Employment Agreement

Amendment to Employment Agreement

Amendment 2 to Employment Agreement

 

 

 

 

EMPLOYMENT AGREEMENT

 

 

 

         AGREEMENT,  dated as of February  24,  1998,  by and between  FIRSTBANK

PUERTO RICO (the "Bank") and Aurelio Aleman (the "Executive").

 

         WHEREAS,  the Bank wishes to retain the services of the  Executive  and

the  retention of the  Executive's  services for and on behalf of the Bank is of

material  importance to the  preservation  and  enhancement  of the value of the

Bank's business;

 

         WHEREAS, the Board of Directors of the Bank has approved and authorized

the entry into this Agreement with the Executive to take effect immediately upon

execution of the same;

 

         WHEREAS , the parties desire to enter into this Agreement setting forth

the terms and  conditions  of the  employment  relationship  of the Bank and the

Executive;

 

         NOW,  THEREFORE,  in  consideration  of the  foregoing  and the  mutual

covenants and agreements herein, the parties hereto agree as follows:

 

         1. Employment.  The Bank agrees to continue to employ the Executive and

the  Executive  agrees to continue in the  employment of the Bank for the period

stated in  Paragraph  4 hereof and upon the other  terms and  conditions  herein

provided.

 

     2. Position and Responsibilities. The Executive is employed as an Executive

Vice President,  and shall carry out and render to the Bank such services as are

customarily   performed  by  persons   situated  in  a  similar   executive  and

professional  capacity.  The  Executive  shall also perform  such other  related

duties as he/she may from time to time be reasonably  directed,  including,  but

not  limited  to  performing  duties  for the Bank or for any of its  present or

future  subsidiaries.  The  Executive  shall report to the  President  and Chief

Executive  Officer of the Bank,  or to any Executive  Officer  designated by the

President or the Board of Directors.

 

         3. Duties.  During the period of employment  hereunder,  and except for

illness, vacation periods, and reasonable leaves of absence, the Executive shall

devote his/her  business  time,  attention,  skill,  and efforts to the faithful

performance of his/her duties hereunder as is customary for an executive holding

a similar position in a financial institution of comparable size.

 

            The  Executive  agrees  that  during the term of his/her  employment

hereunder, except with the express consent of the Board of Directors he/she will

not,  directly or  indirectly,  engage or  participate,  become  director of, or

render  advisory  or other  services  for,  or in  connection  with,  or  become

interested  in,  or make any  financial  investment  in any  firm,  corporation,

business entity or business  enterprise  competitive  with or to any business of

the Bank; provided,  however,  that the Executive shall not thereby be precluded

or prohibited  from owning  passive  investments,  including  investments in the

securities of other financial  institutions,  so long as such ownership does not

require  him/her  to devote  substantial  time to  management  or control of the

business or activities in which he/she has invested.

 

         4. Term. The initial term of employment  under this Agreement  shall be

for a period of four (4) years,  commencing  on the date hereof and  terminating

February 24,  2002.  On each  anniversary  of the date of  commencement  of this

Agreement,  the term of employment hereunder shall automatically be extended for

an additional  one (1) year period beyond the then  effective  expiration  date,

unless either party receives written notice,  not less than 90 days prior to the

anniversary  date,  advising  the other party that this  Agreement  shall not be

further extended.  Any such written notice shall not affect any prior extensions

of the term of employment hereunder.

 

         5.   Standards.   The  Executive   shall  perform  his/her  duties  and

responsibilities  under  this  Agreement  in  accordance  with  such  reasonable

standards as are established  from time to time by the Board of Directors and/or

management of the Bank. The  reasonableness  of such standards shall be measured

against standards for executive  performance generally prevailing in the banking

industry.

 

                  Notwithstanding  anything  to the  contrary,  nothing  in this

Agreement  will be  interpreted  in any  manner  which  would  tend to  limit or

interfere with the authority or oversight  duties and discretion of the Board of

Directors to establish adequate  guidelines for the effective  management of the

Bank.

         6.       Compensation and Reimbursement of Expenses.

 

                  a)       Compensation

 

     The Bank agrees to pay the  Executive  during the term of this  Agreement a

base salary of not less than $200,000 per year. The performance of the Executive

shall be reviewed  annually by the Board of  Directors  and the salary  provided

herein  may  be  increased,   but  not   decreased,   in  accordance   with  the

recommendation of the Compensation  Committee.  The salary provided herein shall

not be paid less frequently than monthly.

