þ | Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
o | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Yes | þ | No | o |
Yes | þ | No | o |
- 1 -
- 2 -
- 3 -
- 4 -
- 5 -
- 6 -
- 7 -
- 8 -
- 9 -
- 10 -
- 11 -
- 12 -
- 13 -
(a) | (b) | (c) | ||||||||||
Number of securities | ||||||||||||
remaining available | ||||||||||||
for future issuance | ||||||||||||
under equity | ||||||||||||
compensation plans | ||||||||||||
Number of securities to be | Weighted-average exercise | (excluding those | ||||||||||
issued upon exercise of | price of outstanding | reflected in column | ||||||||||
Plan Category | outstanding options | options | (a)) | |||||||||
Equity
compensation plans
approved by shareholders |
||||||||||||
1996 Plan
|
681,103 | $ | 15.54 | 32,452 | ||||||||
1998 Plan
|
410,294 | 10.93 | 160,203 | |||||||||
2000 Plan
|
127,936 | 9.38 | | |||||||||
Total
|
1,219,333 | $ | 13.23 | 192,656 | ||||||||
(a) | (b) | (c) | (d) | |||||||||||||
Maximum Number | ||||||||||||||||
(or Approximate | ||||||||||||||||
Total Number of | Dollar Value) of | |||||||||||||||
Shares (or Units) | Shares (or Units) | |||||||||||||||
Total Number of | Purchased as Part of | that May Yet Be | ||||||||||||||
Shares (or units) | Average Price Paid | Publicly Announced | Purchased Under the | |||||||||||||
Period | Purchased | per Share (or Unit) | Plans or Programs | Plans or Programs (1) | ||||||||||||
From April 1, 2005
to April 30, 2005
|
200,000 | $ | 14.86 | 200,000 | $ | 4,866,613 | ||||||||||
From May 1, 2005
to May 31, 2005
|
30,000 | (2) | $ | 14.43 | | $ | 4,866,613 | |||||||||
From June 1, 2005
to June 30, 2005
|
| | | $ | 4,866,613 | |||||||||||
Total
|
230,000 | $ | 14.65 | 200,000 | $ | 4,866,613 |
- 14 -
Year Ended June 30, | ||||||||||||||||||||
2005 | 2004 | 2003 | 2002 | 2001 | ||||||||||||||||
Consolidated Ratios of Earnings to Combined Fixed
Charges and Preferred Stock Dividends:
|
||||||||||||||||||||
Excluding Interest on Deposits
|
1.62x | 2.18x | 2.08x | 1.69x | 2.17x | |||||||||||||||
Including Interest on Deposits
|
1.46x | 1.76x | 1.64x | 1.42x | 1.06x |
- 15 -
- 16 -
EXHIBIT NO.: | DESCRIPTION OF DOCUMENT: | |
3(i)
|
Amended and Restated Certificate of Incorporation. (1) | |
|
||
3(ii)
|
By-Laws. (2) | |
|
||
4.1
|
Certificate of Designation creating the 7.125% Noncumulative Monthly Income Preferred Stock, Series A (3) | |
|
||
4.2
|
Certificate of Designation creating the 7.0% Noncumulative Monthly Income Preferred Stock, Series B (4) | |
|
||
10.1
|
1996 Incentive Stock Option Plan. (5) | |
|
||
10.2
|
1998 Incentive Stock Option Plan. (6) | |
|
||
10.3
|
2000 Incentive Stock Option Plan. (7) | |
|
||
10.4
|
Form of Stock Option Grant. (8) | |
|
||
10.5
|
Lease Agreement Between Oriental Financial Group Inc. and Professional Office Park V, Inc. | |
|
||
10.6
|
First Amendment to Lease Agreement Dated May 18, 2004, Between Oriental Financial Group Inc. and Professional Office Park V, Inc. | |
|
||
10.7
|
Agreements between Oriental Financial Group Inc. and José Enrique Fernández | |
|
||
10.8
|
Employment Agreement between Oriental Financial Group Inc. and José Rafael Fernández | |
|
||
10.9
|
Change in Control Compensation Agreement between Oriental Financial Group Inc. and José E. Fernández | |
|
||
10.10
|
Change in Control Compensation Agreement between Oriental Financial Group Inc. and Héctor Méndez | |
|
||
10.11
|
Change in Control Compensation Agreement between Oriental Financial Group Inc. and Jose E. Fernández Richards | |
|
||
10.12
|
Change in Control Compensation Agreement between Oriental Financial Group Inc. and Jose R. Fernández | |
|
||
10.13
|
Change in Control Compensation Agreement between Oriental Financial Group Inc. and Norberto González | |
|
||
10.14
|
Change in Control Compensation Agreement between Oriental Financial Group Inc. and Ganesh Kumar | |
|
||
10.15
|
Change in Control Compensation Agreement between Oriental Financial Group Inc. and Carlos Vélez | |
|
||
10.16
|
Change in Control Compensation Agreement between Oriental Financial Group Inc. and Néstor Vale | |
|
||
10.17
|
Change in Control Compensation Agreement between Oriental Financial Group Inc. and Carlos J. Nieves | |
|
||
13
|
Portions of annual report to security holders incorporated herein by reference. | |
|
||
21
|
List of Subsidiaries | |
|
||
23
|
Consent of Deloitte & Touche LLP | |
|
||
31.1
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
|
||
31.2
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
|
||
32.1
|
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
|
||
32.2
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
1. | Incorporated herein by reference from Exhibit No. 3 of the Groups registration statement on Form S-3 filed with the SEC on April 2, 1999. | |
2. | Incorporated herein by reference from Exhibit No. 3(ii) of the Groups current report on Form 8-K filed with the SEC on September 1, 2005. | |
3. | Incorporated herein by reference from Exhibit No. 4.1 of the Groups registration statement on Form 8-A filed with the SEC on April 30, 1999. | |
4. | Incorporated herein by reference from Exhibit No. 4.1 of the Groups registration statement on Form 8-A filed with the SEC on September 26, 2003. | |
5. | Incorporated herein by reference from the Groups definitive proxy statement for the 1997 annual meeting of stockholders filed with the SEC on September 19, 1997. | |
6. | Incorporated herein by reference from the Groups definitive proxy statement for the 1998 annual meeting of stockholders filed with the SEC on September 29, 1998. | |
7. | Incorporated herein by reference from the Groups definitive proxy statement for the 2000 annual meeting of stockholders filed with the SEC on November 17, 2000. | |
8. | Incorporated herein by reference from Exhibit No. 10.4 of the Groups annual report on Form 10-K filed with the SEC on September 13, 2004. |
- 17 -
- 18 -
- 19 -
- 20 -
Dated: September 13, 2005
Dated: September 13, 2005
Dated: September 13, 2005
Dated: September 13, 2005
Dated: September 13, 2005
Dated: September 13, 2005
Dated: September 13, 2005
Dated: September 13, 2005
Dated: September 13, 2005
Dated: September 13, 2005
Dated: September 13, 2005
Dated: September 13, 2005
Table of Contents
Dated: September 13, 2005
Dated: September 13, 2005
(1)
Mr. Richa resigned to the Groups Board of Directors effective August 30,
2005
Table of Contents
FORM-10K
FINANCIAL DATA INDEX
PAGE
F-1
F-2
F-3
F-4
F-5
F-6
F-7
F-8 to F-41
F-42 to F-66
F-66 to F-72
F-73
Table of Contents
F-1
Oriental Financial Group Inc.
San Juan, Puerto Rico
San Juan, Puerto Rico
September 9, 2005
affixed to original.
Table of Contents
F-2
F-3
Oriental Financial Group Inc.
San Juan, Puerto Rico
September 9, 2005
Table of Contents
(1)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the Group;
(2)
provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with accounting principles generally
accepted in the United States of America, and that receipts and expenditures of the Group
are being made only in accordance with authorizations of management and directors of the
Group; and
(3)
provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the Groups assets that could have a material effect on
the financial statements.
/s/José Rafael Fernández
By:
/s/ Héctor Méndez
José Rafael Fernández
Héctor Méndez
President and Chief Executive Officer
Senior Executive Vice President,
Date: September 13, 2005
Treasurer and Chief Financial Officer
Date: September 13, 2005
Table of Contents
F-4
2005 | 2004 | 2003 | ||||||||||
Interest income:
|
||||||||||||
Loans
|
$ | 54,966 | $ | 52,130 | $ | 51,486 | ||||||
Mortgage-backed securities
|
103,425 | 104,779 | 96,225 | |||||||||
Investment securities
|
30,395 | 7,312 | 3,739 | |||||||||
Short term investments
|
526 | 164 | 296 | |||||||||
|
||||||||||||
Total interest income
|
189,312 | 164,385 | 151,746 | |||||||||
|
||||||||||||
|
||||||||||||
Interest expense:
|
||||||||||||
Deposits
|
29,744 | 30,012 | 33,657 | |||||||||
Securities sold under agreements to repurchase
|
60,524 | 36,018 | 33,834 | |||||||||
Advances from FHLB, term notes and other borrowings
|
8,313 | 8,158 | 7,918 | |||||||||
Subordinated capital notes
|
4,318 | 2,986 | 1,926 | |||||||||
|
||||||||||||
Total interest expense
|
102,899 | 77,174 | 77,335 | |||||||||
|
||||||||||||
|
||||||||||||
Net interest income
|
86,413 | 87,211 | 74,411 | |||||||||
Provision for loan losses
|
3,315 | 4,587 | 4,190 | |||||||||
|
||||||||||||
Net interest income after provision for loan losses
|
83,098 | 82,624 | 70,221 | |||||||||
|
||||||||||||
|
||||||||||||
Non-interest income (expense):
|
||||||||||||
Commissions and fees from fiduciary activities
|
7,641 | 8,636 | 6,891 | |||||||||
Commissions and fees from broker, investment banking and insurance activities
|
6,730 | 8,981 | 7,581 | |||||||||
Banking service revenues
|
7,752 | 7,165 | 5,968 | |||||||||
Net gain (loss) on:
|
||||||||||||
Mortgage banking activities
|
7,774 | 7,719 | 8,026 | |||||||||
Securities available-for-sale
|
7,446 | 13,414 | 14,223 | |||||||||
Derivatives
|
(2,811 | ) | 11 | (4,061 | ) | |||||||
Trading securities
|
(15 | ) | 21 | 571 | ||||||||
Premises and equipment
|
| | (219 | ) | ||||||||
Other
|
368 | 87 | 59 | |||||||||
|
||||||||||||
Total non-interest income, net
|
34,885 | 46,034 | 39,039 | |||||||||
|
||||||||||||
|
||||||||||||
Non-interest expenses:
|
||||||||||||
Compensation and employees benefits
|
26,663 | 24,579 | 20,563 | |||||||||
Occupancy and equipment
|
10,583 | 9,639 | 9,079 | |||||||||
Advertising and business promotion
|
6,506 | 7,466 | 7,052 | |||||||||
Professional and service fees
|
6,994 | 5,631 | 6,467 | |||||||||
Communication
|
1,630 | 1,849 | 1,671 | |||||||||
Loan servicing expenses
|
1,727 | 1,853 | 1,775 | |||||||||
Taxes, other than payroll and income taxes
|
1,836 | 1,754 | 1,556 | |||||||||
Electronic banking charges
|
2,075 | 1,679 | 1,244 | |||||||||
Printing, postage, stationery and supplies
|
891 | 1,121 | 1,038 | |||||||||
Insurance, including deposit insurance
|
767 | 791 | 736 | |||||||||
Other
|
3,348 | 3,070 | 2,475 | |||||||||
|
||||||||||||
Total non-interest expenses
|
63,020 | 59,432 | 53,656 | |||||||||
|
||||||||||||
|
||||||||||||
Income before income taxes
|
54,963 | 69,226 | 55,604 | |||||||||
Income tax benefit (expense)
|
1,649 | (5,577 | ) | (4,284 | ) | |||||||
|
||||||||||||
Net income
|
56,612 | 63,649 | 51,320 | |||||||||
Less: Dividends on preferred stock
|
(4,802 | ) | (4,198 | ) | (2,387 | ) | ||||||
|
||||||||||||
Net income available to common shareholders
|
$ | 51,810 | $ | 59,451 | $ | 48,933 | ||||||
|
||||||||||||
|
||||||||||||
Income per common share:
|
||||||||||||
Basic
|
$ | 2.11 | $ | 2.65 | $ | 2.32 | ||||||
|
||||||||||||
Diluted
|
$ | 2.05 | $ | 2.49 | $ | 2.15 | ||||||
|
||||||||||||
|
||||||||||||
Average common shares outstanding
|
24,571 | 22,394 | 21,049 | |||||||||
Average potential common share-options
|
687 | 1,451 | 1,683 | |||||||||
|
||||||||||||
|
25,258 | 23,845 | 22,732 | |||||||||
|
||||||||||||
|
||||||||||||
Cash dividends per share of common stock
|
$ | 0.55 | $ | 0.51 | $ | 0.45 | ||||||
|
F-5
CHANGES IN STOCKHOLDERS EQUITY: | 2005 | 2004 | 2003 | |||||||||
Preferred stock:
|
||||||||||||
Balance at beginning of period
|
$ | 68,000 | $ | 33,500 | $ | 33,500 | ||||||
Issuance of preferred stock
|
| 34,500 | | |||||||||
|
||||||||||||
Balance at end of period
|
68,000 | 68,000 | 33,500 | |||||||||
|
||||||||||||
|
||||||||||||
Common stock:
|
||||||||||||
Balance at beginning of period
|
22,253 | 19,684 | 15,300 | |||||||||
Issuance of common stock
|
| 1,955 | | |||||||||
Stock options exercised
|
857 | 614 | 520 | |||||||||
Stock dividend and stock split effected in the form of a dividend
|
1,994 | | 3,864 | |||||||||
|
||||||||||||
Balance at end of period
|
25,104 | 22,253 | 19,684 | |||||||||
|
||||||||||||
|
||||||||||||
Additional paid-in capital:
|
||||||||||||
Balance at beginning of period
|
125,206 | 57,236 | 52,670 | |||||||||
Issuance of common stock
|
| 52,785 | | |||||||||
Stock options and related
|
3,650 | 5,282 | 4,566 | |||||||||
Stock dividend and stock split effected in the form of a dividend
|
58,455 | 14,526 | | |||||||||
Common stock issuance costs
|
(10 | ) | (3,180 | ) | | |||||||
Preferred stock issuance costs
|
| (1,443 | ) | | ||||||||
|
||||||||||||
Balance at end of period
|
187,301 | 125,206 | 57,236 | |||||||||
|
||||||||||||
|
||||||||||||
Legal surplus:
|
||||||||||||
Balance at beginning of period
|
27,425 | 21,099 | 15,997 | |||||||||
Transfer from retained earnings
|
6,468 | 6,326 | 5,102 | |||||||||
|
||||||||||||
Balance at end of period
|
33,893 | 27,425 | 21,099 | |||||||||
|
||||||||||||
|
||||||||||||
Retained earnings:
|
||||||||||||
Balance at beginning of period
|
101,723 | 106,358 | 75,806 | |||||||||
Net income
|
56,612 | 63,649 | 51,320 | |||||||||
Cash dividends declared on common stock
|
(13,522 | ) | (11,425 | ) | (9,415 | ) | ||||||
Stock dividend and stock split effected in the form of a dividend
|
(64,923 | ) | (46,335 | ) | (3,864 | ) | ||||||
Cash dividends declared on preferred stock
|
(4,802 | ) | (4,198 | ) | (2,387 | ) | ||||||
Transfer to legal surplus
|
(6,468 | ) | (6,326 | ) | (5,102 | ) | ||||||
|
||||||||||||
Balance at end of period
|
68,620 | 101,723 | 106,358 | |||||||||
|
||||||||||||
|
||||||||||||
Treasury stock:
|
||||||||||||
Balance at beginning of period
|
(4,578 | ) | (35,888 | ) | (33,674 | ) | ||||||
Stock purchased / used
to match defined contribution plan 1165(e)
|
(3,263 | ) | (499 | ) | (2,214 | ) | ||||||
Stock dividend
|
4,473 | 31,809 | | |||||||||
|
||||||||||||
Balance at end of period
|
(3,368 | ) | (4,578 | ) | (35,888 | ) | ||||||
|
||||||||||||
|
||||||||||||
Accumulated other comprehensive income (loss), net of tax:
|
||||||||||||
Balance at beginning of period
|
(45,362 | ) | (309 | ) | 6,830 | |||||||
Other comprehensive income (loss), net of tax
|
6,979 | (45,053 | ) | (7,139 | ) | |||||||
|
||||||||||||
Balance at end of period
|
(38,383 | ) | (45,362 | ) | (309 | ) | ||||||
|
||||||||||||
|
||||||||||||
Total stockholders equity
|
$ | 341,167 | $ | 294,667 | $ | 201,680 | ||||||
|
COMPREHENSIVE INCOME | 2005 | 2004 | 2003 | |||||||||
Net income
|
$ | 56,612 | $ | 63,649 | $ | 51,320 | ||||||
|
||||||||||||
|
||||||||||||
Other
comprehensive income (loss), net of tax:
|
||||||||||||
Unrealized gain (loss) on securities
available-for-sale arising during the
period
|
$ | 10,830 | $ | (65,037 | ) | $ | 28,691 | |||||
Realized gains on investment securities
available-for-sale included in net
income
|
(7,446 | ) | (13,414 | ) | (14,223 | ) | ||||||
Unrealized gain (loss) on derivatives
designated as cash flows hedges arising
during the period
|
(6,372 | ) | 11,134 | (36,318 | ) | |||||||
Realized loss on derivatives designated
as cash flow hedges included in net
income
|
10,131 | 17,744 | 16,141 | |||||||||
Amount reclassified into earnings
during the period related to transition
adjustment on derivative activities
|
| 372 | 227 | |||||||||
Income tax effect related to unrealized
(gain) loss on securities
available-for-sale
|
(164 | ) | 4,148 | (1,657 | ) | |||||||
|
||||||||||||
Other comprehensive income (loss) for the period
|
6,979 | (45,053 | ) | (7,139 | ) | |||||||
|
||||||||||||
|
||||||||||||
Comprehensive income
|
$ | 63,591 | $ | 18,596 | $ | 44,181 | ||||||
|
F-6
2005 | 2004 | 2003 | ||||||||||
Cash flows from operating activities:
|
||||||||||||
Net income
|
$ | 56,612 | $ | 63,649 | $ | 51,320 | ||||||
|
||||||||||||
Adjustments to reconcile net income to net cash used in operating activities:
|
||||||||||||
Amortization of deferred loan origination fees, net of costs
|
(2,609 | ) | (2,971 | ) | (2,005 | ) | ||||||
Amortization of premiums, net of accretion of discounts on investment securities, net
|
9,835 | 12,535 | 7,086 | |||||||||
Depreciation and amortization of premises and equipment
|
5,857 | 4,970 | 4,692 | |||||||||
Deferred income tax expense
|
982 | 397 | 76 | |||||||||
Equity in earnings of investment in limited liability partnership
|
(247 | ) | | | ||||||||
Provision for loan losses
|
3,315 | 4,587 | 4,190 | |||||||||
Loss (gain) on:
|
||||||||||||
Sale of securities available-for-sale
|
(7,446 | ) | (13,414 | ) | (14,223 | ) | ||||||
Mortgage banking activities
|
(7,774 | ) | (7,719 | ) | (8,026 | ) | ||||||
Derivatives
|
2,811 | (11 | ) | 4,061 | ||||||||
Sale of premises and equipment
|
| | 219 | |||||||||
Originations of loans held-for-sale
|
(178,256 | ) | (227,964 | ) | (113,548 | ) | ||||||
Proceeds from sale of loans held-for-sale
|
102,305 | 124,813 | 2,867 | |||||||||
Net decrease (increase) in:
|
||||||||||||
Trading securities
|
309 | 463 | 8,222 | |||||||||
Accrued interest receivable
|
(4,608 | ) | (1,411 | ) | (2,018 | ) | ||||||
Other assets
|
(11,820 | ) | (1,761 | ) | 5,627 | |||||||
Net increase (decrease) in:
|
||||||||||||
Accrued interest on deposits and borrowings
|
5,252 | 2,628 | (384 | ) | ||||||||
Other liabilities
|
1,296 | (1,314 | ) | 1,218 | ||||||||
|
||||||||||||
Total adjustments
|
(80,798 | ) | (106,172 | ) | (101,946 | ) | ||||||
|
||||||||||||
|
||||||||||||
Net cash used in operating activities
|
(24,186 | ) | (42,523 | ) | (50,626 | ) | ||||||
|
||||||||||||
|
||||||||||||
Cash flows from investing activities:
|
||||||||||||
Net decrease (increase) in time deposits with other banks Purchases of:
|
(30,000 | ) | 365 | (120 | ) | |||||||
Investment securities available-for-sale
|
(1,738,613 | ) | (1,740,118 | ) | (1,912,359 | ) | ||||||
Investment securities held-to-maturity
|
(529,006 | ) | (288,959 | ) | | |||||||
FHLB stock
|
| (5,623 | ) | (6,493 | ) | |||||||
Purchases of equity options and put options
|
(1,371 | ) | (2,425 | ) | (2,238 | ) | ||||||
Maturities and redemption of:
|
||||||||||||
Investment securities available-for-sale
|
562,230 | 710,782 | 1,061,919 | |||||||||
Investment securities held-to-maturity
|
232,290 | 34,709 | | |||||||||
FHLB stock
|
1,102 | | 1,166 | |||||||||
Proceeds from sales of:
|
||||||||||||
Investment securities available-for-sale
|
1,143,501 | 610,566 | 681,234 | |||||||||
Premises and fixed assets
|
3,355 | | | |||||||||
Other real estate owned
|
3,034 | 885 | | |||||||||
Loan production:
|
||||||||||||
Origination and purchase of loans, excluding loans held-for-sale
|
(333,177 | ) | (199,262 | ) | (324,980 | ) | ||||||
Principal repayment of loans
|
206,113 | 180,138 | 168,343 | |||||||||
Additions to premises and equipment
|
(4,073 | ) | (7,360 | ) | (2,866 | ) | ||||||
Other
|
| (1,083 | ) | (1,592 | ) | |||||||
|
||||||||||||
Net cash used in investing activities
|
(484,616 | ) | (707,385 | ) | (337,986 | ) | ||||||
|
||||||||||||
|
||||||||||||
Cash flows from financing activities:
|
||||||||||||
Net increase (decrease) in:
|
||||||||||||
Deposits
|
224,928 | (25,468 | ) | 78,391 | ||||||||
Securities sold under agreements to repurchase
|
295,891 | 495,267 | 403,729 | |||||||||
Federal funds purchased
|
12,310 | |||||||||||
Proceeds from:
|
||||||||||||
Advances from FHLB
|
2,204,272 | 734,200 | 949,700 | |||||||||
Exercise of stock options, net
|
4,507 | 5,896 | 5,086 | |||||||||
Repayments of advances from FHLB
|
(2,204,272 | ) | (564,200 | ) | (1,027,900 | ) | ||||||
Issuance of subordinated capital notes
|
| 35,043 | | |||||||||
Issuance of common stock, net
|
| 51,560 | | |||||||||
Issuance of preferred stock, net
|
| 33,057 | | |||||||||
Common stock purchased
|
(3,263 | ) | (499 | ) | (2,214 | ) | ||||||
Dividends paid
|
(17,919 | ) | (15,014 | ) | (11,395 | ) | ||||||
|
||||||||||||
Net cash provided by financing activities
|
516,454 | 749,842 | 395,397 | |||||||||
|
||||||||||||
|
||||||||||||
Net change in cash and cash equivalents
|
7,652 | (66 | ) | 6,785 | ||||||||
Cash and cash equivalents at beginning of year
|
17,031 | 17,097 | 10,312 | |||||||||
|
||||||||||||
Cash and cash equivalents at end of year
|
$ | 24,683 | $ | 17,031 | $ | 17,097 | ||||||
|
||||||||||||
|
||||||||||||
Cash and cash equivalents include:
|
||||||||||||
Cash and due from banks
|
$ | 14,892 | $ | 9,284 | $ | 15,945 | ||||||
Money Market
Investments
|
9,791 | 7,747 | 1,152 | |||||||||
|
||||||||||||
|
$ | 24,683 | $ | 17,031 | $ | 17,097 | ||||||
|
||||||||||||
|
||||||||||||
Supplemental Cash Flow Disclosure and Schedule of Noncash Activities:
|
||||||||||||
Interest paid
|
$ | 97,647 | $ | 74,546 | $ | 76,416 | ||||||
|
||||||||||||
Income taxes paid
|
$ | 554 | $ | 1,894 | $ | 88 | ||||||
|
||||||||||||
Mortgage loans securitized into mortgage-backed securities
|
$ | 85,809 | $ | 100,202 | $ | 110,843 | ||||||
|
||||||||||||
Investment securities available-for-sale transferred to held-to-maturity
|
$ | 565,191 | $ | 1,114,424 | $ | | ||||||
|
||||||||||||
Accrued dividend payable
|
$ | 3,487 | $ | 3,081 | $ | 2,472 | ||||||
|
||||||||||||
Other comprehensive income (loss) for the year
|
$ | 6,979 | $ | (45,053 | ) | $ | (7,139 | ) | ||||
|
||||||||||||
Securities sold but not yet delivered
|
$ | 1,034 | $ | 47,312 | $ | 1,894 | ||||||
|
||||||||||||
Securities and loans purchased but not yet received
|
$ | 22,772 | $ | 89,068 | $ | 152,219 | ||||||
|
||||||||||||
Transfer from loans to foreclosed real estate
|
$ | 4,689 | $ | 1,237 | $ | 571 | ||||||
|
||||||||||||
Stock dividend paid from treasury stock
|
$ | 4,474 | $ | 31,809 | $ | | ||||||
|
F-7
F-8
F-9
F-10
F-11
F-12
F-13
F-14
F-15
F-16
F-17
F-18
F-19
F-20
F-21
F-22
F-23
F-24
F-25
F-26
F-27
F-28
F-29
F-30
F-31
F-32
F-33
F-34
F-35
F-36
F-37
F-38
F-39
F-40
F-41
F-42
F-43
F-44
F-45
F-46
F-47
F-48
F-49
F-50
F-51
F-52
F-53
F-54
F-55
F-56
F-57
F-58
F-59
F-60
F-61
F-62
F-63
F-64
F-65
F-66
F-67
F-68
F-69
F-70
F-71
F-72
F-73
F-74
AND FOR EACH OF THE THREE YEARS IN THE
PERIOD ENDED JUNE 30, 2005
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Year Ended June 30,
2005
2004
2003
(In thousands, except for per share data)
$
56,612
$
63,649
$
51,320
1,459
1,394
1,417
55,153
62,255
49,903
(4,802
)
(4,198
)
(2,387
)
$
50,351
$
58,057
$
47,516
$
2.11
$
2.65
$
2.32
$
2.05
$
2.59
$
2.26
$
2.05
$
2.49
$
2.15
$
1.99
$
2.43
$
2.09
24,571
22,394
21,049
687
1,451
1,683
25,258
23,845
22,732
(1)
The expected option term is 7 years.
