this Agreement shall be
settled exclusively by arbitration in San Xxxx, Puerto Rico, in accordance with the rules of the
American Arbitration Association then in effect. The arbitration award issued by the arbitrator
shall be final and binding, provided it is in accordance to law. The award maybe enforced or
reviewed by any court with jurisdiction.
(b) The party interested in arbitration shall notify the other party not later than ten (10)
days from the date in which the dispute arises. Arbitration costs, including arbitrator fees, shall
be paid in equal parts by the Employee and the Company. Each party shall pay its own attorneys’
fees and the costs related to the preparation and presentation of his evidence.
| 19. | Execution in Counterparts |
This Agreement may be executed in any number of counterparts and by the parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first
above written.
SECTION 18 OF THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY
THE PARTIES.
| DORAL FINANCIAL CORPORATION |
||||
| By: | /s/ XXXX XXXX III | |||
| XXXX XXXX III | ||||
| Chief Executive Officer | ||||
| By: | /s/ XXXXXXXX XXXXXX-MUNICH | |||
| XXXXXXXX XXXXXX-MUNICH | ||||
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