 

                  b)       Performance Bonus

 

     In addition to the salary set forth above, the performance of the Executive

and of the Bank during each year of  employment  shall be evaluated on the basis

of the Bank's achievement of the predetermined  business objectives contained in

the Bank's  annual  business  plan.  The  contribution  of the  Executive to the

achievement of the Bank's annual business  objectives and his/her performance in

such other  functions as may be  reasonably  put under his/her  charge,  will be

evaluated by the President and Chief Executive  Officer who may recommend to the

Compensation  Committee  payment of a  performance  bonus in an amount which the

Compensation Committee may determine at its discretion.

 

                  c)       Stock Options

 

     The Executive  will be entitled to  participate in and receive the benefits

of any stock option,  profit  sharing,  or other plans,  benefits and privileges

given to employees and executives of the Bank or its subsidiaries and affiliates

which now exist or may come into existence hereafter, to the extent commensurate

with  his/her  then duties and  responsibilities,  as fixed by the  Compensation

Committee  and approved by the Board of Directors.  The terms and  conditions of

such stock options will be within the parameters set forth in the employee stock

option plan of the Bank or other similar plan under which a benefit or privilege

is made available.

 

                  d)       Automobile Expenses.

 

     (i) The Bank shall provide the Executive  with a company owned  automobile.

Such  automobile  will  be  furnished  in  accordance  with  existing  executive

automobile policy as approved by the Board of Directors. All expenses, including

but not  limited to  insurance,  maintenance,  repairs,  fuel,  and  lubrication

services, shall be provided by the Bank.

 

     (ii)  Monthly  or not more than  thirty  (30) days after the  expenses  are

incurred,  the Bank shall pay or reimburse the  Executive for any gasoline,  oil

and  maintenance or repair  expenses which the Executive  incurs directly in the

operation of the automobile provided hereunder.

 

                  e)       Reimbursement of Expenses.

 

     Not less  frequently  than  monthly,  the Bank shall pay or  reimburse  the

Executive for all reasonable travel and other expenses incurred by the Executive

in the performance of his duties under this Agreement.

 

                  f)       Office.

 

     The Bank shall  furnish  the  Executive  with a private  office,  a private

secretary and such other assistance and  accommodations  as shall be suitable to

the  character of the  Executive's  position  with the Bank and adequate for the

performance of his/her duties hereunder.

 

         7.  Participation in Benefit Plans. The payments and benefits  provided

hereunder are in addition to any payment and benefits to which  Executive may be

or may become entitled under any other present or future group employee  benefit

plan or program of the Bank for which  executives are or shall become  eligible,

and the Executive shall be eligible to receive all benefits and entitlements for

which the executives are eligible under every such plan or program.

 

         8. Voluntary Absences; Vacations and Sick Leave. The Executive shall be

entitled,  without loss of pay, to absent  himself  voluntarily  for  reasonable

periods of time from the  performance of his duties and  responsibilities  under

this Agreement.  All such voluntary absences shall count either as paid vacation

time or sick leave,  unless  otherwise  provided by the Board of Directors.  The

Executive  shall be entitled to an annual paid  vacation of 18 working  days per

year,  or such  longer  periods as the Board of  Directors  may  approve,  which

vacations  shall be scheduled by the  Executive  with the prior  approval of the

President and Chief Executive Officer or any other officer to whom the Executive

reports, taking into account the needs of the Bank. The Executive may accumulate

unused paid  vacation time from one calendar  year to the next;  provided,  that

such accumulation  shall not exceed 36 working days of unused vacation time from

prior years. The Executive shall be entitled to up to 15 non-cumulative  working

days of paid sick leave per year or such longer period as the Board of Directors

may approve.

 

         9. Benefits  Payable Upon  Disability or Death.  The Bank shall, at all

times,  maintain  in effect  disability  and death  benefits  insurance  for the

benefit of the  Executive  in an amount at least  equal to that  maintained  for

executives  of similar rank and which will not be less than that  maintained  by

the Bank for all officers and employees. Provided that the Bank may increase but

never decrease the benefits  which the Executive  and/or the  Executive's  heirs

would be entitled to thereunder.