(2)
The expected weighted average volatility was 35% for options granted in fiscal 2005 (2004
33%, 2003 32%).
(3)
The expected weighted average dividend yield was 2.75% for options granted in fiscal 2005
(2004 2.25%, 2003 2.61%).
(4)
The weighted average risk-free interest rate was 4.06% for options granted in fiscal 2005
(2004 3.77%, 2003 3.71%).
Table of Contents
Table of Contents
Table of Contents
(In thousands)
2005
2004
2003
Dollar
Dollar
Dollar
Shares
Amount
Shares
Amount
Shares
Amount
246
$
4,578
2,025
$
35,888
1,534
$
33,674
200
2,962
16
394
97
2,214
24
301
4
105
394
(242
)
(4,473
)
(1,799
)
(31,809
)
228
$
3,368
246
$
4,578
2,025
$
35,888
Table of Contents
2005
2004
2003
Weighted
Weighted
Weighted
Number
Average
Number
Average
Number
Average
Of
Exercise
Of
Exercise
Of
Exercise
Options
Price
Options
Price
Options
Price
1,522,137
$
12.55
1,876,044
$
11.42
2,132,630
$
13.40
157,000
28.04
115,266
23.92
25,000
18.95
(331,887
)
14.61
(344,237
)
8.89
(158,570
)
8.81
(93,751
)
11.95
(40,704
)
12.93
(74,479
)
8.97
1,253,499
14.94
1,606,369
12.78
1,924,581
14.02
125,350
13.58
160,637
11.62
481,145
11.22
393,825
8.47
77,500
26.71
15,000
20.24
(506,086
)
18.28
(269,701
)
10.52
(361,381
)
9.24
(47,255
)
12.41
(52,668
)
12.53
(183,301
)
10.65
1,219,333
$
13.23
1,522,137
$
12.55
1,876,044
$
11.42
Outstanding
Exercisable
Weighted
Weighted
Weighted
Average
Average
Average
Number of
Exercise
Contract Life
Number of
Exercise
Range of Exercise Prices
Options
Price
(Years)
Options
Price
139,313
$
0.18
10.0
139,313
$
0.18
323,064
$
7.31
5.1
323,064
$
7.31
82,051
$
10.74
4.8
82,051
$
10.74
248,148
$
12.84
6.8
248,148
$
12.84
41,622
$
15.90
7.3
41,622
$
15.90
24,200
$
19.28
8.1
24,200
$
19.28
88,935
$
19.90
8.1
88,935
$
19.90
199,400
$
23.95
8.9
199,400
$
23.95
72,600
$
24.53
9.3
72,600
$
24.53
1,219,333
$
13.23
7.6
1,219,333
$
13.23
Table of Contents
June 30,
(In thousands, except per share data)
2005
2004
2003
$
56,612
$
63,649
$
51,320
(4,802
)
(4,198
)
(2,387
)
$
51,810
$
59,451
$
48,933
24,571
22,394
21,049
687
1,451
1,683
25,258
23,845
22,732
$
2.11
$
2.65
$
2.32
$
2.05
$
2.49
$
2.15
Table of Contents
(In thousands)
2005
2004
$
8,768
$
12,527
24,211
27,572
5,404
5,263
$
38,383
$
45,362
Table of Contents
Minimum To Be Well
Capitalized Under
Minimum Capital
Prompt Corrective
Actual
Requirement
Action Provisions
(Dollars in thousands)
Amount
Ratio
Amount
Ratio
Amount
Ratio
$
454,038
39.39
%
$
92,210
8.00
%
N/A
N/A
$
447,543
38.83
%
$
46,105
4.00
%
N/A
N/A
$
447,543
10.65
%
$
168,080
4.00
%
N/A
N/A
$
415,560
38.69
%
$
85,932
8.00
%
N/A
N/A
$
408,007
37.98
%
$
42,966
4.00
%
N/A
N/A
$
408,007
11.24
%
$
145,209
4.00
%
N/A
N/A
$
292,784
25.66
%
$
91,264
8.00
%
$
114,080
10.00
%
$
286,289
25.10
%
$
45,632
4.00
%
$
68,448
6.00
%
$
286,289
6.86
%
$
166,815
4.00
%
$
208,518
5.00
%
$
234,118
23.74
%
$
78,891
8.00
%
$
86,670
10.00
%
$
226,565
22.98
%
$
39,445
4.00
%
$
52,002
6.00
%
$
226,565
6.50
%
$
139,349
4.00
%
$
144,574
5.00
%
Table of Contents
June 30, 2005 (In thousands)
Gross
Gross
Weighted
Amortized
Unrealized
Unrealized
Fair
Average
Cost
Gains
Losses
Value
Yield
$
174,823
$
$
1,807
$
173,016
3.47
%
45,744
1,138
152
46,730
5.78
%
69,028
4
3,098
65,934
4.45
%
289,595
1,142
5,057
285,680
549,936
477
1,880
548,533
4.48
%
13,959
306
36
14,229
5.65
%
182,663
410
1,795
181,278
4.61
%
746,558
1,193
3,711
744,040
$
1,036,153
$
2,335
$
8,768
$
1,029,720
4.40
%
856,964
968
7,250
850,682
3.76
%
62,094
10
1,664
60,440
5.33
%
919,058
978
8,914
911,122
914,174
14,226
2,184
926,216
5.11
%
250,189
4,520
473
254,236
5.33
%
51,325
181
372
51,134
4.49
%
1,215,688
18,927
3,029
1,231,586
2,134,746
19,905
11,943
2,142,708
4.59
%
$
3,170,899
$
22,240
$
20,711
$
3,172,428
4.53
%
June 30, 2004 (In thousands)
Gross
Gross
Weighted
Amortized
Unrealized
Unrealized
Fair
Average
Cost
Gains
Losses
Value
Yield
$
208,485
$
406
$
1,914
$
206,977
3.43
%
51,990
1,418
197
53,211
5.79
%
19,350
1,286
20,636
6.83
%
279,825
3,110
2,111
280,824
936,710
3,330
6,736
933,304
4.39
%
88,409
247
2,059
86,597
3.82
%
228,201
976
2,495
226,682
5.09
%
1,253,320
4,553
11,290
1,246,583
$
1,533,145
$
7,663
$
13,401
$
1,527,407
4.39
%
62,097
1,437
60,660
5.33
%
62,097
1,437
60,660
897,119
725
5,406
892,438
5.07
%
323,646
483
1,693
322,436
5.10
%
1,220,765
1,208
7,099
1,214,874
1,282,862
1,208
8,536
1,275,534
5.09
%
$
2,816,007
$
8,871
$
21,937
$
2,802,941
4.74
%
Table of Contents
(In thousands)
Available-for-sale
Held-to-maturity
Amortized Cost
Fair Value
Amortized Cost
Fair Value
$
$
$
20,074
$
19,845
250,236
245,541
687,176
680,625
4,987
5,173
149,714
150,212
34,372
34,966
62,094
60,440
289,595
285,680
919,058
911,122
685
719
12,511
12,283
733,362
731,038
1,215,688
1,231,586
746,558
744,040
1,215,688
1,231,586
$
1,036,153
$
1,029,720
$
2,134,746
$
2,142,708
Table of Contents
Available-for-sale
(In thousands)
Less than 12 months
Amortized
Unrealized
Market
Cost
Loss
Value
$
174,823
$
(1,807
)
$
173,016
14,381
(152
)
14,229
426,657
(1,626
)
425,031
66,993
(3,098
)
63,895
682,854
(6,683
)
676,171
12 months or more
Amortized
Unrealized
Market
Cost
Loss
Value
139,387
(2,085
)
137,302
139,387
(2,085
)
137,302
Total
Amortized
Unrealized
Market
Cost
Loss
Value
174,823
(1,807
)
173,016
14,381
(152
)
14,229
566,044
(3,711
)
562,333
66,993
(3,098
)
63,895
$
822,241
$
(8,768
)
$
813,473
(In thousands)
Less than 12 months
Amortized
Unrealized
Market
Cost
Loss
Value
$
702,535
$
(7,250
)
$
695,285
183,997
(1,209
)
182,788
886,532
(8,459
)
878,073
12 months or more
Amortized
Unrealized
Market
Cost
Loss
Value
52,130
(1,664
)
50,465
121,351
(1,820
)
119,532
173,481
(3,484
)
169,997
Total
Amortized
Unrealized
Market
Cost
Loss
Value
702,535
(7,250
)
695,285
52,130
(1,664
)
50,465
305,348
(3,029
)
302,320
$
1,060,013
$
(11,943
)
$
1,048,070
Table of Contents
Available-for-sale
(In thousands)
Less than 12 months
Amortized
Unrealized
Market
Cost
Loss
Value
$
75,161
$
(1,061
)
$
74,100
6,201
(172
)
6,029
873,833
(11,290
)
862,543
955,195
(12,523
)
942,672
12 months or more
Amortized
Unrealized
Market
Cost
Loss
Value
10,218
(854
)
9,364
2,524
(24
)
2,500
12,742
(878
)
11,864
Total
Amortized
Unrealized
Market
Cost
Loss
Value
85,379
(1,915
)
83,464
8,725
(196
)
8,529
873,833
(11,290
)
862,543
$
967,937
$
(13,401
)
$
954,536
(In thousands)
Total Less than 12 months
Amortized
Unrealized
Market
Cost
Loss
Value
$
62,097
$
(1,437
)
$
60,660
503,862
(7,099
)
496,763
$
565,959
$
(8,536
)
$
557,423
(In thousands)
2005
2004
$
144
$
538
32
36
89
$
265
$
574
Table of Contents
(In thousands)
2005
2004
$
692,258
$
586,498
4,185
4,259
47,891
65,924
116,982
72,018
861,316
728,699
(8,363
)
(11,716
)
852,953
716,983
12,983
9,828
30,027
18,510
(40
)
(126
)
42,970
28,212
895,923
745,195
(6,495
)
(7,553
)
889,428
737,642
17,963
5,814
$
907,391
$
743,456
Table of Contents
(In thousands)
2005
2004
2003
$
7,553
$
5,031
$
3,039
3,315
4,587
4,190
(5,094
)
(3,207
)
(3,095
)
721
1,142
897
$
6,495
$
7,553
$
5,031
Table of Contents
Useful
Life
(In thousands)
(Years)
2005
2004
$
1,014
$
1,112
40
3,224
5,580
5 10
7,255
7,034
3 7
5,276
5,006
3 7
12,555
12,154
29,324
30,886
(14,055
)
(12,334
)
$
15,269
$
18,552
(In thousands)
2005
2004
$
18,999
$
16,536
10,247
3,536
4,786
3,764
2,507
3,590
4,952
2,171
2,170
2,006
2,021
2,061
17
$
46,374
$
32,989
Table of Contents
(In thousands)
2005
2004
2003
$
900
$
818
$
1,054
941
1,081
1,319
27,903
28,113
31,284
$
29,744
$
30,012
$
33,657
(In thousands)
$
376,523
391,080
767,604
105,940
86,362
29,107
15,985
1,809
$
1,006,807
(In thousands)
Fair Value of
Borrowing
Underlying
Balance
Collateral
$
1,168,502
$
1,171,080
373,824
391,243
20,577
20,557
628,853
638,043
$
2,191,756
$
2,220,923
Table of Contents
(In thousands)
2005
2004
Fair Value of
Fair Value of
Borrowing
Underlying
Borrowing
Underlying
Balance
Collateral
Balance
Collateral
$
168,003
$
170,407
$
222,287
$
223,076
782,034
798,919
974,483
1,013,715
972,614
981,927
485,925
511,623
141,959
146,714
269,105
269,670
71,211
72,402
$
2,191,756
$
2,220,923
$
1,895,865
$
1,967,530
(In thousands)
2005
2004
$
2,174,312
$
1,597,720
$
2,398,861
$
1,895,865
2.78
%
2.26
%
3.07
%
1.23
%
(In thousands)
Maturity Date
Fixed Interest Rate
2005
2004
1.57%
$
50,000
$
50,000
2.48%
25,000
25,000
2.01%
50,000
50,000
2.13%
50,000
50,000
2.96%
50,000
50,000
3.09%
25,000
25,000
4.07%
50,000
50,000
$
300,000
$
300,000
2.62
%
2.62
%
Table of Contents
Table of Contents
(Dollars in thousands)
2005
2004
$
885,000
$
900,000
3.44
%
3.47
%
3.27
%
1.25
%
4 to 64
3 to 76
100
%
100
%
Table of Contents
Notional Amount
(In thousands)
2005
2004
$
850,000
$
900,000
35,000
106,703
$
991,703
$
900,000
$
186,010
$
227,260
178,478
218,884
$
364,488
$
446,144
(In thousands)
Equity Indexed
Year Ending
Cash Flows Hedging
Options
Equity Indexed
June 30,
Swaps
Purchased
Options Sold
Total
$
325,000
$
54,150
$
52,369
$
431,519
410,000
58,490
55,306
523,796
35,860
34,010
69,870
27,760
27,218
54,978
9,750
9,575
19,325
150,000
150,000
$
885,000
$
186,010
$
178,478
$
1,249,488
Table of Contents
(In thousands)
2005
2004
$
3,559
$
3,747
2,233
85
(189
)
(273
)
$
5,603
$
3,559
Table of Contents
(In thousands)
2005
2004
2003
$
(2,631
)
$
5,180
$
4,208
982
397
76
$
(1,649
)
$
5,577
$
4,284
(Dollars in thousands)
2005
2004
2003
Amount
Rate
Amount
Rate
Amount
Rate
$
21,436
39.0
%
$
26,998
39.0
%
$
21,686
39.0
%
(23,090
)
-42.0
%
(23,991
)
-34.7
%
(20,923
)
-37.6
%
746
1.4
%
1,378
2.0
%
925
1.7
%
0.0
%
0.0
%
1,800
3.2
%
(2,800
)
-5.1
%
0
%
0
%
2,059
3.7
%
1,192
1.8
%
796
1.4
%
$
(1,649
)
-3.0
%
$
5,577
8.1
%
$
4,284
7.7
%
Table of Contents
(In thousands)
2005
2004
$
2,533
$
2,946
2,119
2,473
130
3,044
4,115
46
180
8,052
9,534
(86
)
(35
)
112
(193
)
(1,887
)
(1,969
)
(1,861
)
(2,197
)
$
6,191
$
7,337
Table of Contents
Minimum Rent
Year Ending June 30,
(In thousands)
$
2,748
2,310
2,167
2,107
1,958
5,974
$
17,264
Table of Contents
(In thousands)
2005
2004
Fair
Carrying
Fair
Carrying
Value
Value
Value
Value
$
14,892
$
14,892
$
9,284
$
9,284
9,791
9,791
7,747
7,747
30,000
30,000
265
265
574
574
1,029,720
1,029,720
1,527,407
1,527,407
2,142,708
2,134,746
1,275,534
1,282,862
27,058
27,058
28,160
28,160
1,034
1,034
47,312
47,312
917,721
907,391
730,335
743,456
18,999
18,999
16,536
16,536
23,735
23,735
19,127
19,127
1,247,805
1,252,897
1,035,841
1,024,349
2,191,507
2,191,756
1,895,865
1,895,865
297,123
300,000
294,658
300,000
72,166
72,166
72,166
72,166
15,000
15,000
15,000
15,000
12,310
12,310
22,772
22,772
89,068
89,068
42,584
42,584
34,580
34,580
(In thousands)
2005
2004
Contract or
Contract or
Notional
Fair
Notional
Fair
Amount
Value
Amount
Value
$
38,140
$
(763
)
$
10,273
$
(205
)
18,191
(364
)
18,382
(368
)
Table of Contents
Cash and due from banks, money market investments, time deposits with other banks,
securities sold but not yet delivered, accrued interest receivable and payable, securities and
loans purchased but not yet received, federal funds purchased, accrued expenses and other
liabilities have been valued at the carrying amounts reflected in the Consolidated Statements
of Financial Condition as these are reasonable estimates of fair value given the short-term
nature of the instruments.
The fair value of trading securities and investment securities available for sale and held
to maturity is estimated based on bid quotations from securities dealers. If a quoted market
price is not available, fair value is estimated using quoted market prices for similar
securities. Investments in FHLB stock are valued at their redemption value.
The estimated fair value of loans held-for-sale is based on secondary market prices or
contractual agreements to sell. The fair value of the loan portfolio has been estimated for
loan portfolios with similar financial characteristics. Loans are segregated by type, such as
commercial, real estate mortgage and consumer. Each loan category is further segmented into
fixed and adjustable interest rates and by performing and non-performing categories. The fair
value of performing loans is calculated by discounting contractual cash flows, adjusted for
prepayment estimates, if any, using estimated current market discount rates that reflect the
credit and interest rate risk inherent in the loan. The fair value for significant
non-performing loans is based on specific evaluations of discounted expected future cash flows
from the loans or its collateral using current appraisals and market rates.
The fair value of non-interest bearing demand deposits, savings and NOW accounts is the
amount payable on demand at the reporting date. The fair value of fixed-maturity certificates
of deposit is based on the discounted value of the contractual cash flows, using estimated
current market discount rates for deposits of similar remaining maturities.
For short-term borrowings, the carrying amount is considered a reasonable estimate of fair
value. The fair value of long-term borrowings is based on the discounted value of the
contractual cash flows, using current estimated market discount rates for borrowings with
similar terms and remaining maturities.
The fair value of interest rate swaps (excluding balance guarantee
swaps) and index option contracts were obtained from dealer quotes.
In the case of balance guarantee swaps, the fair values were
estimated by management based on the present value of expected future
cash flows using discount rates of the swap yield curve and
considering prepayment assumptions for similar mortgage loans. These
fair values represent the estimated amount the Group would receive or
pay to terminate the contracts taking into account the current
interest rates and the current creditworthiness of the counterparties.
The fair value of commitments to extend credit and unused lines of credit is based on fees
currently charged to enter into similar agreements, taking into account the remaining terms of
the agreements and the counterparties credit standings.
