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EXHIBIT 10.36
FIRST FINANCIAL CARIBBEAN CORPORATION
0000 X.X. Xxxxxxxxx Xxxxxx
Xxxxxx Xxxxx, Xxxxxx Xxxx 00000
As of August 29, 1995
Xxx. Xxxxx Xxxxx
0000 X.X. Xxxxxxxxx Xxxxxx
Xxxxxx Xxxxx, Xxxxxx Xxxx 00000
Dear Xxx. 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, 1995 and ending December 31, 1996, 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 President 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 the Board of Directors of FFCC with respect to your duties,
responsibilities and the exercise of your powers.
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As of August 29, 1995
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3. COMPENSATION
(a) During the term of this Agreement you shall receive
an annual salary of $300,000 annually, payable no less often than monthly in
accordance with corporate policy.
(b) (i) During the term of this Agreement, you shall
also be entitled to receive an annual incentive bonus
equal to the sum of the following:
(1) $300,000 if FFCC earns $10.0
million of Adjusted Net Income (as
hereinafter defined);
(2) 3% of Adjusted Net Income in
excess of $10.0 million and up to $20.0
million; and
(3) 5% 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 (as
hereinafter defined);
provided, however, that total salary and incentive compensation payable to you
pursuant to this Agreement shall not exceed $1.5 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 President 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 Senior
Executive Vice President of FFCC, (B) by adding back
to such net income any extraordinary items of income
and expense such as merger related expenses; and (C)
by reducing from such net income any reductions to
FFCC net worth not reflected in FFCC's consolidated
income statement for such fiscal year or period. 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 Capi-
tal" 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
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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.
(iii) At the option of FFCC, 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, Doral or any other
person or party by reason thereof.
(b) The incentive compensation is personal to you and,
except as provided as contemplated in Section 3(b) above, in the event of your
death or incapacity, is not transferable or assignable either
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As of August 29, 1995
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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
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.
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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 (other than the Cullman & Ernst group or any member thereof)
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.
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
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its shareholders for such Form S-3 registration statement, 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.
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.
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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:
Title:
Accepted and Agreed to as of the
date first above set forth:
/s/ Xxxxx Xxxxx
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Xxxxx Xxxxx