 

         10.      Disability.

 

                 (a) If the Executive  shall become  disabled or  incapacitated

for a number of consecutive  days exceeding those to which he/she is entitled as

sick-leave,  and it is determined  that he/she will continue to  temporarily  be

unable to perform his/her duties under this Agreement, he/she shall nevertheless

continue to receive 60% of his/her compensation, exclusive of any benefits which

may be in effect for Bank employees  under Paragraph 7 hereof until such time as

he/she  may  rejoin  active  employment.  Upon  returning  to active  duty,  the

Executive's  full   compensation  as  set  forth  in  this  Agreement  shall  be

reinstated.  In the event that the  Executive  returns to active  employment  on

other  than a  full-time  basis,  then  his/her  compensation  (as set  forth in

Paragraph 6 of this Agreement)  shall be reduced in proportion to the time spent

in said employment.

 

     (b) For purposes of this  Agreement,  the  Executive  shall be deemed to be

permanently  disabled  or  incapacitated  if the  Executive,  due to physical or

mental  illness,  shall  have been  absent  from his  duties  with the Bank on a

full-time  basis  for  three  consecutive  months.  In such  case,  the Board of

Directors  may remove  the  Executive  from  employment  and may employ  another

executive in such  capacity;  provided,  that, if the Executive  shall not agree

with a determination to remove him/her because of disability or incapacity,  the

question of the Executive's  ability to continue in active  employment  shall be

submitted to an impartial and reputable physician selected by the parties hereto

and such  physician's  determination on the question of disability or incapacity

shall  be  binding.  If it is  determined  that  the  Executive  is  permanently

disabled,   he/she  shall  nevertheless  continue  to  receive  60%  of  his/her

compensation for the remaining term of this Agreement.

 

     (c)  There  shall  be  deducted  from  the  amounts  paid to the  Executive

hereunder during any period of disability or incapacitation as described herein,

any amounts actually paid to the Executive pursuant to any disability  insurance

or other similar such program, as provided in Paragraph 9 hereof, which the Bank

has  instituted  or may  institute on behalf of its employees for the purpose of

compensating the Executive in the event of disability.

 

         11.      Termination of Employment.

 

                  (a) Without cause.  The Board of Directors may, without cause,

terminate  this  Agreement at any time, by giving 90 days written  notice to the

Executive. In such event, the Executive, if requested by the Board of Directors,

shall continue to render  his/her  services,  and shall be paid his/her  regular

salary up to the date of termination.  In addition,  the Executive shall be paid

from the date of  termination a severance  payment of four (4) years base salary

(less all amounts required to be withheld and deducted), such payment to be made

in substantially  equal semimonthly  installments on the fifteenth and last days

of each month, or if these days are nonbusiness days, the immediately  preceding

business day,  commencing with the month in which the date of termination occurs

and continuing for 24 consecutive semimonthly payment dates.

 