Table of Contents
Year ended June 30, (Dollars in thousands)
Financial
Total Major
Banking
Treasury
Services
Segments
Eliminations
Total
$
79,220
$
110,033
$
59
$
189,312
$
$
189,312
(44,676
)
(58,223
)
(102,899
)
(102,899
)
34,544
51,810
59
86,413
86,413
14,234
6,141
14,510
34,885
34,885
(50,923
)
(1,458
)
(10,639
)
(63,020
)
(63,020
)
3,684
3,684
(3,684
)
(558
)
(3,126
)
(3,684
)
3,684
(3,315
)
(3,315
)
(3,315
)
$
(1,776
)
$
55,935
$
804
$
54,963
$
$
54,963
$
977,083
$
3,655,639
$
9,592
$
4,642,314
$
(391,662
)
$
4,250,652
$
52,126
$
112,174
$
85
$
164,385
$
$
164,385
(17,109
)
(60,065
)
(77,174
)
(77,174
)
35,017
52,109
85
87,211
87,211
14,748
13,575
17,711
46,034
46,034
(42,524
)
(3,254
)
(13,654
)
(59,432
)
(59,432
)
2,964
1,028
3,992
(3,992
)
(392
)
(3,600
)
(3,992
)
3,992
(4,587
)
(4,587
)
(4,587
)
$
5,618
$
62,038
$
1,570
$
69,226
$
$
69,226
$
771,483
$
3,096,449
$
12,342
$
3,880,274
$
(154,579
)
$
3,725,695
$
51,486
$
100,176
$
84
$
151,746
$
$
151,746
(20,312
)
(57,023
)
(77,335
)
(77,335
)
31,174
43,153
84
74,411
74,411
13,350
10,766
14,923
39,039
39,039
(41,424
)
(2,850
)
(9,382
)
(53,656
)
(53,656
)
4,888
276
5,164
(5,164
)
(2,136
)
(329
)
(2,699
)
(5,164
)
5,164
(4,190
)
(4,190
)
(4,190
)
$
1,662
$
50,740
$
3,202
$
55,604
$
$
55,604
$
822,681
$
2,423,203
$
9,746
$
3,255,630
$
(215,079
)
$
3,040,551
Table of Contents
CONDENSED STATEMENTS OF FINANCIAL POSITION
(Parent Company Only)
As of June,
(In thousands)
2005
2004
$
15,489
$
10,926
11,734
12,240
11,130
11,134
247,000
180,737
10,054
12,607
119,954
140,602
2,221
2,231
$
417,582
$
370,477
$
3,487
$
3,081
175
126
72,166
72,166
152
155
435
282
76,415
75,810
341,167
294,667
$
417,582
$
370,477
(Parent Company Only)
As of June,
(In thousands)
2005
2004
2003
$
5,000
$
23,000
$
11,500
121
143
57
1,287
1,744
2,811
1,952
278
6,408
26,839
14,646
4,325
3,005
2,006
2,656
1,511
1,128
6,981
4,516
3,134
(573
)
22,323
11,512
(202
)
(573
)
22,323
11,310
59,679
40,300
39,525
(2,494
)
1,026
485
56,612
63,649
51,320
6,979
(45,053
)
(7,139
)
$
63,591
$
18,596
$
44,181
Table of Contents
(In thousands)
2005
2004
2003
$
56,612
$
63,649
$
51,320
(59,679
)
(40,256
)
(39,525
)
2,494
(1,070
)
(485
)
9
61
208
(1,952
)
(300
)
202
63
(74
)
99
541
513
(76
)
(56,592
)
(42,778
)
(39,877
)
40
20,871
11,443
(18,236
)
507
26,676
11,367
4
4
20,648
(140,602
)
(1,083
)
(1,591
)
21,159
(115,005
)
(8,460
)
(7,599
)
7,599
4,507
5,896
5,086
49
65
52
(2,005
)
1,495
33,057
(10
)
51,560
35,043
(3,263
)
(499
)
(2,214
)
(17,919
)
(15,014
)
(11,395
)
(16,636
)
100,504
623
4,563
6,370
3,606
10,926
4,556
950
$
15,489
$
10,926
$
4,556
Table of Contents
FIVE-YEAR PERIOD ENDED JUNE 30, 2005
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(1)
Per share related information has been retroactively adjusted to
reflect stock splits and stock dividends, when applicable.
Table of Contents
of Financial Condition and Results of Operations
For the Year ended June 30, 2005
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Fiscal 2005 versus 2004
Fiscal 2004 versus 2003
Interest Income:
Volume
Rate
Total
Volume
Rate
Total
$
6,342
$
(3,506
)
$
2,836
$
5,089
$
(4,445
)
$
644
29,383
(7,292
)
22,091
29,710
(17,715
)
11,995
35,725
(10,798
)
24,927
34,799
(22,160
)
12,639
1,154
(1,422
)
(268
)
883
(4,528
)
(3,645
)
21,598
2,908
24,506
14,581
(12,397
)
2,184
363
1,124
1,487
4,250
(2,950
)
1,300
23,115
2,610
25,725
19,713
(19,874
)
(161
)
$
12,610
$
(13,408
)
$
(798
)
$
15,085
$
(2,285
)
$
12,800
*
Certain adjustments were made to conform
figures to current period presentation.
(1)
Loan fees amounted to $2,430, $2,923 and $2,333 in
fiscal 2005, 2004 and 2003, respectively.
(2)
Real estate loans
averages include loans
held-for-sale.
(3)
The changes that are not due solely to volume or rate are allocated on
the proportion of the change in each category.
Table of Contents
Table of Contents
Table of Contents
THREE-YEAR PERIOD ENDED JUNE 30, 2005
(Dollars in thousands)
2005
2004
Variance %
2003
$
7,774
$
7,719
0.7
%
$
8,026
14,371
17,617
-18.4
%
14,472
22,145
25,336
-12.6
%
22,498
4,858
4,887
-0.6
%
4,075
2,079
2,037
2.1
%
1,625
815
241
238.2
%
268
7,752
7,165
8.2
%
5,968
7,446
13,414
-44.5
%
14,223
(2,811
)
11
-25654.6
%
(4,061
)
(15
)
21
-171.4
%
571
4,620
13,446
-65.6
%
10,733
368
87
323.0
%
(160
)
$
34,885
$
46,034
-24.2
%
$
39,039
Table of Contents
Table of Contents
THREE-YEAR PERIOD ENDED JUNE 30 2005
(Dollars in thousands)
2005
2004
Variance %
2003
$
26,663
$
24,579
8.5
%
$
20,563
10,583
9,639
9.8
%
9,079
6,506
7,466
-12.9
%
7,052
6,994
5,631
24.2
%
6,467
1,630
1,849
-11.8
%
1,671
1,727
1,853
-6.8
%
1,775
1,836
1,754
4.7
%
1,556
2,075
1,679
23.6
%
1,244
891
1,121
-20.5
%
1,038
767
791
-3.0
%
736
3,348
3,070
9.1
%
2,475
$
63,020
$
59,432
6.0
%
$
53,656
55.36
%
77.46
%
72.76
%
54.01
%
49.61
%
51.35
%
0.83
%
0.85
%
0.99
%
42.3
%
41.4
%
38.3
%
0.63
%
0.66
%
0.68
%
$
50.4
$
45.1
$
40.6
529
545
506
$
8,035
$
6,836
$
6,009
426
454
423
52
52
57
42
20
33
520
526
513
Table of Contents
Table of Contents
Table of Contents
(Dollars in thousands)
Variance
2005
2004
%
2003
$
1,959,760
$
2,467,384
-20.6
%
$
2,092,939
1,029,980
206,977
397.6
%
53,813
108,968
115,846
-5.9
%
50,208
66,023
20,636
219.9
%
11,681
39,791
7,747
413.6
%
1,152
27,058
28,160
(0.04
)
22,537
3,231,580
2,846,750
13.5
%
2,232,330
895,923
745,195
20.2
%
724,295
(6,495
)
(7,553
)
-14.0
%
(5,031
)
889,428
737,642
20.6
%
719,264
17,963
5,814
209.0
%
9,198
907,391
743,456
22.1
%
728,462
1,034
47,312
-97.80
%
1,894
4,140,005
3,637,518
13.8
%
2,962,686
14,892
9,284
60.4
%
15,945
23,735
19,127
24.1
%
17,716
15,269
18,552
-17.7
%
16,162
6,191
7,337
-15.6
%
3,731
4,186
888
371.4
%
536
46,374
32,989
40.6
%
23,775
110,647
88,177
25.5
%
77,865
$
4,250,652
$
3,725,695
14.1
%
$
3,040,551
60.6
%
86.7
%
93.8
%
31.9
%
7.3
%
2.4
%
3.4
%
4.1
%
2.2
%
4.1
%
1.9
%
1.6
%
100.0
%
100.0
%
100.0
%
Table of Contents
Maturities
After one year to five
Balance
years
After five years
outstanding at
One Year
Fixed
Variable
Fixed
Variable
June 30, 2005
or Less
Interest Rates
Interest Rates
Interest Rates
Interest Rates
(In thousands)
$
753,934
$
1,179
$
34,304
$
$
607,962
$
110,490
(1)
129,670
33,133
4,878
73,468
1,015
17,175
30,282
16,085
13,363
834
$
913,886
$
50,397
$
52,545
$
73,468
$
609,811
$
127,665
(1)
Fixed rate converted to variable (see note 4).
Table of Contents
Five-Year Period Ended June 30, 2005
(Dollars in thousands)
2005
2004
2003
2002
2001
$
735,971
$
644,964
$
660,874
$
506,872
$
392,492
129,670
81,572
43,553
41,205
25,829
30,282
18,659
19,826
22,077
22,717
42
295
827
895,923
745,195
724,295
570,449
441,865
(6,495
)
(7,553
)
(5,031
)
(3,039
)
(2,856
)
889,428
737,642
719,264
567,410
439,009
17,963
5,814
9,198
9,360
23,570
$
907,391
$
743,456
$
728,462
$
576,770
$
462,579
82.5
%
86.7
%
91.0
%
89.0
%
89.0
%
14.2
%
10.9
%
5.9
%
7.1
%
5.6
%
3.3
%
2.4
%
2.7
%
3.8
%
4.9
%
0.0
%
0.0
%
0.4
%
0.0
%
1.0
%
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
(1)
Discontinued in June 2000.
(2)
Includes loans held for sale
Table of Contents
AS OF JUNE 30, 2005, 2004 AND 2003
(Dollars in (thousand)
Variance
2005
2004
%
2003
$
62,205
$
44,622
39.4
%
$
63,919
89,930
81,644
10.1
%
68,389
93,920
88,459
6.2
%
92,206
1,002,908
807,783
24.2
%
817,895
1,248,963
1,022,508
22.1
%
1,042,409
3,934
1,841
113.7
%
1,856
1,252,897
1,024,349
22.3
%
1,044,265
2,191,756
1,895,865
15.6
%
1,400,598
300,000
300,000
0.0
%
130,000
72,166
72,166
0.0
%
36,083
15,000
15,000
0.0
%
15,000
12,310
100.0
%
2,591,232
2,283,031
13.5
%
1,581,681
22,772
89,068
-74.4
%
152,219
3,866,901
3,396,448
13.9
%
2,778,165
42,584
34,580
23.1
%
60,706
$
3,909,485
$
3,431,028
13.9
%
$
2,838,871
5.0
%
4.4
%
6.1
%
7.2
%
8.0
%
6.6
%
7.5
%
8.7
%
8.8
%
80.3
%
78.9
%
78.5
%
100.0
%
100.0
%
100.0
%
84.6
%
83.0
%
88.6
%
11.6
%
13.1
%
8.2
%
2.8
%
3.2
%
2.3
%
0.6
%
0.7
%
0.9
%
0.4
%
0.0
%
0.0
%
100.0
%
100.0
%
100.0
%
$
2,191,756
$
1,895,865
$
1,400,598
$
2,174,312
$
1,597,720
$
1,158,243
$
2,398,861
$
1,895,865
$
1,400,598
2.29
%
1.12
%
1.50
%
3.07
%
1.23
%
1.12
%
(In thousands)
$
307,052
57,058
196,303
28,597
$
589,010
Table of Contents
Table of Contents
AS OF JUNE 30, 2005, 2004 and 2003
(In thousands, except for per share data)
Variance
2005
2004
%
2003
$
341,167
$
294,667
15.8
%
$
201,680
10.65
%
11.24
%
-5.2
%
8.19
%
4.00
%
4.00
%
4.00
%
$
447,543
$
408,007
9.7
%
$
234,979
$
168,080
$
145,209
15.8
%
$
114,720
38.83
%
37.98
%
2.2
%
24.48
%
4.00
%
4.00
%
4.00
%
$
447,543
$
408,007
9.7
%
$
234,979
$
46,105
$
42,966
7.3
%
$
38,400
39.39
%
38.69
%
1.8
%
25.00
%
8.00
%
8.00
%
8.00
%
$
454,038
$
415,560
9.3
%
$
240,010
$
92,210
$
85,932
7.3
%
$
76,800
24,904
24,208
35.7
%
21,368
$
10.97
$
9.36
-11.1
%
$
7.87
$
15.26
$
24.61
-38.0
%
$
21.23
$
501,245
$
595,729
-15.9
%
$
453,660
$
13,522
$
11,425
18.4
%
$
9,415
$
0.55
$
0.51
7.8
%
$
0.38
26.10
%
19.22
%
35.8
%
0.00
%
2.33
%
2.19
%
6.4
%
0.00
%
Cash
Price
Dividend
High
Low
Per share
$
23.47
$
13.66
$
0.14
$
28.94
$
22.97
$
0.14
$
28.41
$
24.37
$
0.14
$
26.64
$
22.76
$
0.13
$
29.77
$
23.26
$
0.13
$
29.55
$
22.45
$
0.13
$
23.77
$
19.87
$
0.13
$
22.30
$
19.28
$
0.12
$
21.77
$
17.90
$
0.12
$
17.96
$
16.58
$
0.12
$
17.03
$
13.12
$
0.12
$
16.69
$
13.72
$
0.10
(1)
Adjusted to give retroactive effect to the 10% stock dividends declared on the Groups common stock on November 30, 2004.
Table of Contents
Table of Contents
Five-Year Period Ended June 30, 2005
(Dollars in thousands)
2005
2004
2003
2002
2001
$
7,553
$
5,031
$
3,039
$
2,856
$
6,837
3,315
4,587
4,190
2,117
2,903
(4,373
)
(2,065
)
(2,198
)
(1,934
)
(6,884
)
$
6,495
$
7,553
$
5,031
$
3,039
$
2,856
Five-Year Period Ended June 30, 2005
(Dollars in thousands)
2005
2004
2003
2002
2001
$
3,167
$
3,861
$
1,749
$
1,178
$
816
1,714
1,317
433
284
419
1,335
1,462
1,289
1,486
1,318
10
73
303
279
913
1,550
18
$
6,495
$
7,553
$
5,031
$
3,039
$
2,856
48.8
%
51.1
%
34.8
%
38.8
%
28.6
%
26.4
%
17.4
%
8.6
%
9.3
%
14.7
%
20.6
%
19.4
%
25.6
%
48.9
%
46.1
%
0.0
%
0.0
%
0.2
%
2.4
%
10.6
%
4.2
%
12.1
%
30.8
%
0.6
%
0.0
%
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
0.42
%
0.59
%
0.26
%
0.23
%
0.20
%
1.32
%
1.61
%
0.99
%
0.69
%
1.62
%
4.41
%
7.84
%
6.50
%
6.73
%
5.80
%
0.00
%
0.00
%
23.81
%
24.75
%
36.64
%
0.03
%
0.10
%
0.21
%
0.00
%
0.00
%
0.71
%
1.01
%
0.69
%
0.52
%
0.61
%
14.1
%
35.6
%
29.0
%
31.9
%
23.8
%
21.1
%
24.5
%
17.4
%
15.1
%
16.9
%
139.0
%
229.8
%
217.3
%
256.2
%
103.4
%
(1)
Includes loans held for sale.
(2)
Discontinued in June 2000.
Table of Contents
Five-Year Period Ended June 30, 2005
(Dollars in thousands)
2005
2004
2003
2002
2001
$
(2,860
)
$
(378
)
$
(5
)
$
(30
)
$
(77
)
(2,860
)
(378
)
(5
)
(30
)
(77
)
(614
)
(249
)
(24
)
(222
)
118
139
63
42
58
(496
)
(110
)
39
42
(164
)
(1,619
)
(2,563
)
(2,928
)
(2,389
)
(3,289
)
602
832
606
566
1,352
(1,017
)
(1,731
)
(2,322
)
(1,823
)
(1,471
)
(17
)
(138
)
(420
)
(5,442
)
171
228
297
736
154
90
(123
)
(4,706
)
(5,093
)
(3,207
)
(3,095
)
(2,839
)
(9,030
)
720
1,142
897
905
2,146
$
(4,373
)
$
(2,065
)
$
(2,198
)
$
(1,934
)
$
(6,884
)
0.41
%
0.06
%
0.00
%
0.01
%
0.02
%
0.46
%
0.19
%
-0.10
%
-0.13
%
0.72
%
4.31
%
9.70
%
11.97
%
8.46
%
7.54
%
0.00
%
1100.00
%
-50.85
%
22.20
%
95.90
%
0.53
%
0.28
%
0.33
%
0.35
%
1.55
%
$
699,027
$
662,590
$
608,189
$
495,631
$
401,916
108,636
57,047
40,477
31,345
22,926
23,576
17,853
19,404
21,549
19,517
14
177
554
4,907
$
831,239
$
737,504
$
668,070
$
549,079
$
444,359
(1)
Discontinued in June 2000.
(2)
Includes loans held for sale.
Five-Year Period Ended June 30, 2005
(Dollars in thousands)
2005
2004
2003
2002
2001
$
21,859
$
23,714
$
10,350
$
10,196
$
6,537
8,997
7,224
18,532
9,920
10,366
30,856
30,938
28,882
20,116
16,903
4,186
888
536
476
847
107
$
35,042
$
31,826
$
29,418
$
20,592
$
17,857
0.82
%
0.85
%
0.97
%
0.83
%
0.88
%
$
2,164
$
843
$
648
$
724
$
664
Table of Contents
Five-Year Period Ended June 30, 2005
(Dollars in thousands)
2005
2004
2003
2002
2001
$
26,184
$
27,651
$
26,567
$
18,930
$
14,140
4,549
2,954
1,798
585
1,535
123
333
498
454
588
19
147
640
$
30,856
$
30,938
$
28,882
$
20,116
$
16,903
84.9
%
89.4
%
92.0
%
94.1
%
83.7
%
14.7
%
9.6
%
6.2
%
2.9
%
9.1
%
0.4
%
1.1
%
1.7
%
2.3
%
3.5
%
0.0
%
0.0
%
0.1
%
0.7
%
3.8
%
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
3.38
%
4.12
%
3.94
%
3.47
%
3.63
%
0.73
%
0.83
%
0.95
%
0.81
%
0.83
%
9.04
%
10.50
%
14.32
%
12.09
%
14.89
%
(1)
Discontinued in June 2002.
Table of Contents
1.
Overall historical loss trends; and
2.
Other information, including underwriting standards, economic trends and unusual
events.
Real estate loans
are placed in non-accrual status when they
become 365 days or more past due and are written- down, if
necessary, based on the specific evaluation of the collateral
underlying the loan. At June 30, 2005, the Groups non-performing
real estate loans totaled $26.2 million (84.9% of the Groups
non-performing loans, compared to $27.7 million or 89.4% at June
30, 2004, and to $26.6 million or 92.0% at June 30, 2003).
Non-performing loans in this category are primarily residential
mortgage loans. Based on the value of the underlying collateral
and the loan-to-value ratios, management considers that no
significant losses will be incurred on this portfolio.
Commercial business loans
are placed in non-accrual status when
they become 90 days or more past due and are charged-off based on
the specific evaluation of the underlying collateral. At June 30,
2005, the Groups non-performing commercial business loans
amounted to $4.5 million (14.7% of the Groups non-performing
loans, compared to $3.0 million or 9.6% at June 30, 2004, and $1.8
million or 6.2% at June 30, 2003). Most of this portfolio is also
collateralized by real estate and no significant losses are
expected.
Consumer loans
are placed in non-accrual status when they become
90 days past due and charged-off when payments are delinquent 120
days. At June 30, 2005, the Groups non-performing consumer loans
amounted to
$123,000 (0.4% of the Groups total non-performing loans, compared to $333,000 or 1.1% at June
30, 2004, and $498,000 or 1.7% at June 30, 2003).
Finance leases
are placed in non-accrual status when they become
90 days past due. There are no non-performing financing leases at
June 30, 2005 and 2004. At June 30, 2003, the Groups
non-performing financing leases portfolio amounted to $19,000
(0.1% of the Groups total non-performing loans and compared to
$147,000 or 0.7% at June 30,
Table of Contents
2002). The underlying collateral
secures these financing leases. As reported, the Group
discontinued leasing operations on June 30, 2000.
Foreclosed real estate
is initially recorded at the
lower of the related loan balance or fair value at the date of
foreclosure. Any excess of the loan balance over the fair market
value of the property is charged against the allowance for loan
losses. Subsequently, any excess of the carrying value over the
estimated fair market value less selling costs is charged to
operations. Management is actively seeking prospective buyers for
these foreclosed real estate properties. Foreclosed real estate
balance amounted to $4.2 million at June 30, 2005 and $888,000 at
June 30, 2004, $536,000 at June 30, 2003 and $476,000 June 30,
2002.
Table of Contents
(Dollars in thousands)
2005
2004
$
885,000
$
900,000
3.44
%
3.47
%
3.27
%
1.25
%
4 to 64
3 to 76
100
%
100
%
Table of Contents
Notional Amount
(In thousands)
Type of Contract:
2005
2004
$
850,000
$
900,000
35,000
106,703
$
991,703
$
900,000
$
186,010
$
227,260
178,478
218,884
$
364,488
$
446,144
(In thousands)
Equity Indexed
Options
Cash Flows Hedging
Purchased and
Equity Indexed
Year Ending June 30,
Swaps
Swaps
Options Sold
Total
$
325,000
$
54,150
$
52,369
$
431,519
410,000
58,490
55,306
523,796
35,860
34,010
69,870
27,760
27,218
54,978
9,750
9,575
19,325
150,000
150,000
$
885,000
$
186,010
$
178,478
$
1,249,488
Table of Contents
Change in
Expected
Amount
Percent
Interest rate
NII (1)
Change
Change
$
78,855
$
0.00
%
$
50,236
$
(28,619
)
-36.29
%
$
84,867
$
6,012
7.62
%
$
133,430
$
0.00
%
$
123,552
$
(9,878
)
-7.40
%
$
132,876
$
(554
)
-0.42
%
(1)
The NII figures exclude the effect of the amortization of loan fees.
Table of Contents
Table of Contents
Allowance for Loan Losses.
The Group assesses the overall risks in its loan portfolio and
establishes and maintains a reserve for probable losses thereon. The allowance for loan losses
is maintained at a level sufficient to provide for estimated loan losses based on the evaluation
of known and inherent risks in the Groups loan portfolio. The Groups management evaluates the
adequacy of the allowance for loan losses on a quarterly basis. Based on current and expected
economic conditions, the expected level on net loan losses and the methodology established to
evaluate the adequacy of the allowance for loan losses, management considers that the allowance
for loan losses is adequate to absorb probable losses on its loan portfolio. In determining the
allowance, management considers the portfolio risk characteristics, prior loss experience,
prevailing and projected economic conditions and loan impairment measurements. Any significant
changes in these considerations would have an impact on the allowance for loan losses. See
Financial Condition Allowance for Loan Losses and Non-Performing Assets and Note 1 to the
consolidated financial statements Summary of Significant Accounting Policies for a detailed
description of the Groups estimation process and methodology related to the allowance for loan
losses.
Income Taxes.
In preparing the consolidated financial statements,
management of the Group is required to estimate income taxes.
This involves an estimation of current tax expense together with
an assessment of temporary differences resulting from differences
between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. The determination of current tax expense involves
estimates and assumptions that require the Group to assume certain
positions based on its interpretation of current tax regulations.
Changes in assumptions affecting estimates may be required in the
future and estimated tax liabilities may need to be increased or
decreased accordingly. The determination of deferred tax expense
or benefit is based on changes in the carrying amounts of assets
and liabilities that generate temporary differences. The carrying
value of the Groups net deferred tax assets assumes that the
Group will be able to generate sufficient future taxable income
based on estimates and assumptions. If these estimates and
related assumptions change in the future, the Group may be
required to record or adjust valuation allowances against its
deferred tax assets resulting in additional income tax expense in
the consolidated statements of income.
Financial Instruments.
Certain financial instruments including
derivatives, hedged items and investment securities
available-for-sale are recorded at fair value and unrealized gains
and losses are recorded in other comprehensive income or other
gains and losses as appropriate. Fair values are based on listed
market prices, if available. If listed market prices are not
available, fair value is determined based on other relevant
factors including price quotations for similar instruments. Fair
value for certain derivative contracts are derived from pricing
models that consider current market and contractual prices for the
underlying financial instruments as well as time valued and yield
curve or volatility factors underlying the positions. See Note 1
to the consolidated financial statements Summary of Significant
Accounting Policies for a detailed description of the Groups
estimation process and methodology related to the financial
instruments.
Table of Contents
Table of Contents
FISCAL YEARS ENDED JUNE 30, 2005, 2004 AND 2003
(dollars in thousands)
Table of Contents
FISCAL YEARS ENDED JUNE 30, 2005, 2004 AND 2003
(dollars in thousands)
September 30,
December 31,
March 31,
June 30,
YTD
$
37,714
$
37,851
$
39,121
$
37,060
$
151,746
19,548
19,414
19,420
18,953
77,335
18,166
18,437
19,701
18,107
74,411
840
1,100
850
1,400
4,190
17,326
17,337
18,851
16,707
70,221
7,567
8,592
8,622
14,258
39,039
(12,836
)
(12,471
)
(13,770
)
(14,579
)
(53,656
)
12,057
13,458
13,703
16,386
55,604
(483
)
(943
)
(697
)
(2,161
)
(4,284
)
11,574
12,515
13,006
14,225
51,320
(597
)
(597
)
(597
)
(596
)
(2,387
)
$
10,977
$
11,918
$
12,409
$
13,629
$
48,933
$
0.53
$
0.57
$
0.59
$
0.64
$
2.32
$
0.49
$
0.53
$
0.55
$
0.59
$
2.15
20,839
21,005
21,055
21,244
21,049
1,712
1,659
1,698
1,662
1,683
22,551
22,664
22,753
22,906
22,732
1.84
%
1.87
%
1.82
%
1.99
%
1.88
%
31.10
%
31.25
%
30.45
%
32.06
%
31.33
%
52.47
%
48.76
%
51.54
%
55.22
%
51.35
%
1.14
%
0.82
%
1.03
%
0.99
%
0.99
%
3.08
%
2.97
%
2.93
%
2.65
%
2.91
%
(1)
Adjusted for stock dividends and stock splits effected in the form of dividend.
EXHIBIT 10.5
LEASE AGREEMENT
ENTERED into this 18th day of May, 2004, by and between PROFESSIONAL OFFICES PARK V, INC. (hereafter "Landlord"), a corporation organized and existing under the laws of the Commonwealth of Puerto Rico, and ORIENTAL FINANCIAL GROUP INC., a financial holding company organized and existing under the laws of the Commonwealth of Puerto Rico (hereafter "Tenant").
1. THE LAND. Landlord is the owner of that certain parcel of land with an area of approximately 17,047.5556 square meters, located at State Road Number 1, kilometer 15.1, Marginal Road, Monacillos Ward, San Juan, Puerto Rico, more accurately described in the survey attached hereto as EXHIBIT A, with full and unimpaired access to State Road Number One and State Road #8838 (hereafter the "Land") . The legal description of the Land and its recording data appears in EXHIBIT B attached hereto.
2. PLANS AND SPECIFICATIONS FOR THE BUILDING. Landlord engaged the services of Underwood Architects (the "Building Architects")to prepare the plans and specifications, including but not limited to schematic drawings, design development, floor plans, parking plans, and final drawings (hereafter the "Plans and Specifications") for the construction by Landlord of a fifteen (15) story building on the Land (Tower III), with approximately 130,896 square feet of rentable space (hereafter the "Building"). The construction plans and specifications of the Building (hereafter the "Construction Plans") are attached hereto as EXHIBIT C.
2.1. Landlord has delivered a full copy of the Construction Plans to Tenant. Tenant shall provide Landlord
a preliminary floor plan distribution for the Premises (as such term is hereinafter defined) no later than December 1st, 2004 and the final floor plan distribution not later than April 1st, 2005.
3. CONSTRUCTION OF BUILDING. Landlord represents to Tenant that construction of the Building on the Land will be carried out in accordance with the Plans and Specifications, good construction practice, in a workmanlike manner and in compliance with all applicable governmental laws and regulations, including zoning and building codes and regulations.
3.1. As soon as practicable, but not later than one hundred and twenty (120) days prior to the projected substantial completion date for the Building established in paragraph 8, as such substantial completion date may be extended pursuant to paragraph 8.1, Tenant and Tenant's agents and contractors shall have the required access to the Premises to make such leasehold improvements to the Premises as may be deemed necessary by Tenant, and to install Tenant's communications antenna, satellite dish, building signage, telephone communications, security, and computer systems and other trade fixtures and equipment (hereinafter collectively "Tenant's Improvements"), all of which is hereby authorized by Landlord subject only to the compliance by Tenant with the applicable provisions of this Agreement. The cost and expenses of Tenant's Improvements shall be for the account of Tenant. Landlord will coordinate with the Building's Contractor to insure that Tenant, its agents and contractors shall have the required access to the Building and the Premises to perform Tenant's Improvements.
3.2. CONSTRUCTION OF TENANT'S IMPROVEMENTS. The Building and the Premises shall be considered ready for the construction of Tenant's Improvements when it has been enclosed and access to the Building and the Premises is possible, at a minimum, by means of a construction elevator (hoist).
3.3. Landlord shall make the improvements to the Premises listed in EXHIBIT D at its own cost and expense. Landlord shall install a sprinkler system in all floors of the Building, except for the area in the Premises designated by Tenant to be occupied by Tenant's data processing equipment. If required, Tenant shall provide, at its own cost and expense, fire prevention and safety measures for such areas.
4. THE PREMISES. Tenant shall lease from Landlord the fifth (5th) and sixth (6th) floors of the Building, each with a rentable area of 21,706 square feet, for a total rentable area of 43,412 square feet (the "Premises"). The total rentable area of the Premises and the Building and the percentage that the Premises represents of the total rentable area of the Building shall be determined by the Building Architects and verified by Tenant's architects upon the substantial completion of the Building using the American National Standard BOMA ANSI 265.1-1980, as reaffirmed in 1989, published by the Building Owners and Managers Association (the "BOMA System").
4.1. Tenant shall have the option to lease the fourth (4th) floor of the Building with a rentable area of 21,706 square feet. Tenant's option of leasing the fourth (4th) floor of the Building will expire on February
1st,
2005. If Tenant exercises such option, the total rentable area of the Premises shall be 65,118 square feet, as may be adjusted following the procedure described above.
4.2. Commencing with rental offers made by Landlord after the Commencement Date, Tenant shall have the first right of refusal with respect to leasing of space in the Building by Landlord. Tenant shall have fifteen (15) business days from Landlord's written notice in which to accept the space and execute the appropriate lease amendment incorporating such space into this Agreement. If Tenant fails to accept the space, Landlord may lease it to another tenant. If Tenant accepts the space, the Basic Rent (as defined hereinbelow) applicable to the lease of such additional space by Tenant shall be the same to that offered by Landlord to the prospective tenant. All other terms and conditions applicable to the lease of the Premises under this Agreement shall be applicable to the lease of such additional space.
5. FINANCING. Landlord represents that it has secured at its own risk, cost and expense, the interim financing necessary for the construction of the Building as well as its permanent financing, as required to fulfill Landlord's obligations under this Agreement.
6. AUTHORIZED USE. Landlord represents, warrants, and agrees that the Land, the Building, the Premises and the use and occupancy of the Premises by Tenant for the purposes authorized in paragraph 21 of this Agreement shall comply with all applicable laws and regulations from time to time in effect.
7. TENANT ACCESS. During the period of construction, Tenant and its representatives shall have access to the Land, the Building and the Premises at all reasonable times for the purpose of inspecting the work as it progresses to determine compliance with this Agreement and the Plans and Specifications.
7.1. Such access by Tenant shall not interfere with construction by Landlord. No such inspection by Tenant or failure to inspect shall relieve Landlord of its responsibility for constructing the Building in accordance with the Plans and Specifications.
8. TIME FOR SUBSTANTIAL COMPLETION. The Building shall be substantially completed not later than March 31st, 2006. Unavoidable delays solely caused by, or arising out of, adverse weather conditions, unforeseeable labor or material shortages, action of the civil authorities or any other cause beyond the control of Landlord shall extend the construction completion date on a day for day basis, provided that Landlord notifies Tenant of such occurrence within five (5) calendar days after the start of any such delay and within five (5) calendar days after the resumption of work.
8.1. In the event that Landlord or the Building Architects determine or anticipate that the substantial completion of the Building will not occur by March 31st, 2006, Landlord shall promptly give Tenant notice of such delay. If the substantial completion of the Building is not expected to occur before October 1st, 2006, Tenant shall have the option to terminate this Agreement at any time by notice to Landlord and, upon such termination, both parties shall be relieved of all obligations to each other emanating
from this Agreement, and neither party shall have any liability to the other emanating from this Agreement, except that Landlord shall reimburse Tenant for the cost and expenses of any Tenant's Improvements made by Tenant pursuant to paragraph 3.1 above; provided, however, that in no event shall Landlord be responsible for the reimbursement of such cost and expenses in excess of $10.00 per usable square feet.
9. PERFORMANCE BOND. Landlord has secured a bond from the contractor under the contract for construction of the Building guaranteeing the performance by such contractor of all the undertakings, covenants, terms, conditions and agreements to be performed and observed by the contractor under said contract.
10. SUBSTANTIAL COMPLETION. Construction of the Building and the Premises shall be considered substantially completed when all work has been finished in accordance with the Plans and Specifications, including the work to be performed by Landlord on the Premises pursuant to paragraph 3.3, and a preliminary certificate of occupancy shall have been issued by the appropriate governmental agency permitting the use and occupancy of the Building and the Premises by Tenant for the purposes herein authorized.
10.1. Substantial completion of the Building and the Premises shall include but not be limited to, the following: (i) air conditioning, plumbing and electrical systems, and elevators installed and operating and in good working condition; (ii) a temporary or permanent certificate of occupancy issued by the appropriate government agency,
permitting the occupancy of the Building and the Premises for the purposes and use intended by Tenant.
11. INSURANCE DURING CONSTRUCTION. During construction, Landlord shall maintain such insurance coverage with carriers licensed to do business in Puerto Rico and acceptable to Tenant, as it may be necessary to protect Tenant from claims for property damage or bodily injury, including death, which may arise from and during the construction of the Building and Landlord's work on the Premises, whether such claims be against Landlord or any contractor or anyone directly or indirectly employed by either of them. Tenant shall be named as an additional insured under all such policies. Landlord shall deliver to Tenant an insurance certificate evidencing such insurance within thirty (30) days from the date hereof.
12. COMMENCEMENT DATE. Subject to the provisions of paragraphs 10 and 14 of this Agreement, the lease term and the obligation to pay rent shall commence on the date that the Premises are ready for occupancy by Tenant as defined in paragraph 14 (the "Commencement Date").
13. INITIAL TERM. The lease term shall be for a period of ten (10) years commencing on the Commencement Date (the "Initial Term").
14. READY FOR OCCUPANCY. For purposes of paragraph 12 of this Agreement, the Premises shall be ready for occupancy upon the occurrence of all of the following to the satisfaction of Tenant: (a) the issuance of a preliminary certificate of occupancy by the appropriate authorities permitting the use and occupancy of the Building and the Premises by Tenant for the
purpose of conducting the business of Tenant. Landlord shall pursue with due
diligence all action required for the issuance of such certificate of occupancy;
(b) the substantial completion of (i) the Building and the Premises, (ii) all
construction, installation, and other work required to be done by Landlord
hereunder; and (iii) the plumbing, air conditioning and electrical systems
serving the Building and the Premises; (c) the means of ingress and egress to
the Building, the Building's parking garage and the Premises are in no manner
obstructed; and (d) Tenant shall have inspected the Land, the Building and the
Premises and notified Landlord to have found them to its satisfaction. Landlord
shall notify Tenant thirty (30) days prior to the date Landlord expects to have
the Premises ready for occupancy, during which period Tenant shall have the
right to inspect.
15. EXTENSIONS OF TERM. Tenant shall have the option to extend the Initial Term upon the same terms and conditions contained in this Agreement (except that the rent shall be increased as hereafter provided) for a second term of five (5) years (hereafter the "First Extended Term") to commence on the day after expiration of the Initial Term; for a third term of five (5) years (hereafter the "Second Extended Term"), to commence on the day after expiration of the First Extended Term and for a fourth term of five (5) years (hereafter the "Third Extended Term"), to commence on the day after expiration of the Second Extended Term.
15.1. Not later than twelve (12) months from the date of expiration of the Initial Term or of any extension thereof, Landlord shall send Tenant a reminder notice and
Tenant shall have ninety (90) days from the date of such notice to exercise its option to extend the term.
15.2. Tenant will have the option to terminate this Agreement at any time after the end of the fifth (5th) year of the Initial Term and during any extended term with the payment of a penalty of one (1) year Basic and Additional Rent (as such terms are defined herein below) and after having notified Landlord of the exercise of such option at least 120 days prior to the intended date of termination. The termination penalty will be paid by Tenant in twelve (12) equal monthly installments of Basic and Additional Rent following the date of termination. Should Landlord lease all or part of the Premises during the twelve (12) months following the termination of the Lease Agreement, the amount to be paid as penalty by Tenant will be reduced by an amount equal to the Basic and Additional Rent per square feet payable by the new tenant to Landlord.
16. RENT. Tenant shall pay to Landlord a basic rent for the Premises (the "Basic Rent") as follows:
16.1. For the Initial Term - $22.63 per rentable square foot per annum;
16.2. For the First Extended Term - $25.00 per rentable square foot per annum;
16.3. For the Second Extended Term - $27.63 per rentable square foot per annum; and
16.4 For the Third Extended Term - $30.52 per rentable square foot per annum.
17. PAYMENT OF RENT. Prior to the Commencement Date of the Initial Term, the aggregate number of rentable square feet in the Premises shall be determined as provided in paragraph 4 and the rent shall be fixed and established as a full dollar amount per year and month. All rent shall be payable in legal tender of the United States of America, without notice or demand, at the address designated hereunder for notices, in equal monthly installments, in advance on the first day of each calendar month of the Lease Term. If the Lease Term commences on a day other than the first day of a calendar month, Tenant shall pay to Landlord, on or before the Commencement Date, a pro rata portion of the monthly installment of rent due for such a partial month, such pro rata portion to be based on the number of days remaining in such partial month after the Commencement Date.
17.1. No security deposit shall be required.
17.2. The extension of time for payment of any installment of rent, or the acceptance by Landlord of any payment other than as herein specified, shall not be a waiver of the rights of Landlord to insist on that all other payments of rent be made in the manner and at the time herein specified.
17.3. No payment by Tenant or receipt by Landlord of a lesser amount than the stipulated monthly rent shall be deemed other than a payment on account of the earliest rent due, nor shall any endorsement or statement on any check or on any letter accompanying any payment be deemed an accord
and satisfaction. Landlord may accept such check or payment without prejudice to its right to recover the balance of the rent due or to pursue any other remedy provided for in this Agreement.
17.4. Any amounts payable by Tenant to Landlord not paid when due shall bear interest at Citibank, N.A. New York base (prime) rate, from due date until paid. Payment of such interest shall not excuse or cure any default by Tenant under this Agreement provided, however, that, notwithstanding the foregoing, the first time in any Lease Year that any payment due hereunder is not paid on its due date, or within five (5) days thereafter, no interest shall be due on such late payment if such payment is made in full not later than five (5) days after its due date.
18. NAME; COLOR SCHEME OF BUILDING. During the Initial Term and, if applicable, the First Extended Term and the Second Extended Term, and provided that it leases from Landlord at least 43,412 square feet of rentable space in the Building (as such rentable square footage may be adjusted pursuant to the provision of paragraph 4), Tenant shall have the exclusive right to (i) select the exterior and interior color scheme for the Building, except for the color scheme for the interiors of those premises that may be leased to other tenants, provided, that the selection of the exterior and the interior color scheme for the Building is made by Tenant not later than one hundred eighty (180) days prior to November 16, 2005, the estimated date for the commencement of Tenant's Improvements as provided in paragraph 3.2 (as it may be extended as provided herein) and, provided further, that once such selection is made by Tenant, the color scheme shall remain the same for the duration of this
Agreement unless Tenant and Landlord shall mutually agree otherwise; (ii) name and identify the Building with a name, trade name or trademark (or combinations thereof) selected by Tenant; and (iii) place or install on the Land, the exterior and interior of the Building, the lobbies of the floors where the Premises are located, and in the Premises such names, markings, letterings, signs and other indicia as Tenant shall deem proper or advisable, all in good taste and in compliance with all applicable laws and regulations. Tenant shall bear the cost of any name, trade name or trademark (or combinations thereof) installed by Tenant in the Land, the Building or the Premises. The Building will be known as the "Oriental Group Building." All Building identifications will have Oriental Group's name. Tenant will be allowed to place banners and video displays in the exterior of the Building and signs in the lobby with prior approval from Landlord which will not be unreasonably denied, delayed or conditioned. Tenant will be the only institution allowed to place signs in the exterior of the Building and its lobby.
18.1. Tenant shall pay Landlord an annual fee of $24,000 in equal monthly installments for the rights described above. In the event that Tenant exercises its option to lease an additional floor in the Building as provided in paragraph 4.1, Tenant will not have to pay the $24,000 annual fee provided for above.
18.2 If Tenant does not lease at least 43,412 rentable square feet in the Building (as may be adjusted pursuant to paragraph 4.), Tenant's rights with respect to the color scheme and the name and identity of the Building as described in this paragraph 18 shall cease and Tenant shall no longer be obligated to pay Landlord the annual fee
for those rights provided for in paragraph 18.1 above. The above notwithstanding, while this lease agreement is in effect, the color scheme and the name and identity of the Building shall never correspond to that of a competitor of Tenant.
19. ALTERATIONS OR IMPROVEMENTS BY TENANT. Except as otherwise provided in paragraph 3.1, during the lease term Tenant may, at its own cost and expense, and with the prior written consent of Landlord, which shall not be unreasonably withheld, delayed, or conditioned, make structural improvements, betterments, alterations and additions to the Premises; non-structural improvements, betterments, alterations, and additions to the Premises shall not require the prior written consent of Landlord. Title to all improvements, alterations and additions made by Tenant to the Premises under the provision of paragraph 3.1 or this paragraph, other than trade fixtures, equipment and other movable property, shall pass to Landlord upon the expiration or earlier termination of this Agreement without any compensation to Tenant.
19.1. TENANT'S IMPROVEMENT ALLOWANCE. Notwithstanding anything herein to the contrary, Landlord shall reimburse Tenant in cash the first $376,620 spent by Tenant in Tenant's Improvements. Such reimbursement shall be made by Landlord to Tenant within thirty (30) days after Tenant's Architect certifies to Landlord that Tenant's Improvements to the Premises have been completed in accordance with the plans and specifications therefor. The Tenant's Improvement allowance will increase by $188,310 if Tenant exercises its option to lease the 4th floor of the Building.
19.2. Landlord will pay Tenant a minimum of $250,000 to compensate for unamortized leasehold improvements of Tenant at Premises leased from Landlord and Landlord's affiliates at the time this lease agreement is executed (the "vacated premises") , on the first to occur of, (i) one hundred twenty (120) days from the Commencement Date or (ii) ten (10) days after receipt of payment from new tenant, as follows:
a. If new tenant (s) for the vacated premises pay(s) Landlord $250,000 or more for the leasehold improvements to the vacated premises, Landlord will pay Tenant the amount paid to it by such tenant(s) plus $100,000;
b. If new tenant (s) for the vacated premises pay(s) Landlord $150,000 or more but less than $250,000 for the leasehold improvements to the vacated premises, Landlord will pay Tenant the amount paid to it by such tenant(s) plus $100,000; and
c. If new tenant(s) for the vacated premises pay (s) Landlord less than $150,000 for the leasehold improvements to the vacated premises, Landlord shall pay Tenant $250,000.
19.3. Landlord hereby consents to the installation, maintenance, and removal by Tenant of up to two (2) satellite dish-type antennas or other common roof top communication systems on the roof of the Building with the exception of the elevators roof.
20. REAL ESTATE TAXES. Tenant shall pay to Landlord as additional rent an amount equal to Tenant's proportionate share of real property taxes for any tax year during the lease term ("Tenant's Real Property Taxes") which shall be paid in accordance with sections (i) through (iii) below. Tenant's Real Property Taxes shall be prorated on a per diem basis for any partial tax year included within the lease term. Tenant's Real Property Taxes shall be paid as follows:
(i) Landlord has informed Tenant that it has estimated the real property taxes on the Land, the Building and the Premises for the first year of the lease term (base year) at $1.39 per rentable square feet. Tenant's obligation hereunder shall be to pay such amount as additional rent as provided in (ii) below until such time as the Land, Building and Premises are assessed by the taxing authority and the corresponding tax bill is issued by such taxing authority.
(ii) Thereafter, after receipt of the annual property tax bill for the Land and the Building, Landlord shall furnish Tenant a tax statement together with a copy of said tax bill. Commencing on the Commencement Date, Tenant shall pay one-twelfth (1/12) of Tenant's Real Property Taxes based on Landlord's estimate as provided in (i) above or as shown on the current tax statement, on a monthly basis, together with payments of the Basic Rent, as an estimate and on account of Tenant's Real Property Taxes for the current year, which payments shall continue until receipt by Tenant of a tax statement or other notice from Landlord, pursuant to subsection (iii) below, revising the amount of Tenant's Real Property Taxes or increasing the amount of monthly estimated payments.