     The Executive may, without cause, terminate the Agreement by giving 90 days

written  notice to the Board of Directors.  In such event,  the Executive  shall

continue to render his/her  services and shall be paid his/her regular salary up

to the date of termination,  but shall not receive any severance payment. In the

event that the Executive  terminates  his/her  agreement without cause, the Bank

shall be entitled to enjoin the  employment  of the  Executive  as an officer or

employee of any significant competitor of the Bank for a period of one year. The

term "significant  competitor" shall mean any bank,  savings bank or savings and

loan association  which at the date of its employment of the Executive has total

assets of one billion dollars or more and a home or branch office in any city in

Puerto  Rico.   In   consideration   of  the   Executive   entering   into  this

non-competition  agreement,  he/she  shall  receive an amount of  $50,000  which

amount is for  purposes of this  Agreement  included as part of the  Executive's

base salary. (b) With Cause. The Board of Directors may, at any time,  terminate

this Agreement for cause. In such event,  the Executive shall not be entitled to

receive any further compensation from the date of notice of termination. For the

purpose of this  Agreement,  "termination  for cause"  shall  include any act or

omission  on the  part of the  Executive  which  involves  personal  dishonesty,

willful  misconduct,  breach of fiduciary duty, a material violation of any law,

rule or regulation  relating to the banking industry or a material breach of any

provision of this  Agreement,  such as the willful and continued  failure of the

Executive  to perform the duties  herein set forth.  No act or failure to act on

the Executive's part shall be considered "willful" unless done, or omitted to be

done,  by him/her not in good faith and without  reasonable  belief that his/her

action or omission  was in the best  interest of the Bank.  For purposes of this

paragraph,  any act or omission to act on the part of the  Executive in reliance

upon an opinion of counsel to the Bank or to the  Executive  shall not be deemed

to be willful or without  reasonable  belief that the act or omission to act was

in the best interest of the Bank. The Executive may, with cause,  terminate this

Agreement.  For purposes of this paragraph,  termination with cause shall mean a

failure of the Bank to comply with any  material  provision  of this  Agreement,

which  failure has not been cured within 15 days of receipt of a written  notice

by the  Executive of such  noncompliance  by the Bank.  (c) If the  Executive is

suspended  and/or  prohibited  from  participating  in the conduct of the Bank's

affairs by a notice or order served under Sections 8(e)(3),  (e)(4) or (g)(1) of

the Federal Deposit Insurance Act [12 USC 1818(e)(3), (e)(4) and (g)(1)], or any

other  similar  provision  of state or  federal  law now in place or  enacted in

future, the Bank's obligations under this Agreement shall be suspended as of the

date of  service,  unless  such  prohibition  and/or  suspension  is  stayed  by

appropriate  proceedings.  If after a hearing is held and upon judicial  review,

the  notice  or  order   suspending   and/or   prohibiting  the  Executive  from

participating in the affairs of the Bank is confirmed, then this Agreement shall

be terminated  with cause.  If the charges in the notice or order are dismissed,

the Bank shall:  (i) pay the Executive all the  compensation  withheld while the

contractual  obligations were suspended and (ii) reinstate, in whole or in part,

any of the obligations which were suspended.  (d) If the Bank is in default,  as

defined to mean an  adjudication or other official  determination  of a court of

competent  jurisdiction,  the appropriate Federal banking agency or other public

authority pursuant to which a conservator,  receiver or other legal custodian is

appointed for the Bank for the purpose of  liquidation,  all  obligations  under

this  Agreement  shall  terminate  as of the date of default,  but rights of the

Executive  to  compensation  earned as of the date of  termination  shall not be

affected. (e) In the event that the Executive is terminated or he/she terminates

this Agreement,  in a manner which violates the provisions of this Paragraph 11,

as  determined  by the  arbitration  procedure  provided  in  Paragraph  21, the

Executive or the Bank,  as the case may be,  shall be entitled to  reimbursement

for all reasonable costs,  including  attorney's fees, incurred by the Executive

or the Bank, as the case may be, in challenging such termination. 

 

     12. Change in Control.  (a) If during the term of this Agreement there is a

"change in control" of the Bank,  as such term is defined in  sub-paragraph  (c)

hereunder,  the Executive shall be entitled to receive from the Bank a severance

payment in  consideration  of having bound himself to employment by the Bank and

having  foregone  other  business  or  professional  opportunities,   actual  or

potential.  The severance payment shall be a lump sum cash payment equal to four

(4) times the Executive's total compensation,  as the term is defined in Section

12(b) of this  Agreement,  to be made on or before the fifth day  following  the

date on which the change in control  occurs.  (b) For purposes of this  section,

the term total  compensation  shall mean the  Executive's  base  salary plus the

highest  cash  Performance  Bonus paid to the  Executive  in any of the four (4)

fiscal  years prior to the date of the change in  control,  and the value of any

other benefits  provided to the Executive during the year in which the change in

control  occurs which are listed and attached  hereto as Exhibit A, as it may be

amended from time to time.  (c) The term "change in control"  shall be deemed to

have  taken  place if:  (i) a third  person,  including  a "group" as defined in

Section 13(d)(3) of the Securities  Exchange Act of 1934, becomes the beneficial

owner of shares  of the Bank  having  25% or more of the  total  number of votes

which  may be cast  for the  election  of  directors  of the Bank or  which,  by

cumulative  voting,  if permitted by the Bank's charter or bylaws,  would enable

such third person to elect 25% or more of the  directors of the Bank; or (ii) as

the result of, or in connection with, any cash tender or exchange offer,  merger

or any other business combination, sales of assets or contested election, or any

combination of the foregoing transactions, the persons who were directors of the

Bank before such  transaction  shall cease to constitute a majority of the Board

of the Bank or any successor institution. Notwithstanding the provisions of this

paragraph,  a change in control of the Bank shall not be deemed to have occurred

in the  event  the  Bank  undertakes  a  reorganization  to form a bank  holding

company.  (d) Any payments made to the Executive  pursuant to this Agreement are

subject to and  conditioned  upon their  compliance  with 12 USC 1828(k) and any

regulations promulgated thereunder. The Bank shall in good faith seek to obtain,

if necessary or required,  any consents or approvals  from the FDIC or any other

applicable  regulatory  agency and any  successors  thereto  with respect to any

payments to be made or any benefits to be provided to the Executive  pursuant to

the terms of this Agreement.

 

     13. Confidentiality;  Injunctive Relief. Recognizing that the knowledge and

information about, or relationships  with, the business  associates,  customers,

clients,  and agents of the Bank and its  affiliated  companies and the business

methods,  systems,  plans,  and  policies  of the  Bank  and  of its  affiliated

companies which Executive has heretofore and shall hereafter receive, obtain, or

establish as an employee of the Bank or otherwise are valuable and unique assets

of the Bank, the Executive agrees that, during the continuance of this Agreement

and  thereafter,  he/she shall not  (otherwise  than pursuant to his/her  duties

hereunder)  disclose  without the written  consent of the Bank,  any material or

substantial,   confidential,  or  proprietary  know-how,  data,  or  information

pertaining  to the Bank, or its business,  personnel,  or plans,  to any person,

firm,  corporation,  or other  entity,  for any  reason or  purpose  whatsoever.

Executive acknowledges and agrees that all memoranda,  notes, records, and other

documents  made  or  compiled  by  Executive  or  made  available  to  Executive

concerning the Bank's business shall be the Bank's exclusive  property and shall

be delivered by Executive to the Bank upon  expiration  or  termination  of this

Agreement or at any other time upon the request of the Company.  The  provisions

of this  Paragraph  13 shall  survive  the  expiration  or  termination  of this

Agreement or any part thereof, without regard to the reason therefor.  Executive

hereby  acknowledges that the services to be rendered by him/her are of special,

unique,  and  extraordinary  character  and, in connection  with such  services,

he/she  will have  access to  confidential  information  concerning  the  Bank's

business.  By reason  of this,  Executive  consents  and  agrees  that if he/she

violates   any  of  the   provisions   of  this   Agreement   with   respect  to

confidentiality,  the Bank would sustain  irreparable  harm and,  therefore,  in

addition to any other  remedies  which the Bank may have under this Agreement or

otherwise,  the Bank will be entitled to an injunction to be issued by any court

of  competent   jurisdiction   restraining  the  Executive  from  committing  or

continuing  any  such  violation  of  this  Agreement.  The  term  "Confidential

Information"  means:  (1)  proprietary  information of the Bank; (2) information

marked or designated by the Bank as confidential;  (3)  information,  whether or

not in written  form and whether or not  designated  as  confidential,  which is

known  to the  Executive  as  treated  by the  Bank  as  confidential;  and  (4)

information provided to the Bank by third parties which the Bank is obligated to

keep confidential,  specifically  including Bank customer lists and information.

Confidential  Information  does not include  any  information  now or  hereafter

voluntarily  disseminated by the Bank to the public,  or which otherwise becomes

part of the  public  domain  through  lawful  means. 

 

     14. No  assignments.  This  Agreement  is  personal  to each of the parties

hereto.  Neither  party  may  assign  or  delegate  any of his or its  rights or

obligations  hereunder  without first obtaining the written consent of the other

party.  However,  in the event of the death of the  Executive  all his rights to

receive payments hereunder shall become rights of his estate.

 

     15. Benefits. Any benefits due or provided hereunder to the Executive shall

be in  addition  to,  and not in  substitution  of,  any  benefit  to which  the

Executive  is  otherwise  entitled  to  without  regard  to the  Agreement.

 

     16.  Mitigation.  The  Executive  shall  not be  obligated  to  seek  other

employment in mitigation of the amounts payable or  arrangements  made under any

provision of this  Agreement,  and the  obtaining  of any such other  employment

shall in no event  effect any  reduction  of the Bank's  obligation  to make the

payments and arrangements required to be made under this Agreement.