(iii) All estimated monthly payments shall be subject to an adjustment when the actual real property taxes for the applicable year can be verified. If the actual taxes are less than the amounts upon which the payments previously made by Tenant were based, Tenant shall receive a credit against the first installment(s) of rent coming due after the end of the calendar year in which such adjustment is received in the amount by which Tenant's payment of Tenant's Real Property Taxes exceeded the payments actually due for the applicable year, or if the lease term has expired, Landlord shall refund the amount of any such overpayment to Tenant within fifteen (15) days after determination of the amount due to Tenant. If the actual taxes are more than the amounts upon which the payments previously made by Tenant were based, the installment of rent next coming due shall include the corresponding retroactive adjustment and subsequent installments of rent shall be adjusted accordingly.
21. USE OF PREMISES. Tenant may use the Premises to conduct its business consisting of financial services and related activities, including general office, data processing, employee cafeteria with vending machines, print shop, storage and related incidental administrative and office use, and for general office use.
21.1 Tenant shall keep and maintain the Premises in good order, condition and repair, except to the extent that Landlord is obligated to do so, and shall keep the Premises free of dirt, rubbish and obstructions.
22. PARKING.
22.1 Tenant shall be entitled to the exclusive use of 150 reserved covered parking spaces at no additional cost to Tenant. The locations of those covered parking spaces are indicated in EXHIBIT E.
22.2 Landlord will provide Tenant 77 additional reserved covered parking spaces rent free for the first two (2) years of the Lease Term at the locations indicated in Exhibit E. After the two (2) year rent-free period, rent for the 77 covered parking spaces will be $90 per parking space per month.
22.3 Tenant shall have the option to lease from Landlord up to 120 additional reserved covered parking spaces at a cost of $90 per parking space per month.
22.4 The parking rent is to be paid by Tenant to Landlord as additional rent within the monthly rent invoice. All Tenant reserved parking spaces shall be marked on the pavement by Tenant.
22.5 In the event that Tenant leases additional office space in the Building, Landlord shall provide Tenant 3.6 additional reserved covered parking spaces for each 1,000 square feet of additional rentable space, at no cost to Tenant.
22.6 Tenant will have the right to occasional overnight parking of cars, trucks, and trailers in the parking spaces assigned to it.
23. UTILITIES. Tenant shall be responsible for the payment of water, gas, electricity, telephone and similar utility services provided to the Premises and utilized by Tenant, all of which shall be separately metered.
23.1. Tenant and/or Tenant's telecommunication companies, including but not limited to, local exchange telecommunication companies and alternative access vendor service companies, shall have the right of access to, from and within the Building (including a pathway to the Premises) for the installation and operation of Tenant's telecommunications systems including, but not limited to, voice, video, data, and any other telecommunication services provided over wire, fiber optic, microwave, wireless, and any other transmission systems, for part or all of Tenant's telecommunications to, from and within the Building and the Premises.
24. BUILDING OPERATION AND SERVICES. The Building will be operated as an
office building with normal business operation, Monday through Friday from 7:00
a.m. to 8:00 p.m., and Saturdays from 8:00 a.m. to 12:00 p.m. ("Normal Hours"),
except for the following legal holidays in the Commonwealth of Puerto Rico: New
Year Day (January 1st) , Three Kings Day (January 6th) , Presidents Day, Holy
Friday, Memorial Day, U.S. Independence Day (July 4th) , Puerto Rico
Constitution Day (July 25th) , Labor Day, Elections Day (election years),
Thanksgiving Day, and Christmas Day (December 25). Landlord will provide
flexible access to the Building, to the Building's parking garage, and the
Premises to Tenant's authorized personnel on a 24 hours a day, 7 days a week
basis. The following services shall be provided to the Building and/or the
Premises by Landlord:
(i) ventilating and air conditioning to provide a reasonably comfortable temperature and ventilation in the common areas of the Building and air conditioning for connection to the distribution system on the floor of the Building where the Premises are located during Normal Hours;
(ii) water, electric, and telephone services for connection to the distribution system for these services on the floors of the Building where the Premises are located;
(iii) cleaning and janitorial services for the Building excluding the Premises, of a scope, quality and frequency of such services customarily provided by landlords of first-class office buildings in San Juan, Puerto Rico;
(iv) five (5) fully automatic elevators for the use of tenants and visitors for access to and from the floors of the Building and its parking garage;
(v) elevator services for freight and maintenance during Normal Hours;
(vi) twenty-four (24) hours a day, seven (7) days a week security services to the Building and the Offices Park which shall consist of at least one (1) security guard on duty at the entrances of the Offices Park;
(vii) sprinkler and fire protection system for the Building and the Premises, including regular checking testing and servicing thereof;
(viii) exterminating services for the Building and the Premises, with a frequency of no less than once a month;
(ix) replacement of lighting tubes, lamp bulbs, and ballast required in the common areas of the Building.
24.1. The services identified above shall be provided by Landlord as part of the Building's operating expenses.
24.2. In case Landlord is prevented or delayed in furnishing any service to be provided by Landlord to Tenant as set forth in this Agreement for any reason or cause whether or not in Landlord's control, Landlord shall not be liable to Tenant therefore unless the interruption continues unremedied for a period of three (3) consecutive business days, nor shall Tenant be entitled to any abatement or reduction in the Basic Rent or Additional Rent by reason thereof except as provided below, nor shall the same give rise to a claim in Tenant's favor that such absence of Building services constitutes actual or constructive, total or partial eviction, or renders the Premises untenantable. Landlord shall use its best efforts to restore such service as soon as reasonably possible. However, in the event such service is not restored within three (3) business days, whether or not through the fault of Landlord, to the extent that Tenant cannot reasonably use all or any part of the Premises, Basic Rent and Additional Rent shall abate as to such part effective on the fourth (4th) business day and continue until such service is restored. If such service is not restored within sixty (60) consecutive days of
interruption, then Tenant shall have the right and option to cancel and terminate this Agreement, on ten (10) days written notice to Landlord, and thereafter shall be relieved of all further liability under this Agreement.
25. MAINTENANCE, REPAIRS AND JANITORIAL CLEANING SERVICES BY TENANT. Tenant shall, at its sole cost and expense, maintain, repair and provide janitorial services to the interior of the Premises, its doorways, windows (interior cleaning only) and walls, and keep the same in good condition and repair, reasonable wear and tear excepted.
26. MAINTENANCE AND REPAIRS BY LANDLORD. Landlord shall be responsible for making all repairs necessary to maintain the plumbing, the fire protection, sprinkler and security systems, ventilating, air conditioning and electric systems of the Building and those serving the Premises; the elevators servicing the Building; the electric feeder lines carrying electricity to the distribution boxes servicing each floor of the Building (but not including the cost of maintenance and repair of the electric lines carrying electricity from the distribution box to the Premises); external windows; and structural components of the floors (excluding carpet, linoleum, wood, tiles or other flooring installed by Tenant). Landlord shall be responsible for maintaining any connections to the Building plumbing, electric and air conditioning systems, and for making all repairs to the meters installed for measuring utility consumption. Landlord shall not be obligated to commence any such repairs within the Premises (other than normal air conditioning maintenance) until after receipt of written notice from Tenant that such repair is needed. If any such repair is caused by any act, omission or negligence of Tenant or its employees, agents, invitees,
licensees, subtenants, or contractors, Landlord shall have the right to make the repair at Tenant's sole cost and expense, provided that if the damage necessitating such repairs is covered by insurance carried by Landlord or Tenant, the proceeds of such insurance shall be made available by Landlord, or by Tenant, as the case may be, to cover the cost of such repairs. If Tenant requires maintenance, servicing, repair or replacement of any special plumbing, ventilating, air conditioning, electric, fire protection or sprinkler system installed for the Tenant's benefit in the Premises, such as any special air extractor equipment, whether or not such system is tied into the standard Building systems, such maintenance, servicing, repair or replacement shall be made by Landlord, its agents, or contractors, or, if Tenant shall so determine, by engineers or contractors engaged by Tenant but, in either event, at the sole expense of Tenant, unless the need for such repairs is caused solely by the negligence or willful misconduct of Landlord, its contractors, agents or employees. Any repairs by Landlord for Tenant's account shall be performed by Landlord or under Landlord's supervision, and the cost of such repairs shall be at rates competitive in the San Juan market for work of the same type.
26.1. Landlord shall provide regular maintenance to and service the ventilating and air conditioning equipment servicing the Premises (for example, without limitation, regular filter changes and fan belt replacement). Except with regard to repair or replacement following a casualty or an eminent domain taking, or due to the negligence or willful misconduct of the Landlord, Tenant shall be responsible for all maintenance, repair and replacement of any kind and nature of the Premises, at Tenant's sole expense.
26.2. If Landlord shall fail to commence repairs or provide maintenance or services as required by this Agreement within ten (10) days after notice by Tenant of needed repairs, maintenance or services, Tenant may cause such repairs, maintenance or services to be made or provided by others for the account of Landlord. Tenant may make or provide for the account of Landlord such temporary emergency repairs and services as may deemed necessary by Tenant.
27. OPERATING EXPENSES; INSURANCE AND TENANT'S REAL PROPERTY TAXES. During the terms of this Agreement, Tenant shall pay in addition to the Basic Rent, Tenant's proportionate share of all operating expenses, insurance and Tenant's Real Property Taxes for each operating year (the "Additional Rent"), in accordance with the following:
27.1. Operating expenses shall be all costs incurred by Landlord for
the operation, repair and maintenance of: (i) the common areas, parking
spaces, loading and unloading areas, trash areas, roadways, sidewalks,
walkways, parkways, driveways, landscaped areas, striping, bumpers,
irrigation systems, common area lighting facilities, surrounding areas to
the Offices Park, and fences and gates; (ii) trash disposal services;
(iii) tenant's directories; (iv) fire detection systems, including
sprinkler system maintenance and repair; (v) security services; (vi)
management services related to the operation of the Building; (vii) any
other service to be provided by Landlord related to the operation of the
Building; (viii) insurance premiums and deductibles over the Land and the
Building; and real property taxes for the Land and the Building.
27.2. Operating expenses shall not include any special assessment that will have the effect of increasing the value of the Land or the Building; repairs or other work occasioned by fire, hurricane, flooding, windstorm or other insured casualty or hazard, to the extent that Landlord receives proceeds of insurance therefore; any capital repairs or improvements made by Landlord to the Land or the Building; depreciation of the Building; brokers commissions for procuring tenants; advertising expenses; cost of renovating rental spaces; principal or interest payments for any financing; the cost of correcting any construction defects in the Land or the Building; or any other expenses of Landlord not directly related to the operation of the Land or the Building. Tenant's share of management or administration services for the Land and Building shall not exceed four percent (4%) of Tenant's net rental payments for the Premises.
27.3. All operating expenses shall be "net" and, for that purpose, shall be reduced by the amount of any reimbursement or credit received or receivable by Landlord directly related to an item of cost that is included in operating expenses.
27.4. Not later than the Commencement Date, and the commencement of each lease year thereafter, Landlord shall submit for the review of Tenant, Landlord's budget of operating expenses for the Land, the Building and the Offices Park for the next lease year (hereafter the "Proposed Schedule of Operating Expenses").
27.5. Tenant's proportionate share of operating expenses for the Land and Building shall be calculated by dividing the total number of rentable square feet in the Premises by the total number of square feet of rentable space in the Building, and multiplying this result by the operating expenses per rentable square feet reflected in the Proposed Schedule of Operating Expenses for the Land and the Building.
27.6. Tenant's proportionate share of operating expenses for the Offices Park shall be calculated by dividing the total number of rentable square feet in the Premises by the total number of square feet of rentable space in the Offices Park, and multiplying this result by the operating expenses per rentable square feet reflected in the Proposed Schedule of Operating Expenses for the Offices Park.
27.7. Tenant's Additional Rent shall be payable by Tenant in advance, in twelve equal monthly installments, together with the payment of Basic Rent.
27.8. Not later than forty-five (45) calendar days after the close of each calendar year, Landlord shall submit for the review and approval of Tenant a schedule of actual operating expenses incurred by Landlord in connection with the operation of the Land, the Building, and the Offices Park (hereafter the "Schedule of Actual Operating Expenses") for the immediately preceding calendar year. Tenant shall have access to the books and records of Landlord pertaining to the Schedule of Operating Expenses, and the right to audit, review and copy such books and records for the
calendar year in question, except in case of fraud in which the term will be extended for an additional three (3) years. Any differences between the Proposed Scheduled of Operating Expenses and the Actual Schedule of Operating Expenses shall be promptly paid by Tenant or credited by Landlord, as the case may be.
27.9. Notwithstanding any provision herein above contained to the
contrary, for the first three (3) years of the Initial Term, the operating
expenses per rentable square foot shall be $5.50 plus Tenant's
proportionate share of the insurance costs for the Building and the Land,
provided however, that the operating expenses for the first three (3)
years of the Initial Term are subject to increase only with respect to (i)
security and payroll in the event of a Federal Minimum Wage increase and
(ii) an increase in the Building's utilities costs exceeding 10% of the
rates in effect on the Commencement Date.
27.10. Notwithstanding the provisions of this paragraph 27, it is hereby understood and agreed that, excluding any increases in real property taxes and insurance expenses, increases with respect to operating expenses payable by Tenant hereunder shall never exceed 3% from one calendar year to the next commencing with the fourth (4th) lease year of the Initial Term. In computing the 3% limitation referred to above, increases in the cost of service provided by third party contractors and increases in utilities costs in excess of 10% shall be excluded.
28. RIGHT OF ENTRY TO REPAIR. Landlord shall have the right to enter the Premises from time to time to inspect or to
make repairs and maintenance. Except for the event of an emergency threatening bodily injury or substantial property damage, such inspections, repairs, and maintenance shall be performed with prior reasonable notice to Tenant, in such reasonable manner and at such reasonable times as shall not interfere with Tenant's business operations. In exercising its right of entry, Landlord, its agents and employees shall comply with all rules and regulations as Tenant may have implemented and notified to Landlord.
29. ENVIRONMENTAL MATTERS. Landlord covenants, warrants, and represents that the Premises, the Building, and the Land will be free of any friable asbestos containing materials.
Landlord covenants, warrants, and represents that to the best of its knowledge, after thorough investigation, the Premises, the Building, and the Land do not (or will not) contain any environmental contaminants ("toxic contamination") of any kind (including PCBs, except for PCBs that are totally contained within light fixtures and exterior transformers) and will not have a magnetic flux density ("MFD") level greater than 10 milliGauss in any one location, nor an average MFD level greater than 5 milliGauss throughout the Premises. At any time during the term of this Agreement, Tenant shall have the right and option to investigate the Building and the Premises for the presence of asbestos and PCBs and MFD levels and to investigate the Land for the presence of toxic contaminants.
Landlord covenants, represents, and warrants that all common areas and Building systems shall be maintained in such a way as to keep airborne concentrations of the spores and other
by-products of toxic or hazardous molds and other biota to levels that will not be injurious to human health.
Landlord agrees to indemnify and hold Tenant harmless from any and all damages, losses, expenses (including reasonable attorneys' fees), claims or actions related to or arising out of any subsequent discovery of friable asbestos or toxic contamination at the Premises, the Building or the Land (but excluding Tenant's Improvements.) In the event of such a finding, or in the event of any breach of a covenant, warranty or representation by Landlord under this paragraph, in addition to all other rights and remedies available by Tenant, Tenant shall have the option of terminating this Agreement without penalty of any kind and be released from any liability under the Agreement after the date of such termination.
29.1. Tenant agrees to indemnify, defend, and hold harmless Landlord, its employees, agents, officers, directors, and assigns from any and all claims, liabilities, costs (including reasonable attorney's fees), and damages out of Tenant's use of the Premises for the release, threatened release, storage, generation, transportation, reclamation, recycling or disposal of any hazardous waste, toxic substance, or any other regulated substance. Such indemnification shall require Tenant to remedy at Tenant's sole cost and expense any release or threatened release of hazardous waste or any regulated substance and shall require Tenant to comply with all federal and local statutes, rules, regulations, ordinances, orders and permits applicable to hazardous waste, toxic substance, or any other regulated substance.
30. INSURANCE BY LANDLORD. Landlord shall, at all times during the term of this Agreement and any extension thereof, at Landlord's own cost and expense, procure and continue in force insurance coverage: (i) for loss or damage to the Land and the Building, including the Premises (other than Tenant's Improvements), in the amount of the replacement value, providing protection against all perils included within the classification of fire, standard extended coverage, including vandalism and malicious mischief, earthquake, collapse and sprinkler leakage; and (ii) for bodily injury liability and property damage liability insurance coverage in an amount of not less than $3,000,000 for injury or death to any person or for damage to property arising from any one occurrence. Upon completion of all construction work Landlord and Tenant shall determine whether or not it is advisable to procure flood insurance and, if so, set adequate limits of coverage for said peril.
30.1. For purposes of Landlord obtaining the required insurance coverage, Tenant shall notify Landlord of the cost of Tenant's Improvements, not later than thirty (30) days after their completion date.
31. INSURANCE BY TENANT. Tenant shall, at all times during the term of this Agreement and any extension thereof, at Tenant's own cost and expense, procure and continue in force insurance coverage for: (i) loss or damage to Tenant's Improvements; (ii) loss or damage to Tenant's personal property including furniture, fixtures and equipment providing protection against all perils included within the classification of fire, standard extended coverage, including vandalism and malicious mischief, earthquake, and sprinkler leakage; and (iii) bodily injury liability and property damage liability insurance coverage in an
amount of not less than $3,000,000 for injury or death to any person or for damage to property arising from any one occurrence. Landlord shall be named as additional insured under such policies, and all such policies shall provide for payment for loss thereunder to Tenant or Landlord, as their interest may appear.
32. INSURANCE POLICIES. All insurance policies shall be with insurance companies licensed to do business in the Commonwealth of Puerto Rico. Each party shall furnish to the other the corresponding certificates of insurance upon reasonable request. No such policy shall be cancelable or subject to reduction of coverage or to any other modification materially affecting coverage except after thirty (30) days prior written notice to the party named as an additional insured. Renewal premiums on such insurance shall be paid not less than ten (10) days prior to expiration of such insurance and the insuring party shall deliver evidence of such renewal to the other party.
32.1. If either party shall fail to procure and maintain the required insurance coverage, the other may, but shall not be required to, procure and maintain the same at the expense of the other party.
32.2. Each party shall cooperate with the other in collecting any insurance proceeds due, and shall execute, acknowledge and deliver proofs of loss and other instruments facilitating such collection.
33. LEASE AGREEMENTS PRESENTLY IN EFFECT. Tenant and Landlord are parties to the following lease agreements in effect on the date of execution of this Agreement: POP IV (1) dated
January 29, 1999; POP IV(2), dated December l, 1999; POP V (offices) dated April 3, 2001; and POP V (Bank Branch) dated November 9, 2000 (the "Present Leases")
33.1 In consideration for entering into this Agreement, Tenant and Landlord have agreed as follows with respect to the Present Leases:
a. All of Tenant's obligations under the Present Leases shall cease and terminate on the Commencement Date, except with respect to the Bank Branch; and
b. Except with respect to the Bank Branch, the Basic Rent under the Present Leases in effect on the date of execution of this Agreement shall be the applicable Basic Rent for all of the spaces under the Present Leases to the date of termination of the Present Leases as provided in a. above.
34. DAMAGE OR DESTRUCTION. If the Land, the Building or the Premises are damaged or destroyed by fire or other casualty insurable under the terms of this Agreement, Landlord shall promptly repair, replace or rebuild the same. Tenant shall cooperate with Landlord in processing any insurance claims.
34.1. In the event of such repair, replacement or rebuilding, rent shall be abated in proportion to the extent to which Tenant is deprived of the use and occupancy of the Premises. The full rent shall again become payable after the completion of such repair, replacement or rebuilding.
34.2. If the Land or the Building is damaged or destroyed to the extent that Tenant cannot reasonably continue to use and occupy the Premises and it will take more than ninety (90) days from the date of the casualty to repair, replace or rebuild, or if Landlord does not repair, replace or rebuild within ninety (90) days from the date of the casualty, then Tenant at its option may terminate this Agreement, effective as of the date of the occurrence of such damage or destruction. In the event that Tenant elects to terminate this Agreement pursuant to the provisions of this paragraph 34.2, Tenant shall have no other remedy, nor any further claims against Landlord, for Landlord's failure to repair, replace or rebuild the Land or the Building, unless such damage or destruction was caused by a negligent act or omission of Landlord, or by those for which Landlord is responsible for at law.
35. CONDEMNATION. In the event that the whole of the Land or the Building shall be condemned or taken in any manner for any public or quasi-public use, this Agreement shall forthwith cease and terminate as of the date of vesting of title in the condemning authority. In the event that only a part of the Land or the Building shall be so condemned or taken then, effective as of the date of such vesting of title, the rent hereunder for such part shall be equitably abated and this Agreement shall continue unaffected as to such part not so taken, unless terminated as hereafter provided.
35.1. If only a part of the Land or the Building shall be so condemned or taken and after Tenant and Landlord come to an agreement that the remaining part is inadequate for the continued use of the Premises by Tenant, then Tenant
may, at its option, terminate this Agreement effective as of the date of such vesting of title.
35.2. If only a part of the Land or Building shall be so condemned or taken and this Agreement is not terminated as provided herein, Landlord shall, at its expense, restore with all due diligence the remaining portions of the Land and Building, as nearly as practicable to the same condition as they were in prior to such condemnation or taking. If such restoration shall not be effected within ninety (90) days after the vesting of title to the portion of the Land or Building taken, Tenant shall have the right to terminate this Agreement effective as of the date of such vesting of title.
35.3. All compensation awarded for any such taking or conveyance, whether for the whole or a part of the leased premises, shall go to and shall be the sole property of Landlord, whether such damages shall be awarded as compensation for the unexpired portion of, or diminution in the value of, the leasehold or for compensation, or damages to the leased premises or otherwise; and the tenant hereby assigns to Landlord all of Tenant's right, title and interest in and to any and all such compensation provided, however, that nothing herein contained shall be construed to preclude Tenant from prosecuting any claim directly against the condemning authority, but not against Landlord, for Tenant's relocation and moving expense, provided further that no such claim shall diminish or otherwise affect Landlord's real estate property award.
36. QUIET ENJOYMENT. Tenant's right to quiet enjoyment of the Premises shall not be disturbed in any respect by Landlord or his successor, transferees and assigns if Tenant is not in default. In the event Landlord shall sell, transfer or encumber all or any portion of the Land or the Building, or its leasehold interest by operation of law, foreclosure or otherwise, or if the premises become subject to the jurisdiction of the bankruptcy court, then it shall be deemed and construed without further agreement that Tenant shall be promptly notified, and that any assignee, transferee, successor, buyer, or third party, including any person appointed by such bankruptcy court has reaffirmed this Agreement, attorney Tenant, and assumed and agreed to take subject to this Agreement and agreed to carry out all covenants, terms and conditions of this Agreement.