 

     17.  Notices.  All notices  required by this  Agreement  to be given by one

party to the  other  shall  be in  writing  and  shall be  deemed  to have  been

delivered either:

 

     (a) When personally delivered to the Office of the Secretary of the Bank at

his regular corporate office, or the Executive in person; or

 

     (b) Five days after  depositing  such  notice in the United  States  mails,

certified mail with return receipt requested and postage prepaid, to:

 

                           (i)      the Bank:

                                    c/o Office of the Secretary of the Bank

                                    FirstBank Puerto Rico

                                    PO Box 9146

                                    Santurce, PR 00908-0146

 

                           (ii)     the Executive:

 

                                    Mr. Aurelio Aleman

                                    Calle San Paolo #4

                                    Monte Alvernia

                                    Guaynabo, PR  00969

 

or to such other address as either party may designate to the other by notice in

writing in accordance with the terms hereof.

 

         18.  Amendments  or  Additions;   Action  by  Board  of  Directors.  No

amendments or additions to this Agreement shall be binding unless in writing and

signed by both parties.  The prior approval by a two-thirds  affirmative vote of

the full Board of  Directors of the Bank shall be required in order for the Bank

to authorize any amendments or additions to this Agreement, to give any consents

or waivers of  provisions of this  Agreement,  or to take any other action under

this Agreement including any termination of the employment of the Executive with

or without cause under Paragraph 10 hereof.

 

         19. Section Headings. The Paragraph headings used in this Agreement are

included solely for  convenience and shall not affect,  or be used in connection

with, the interpretation of this Agreement.

 

     20.  Severability.  The  provisions  of  this  Agreement  shall  be  deemed

severable and the  invalidity  or  unenforceability  of any provision  shall not

affect the validity or enforceability of the other provisions hereof.

 

         21.  Governing Law. This Agreement shall be governed by the laws of the

Commonwealth  of Puerto Rico.  Venue for the  litigation  of any and all matters

arising  under or in  connection  with this  Agreement  shall be in the Superior

Court for the  Commonwealth  of Puerto Rico,  in San Juan,  in the case of state

court jurisdiction, when clause 21 of this Agreement is not legally applicable.

 

         22.  Arbitration.  Any  controversy  as to the  interpretation  of this

contract  must be  submitted  before  three  arbitrators  to be appointed by the

American  Arbitration  Association ("AAA"). The rules and regulations of the AAA

shall  govern the  procedures  of said  arbitration.  The award of a majority of

arbitrators shall be binding and final on the parties.

 

 

                                                          FIRSTBANK PUERTO RICO

 

 

 

                                                  /S/ German Malaret   

                                                 ---------------------------

                                                              Chairman

 

ATTEST:/s/ Angel Alvarez-Perez   

- - ----------------------------------

 

 

                                                 EXECUTIVE: /s/Aurelio Aleman  

                                                 -----------------------------

 

 

 

 

EX-10.2 3 g19054exv10w2.htm EX-10.2

Exhibit 10.2

AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT

     This AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT (this “Amendment”), is entered into and is effective as of January 15, 2009, by and between, on the one hand, FIRST BANCORP (the “Corporation”), a corporation organized under the laws of the Commonwealth of Puerto Rico (the “Commonwealth”), and FIRSTBANK PUERTO RICO (the “Bank”), a banking institution organized under the laws of the Commonwealth that is a wholly-owned subsidiary of the Corporation, and, on the other hand, Aurelio Alemán (the “Executive”), Chief Operating Officer and Senior Executive Vice President of the Corporation.

Recitals

     WHEREAS, the Corporation and the Executive entered into a certain Employment Agreement dated as of February 24, 1998 (the “Employment Agreement”), pursuant to which the Corporation and the Bank retained the professional services of the Executive, subject to the terms and conditions set forth therein; and

     WHEREAS, the parties hereto wish to amend the terms of the Employment Agreement in the manner set forth below.

     NOW THEREFORE, in consideration of the premises herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, each intending to be legally bound hereby, agree as follows:

     1. DefinitionsAll capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Employment Agreement; provided, however, that for all purposes the term “Corporation”, whenever utilized in the Employment Agreement, shall include the Bank, its affiliates, and any other subsidiaries of the Corporation, irrespective of the context of which such term is utilized.

     2. Particular Amendments to the Employment AgreementThe Employment Agreement is hereby amended as follows:

     (a) In the event of any payment made pursuant to the provisions of the Employment Agreement which qualify as an applicable severance from employment or a golden parachute payment, as such terms are defined in Section 280G of the Internal Revenue Code of 1986, as amended by the provisions of the Emergency Economic Stabilization Act of 2008, such payment shall not equal or exceed an amount equal to three times the Executive’s average taxable compensation over the five years preceding the year of the applicable severance from employment or the golden parachute payment (the “Compensation”). In accordance herewith, to the extent such severance from employment or a golden parachute payment exceeds the Compensation, the severance from employment or the golden parachute payment shall equal the Compensation less one dollar.

     (b) The Bank shall recover from the Executive any bonus or incentive compensation paid to the Executive based on statements of earnings, gains, or other criteria that are later proven to be materially inaccurate.

     (c) The limitations imposed herein under paragraph (a) and (b) shall apply during the period that the United States Department of the Treasury holds an equity or debt position in the Corporation pursuant to the provision of Section 101(a) of the Emergency Economic Stabilization Act of 2008.

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     (d) Any severance from employment or golden parachute payment not paid to the Executive as a result of the provisions of paragraph (a) above shall be paid to the Executive within a period no longer than ten (10) business days following the date upon which the Department of the Treasury no longer holds an equity or debt position in the Corporation (the “Deferred Payment Date”) irrespective of the Executive being an employee of the Corporation on the Deferred Payment Date.

     3. EffectivenessExcept as expressly amended herein, the Employment Agreement shall continue to be and shall remain in full force and effect in accordance with its terms; and, in such connection, it is hereby acknowledged and agreed to by the parties hereto that this Amendment is not intended to cause an extinctive novation of the terms and conditions of, and the obligations of the respective parties under, the Employment Agreement.

     4. WaiverThe execution, delivery, and effectiveness of this Amendment shall not operate as a waiver of any right, power, or remedy of the parties to the Employment Agreement nor constitute a waiver of any provision of the Employment Agreement.

     5. Governing LawThis Amendment shall be governed by and construed in accordance with the laws of the Commonwealth.

     6. CounterpartsThis Amendment may be executed in any number of counterparts and by different 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 but one and the same document. Delivery of an executed counterpart of a signature page to this Amendment by telecopier shall be as effective as delivery of a manually executed counterpart of this Amendment.

     7. SeverabilityAny provision of this Amendment which is prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or non-authorization, without invalidating the remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction.

[SIGNATURE PAGE FOLLOWS]

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     IN WITNESS WHEREOF, the parties hereto have executed and delivered, or caused this Amendment to be duly executed and delivered by their respective officers thereunto as of the date first above written.

 

 

 

FIRST BANCORP

 

 

 

By:

 

/s/ Luis M. Beauchamp

Name:

 

Luis M. Beauchamp

Title:

 

President and Chief 
Executive Officer

 

 

 

FIRSTBANK PUERTO RICO

 

 

 

By:

 

/s/ Aurelio Alemán

Name:

 

Aurelio Alemán

Title:

 

Senior Executive Vice President and 
Chief Operating Officer

3

 

EX-10.6 2 g22320exv10w6.htm EX-10.6

EXHIBIT 10.6

AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT

This AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT (this “Amendment”), is entered into and is effective as of October 27, 2009, by and between, on the one hand, FIRST BANCORP (the “Corporation”), a corporation organized under the laws of the Commonwealth of Puerto Rico (the “Commonwealth”), and FIRSTBANK PUERTO RICO (the “Bank”), a banking institution organized under the laws of the Commonwealth that is a wholly-owned subsidiary of the Corporation, and, on the other hand, Aurelio Alemán (the “Executive”), President and Chief Executive Officer of the Corporation.

Recitals

     WHEREAS, the Corporation and the Executive entered into a certain Employment Agreement dated as of February 24, 1998 (the “Employment Agreement”), pursuant to which the Corporation and the Bank retained the professional services of the Executive, subject to the terms and conditions set forth therein;

     WHEREAS, the Corporation has entered into agreements with the U.S. Department of the Treasury (the “Treasury”) under which the Corporation issued preferred shares (“Preferred Shares”) and other securities to the Treasury (the “TARP Investment”) as part of the Troubled Assets Relief Program Capital Purchase Program (“CPP”) established under the Emergency Economic Stabilization Act of 2008 (“EESA”), as amended by the America Reinvestment and Recovery Act of 2009 (“ARRA”);

     WHEREAS, EESA and ARRA impose certain restrictions on employment agreements, severance, bonus and incentive compensation, stock awards, and other compensation and benefit plans and arrangements (the “Plans”) maintained by the Corporation, the Bank and other subsidiaries of the Corporation and requires that such restrictions remain in place for so long as the Treasury holds any debt or equity securities issued by the Corporation.