37. DEFAULT BY TENANT. The occurrence of any one of the following events shall constitute a material default and breach of this Agreement by Tenant: (i) the abandonment of the Premises; (ii) failure to make any monthly installment of rent or any other payment when and as due and such failure shall continue for a period of thirty (30) days after written notice to Tenant; or (iii) failure to observe or perform any of the covenants, conditions or provisions of this Agreement, where such failure shall continue for a period of sixty (60) days after written notice from Landlord, provided, however, that Tenant shall not be deemed to be in default if Tenant commenced such cure within said sixty (60) days period and thereafter diligently pursues such cure to completion; or (iv) the making by Tenant of any general assignment or general arrangement for the benefit of creditors, or the filing by or for reorganization or arrangement under any law relating to bankruptcy, or the appointment of a trustee or receiver to take possession of substantially all of Tenant's
assets or of Tenant's interest in this Agreement, or the attachment, execution or other judicial seizure of substantially all of the Tenant's assets interest in this Agreement, unless any such action is dismissed or discharged within ninety (90) days.
37.1. In the event of any such material default or breach by Tenant, Landlord may at any time thereafter, with notice and demand and without limiting Landlord in the exercise of any right or remedy which Landlord may have by reason of such default or breach: (i) terminate the Lease Agreement and Tenant's right to possession of the Premises by any lawful means, in which case Tenant shall after notice and demand surrender possession of the Premises; and (ii) pursue any other remedy now or hereafter available to Landlord under the Lease Agreement or by law.
37.2. Should Landlord terminate this Agreement for default, in addition to any other remedies Landlord may have, Landlord may recover from Tenant all damages suffered by reason of such default, including the cost of recovering and reletting the Premises and reasonable attorney's fees.
38. DEFAULT BY LANDLORD. Landlord shall be in default if Landlord fails in the observance or performance of any of Landlord's covenants, conditions, agreements or obligations contained in the Lease Agreement and such failure continues for a period of sixty (60) days after notice from Tenant.
38.1. In the event Landlord is in default of any payment or other obligation to a third party, including any tax payments owed on the Land or the Building, and such default may place in jeopardy Landlord's interest over the
Land, the Building or this Agreement, or may place in jeopardy Tenant's rights under this Agreement, Landlord shall timely notify Tenant of such default, and Tenant shall have the right, but not the obligation, to cure Landlord's default, and the right to collect from Landlord the amount of any payment made or reasonable expenses incurred for Landlord.
38.2. Tenant may recover from Landlord all damages incurred by Tenant by reason of Landlord's default, including reasonable attorney's fees, and may pursue any other remedy available under this Agreement or by law.
39. RECORDATION OF LEASE. This Agreement shall be recordable in the appropriate Registry of Property, as a lien. Tenant shall pay all expenses related to the execution and recordation of the public deed containing the terms and conditions of this Agreement. Landlord shall execute all such documents as may be necessary to obtain such recordation. Tenant shall pay for all expenses related to the cancellation of the lease and its recordation in the Registry of Property.
40. NOTICES. Any notices, requests, consents and other communications required or permitted under this Agreement shall be in writing (including telefax and e-mail communications) and shall be (as elected by the person giving the notice) hand delivered by messenger or courier service, telecommunicated, or mailed (airmail if international) by registered or certified mail (postage prepaid), return receipt requested, at the respective addresses of each party set forth below:
If to Landlord, to
Professional Offices Park V, Inc.
attention: Enrique Vila del Corral
P.O. Box 11363
San Juan, Puerto Rico 00922-1363, or
EVC@professionalofficepark.com
If to Tenant, to
Oriental Group
attention: Norberto Gonzalez
P.O. Box 195115
San Juan, Puerto Rico, 00919-5115, or
NOGONZALEZ@orientalfg.com
With copies to:
Rafael Cruz
PO Box 195115
San Juan, Puerto Rico 00919-5115, or
RCRUZ@orientalfg.com, and
Carlos O. Souffront
McConnell Valdes
P.O. Box 364225
San Juan, Puerto Rico 00936-4225, or
COS@mcvpr.com
Each such notice shall be deemed delivered (i) on the date delivered receipt acknowledged if by personal delivery, (ii) on the date of transmission with confirmed answer back if by telefax, or (iii) on the date upon which the return receipt is signed or delivery is refused or the notice is designated by the postal authorities as not deliverable, as the case may be, if mailed.
By giving to the other party at least fifteen (15) days prior written notice thereof, such party and its permitted successors and assigns shall have the right from time to time and at any time during the term of this Agreement to change their respective addresses.
41. RESERVED.
42. SURRENDER. Upon expiration or sooner termination of this Agreement, Tenant shall surrender the Premises to Landlord, including all improvements and additions constructed or placed by Tenant thereon, except Tenant's trade fixtures, equipment and other movable property, broom clean, free of subtenancies, and in good condition and repair, reasonable wear and tear, damage by fire or other casualty and other conditions not the responsibility or obligation of Tenant to repair or replace excepted.
42.1. Any trade fixtures, equipment or personal property of Tenant or to any subtenant, not removed shall be deemed abandoned and become the property of Landlord without any payment or offset therefore. Or, if Landlord shall elect, Landlord may remove such fixtures, equipment or property from the Premises and store them at Tenant's risk and expense. Tenant shall repair and restore, and save Landlord harmless from, all damage to the Premises caused by such removal, whether by Tenant or by Landlord.
43. HOLDING OVER. If Tenant remains in possession of the Premises or any part thereof after the expiration or termination of the Third Extended Term of this Agreement without the express written consent of Landlord, such occupancy shall be a tenancy from month to month at a rental per square foot of 15% over the last monthly rental plus all other charges payable hereunder, and upon all the terms hereof applicable to a month-to-month tenancy. Notwithstanding, such holding over by Tenant shall in no event exceed ninety (90) days.
44. ASSIGNMENT AND SUBLETTING. Tenant may not assign or transfer the Lease Agreement or sublet the Premises either in whole or in part without Landlord's prior written consent, which consent shall not be unreasonably withheld, delayed or conditioned.
44.1 Notwithstanding anything to the contrary provided above, Tenant shall have the right, without obtaining Landlord's consent to assign its interest in or sublet the Premises or any part thereof at any time during the lease term, to any parent, subsidiary or affiliate corporation or entity of Tenant; or to the surviving corporation or entity (the "Surviving Entity") in connection with a merger, consolidation, amalgamation or acquisition involving tenant or any of its parents, affiliates or subsidiaries; nor shall any such consent be required in the case of an assignment or sublease to any person, firm or corporation, or any group or combination thereof, who is acquiring all or most of the assets of Tenant, provided that the acquirer undertakes in writing to respect the lease Agreement. In addition, the following shall not be deemed to be an assignment by Tenant of this Agreement: (i) the sale or offering for sale to the public, either pursuant to a public or private offering, of the stock of Tenant or its parent entity or of new stock of Tenant or its parent entity; (ii) the sale or transfer of stock by any stockholders of tenant or its parent entity either through or over a recognized exchange or over-the-counter or privately, and (iii) the sale or transfer of stock pursuant to a will, trust or by gift or devise. Tenant covenants to advise Landlord of the occurrence of any such event. In connection with any assignment of this Agreement to a Surviving Entity,
effective as of the date of such assignment, tenant shall be released from all liability under this Agreement, provided that the Surviving Entity assumes all of Tenant's obligation hereunder and agrees to perform all of the obligations of Tenant under this Agreement and that Landlord has consented in writing to such release of Tenant from liability under this Lease Agreement, which consent shall not be unreasonably withheld, delayed or conditioned.
44.2 Tenant's request for Landlord's consent shall be in writing and contain the name, address, and description of the business of the proposed assignee or subtenant, its most recent financial statement and other evidence of financial responsibility and a copy of the proposed sublease or assignment.
44.3 Within thirty (30) days from receipt of such request that includes the information described in Paragraph 44.2 above, Landlord shall grant or refuse its consent to the proposed assignment, provided, however, that if Landlord shall not notify Tenant to the contrary within said thirty (30) day period, Landlord shall be deemed to have consented to such assignment or sublease.
45. INDEMNITY. Tenant and Landlord shall promptly and mutually indemnify and save each other harmless and their agents, servants and employees against and from any and all liability, fines, suits, claims, demands, expenses and actions arising by reason of injury to persons or property or violation of any law or ordinance occurring in the Premises, caused in whole or in part by any act or omission on the part of the Tenant or Landlord, or their employees (whether or not acting within the
scope of employment) servants, agents, licensees, visitors, assigns or tenants or by any use or occupancy of the Premises or any breach, violation or non performance of any covenant in this Agreement on their part to be observed or performed.
46. BROKERS. Landlord represents and warrants that Landlord did not engage or deal with any real estate broker in connection with this Agreement. Tenant represents and warrants that Tenant did not engage or deal with any real estate broker in connection with this Agreement. Landlord agrees to save and hold harmless Tenant of and from any brokerage commission or finder's fee claimed with respect to the Agreement, any extension or renewal thereof, any purchase of the Land or the Building by Tenant pursuant to its rights hereunder.
47. CONSENT NOT UNREASONABLY WITHHELD. Whenever the consent or approval of Landlord or Tenant is required or requested, such consent or approval shall not be unreasonably withheld or delayed.
48. GOVERNING LAW. This Agreement shall be governed by the laws of the Commonwealth of Puerto Rico. The invalidity or unenforceability of any provision of this Agreement shall not affect or impair any other provision.
49. CUMULATIVE RIGHTS. The failure of any of the parties to insist upon a strict performance of any term or condition of this Agreement shall not be a waiver of any right or remedy, or a waiver of any subsequent breach of such term or condition.
49.1 All rights and remedies of the parties are cumulative. The exercise of one or more rights or remedies
shall not exclude or waive the right to exercise any other. All such rights and remedies may be exercised and enforced concurrently and whenever and as often as the parties deems necessary. The rights and remedies of the parties are in addition to those available as a matter of law.
50. SUCCESSORS AND ASSIGNS. The covenants, terms and conditions of this Agreement shall inure to the benefit of and be binding upon the parties and their respective permitted successors, and assigns.
51. ENTIRE AGREEMENT. This Agreement supersedes and cancels any and all previous negotiations, arrangements, understandings, agreements, representations, and warranties, if any, between the parties, and none thereof shall be used to interpret or construe this Agreement. This Agreement may not be changed or modified except by agreement in writing executed by the parties.
52. SEVERABILITY. The invalidity of any provision of this Agreement as determined by a court of competent jurisdiction shall not affect the validity of any other provision.
Executed in San Juan, Puerto Rico, on the date first written above.
PROFESSIONAL OFFICES PARK V, INC. ORIENTAL FINANCIAL GROUP, INC. /s/ Enrique Vila del Corral /s/ Norberto Gonzalez ------------------------------ ------------------------------ Enrique Vila del Corral Norberto Gonzalez President Executive Vice President |
EXHIBIT 10.6
FIRST AMENDMENT TO LEASE AGREEMENT, DATED MAY 18, 2004
between
PROFESSIONAL OFFICES PARK V, INC., LANDLORD
and
ORIENTAL FINANCIAL GROUP INC., TENANT
This First Amendment to Lease Agreement dated as of July 15th, 2005
between PROFESSIONAL OFFICES PARK V, INC., as Landlord, and ORIENTAL FINANCIAL
GROUP Inc., as Tenant.
WITNESSETH:
WHEREAS, Landlord and Tenant entered into a lease agreement dated May 18, 2004, for premises (the "Premises") located at State Road Number 1, kilometer 15.1, Marginal Road, Monacillos Ward, San Juan, Puerto Rico, which lease as may be further amended or modified is hereafter called the "Lease";
WHEREAS, Landlord and Tenant have agreed to amend the Lease to add additional space on the fourth (4th) floor of the Building (the "Additional Space") and thus, increase the rentable square feet area of the Premises and in certain other respects;
NOW, THEREFORE, in consideration of the mutual promises herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, Landlord and Tenant agree that the Lease shall be amended as follows:
1. Unless otherwise provided, terms used herein shall have the same meaning assigned thereto under the Lease.
2. The following terms and conditions apply to the lease of the Additional Space:
(a) ADDITIONAL SPACE: The space shown in Exhibit A hereto with an area of 11,924 rentable square feet (using the BOMA System).
(b) Except as otherwise specifically provided herein, all of the terms and conditions applicable to the Premises shall be applicable to the Additional Space.
3. Section 4. The Premises of the Lease is hereby amended to read as follows:
"4. THE PREMISES. Tenant shall lease from Landlord the fifth (5th), sixth (6th) floors and half of the rentable area of the fourth (4th) floor of the Building. The fifth (5th) and sixth (6th) floors each with rentable area of 21,706 square feet and approximately half of the fourth (4th) floor with a rentable area of 11,924 square feet for a total rentable area of 55,336 square feet (the "Premises"). The total rentable area of the Premises and the Building and the percentage that the Premises represents of the total rentable area of the Building shall be determined by the Building Architects and verified by Tenant's architects upon the substantial completion of the Building using the American National Standard BOMA ANSI 265.1-1980, as reaffirmed in 1989, published by the Building Owners and Managers Association (the "BOMA System").
"4.1 From the date of execution of this First Amendment to Lease
Agreement to the Commencement Date, Tenant shall have the first
right of refusal with respect to leasing the balance of the fourth
(4th) floor of the Building. Tenant's first right of refusal with
respect to leasing the balance of the fourth (4th) floor of the
Building with a rentable area of 9,782 square feet shall be governed
by the provisions of Section 4.2 of the May 18th, 2004 lease
agreement."
4. Sub-section 19.1 of Section 19 Tenant's Improvement Allowance of the Lease is hereby amended to read as follows:
"19.1 Tenant's Improvement Allowance. Notwithstanding anything
herein to the contrary, Landlord shall reimburse Tenant in cash the
first $469,404 spent by Tenant in Tenant's Improvements. Such
reimbursement shall be made by Landlord to Tenant within thirty (30)
days after Tenant's Architect certifies to Landlord that Tenant's
Improvements to the Premises have been completed in accordance with
the plans and specifications therefore. The Tenant's Improvement
Allowance will increase by $95,526 before landlord makes improvement
to floor to permit multiple tenants, if Tenant leases the balance of
the fourth (4th) floor of the Building pursuant to the provisions of
Section 4.1 hereinabove."
5. Sub-section 22.1 of Section 22 Parkings of the Lease is hereby amended to read as follows:
"22. Parking.
22.1 Tenant shall be entitled to the exclusive use of 190 reserved covered parking spaces at no additional cost to
Tenant. The locations of those covered parking spaces are indicated in Exhibit E."
6. Other than as set forth herein, all of the terms and conditions of the Lease shall remain unamended and in full force and effect and are hereby ratified and confirmed in all respects. The parties hereby agree that this Lease Amendment represents the entire agreement between the parties with respect to the matters herein contained and may not be changed, modified, or altered except by a written agreement signed by the parties thereto. This Amendment and the Lease shall be read and construed together as one instrument. Except for those which are set forth in this Lease Amendment, no representations, warranties, or agreements have been made by Landlord or Tenant to one another with respect to this Lease Amendment.
7. Landlord and Tenant warrant and represent that their undersigned representatives have all due power and authority to execute this Lease Amendment on behalf of Landlord and Tenant respectively and that all necessary action has been taken to ensure the validity and enforceability of the terms and provisions of this Lease Amendment.
IN WITNESS WHEREFORE, the parties have caused this Amendment to be executed this 15th day of July, 2005.
PROFESSIONAL OFFICES PARK V, INC.
Landlord
By: /s/ Enrique Vila Del Corral --------------------------------------- Enrique Vila Del Corral, CPA President |
ORIENTAL FINANCIAL GROUP INC.
Tenant
By: /s/ Jose Rafael Fernandez --------------------------------------- Jose Rafael Fernandez President & CEO |
EXHIBIT A
[OFFICE FLOOR PLAN]
EXHIBIT 10.7
AGREEMENT
BETWEEN
ORIENTAL FINANCIAL GROUP INC.
AND
JOSE ENRIQUE FERNANDEZ
AGREEMENT made as of the 4th day of April, 2005, by and between ORIENTAL FINANCIAL GROUP INC., a financial holding company which has its principal office in San Juan, Puerto Rico (hereinafter referred to as the "Company") and JOSE ENRIQUE FERNANDEZ (sometimes hereinafter referred to as the "Chairman").
WITNESSETH:
WHEREAS, Jose Enrique Fernandez has been the President, Chief Executive Officer and Chairman of the Company since October, 1988 and the retention of his services as non-executive Chairman of the Company's Board of Directors is of material importance to the preservation and enhancement of the value of the Company's business;
WHEREAS, the Company and the Chairman wish to enter into this Agreement and intend that this Agreement shall become effective as of January 1, 2005;
NOW THEREFORE, in consideration of the mutual covenants set forth, the Company and the Chairman do hereby agree as follows:
1. TERM OF ENGAGEMENT
1.1 The Company hereby retain the services of Mr. Jose Enrique Fernandez as Chairman of its Board of Directors and the Chairman hereby accepts said retention and agrees to render such
services to the Company on the terms and conditions set forth in this Agreement for a term of three (3) years commencing on January 1st, 2005 (the "Effective Date") and terminating on December 31, 2007, unless further extended or sooner terminated in accordance with the terms and conditions hereinafter set forth.
Not less than one hundred twenty (120) days in advance of the expiration of the term of this Agreement the parties will determine whether to extend the term and, if extended, under which terms and conditions.
1.2 During the term of this Agreement, the Chairman shall devote his best efforts to performing such services for the Company as may be consistent with his title of non-executive Chairman of the Company's Board of Directors.
1.3 The services of the Chairman to the Company shall be rendered principally in the Commonwealth of Puerto Rico, but he shall do such traveling on behalf of the Company as may be reasonably required by his duties.
1.4 The Chairman shall continue to occupy his position as a Director of the Company and of the Bank. Furthermore, during the term of this Agreement or extension thereof and for any elections of Directors of the Company in which his term as Director will expire, the Board of Directors shall nominate and recommend to the stockholders the election of the Chairman as a Director and, if elected, the Board of Directors of the Company and of the Bank shall, respectively, name the Chairman to the position of Chairman of the Board of Directors of the Company and of the Bank.
2. COMPETITIVE ACTIVITIES:
2.1 The Chairman agrees that during the term of this Agreement, except with the express written consent of the Company's Board of Directors, he will not, directly or indirectly, engage or participate in, become a director of, or render advisory or other services for, or in connection with, or become interested in, or make financial investment in any firm, corporation, business entity or business enterprise competitive with or to any business of the Company; provided, however, that the Chairman 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 to devote substantial time to the management or control of the business or activities in which he has invested. The above notwithstanding, it is specifically agreed by the parties hereto that the Chairman's investment and active involvement in an international banking entity known as "Omega Overseas Investment Corporation" shall be exempt from the provisions of this Section 2.
2.2 The Chairman agrees and acknowledges that during the time that this Agreement is in effect, he will maintain an intimate knowledge of the activities and affairs of the Company including trade secrets and other confidential matters. As a result, and also because of the special, unique, and extraordinary services that the Chairman is capable of performing for the Company or one of its competitors, the Chairman recognises that the services to be rendered by him hereunder are of a character giving them a peculiar value, the loss of which cannot be adequately or reasonably compensated for by damages. Therefore, if during the time he is rendering services to the Company, the Chairman renders services to a
competitor of the Company other than as authorized pursuant to Section 2.1 hereof, the Company shall be entitled to immediate injunctive or other equitable relief to restrain the Chairman from rendering his services to the competitor of the Company, 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 of this Agreement.
3. COMPENSATION AND REIMBURSEMENT OF EXPENSES:
3.1 COMPENSATION. The Company will compensate and pay for the Chairman's services an annual base fee of $300,000 for the first year of the term of this Agreement; $225,000 for the second year of the term of this Agreement; and $150,000 for the third year of the term of this Agreement. The Chairman's annual base fee for any extension of the term of this agreement shall be mutually agreed by the Company and the Chairman.
3.2 BONUS. The Chairman shall be paid an annual cash bonus of $200,000 for each of the first and second year of the term of this Agreement and of $150,000 for the third year. The annual cash bonus shall be paid to the Chairman not later than January 15, 2006, 2007 and 2008, respectively.
3.3 CAR ALLOWANCE. The Company shall provide the Chairman a car allowance in the sum of thirty thousand dollars ($30,000) for the first year of the term of this Agreement and of twenty four thousand dollars ($24,000) for the second and third year of the term of this Agreement. From such allowance the Chairman shall pay all his car related expenses, such as car lease payment
insurance, repairs, maintenance, gasoline, chauffeur, and related equipment such as a car installed cellular phone.
3.4 MEMBERSHIPS. During the term of this Agreement and any extension thereof, the Company shall provide and maintain at its expense membership in such social and business clubs which in the judgement of the Chairman are reasonably appropriate to the performance of his duties pursuant to this Agreement. Such membership shall be maintained in the name of the Chairman and he shall be reimbursed for all reasonable expenses and charges incurred by him at such clubs in performing his company-related duties hereunder.
3.5 REIMBURSEMENT OF EXPENSES. Not less frequently than monthly, the Company shall pay for or reimburse the Chairman for all reasonable travel and other expenses incurred by the Chairman in the performance of his duties under this Agreement, including, without limiting the generality of the foregoing, the allowance and reimbursable expenses provided for in Section 3.3 and 3.4 herein above.
3.6 OFFICE. The Company shall furnish the Chairman with private office facilities to be known as the "Office of the Chairman", and provide all necessary secretarial services and such other assistance and accommodations as shall be suitable to the character of the Chairman's position and adequate for the performance of his duties hereunder.
3.7 LIFE INSURANCE. The Company shall provide a ten (10) year term life insurance policy in the sum of two million dollars ($2,000,000) covering the life of the Chairman and having as its beneficiary the Estate of Jose Enrique Fernandez or any other
person or entity which the Chairman may designate from time to time. All premiums and costs associated with such term life insurance policy shall be for the account of the Company.
3.8 VACATION. The Chairman shall be entitled to forty-five (45) days of paid vacation each year during the term of this agreement.
4. DISABILITY
4.1 If the Chairman shall become disabled or incapacitated to the extent that he is unable to perform his duties hereunder, and so long as such disability continues, the Chairman shall continue to receive his full compensation for a period not to exceed the remaining term of this Agreement.
4.2 There shall be deducted from the amounts paid to the Chairman
hereunder during any period of disability or incapacitation, as described in
Section 4.1 hereof, any amounts actually paid to the Chairman pursuant to any
disability insurance or other similar such programs which the Company has
instituted or may institute on behalf of its employees for the purpose of
providing compensation in the event of disability.