     WHEREAS, the parties hereto wish to amend the terms of the Employment Agreement in the manner set forth below in order to assure compliance with EESA and ARRA restrictions.

     NOW THEREFORE, in consideration of the premises herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, each intending to be legally bound hereby, agree as follows:

          1. DefinitionsAll capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Employment Agreement; provided, however, that for all purposes the term “Corporation”, whenever utilized in the Employment Agreement, shall include the Bank, its affiliates, and any other subsidiaries of the Corporation, irrespective of the context of which such term is utilized.

          2. Particular Amendments to the Employment AgreementThe Employment Agreement is hereby amended as follows:

          The parties hereby agree that all Plans, including the Employment Agreement, providing benefits to Executive shall be construed and interpreted at all times that the Treasury maintains any debt or equity investment in the Corporation in a manner consistent with EESA and ARRA, and all such Plans shall be deemed to have been

1


 

amended as determined by the Corporation so as to comply with the restrictions imposed by EESA and ARRA. Notwithstanding any other terms of this Amendment or any other Plan providing benefits to Executive, to the extent that any provision of this Amendment, the Employment Agreement or any other Plan is determined by the Corporation, to be subject to and not in compliance with EESA and ARRA, including the timing, amount or entitlement of Executive to any payment of severance, bonus or any other amounts, such provisions shall be interpreted and deemed to have been amended to comply with the terms of EESA, ARRA and the rules and regulations thereunder. The above will not be applicable to any compensation, bonus or amount to be paid in accordance with the Employment Agreement that is permitted under EESA, ARRA or their Regulations. The parties hereto further agree that (i) Executive shall at no time be entitled to receive any compensation based upon incentives that encourage Executive to take unnecessary and excessive risks on behalf of Bank or the Corporation; (ii) the Bank shall recover from Executive any bonus or incentive compensation paid to Executive based on statements of earnings, gains, or other criteria that are later proven to be materially inaccurate; (iii) the limitations imposed herein shall apply during the period that the Treasury holds the TARP Investment in the Corporation pursuant to the provision of Section 101(a) of EESA; accordingly upon the repayment of the TARP Investment the provisions of the Employment Agreement shall revert to its original terms and conditions.

          3. EffectivenessThis Amendment embodies the entire agreement between the parties and supersedes Amendment No. 1 to Employment Agreement executed on January 15, 2009 or any other any prior agreements or understanding between the parties in connection with the subject matter hereof and the amendments contemplated hereby. Except as expressly amended herein, the Employment Agreement shall continue to be and shall remain in full force and effect in accordance with its terms; and, in such connection, it is hereby acknowledged and agreed to by the parties hereto that this Amendment is not intended to cause an extinctive novation of the terms and conditions of, and the obligations of the respective parties under, the Employment Agreement.

          4. WaiverExcept as expressly amended herein, the execution, delivery, and effectiveness of this Amendment shall not operate as a waiver of any right, power, or remedy of the parties to the Employment Agreement nor constitute a waiver of any provision of the Employment Agreement.

          5. Governing LawThis Amendment shall be governed by and construed in accordance with the laws of the Commonwealth.

          6. CounterpartsThis Amendment may be executed in any number of counterparts and by different 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 but one and the same document. Delivery of an executed counterpart of a signature page to this Amendment by telecopier shall be as effective as delivery of a manually executed counterpart of this Amendment.

          7. SeverabilityAny provision of this Amendment which is prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or non-authorization, without invalidating the remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction.

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[SIGNATURE PAGE FOLLOWS]

3


 

     IN WITNESS WHEREOF, the parties hereto have executed and delivered, or caused this Amendment to be duly executed and delivered by their respective officers thereunto as of the date first above written.

 

 

 

 

 

FIRST BANCORP

 

 

 

 

 

 

 

By:

 

/s/ Lawrence Odell

 

 

Name:

 

 

Lawrence Odell

 

 

Title:

 

Executive Vice President and General Counsel

 

 

 

 

 

 

 

FIRSTBANK PUERTO RICO

 

 

 

 

 

 

 

By:

 

/s/ Aurelio Alemán

 

 

 

 

 

 

 

Name:

 

Aurelio Alemán

 

 

Title:

 

President and Chief Executive Officer

 

 

4