5. ADDITIONAL COMPENSATION AND BENEFITS
5.1 During the term of this Agreement, the Chairman will be entitled to participate and receive the benefits and privileges given to employees and executives of the Company or its subsidiaries and affiliates which may now exist or come into existence hereinafter, to the extent commensurate with his then duties and responsibilities, as fixed by the Company's Board of Directors or its Compensation Committee, and, to the extent that the Chairman is otherwise eligible and qualifies, to so
participate in, and receive such benefits or privileges. Furthermore, as additional consideration for the Chairman entering into this Agreement, the Company agrees that during the Chairman's lifetime, the Chairman and his spouse will be covered by all health, hospitalization and disability insurance and benefits which may be in effect from time to time for the benefit of Company employees and executives. The Company shall pay for all of the cost of providing such insurance and benefits to the Chairman and his spouse during the Chairman's lifetime. The Company shall not make any changes in such plans, benefits or privileges which would adversely affect the Chairman's rights or benefits thereunder, unless such change or changes are made pursuant to a program applicable to all executives of the Company and does not result in a proportionately greater adverse change in the rights of or benefits to the Chairman as compared to any executive officer of the Company. Nothing paid to the Chairman under any plan or arrangement presently in effect or made available in the future shall be deemed in lieu of the base fee or bonus payable to the Chairman pursuant to Sections 3.1 and 3.2 hereof.
6. TERMINATION
6.1 The Board of Directors shall have the right, at any time upon prior written Notice of Termination satisfying the requirements of Section 6.8(b) hereof, to terminate this Agreement, including termination for just cause. For the purpose of this Agreement, "termination for just cause" shall mean termination for the willful and continued failure of the Chairman to perform his duties under this Agreement or the willful engaging by the Chairman in illegal conduct or gross misconduct materially injurious to the Company, as determined by a court of competent jurisdiction or a federal or state
regulatory agency having jurisdiction over the Company. For purposes of this paragraph, no act, or failure to act, on the Chairman's part shall be considered "willful" unless done, or omitted to be done, by him not in good faith and without reasonable belief that his action or omission was in the best interest of the Company; provided that any act or omission to act on the Chairman's behalf in reliance upon an opinion of counsel to the Company or counsel to the Chairman shall not be deemed to be willful.
6.2 In the event this Agreement is terminated for just cause pursuant to
Section 6.1 hereof, the Chairman shall have no right to compensation or other
benefits for any period after such date of termination. If the Chairman is
terminated by the Company other than for just cause pursuant to Section 6.1
hereof and other than in connection with a change of control of the Company, as
defined in the Compensation Agreement, the Chairman's right to compensation and
other benefits under this Agreement shall be as set forth in Sections 6.8(c) and
(d) hereof.
6.3 The Chairman shall have the right, upon prior written Notice of
Termination of not less than thirty (30)days satisfying the requirements of
Section 6.8(b) hereof, to terminate this Agreement. In such event, the Chairman
shall have the right as of the date of termination to receive all accrued
compensation and other benefits provided for in this Agreement. Provided,
however, that if the Chairman terminates this Agreement for "good reason"
pursuant to Section 6.8 (a) hereof he shall be entitled to receive the severance
payment provided for in Section 6.8 (c) hereof. If the Chairman provides a
Notice of Termination for good reason the date of Termination shall be the date
on which a Notice of Termination is given.
6.4 If the Chairman is suspended from office and/or temporarily prohibited
from participating in the conduct of the Company's affairs pursuant to a notice
served under the Federal Deposit Insurance Act ("FDIA") or under the Federal
Reserve Act ("FRA"), the Company's obligations 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 shall: (i) pay the Chairman
all the compensation withheld while contract obligations were suspended, and,
(ii) reinstate (in whole or in part) any of its obligations which were
suspended.
6.5 If the Chairman is removed from office and/or permanently prohibited from participating in the conduct of the Company's affairs by an order issued under the FDIA or the FRA, all obligations of the Company under this Agreement shall terminate, as of the effective date of the order, but the rights of the Chairman to compensation earned as of the date of termination shall not be affected.
6.6 If the Company is in default, as defined to mean an adjudication or other official determination of a court of competent jurisdiction or other public authority pursuant to which a conservator, receiver or other legal custodian is appointed for the Company for the purpose of liquidation, all obligations under this Agreement shall terminate as of the date of default, but the rights of the Chairman to compensation and benefits accrued as of the date of termination shall not be affected.
6.7 In the event that this Agreement is terminated in a manner which violates the provisions of Section 6.1, as
determined by a court of competent jurisdiction, the Chairman shall be entitled to reimbursement for all reasonable costs, including attorneys' fees in challenging such termination. Such reimbursement shall be in addition to all rights to which the Chairman is otherwise entitled under this Agreement.
6.8 (a) The Chairman may terminate this Agreement for good reason. For purposes of this Agreement, "good reason" shall mean (i) a failure by the Company to comply with any material provision of this Agreement, which failure has not been cured within ten (10) days after a notice of such noncompliance has been given by the Chairman to the Company, or (ii) any purported termination of this Agreement which is not effected pursuant to a Notice of Termination satisfying the requirements of paragraph (b) hereof (and for purposes of this Agreement no such purported termination shall be effective).
(b) Any termination of the Chairman's employment by the Company or by the Chairman shall be communicated by a written Notice of Termination to the other party hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a dated notice which shall (i) indicate the specific termination provision in the Agreement relied upon; (ii) set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of this Agreement under the provision so indicated; (iii) specify a date of termination, which shall be not less than thirty (30) nor more than ninety (90) days after such Notice of Termination is given except in the case of the Company's termination of this Agreement for Just cause pursuant to Section 6.1 hereof, in which case the Notice of Termination may specify a date of termination as of the date such
Notice of Termination is given; and (iv) be given in the manner specified in Section, 9.1 hereof.
(c) In the event that: (i) the Chairman shall terminate this Agreement for good reason as defined in subparts (i) or (ii) of Section 6.8 (a) hereof, or (ii) if this Agreement is terminated by the Company for other than just cause pursuant to Section 6.1 hereof and other than in connection with a change in control of the Company, as defined in the Compensation Agreement, then in lieu of any further fee payments to the Chairman for periods subsequent to the date of termination, the Company shall pay as a termination payment to the Chairman an amount equal to the product of (A) the aggregate annual compensation paid to or payable by the Company and any of its subsidiaries to the Chairman, which amount shall include the Chairman's base fee, bonus (equal to the highest cash bonus paid to the Chairman in any of the two fiscal years prior to the date of termination of this Agreement, car allowance and the value of any other benefits provided to the Chairman, during the year in which the termination of this Agreement occurs, multiplied by (B) 2.00, such payment to be made in a lump sum on or before the fifth day following the date of termination.
(d) Unless this Agreement is terminated for just cause pursuant to
Section 6.1 hereof or pursuant to Section 6.5 hereof, the Company shall maintain
in full force and effect, for the continued benefit of the Chairman for the
balance of the term of this Agreement (as such term may have been extended or
provided herein), all benefit plans and programs in which the Chairman was
entitled to participate immediately prior to the date of termination, provided
that the Chairman's continued participation
is possible under the general terms and provisions of such plans and programs.
(e) The Chairman shall not be required to mitigate the amount of any payment provided for in paragraphs (c) and (d) of this Section 6.8 by seeking other sources of income or otherwise.
7. INDEMNIFICATION
7.1 The Company shall indemnify the Chairman, to the fullest extent authorized by applicable federal and Commonwealth of Puerto Rico laws and regulations, with respect to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Company) that the Chairman is a party or is threatened to made a party by reason of the fact that he was the President and Chief Executive Officer of the Company or that he is or was a Director and Chairman of the Company's Board of Directors, or is or was serving at the written request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against costs and expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a matter he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful, provided that the Company shall not be liable for any amounts which may be due to the Chairman in connection with a settlement of any action, suit or proceeding effected without its prior written consent or any action, suit or proceeding initiated by the Chairman seeking indemnification
hereunder without its prior written consent. The provisions of this Section 7.1 shall survive the termination of this Agreement.
8. SUCCESSORS OF THE PARTIES
8.1 This Agreement shall inure to the benefit of and be binding upon the Chairman, and, to the extent applicable, his assigns, executors, and personal representatives and the Company, its successors, and assigns, including, without limitation, any person, partnership, or corporation which may acquire all or substantially all of the Company's assets and business, or with or into which the Company may be consolidated or merged, and this provision shall apply in the event of any subsequent merger, consolidation, or transfer.
8.2 This Agreement is personal to each of the parties hereto and 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.
9. NOTICES
9.1 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 Company at his regular corporate office, or the Chairman 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) Jose E. Fernandez 1717 Lila Street San Francisco San Juan, Puerto Rico 00927
(ii) Oriental Financial Group Inc.
P.O. Box 195115
San Juan, Puerto Rico 00919-5115
or such other address as either party may designate to the other by notice in writing in accordance with the terms hereof.
10. AMENDMENTS OR ADDITIONS
10.1 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 Company shall be required in order for the Company to authorize any amendments or additions to this Agreement, to give any consent or waivers of provisions of this Agreement, or to take any other action under this Agreement including any termination of this Agreement with or without just cause under Section 6.1 hereof,
11. MISCELLANEOUS
11.1 No course of conduct between the Company and Chairman to exercise any right or power given under this Agreement shall: (i) impair the subsequent exercise of any right or power, or (ii) be construed to be a waiver of any default or any acquiescence in or consent to the curing of any default while any other default shall continue to exist, or be construed to be a waiver of such continuing default or of any other right or power that shall theretofore have arisen; and, every power and remedy granted by law and by this Agreement to any party hereto may be exercised from time to time, and as often as may be deemed expedient. All
such rights and powers shall be cumulative to the fullest extent permitted by law.
11.2 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.
11.3 This Agreement shall be governed in all respects and be interpreted by and under the laws of the Commonwealth of Puerto Rico, except to the extent that such law may be preempted by applicable Federal law, including regulations, opinions or orders duly issued by the FDIC and the ("Federal Law"), in which event this Agreement shall be governed and be interpreted by and under Federal Law. Venue for the litigation of any and all matters arising under or in connection with this Agreement shall be laid in the United States District Court for the District of Puerto Rico, at San Juan, in the case of federal jurisdiction, and in the Superior Court of the Commonwealth of Puerto Rico in San Juan, in the case of state court jurisdiction.
11.4 Notwithstanding anything to the contrary herein contained, the payment or obligation to pay any monies or granting of any rights or privileges to the Chairman as provided in this Agreement shall not be in lieu or derogation of the rights and privileges that the Chairman now has under any plan or benefit presently outstanding.
11.5 As used herein the term "Company" shall include all of the Companys subsidiaries and affiliates.
At San Juan, Puerto Rico as of this 4th day of April, 2005, ORIENTAL
FINANCIAL GROUP INC.
By: /s/ Jose Enrique Fernandez By: /s/ Julian Inclin --------------------------- --------------------------- JOSE ENRIQUE FERNANDEZ Julian Inclin Chairman Director _________________________________ Maricarmen Aponte Director /s/ Alberto Richa --------------------------- Alberto Richa Director /s/ Emilio Rodriguez, Jr. ------------------------ Emilio Rodriguez, Jr. Director |
EXHIBIT 10.8
EMPLOYMENT AGREEMENT
BETWEEN
ORIENTAL FINANCIAL GROUP INC.
AND
JOSE RAFAEL FERNANDEZ
AGREEMENT made on the 4th day of April, 2005, by and between ORIENTAL FINANCIAL GROUP INC., a financial bank holding company which has its principal office in San Juan, Puerto Rico (sometimes hereinafter referred to as the "Company") and JOSE RAFAEL FERNANDEZ (sometimes hereinafter referred to as the "President").
WITNESSETH:
WHEREAS, Jose Rafael Fernandez has been an executive officer of the Company since June, 1991, is presently its Senior Executive Vice President and Chief Operating Officer, has been appointed as the Company's President and Chief Executive Officer effective January 1, 2005 and the retention of his services for and on behalf of the Company is of material importance to the preservation and enhancement of the value of the Company's business;
WHEREAS, the Company and the President wish to enter into this Agreement and intend that this Agreement shall become effective on January 1, 2005 and replace the Employment Agreement, dated as of February 16, 2001 between the President and the Company, now in effect;
NOW THEREFORE, in consideration of the mutual covenants set forth, the Company and the President do hereby agree as follows:
1. TERM OF EMPLOYMENT
1.1 The Company hereby employs Jose Rafael Fernandez as President and Chief Executive Officer as hereinafter provided, and the President hereby accepts said employment and agrees to render such services to the Company on the terms and conditions set forth in this Agreement for a term of three (3) years commencing on January 1st, 2005 (the "Effective Date") and terminating on December 31, 2007, unless further extended or sooner terminated in accordance with the terms and conditions hereinafter set forth.
Not less than one hundred twenty (120) days in advance of the expiration of the term of this Agreement the parties will determine whether to extend the term and, if extended, under which terms and conditions.
1.2 During the term of this Agreement, the President shall devote his best efforts to performing such services for the Company as may be consistent with his title of President and Chief Executive Officer and those which from time to time may be assigned to him by the Company's Board of Directors.
1.3 The services of the President to the Company shall be rendered principally in the Commonwealth of Puerto Rico, but he shall do such traveling on behalf of the Company as may be reasonably required by his duties.
1.4 The President shall have sole, full and complete authority to make all determinations concerning hiring, dismissal and compensation for all classes of employees of the Company, which determinations shall be in accordance with the policies for such hiring, dismissal and compensation established by the
Compensation Committee of the Board of Directors from time to time and in accordance with applicable laws and, the rules and regulations of the Federal Deposit Insurance Corporation (the "FDIC") and the Federal Reserve Board (the "FRB").
1.5 The President shall continue to occupy his position as a Director on the Board of Directors of the Company. Furthermore, during the term of this Agreement or extension thereof and for any elections of Directors in which his term as Director will expire, the Board of Directors shall nominate and recommend to the stockholders the election of the President to the Board of Directors of the Company.
2. COMPETITIVE ACTIVITIES:
2.1 The President agrees that during the term of this Agreement, except with the express written consent of the Board of Directors, he will not, directly or indirectly, engage or participate in, become a director of, or render advisory or other services for, or in connection with, or become interested in, or make financial investment in any firm, corporation, business entity or business enterprise; provided, however, that the President 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 to devote substantial time to management or control of the business or activities in which he has invested.
2.2 The President agrees and acknowledges that during the time that he is employed by the Company, he will maintain an intimate knowledge of the activities and affairs of the Company including trade secrets and other confidential matters. As a
result, and also because of the special, unique, and extraordinary services that the President is capable of performing for the Company or one of its competitors, the President recognizes that the services to be rendered by him hereunder are of a character giving them a peculiar value, the loss of which cannot be adequately or reasonably compensated for by damages. Therefore, if during the time he is employed by the Company, the President renders services to a competitor of the Company other than as authorized pursuant to Section 2.1 hereof, the Company shall be entitled to immediate injunctive or other equitable relief to restrain the President from rendering his services to the competitor of the Company, 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 of the President's employment with the Company.
3. COMPENSATION AND REIMBURSEMENT OF EXPENSES:
3.1 COMPENSATION. The Company will compensate and pay for the President's services during the term of this Agreement (i) an annual base salary of three hundred twenty-five thousand dollars ($325,000) equivalent to twenty-seven thousand eighty-three dollars with thirty-three cents ($27,083.33) per month from January 1 to June 30, 2005; (ii) an annual base salary of three hundred fifty thousand dollars ($350,000) equivalent to twenty-nine thousand one hundred sixty-six dollars with sixty-six cents ($29,166.66) per month from July 1, 2005 to June 30, 2006; (iii) an annual base salary of four hundred thousand dollars ($400,000) equivalent to thirty-three thousand three hundred thirty-three dollars ($33,333.33) per month from July 1, 2006 to June 30, 2007; and (iv) thirty seven thousand five hundred dollars ($37,500) per month equivalent to an annualized annual base salary of four
hundred fifty thousand dollars ($450,000) from July 1 to December 31, 2007. The President's base salary for any extension of the term, of this Agreement shall be mutually agreed by the Compensation Committee of the Board of Directors and the President, provided, however, that at no time shall such base salary be reduced below the amount set forth above for the second year of the term of this Agreement.
3.2 BONUS. The Company shall pay the President a bonus of up to 50% of the President's annual base salary as may be earned by him under the Company's "Pay for Performance" compensation plan (the "Plan") for the first year of the term of this Agreement and of up to 55% of the President's annual base salary as may be earned by him under the Plan for each subsequent year of the term of this Agreement.
3.3 CAR ALLOWANCE. During the term of this Agreement and any extension thereof, the Company shall provide the President an annual car allowance in the amount of thirty thousand dollars ($30,000.00) from which the President shall pay all his car related expenses, such as car lease payment insurance, repairs, maintenance, gasoline, chauffeur, and related equipment such as a car installed cellular phone.
3.4 MEMBERSHIPS AND PROFESSIONAL EXPENSES. During the term of this Agreement and any extension thereof, the Company shall provide the President with an annual allowance in the sum of eighteen thousand dollars ($18,000). From such allowance the Executive Officer shall pay the membership expenses for such social and business clubs and professional or training expenses which in his judgement are reasonably appropriate to the performance of his duties as President pursuant to this
Agreement. Such membership(s) shall be maintained in the name of the President.
3.5 REIMBURSEMENT OF EXPENSES. Not less frequently than, monthly, the Company shall pay for or reimburse the President for-all reasonable travel and other expenses incurred by the President in the performance of his duties under this Agreement, including, without limiting the generality of the foregoing, the allowance and reimbursable expenses provided for in Section 3.3 and 3.4 herein above.
3.6 OFFICE. The Company shall furnish the President with a private office, all necessary secretarial services and such other assistance and accommodations as shall be suitable to the character of the President's position with the Company and adequate for the performance of his duties hereunder.
3.7 LIFE INSURANCE. The Company shall provide a ten (10) year term life insurance policy in the sum of three million dollars (53,000,000) covering the life of the President and having as its beneficiary the Estate of Jose Rafael Fernandez or any other person or entity which the President may designate from time to time. The President authorises the Company to obtain a ten million dollars ($10,000,000) key man term life insurance policy covering his life and having the Company as its beneficiary. For as long as the President is employed by the Company, all premiums and costs associated with such term life insurance policies described above shall be for the account of the Company.
3.8 VACATION. The President shall be entitled to twenty-two (22) days of paid vacation each year during the term of this agreement.
4. DISABILITY
4.1 if the President shall become disabled or incapacitated to the extent that he is unable to perform his duties hereunder, and so long as such disability continues, the President shall, subject to the provisions of Section 6.2 and 6.3 hereof, continue to receive his full compensation for a period not to exceed the remaining term of this Agreement.
4.2 There shall be deducted from the amounts paid to the President
hereunder during any period of disability or incapacitation, as described in
Section 4.1 hereof, any amounts actually paid to the President pursuant to any
disability insurance or other similar such programs which the Company has
instituted or may institute on behalf of its employees for the purpose of
providing compensation in the event of disability.
5. ADDITIONAL COMPENSATION AND BENEFITS
5.1 During the term of this Agreement, the President will be entitled to participate in, and receive the benefits of, any stock option plan, profit sharing plan or other plans, benefits and privileges given to employees and executives of the Company or its subsidiaries and affiliates which may now exist or come into existence hereinafter, to the extent commensurate with his then duties and responsibilities, as fixed by the Compensation Committee of the Board of Directors, and, to the extent that the President is otherwise eligible and qualifies, to so participate in, and receive such benefits or privileges. The Company shall not make any changes in such plans, benefits or privileges which
would adversely affect the President's rights or benefits thereunder, unless such change or changes are made pursuant to a program applicable to all executives of the Company and does not result in a proportionately greater adverse change in the rights of or benefits to the President as compared to any executive officer of the Company. Nothing paid to the President under any plan or arrangement presently in effect or made available in the future shall be deemed in lieu of the base salary or bonus payable to the President pursuant to Sections 3.1 and 3.2 hereof.
5.2 (a) On November 29, 2004 the Compensation Committee of the Board of Directors of the Company, in contemplation of the execution of this Agreement, granted the President an option to purchase 20,000 shares of the common stock of the Company. The option granted shall be subject to the conditions described in subsections (c) and (d) below except that the exercised period for the option shall commence after the second and end on the tenth anniversary of the date of the grant;
(b) The President shall be granted options to purchase shares of the
common stock of the Company as follows: 40,000 shares effective on July 1, 2005,
20,000 shares effective on January 1, 2006 and 20,000 shares effective on
January 1, 2007. The options granted to the President pursuant to subsections
(a) and (b) of this Section 5.2 shall be referred to as the "Options".The
Options shall be entitled to all of the rights, benefits and privileges to which
stock options issued under the Company's Incentive Stock Options Plans are
entitled including, without limiting the generality of the foregoing, their
adjustment to take into account the dilution effect of stock dividends and stock
splits.
(c) Up to twenty percent (20%) of the Options may be exercised by the President each year during a period commencing after the second and ending on the tenth anniversary of this Agreement, provided that the Options will become fully vested and exercisable in the event of a change of control of the Company as such term is defined in the "Change of Control Compensation Agreement" between the President and the Company dated December 15, 2004, or if the President becomes disabled, dies or retires from employment with the Company; and
(d) The Options shall survive one (1) year after termination of this Agreement, unless said termination is pursuant to Sections 6.1, 6.5 or 6,6 hereto.
6. TERMINATION
6.1 The Board of Directors shall have the right, at any time upon prior written Notice of Termination satisfying the requirements of Section 6.8(b) hereof, to terminate the President's employment hereunder, including termination for just cause. For the purpose of this Agreement, "termination for just cause" shall mean termination for the willful and continued failure of the President to perform his duties under this Agreement or the willful engaging by the President in illegal conduct or gross misconduct materially injurious to the Company, as determined by a court of competent jurisdiction or a federal or state regulatory agency having jurisdiction over the Company. For purposes of this paragraph, no act, or failure to act, on the President's part shall be considered "willful" unless done, or omitted to be done, by him not in good faith and
without reasonable belief that his action or omission was in the best interest of the Company; provided that any act or omission to act on the President's behalf in reliance upon an opinion of counsel to the Company or counsel to the President shall not be deemed to be willful.
6.2 In the event employment is terminated for just cause pursuant to
Section 6.1 hereof, the President shall have no right to compensation or other
benefits for any period after such date of termination. If the President is
terminated by the Company other than for just cause pursuant to Section 6.1
hereof and other than in connection with a change of control of the Company, as
defined in the Compensation Agreement, the President's right to compensation and
other benefits under this Agreement shall be as set forth in Sections 6,8(c) and
(d) hereof.
6.3 The President shall have the right, upon prior written Notice of
Termination of not less than thirty (30)days satisfying the requirements of
Section 6.8(b) hereof, to terminate his employment hereunder. In such event, the
President shall have the right as of the date of termination to receive all
accrued compensation and other benefits provided for in this Agreement.
Provided, however, that if the President terminates his employment hereunder for
"good reason" pursuant to Section 6.8(a) hereof he shall be entitled to receive
the severance payment provided for in Section 6.8 (c) hereof. If the President
provides a Notice of Termination for good reason the date
of Termination shall be the date on which a Notice of Termination is given,
6.4 If the President is suspended from office and/or temporarily prohibited from participating in the conduct of the Company's affairs pursuant to a notice served under the Federal Deposit Insurance Act ("FDIA") or under the Federal Reserve Act ("FRA"), the Company's obligations 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 shall: (i) pay the President all the compensation withheld while contract obligations were suspended, and, (ii) reinstate (in whole or in part) any of its obligations which were suspended.
6.5 If the President is removed from office and/or permanently prohibited from participating in the conduct of the Company's affairs by an order issued under the FDIA or the FRA, all obligations of the Company under this Agreement shall terminate, as of the effective date of the order, but the rights of the President to compensation earned as of the date of termination shall not be affected.
6.6 If the Company is in default, as defined to mean an adjudication or other official determination of a court of competent jurisdiction or other public authority pursuant to which a conservator, receiver or other legal custodian is appointed for the Company for the purpose of liquidation, all
obligations under this Agreement shall terminate as of the date of default, but the rights of the President to compensation and benefits accrued as of the date of termination shall not be affected.
6.7 In the event that the President is terminated in a manner which violates the provisions of Section 6.1, as determined by a court of competent jurisdiction, the President shall be entitled to reimbursement for all reasonable costs, including attorneys' fees in challenging such termination. Such reimbursement shall be in addition to all rights to which the President is otherwise entitled under this Agreement.
6.8 (a) The President may terminate his employment hereunder for good reason. For purposes of this Agreement, "good reason" shall mean (i) a failure by the Company to comply with any material provision of this Agreement, which failure has not been cured within ten (10) days after a notice of such noncompliance has been given by the President to the Company, or (ii) any purported termination of the President's employment hereunder which is not effected pursuant to a Notice of Termination satisfying the requirements of paragraph (b) hereof (and for purposes of this Agreement no such purported termination shall be effective).
(b) Any termination of the President's employment by the Company or by the President shall be communicated by a written Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a dated notice which shall (i) indicate the specific termination provision in the Agreement relied upon; (ii) set forth in reasonable detail, the facts and circumstances claimed to provide a basis for termination of the President's employment under the provision so indicated; (iii) specify a date of termination, which shall be not less than thirty (30) nor more than ninety (90) days after such Notice of Termination is given, except in the case of the Company's termination of the President's employment for just cause pursuant to Section 6.1 hereof, in which case the Notice of Termination may specify a date of termination as of the date such Notice of Termination is given; and (iv) be given in the manner specified in Section 9.1 hereof.
(c) In the event that: (i) the President shall terminate his employment for good reason as defined in subparts (i) or (ii) of Section 6.8(a) hereof, or (ii) if the President is terminated by the Company for other than just cause pursuant to Section 6.1 hereof and other than in connection with a change in control of the Company, as defined in the Compensation Agreement, then in lieu of any further salary payments to the President for periods subsequent to the date of termination, the Company shall pay as severance to the President an amount equal to the product of (A) the aggregate annual compensation paid to or payable by the Company and any of its subsidiaries to the President, which amount shall include the President's base salary, bonus (equal to the highest cash bonus paid to the
President in any of the two fiscal years prior to the date of termination of employment, car allowance and the value of any other benefits provided to the President, during the year in which the termination of the President's employment occurs, multiplied by (B) 2.00, such payment to be made in a lump sum on or before the fifth day following the date of termination.
(d) Unless the President's employment is terminated for just cause pursuant to Section 6.1 hereof or pursuant to Sections 6.5 and 6.6 hereof, the Company shall maintain in full force and effect, for the continued benefit of the President for the balance of the term of this Agreement (as such term may have been extended or provided herein), all employee benefit plans and programs in which the President was entitled to participate immediately prior to the date of termination, provided that the President's continued participation is possible under the general terms and provisions of such plans and programs.
(e) The President shall not be required to mitigate the amount of any payment provided for in paragraphs (c) and (d) of this Section 6.8 by seeking other employment or otherwise.
7. INDEMNIFICATION
7.1 The Company shall indemnify the President, to the fullest extent authorized by applicable federal and Commonwealth of Puerto Rico laws and regulations, with respect to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the Company) that the President is a party or is threatened to made a party by reason of the fact that he is or was the President and Chief Executive Officer of the Company or that he is or was a member of the Company's Board of Directors, or is or was serving at the written request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against costs and expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a matter he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful, provided that the Company shall not be liable for any amounts which may be due to the President in connection with a settlement of any action, suit or proceeding effected without its prior written consent or any action, suit or proceeding initiated by the President seeking indemnification hereunder without its prior written consent. The provisions of this Section 7.1 shall also extend the conjugal partnership of the President and his spouse and to the President's spouse, when applicable, and shall survive the termination of this Agreement.
8. SUCCESSORS OF THE PARTIES
8.1 This Agreement shall inure to the benefit of and be binding upon the President, and, to the extent applicable, his assigns, executors, and personal representatives and the Company,
its successors, and assigns, including, without limitation, any person, partnership, or corporation which may acquire all or substantially all of the Company's assets and business, or with or into which the Company may be consolidated or merged, and this provision shall apply in the event of any subsequent merger, consolidation, or transfer,
8.2 This Agreement is personal to each of the parties hereto and 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.
9. NOTICES
9.1 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 Company at his regular corporate office, or the President 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) Jose R. Fernandez Narciso 1893 Urb. Santa Maria Rio Piedras, PR 00927
(ii) Oriental Financial Group Inc.
P.O. Box 195115
San Juan, Puerto Rico 00919-5115
or such other address as either party may designate to the other by notice in writing in accordance with the terms hereof.
10. AMENDMENTS OR ADDITIONS
10.1 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 Company shall be required in order for the Company to authorize any amendments or additions to this Agreement, to give any consent or waivers of provisions of this Agreement, or to take any other action under this Agreement including any termination of the employment of the President with or without just cause under Section 6.1 hereof.
11. MISCELLANEOUS
11.1 No course of conduct between the Company and President to exercise any right or power given under this Agreement shall: (i) impair the subsequent exercise of any right or power, or (ii) be construed to be a waiver of any default or any acquiescence in or consent to the curing of any default while any other default shall continue to exist, or be construed to be a waiver of such continuing default or of any other right or power that shall theretofore have arisen; and, every power and remedy granted by law and by this Agreement to any party hereto may be exercised from time to time, and as often as may be deemed expedient. All such rights and powers shall be cumulative to the fullest extent permitted by law.
11.2 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.
11.3 This Agreement shall be governed in all respects and be interpreted by and under the laws of the Commonwealth of Puerto Rico, except to the extent that such law may be preempted by applicable Federal law, including regulations, opinions or orders duly issued by the FDIC and the FRB("Federal Law"), in which event this Agreement shall be governed and be interpreted by and under Federal Law. Venue for the litigation of any and all matters arising under or in connection with this Agreement shall be laid in the United States District Court for the District of Puerto Rico, at San Juan, in the case of federal jurisdiction, and in the Superior Court of the Commonwealth of Puerto Rico in San Juan, in the case of state court jurisdiction.
11.4 Notwithstanding anything to the contrary herein contained, the payment or obligation to pay any monies or granting of any rights or privileges to the President as provided in this Agreement shall not be in lieu or derogation of the rights and privileges that the President now has under any plan or benefit presently outstanding.
11.5 As used herein the term "Company" shall include all of the Company's subsidiaries and affiliates.
At San Juan Puerto Rico this 4th day of April, 2005.
ORIENTAL FINANCIAL GROUP INC.
/s/ Jose Rafael Fernandez By: /s/ Julian Inclan ------------------------- ------------------------- JOSE RAFAEL FERNANDEZ Julian Inclan Director __________________________________ Maricarmen Aponte Director /s/ Alberto Richa ------------------------- Alberto Richa Director /s/ Emilio Rodriguez, Jr. ---------------------------------- Emilio Rodriguez, Jr. Director |
EXHIBIT 10.9
CHANGE IN CONTROL COMPENSATION AGREEMENT
BETWEEN
ORIENTAL FINANCIAL GROUP INC.
AND
JOSE E. FERNANDEZ
Agreement made as of the 15th day of December, 2004, by and between Oriental Financial Group Inc., a Puerto Rico corporation and a financial holding company with principal offices in San Juan, Puerto Rico (hereinafter referred to as "OFG") and Jose E. Fernandez, of legal age, married, business executive and resident of San Juan, Puerto Rico (hereinafter referred to as the "Executive Officer").
WITNESSETH:
WHEREAS, the Executive Officer is presently the Chairman of the Board, President and CEO of OFG and, effective January 1, 2005, will become the non-executive Chairman of OFG;
WHEREAS, it is in the best interest of OFG to promote the retention of the Executive Officer's services on behalf of OFG by reducing concerns that the Executive Officer may be adversely affected in the event of change in control of OFG as defined herein below;
WHEREAS, OFG and the Executive Officer wish to enter into this Agreement to set forth the terms and conditions for the payment by OFG of certain compensation to the Executive Officer
in the event of a termination of Executive Officer's employment as a result of a change in control of OFG;
NOW, THEREFORE, in consideration of the mutual covenants set forth herein, OFG and the Executive Officer do hereby agree as follows:
1. TERM.
This Agreement shall be in full force and effect so long as the Executive Officer is employed by the Company.
2. TERMINATION OF EMPLOYMENT DUE TO A CHANGE IN CONTROL
A. In the event there is a Change in Control of OFG (as defined herein below) while this Agreement is in effect and as a result thereof or within one (1) year after the Change in Control, the Executive Officer's employment with OFG is terminated by OFG or its successor in interest, the Executive Officer shall be entitled to the cash payment compensation determined as provided in subparagraph B below.
B. The cash payment compensation shall be in an amount equal to two
(2) times the sum of the Executive Officer's annual base salary at the time the
termination of his employment occurs and the last cash bonus paid to the
Executive Officer prior to the termination of his employment.
C. The cash payment compensation shall be in lieu of any other payments which the Executive Officer may be entitled to receive by law, contract or otherwise. The cash payment compensation shall be due and payable in a lump sum to
the Executive Officer on or before the thirtieth (30th) day following the termination of the Executive Officer employment. The receipt of the cash payment compensation shall not affect the rights of Executive Officer to any vested benefits or accrued compensation, including bonuses.
D. For purposes of this Agreement, a "Change in Control of OFG" shall be deemed to have occurred if any Person or persons acting as a group within the meaning of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is or becomes the Beneficial Owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of OFG representing 25% or more of either the then outstanding shares of common stocks of OFG or the combined voting power of OFG's then outstanding securities and if individuals who on the date hereof are members of OFG's Board of Directors cease for any reason to constitute at least a majority thereof, unless the appointment election or nomination of each new director who was not a director on the date hereof has been approved by at least two-thirds of the directors in office on the date hereof.
E. For purposes of this Agreement, "Person" shall have the meaning given in Section 3(a) (9) of the Exchange Act, except that such term shall not include (i) OFG or any of its subsidiaries; (ii) an individual who on the date of this Agreement is a director or officer of OFG or any of its subsidiaries, or a beneficial owner of more than ten percent (10%) of OFG's outstanding securities; (iii) a trustee or other fiduciary holding securities under an employee benefit plan of OFG or any of its subsidiaries; (iv) an underwriter temporarily holding securities pursuant to an offering of such securities; or
(v) a corporation or entity owned, directly or indirectly, by the stockholders of OFG in substantially the same proportion as their ownership of stock of OFG on the date of this Agreement.
F. Notwithstanding anything to the contrary herein, any event or transaction which would otherwise constitute a Change in Control of OFG (hereinafter referred to as a "Transaction") shall not constitute a Change in Control of OFG for purposes of this Agreement if the Executive Officer participates as an acquirer in the Transaction or as an equity investor or stockholder of the acquiring entity or any of its affiliates and thus, the Executive Officer shall not be entitled to receive the benefits provided for in this Agreement.
3. ASSIGNMENT.
This Agreement is personal to each of the parties hereto and 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.
4. AMENDMENTS OR ADDITIONS.
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 OFG shall be required in order for OFG to authorize any amendments or additions to this Agreement, to give any consent or waivers of provisions of this Agreement, or to take any other action under this Agreement.
5. MISCELLANEOUS.
A. 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.
B. This Agreement shall be governed in all respects and be interpreted by and under the laws of the Commonwealth of Puerto Rico, except to the extent that such law may be preempted by applicable United States federal law, in which case this Agreement shall be governed and be interpreted by and under United States federal law. Venue for the litigation of any and all maters arising under or in connection with this Agreement shall be laid in the United States District Court for the District of Puerto Rico, at San Juan, in the case of federal jurisdiction, and in the Court of First Instance, Superior Part, the Commonwealth of Puerto Rico in San Juan, in the case of state court jurisdiction.
EXECUTIVE OFFICER ORIENTAL FINANCIAL GROUP INC. /s/ Jose E. Fernandez /s/ Julian S. Inclan ------------------------ ----------------------------- Jose E. Fernandez Julian S. Inclan /s/ Alberto Richa ----------------------------- Alberto Richa /s/ Emilio Rodriguez ----------------------------- Emilio Rodriguez |
FORM APPROVED ON NOVEMBER 29, 2004
EXHIBIT 10.10
CHANGE IN CONTROL COMPENSATION AGREEMENT
BETWEEN
ORIENTAL FINANCIAL GROUP INC.
AND
HECTOR MENDEZ
Agreement made as of the 15th day of December, 2004, by and between Oriental Financial Group Inc., a Puerto Rico corporation and a financial holding company with principal offices in San Juan, Puerto Rico (hereinafter referred to as "OFG") and Hector Mendez, of legal age, married, business executive and resident of San Juan, Puerto Rico (hereinafter referred to as the "Executive Officer") .
WITNESSETH:
WHEREAS, the Executive Officer is presently a Senior Executive Vice President of OFG;
WHEREAS, it is in the best interest of OFG to promote the retention of the Executive Officer's services on behalf of OFG by reducing concerns that the Executive Officer may be adversely affected in the event of change in control of OFG as defined herein below;
WHEREAS, OFG and the Executive Officer wish to enter into this Agreement to set forth the terms and conditions for the payment by OFG of certain compensation to the Executive Officer in the event of a termination of Executive Officer's employment as a result of a change in control of OFG;
NOW, THEREFORE, in consideration of the mutual covenants set forth herein, OFG and the Executive Officer do hereby agree as follows:
1. TERM.
This Agreement shall be in full force and effect so long as the Executive Officer is employed by the Company.
2. TERMINATION OF EMPLOYMENT DUE TO A CHANGE IN CONTROL
A. In the event there is a Change in Control of OFG (as defined herein below) while this Agreement is in effect and as a result thereof or within one (1) year after the Change in Control, the Executive Officer's employment with OFG is terminated by OFG or its successor in interest, the Executive Officer shall be entitled to the cash payment compensation determined as provided in subparagraph B below.
B. The cash payment compensation shall be in an amount equal to two (2) times the sum of the Executive Officer's annual base salary at the time the termination of his employment occurs and the last cash bonus paid to the Executive Officer prior to the termination of his employment.
C. The cash payment compensation shall be in lieu of any other payments which the Executive Officer may be entitled to receive by law, contract or otherwise. The cash payment compensation shall be due and payable in a lump sum to the Executive Officer on or before the thirtieth (30th) day following the termination of the Executive Officer employment. The receipt of the cash payment compensation shall not affect the
rights of Executive Officer to any vested benefits or accrued compensation, including bonuses.
D. For purposes of this Agreement, a "Change in Control of OFG" shall be deemed to have occurred if any Person or persons acting as a group within the meaning of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is or becomes the Beneficial Owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of OFG representing 25% or more of either the then outstanding shares of common stocks of OFG or the combined voting power of OFG's then outstanding securities and if individuals who on the date hereof are members of OFG's Board of Directors cease for any reason to constitute at least a majority thereof, unless the appointment election or nomination of each new director who was not a director on the date hereof has been approved by at least two-thirds of the directors in office on the date hereof.
E. For purposes of this Agreement, "Person" shall have the meaning
given in Section 3(a) (9) of the Exchange Act, except that such term shall not
include (i) OFG or any of its subsidiaries; (ii) an individual who on the date
of this Agreement is a director or officer of OFG or any of its subsidiaries, or
a beneficial owner of more than ten percent (10%) of OFG's outstanding
securities; (iii) a trustee or other fiduciary holding securities under an
employee benefit plan of OFG or any of its subsidiaries; (iv) an underwriter
temporarily holding securities pursuant to an offering of such securities; or
(v) a corporation or entity owned, directly or indirectly, by the stockholders
of OFG in substantially the same proportion as their ownership of stock of OFG
on the date of this Agreement.
F. Notwithstanding anything to the contrary herein, any event or transaction which would otherwise constitute a Change in Control of OFG (hereinafter referred to as a "Transaction") shall not constitute a Change in Control of OFG for purposes of this Agreement if the Executive Officer participates as an acquirer in the Transaction or as an equity investor or stockholder of the acquiring entity or any of its affiliates and thus, the Executive Officer shall not be entitled to receive the benefits provided for in this Agreement.
3. ASSIGNMENT.
This Agreement is personal to each of the parties hereto and 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.
4. AMENDMENTS OR ADDITIONS.
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 OFG shall be required in order for OFG to authorize any amendments or additions to this Agreement, to give any consent or waivers of provisions of this Agreement, or to take any other action under this Agreement.
5. MISCELLANEOUS.
A. 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.
B. This Agreement shall be governed in all respects and be interpreted by and under the laws of the Commonwealth of Puerto Rico, except to the extent that such law may be preempted by applicable United States federal law, in which case this Agreement shall be governed and be interpreted by and under United States federal law. Venue for the litigation of any and all maters arising under or in connection with this Agreement shall be laid in the United States District Court for the District of Puerto Rico, at San Juan, in the case of federal jurisdiction, and in the Court of First Instance, Superior Part, the Commonwealth of Puerto Rico in San Juan, in the case of state court jurisdiction.
EXECUTIVE OFFICER ORIENTAL FINANCIAL GROUP INC. /s/ Hector Mendez /s/ Julian S. Inclan --------------------- ----------------------------- Hector Mendez Julian S. Inclan /s/ Alberto Richa ----------------------------- Alberto Richa /s/ Emilio Rodriguez ----------------------------- Emilio Rodriguez |
FORM APPROVED ON NOVEMBER 29, 2004
EXHIBIT 10.11
CHANGE IN CONTROL COMPENSATION AGREEMENT
BETWEEN
ORIENTAL FINANCIAL GROUP INC.
AND
JOSE E. FERNANDEZ RICHARDS
Agreement made as of the 15th day of December, 2004, by and between Oriental Financial Group Inc., a Puerto Rico corporation and a financial holding company with principal offices in San Juan, Puerto Rico (hereinafter referred to as "OFG") and Jose E. Fernandez Richards, of legal age, married, business executive and resident of San Juan, Puerto Rico (hereinafter referred to as the "Executive Officer").
WITNESSETH:
WHEREAS, the Executive Officer is presently an Senior Vice President of
OFG;
WHEREAS, it is in the best interest of OFG to promote the retention of the Executive Officer's services on behalf of OFG by reducing concerns that the Executive Officer may be adversely affected in the event of change in control of OFG as defined herein below;
WHEREAS, OFG and the Executive Officer wish to enter into this Agreement to set forth the terms and conditions for the payment by OFG of certain compensation to the Executive Officer in the event of a termination of Executive Officer's employment as a result of a change in control of OFG;
NOW, THEREFORE, in consideration of the mutual covenants set forth herein, OFG and the Executive Officer do hereby agree as follows:
1. TERM.
This Agreement shall be in full force and effect so long as the Executive Officer is employed by the Company.
2. TERMINATION OF EMPLOYMENT DUE TO A CHANGE IN CONTROL
A. In the event there is a Change in Control of OFG (as defined herein below) while this Agreement is in effect and as a result thereof or within one (1) year after the Change in Control, the Executive Officer's employment with OFG is terminated by OFG or its successor in interest, the Executive Officer shall be entitled to the cash payment compensation determined as provided in subparagraph B below.
B. The cash payment compensation shall be in an amount equal to two (2) times the sum of the Executive Officer's annual base salary at the time the termination of his employment occurs and the last cash bonus paid to the Executive Officer prior to the termination of his employment.
C. The cash payment compensation shall be in lieu of any other payments which the Executive Officer may be entitled to receive by law, contract or otherwise. The cash payment compensation shall be due and payable in a lump sum to the Executive Officer on or before the thirtieth (30th) day following the termination of the Executive Officer employment. The receipt of the cash payment compensation shall not affect the
rights of Executive Officer to any vested benefits or accrued compensation, including bonuses.
D. For purposes of this Agreement, a "Change in Control of OFG" shall be deemed to have occurred if any Person or persons acting as a group within the meaning of Sections 13 (d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is or becomes the Beneficial Owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of OFG representing 25% or more of either the then outstanding shares of common stocks of OFG or the combined voting power of OFG's then outstanding securities and if individuals who on the date hereof are members of OFG's Board of Directors cease for any reason to constitute at least a majority thereof, unless the appointment election or nomination of each new director who was not a director on the date hereof has been approved by at least two-thirds of the directors in office on the date hereof.
E. For purposes of this Agreement, "Person" shall have the meaning
given in Section 3(a)(9) of the Exchange Act, except that such term shall not
include (i) OFG or any of its subsidiaries; (ii) an individual who on the date
of this Agreement is a director or officer of OFG or any of its subsidiaries, or
a beneficial owner of more than ten percent (10%) of OFG's outstanding
securities; (iii) a trustee or other fiduciary holding securities under an
employee benefit plan of OFG or any of its subsidiaries; (iv) an underwriter
temporarily holding securities pursuant to an offering of such securities; or
(v) a corporation or entity owned, directly or indirectly, by the stockholders
of OFG in substantially the same proportion as their ownership of stock of OFG
on the date of this Agreement.
F. Notwithstanding anything to the contrary herein, any event or transaction which would otherwise constitute a Change in Control of OFG (hereinafter referred to as a "Transaction") shall not constitute a Change in Control of OFG for purposes of this Agreement if the Executive Officer participates as an acquirer in the Transaction or as an equity investor or stockholder of the acquiring entity or any of its affiliates and thus, the Executive Officer shall not be entitled to receive the benefits provided for in this Agreement.
3. ASSIGNMENT.
This Agreement is personal to each of the parties hereto and 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.
4. AMENDMENTS OR ADDITIONS.
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 OFG shall be required in order for OFG to authorize any amendments or additions to this Agreement, to give any consent or waivers of provisions of this Agreement, or to take any other action under this Agreement.
5. MISCELLANEOUS.
A. 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.
B. This Agreement shall be governed in all respects and be interpreted by and under the laws of the Commonwealth of Puerto Rico, except to the extent that such law may be preempted by applicable United States federal law, in which case this Agreement shall be governed and be interpreted by and under United States federal law. Venue for the litigation of any and all maters arising under or in connection with this Agreement shall be laid in the United States District Court for the District of Puerto Rico, at San Juan, in the case of federal jurisdiction, and in the Court of First Instance, Superior Part, the Commonwealth of Puerto Rico in San Juan, in the case of state court jurisdiction.
EXECUTIVE OFFICER ORIENTAL FINANCIAL GROUP INC. /s/ Jose E. Fernandez Richards /s/ Julian s. Inclan ------------------------------ ----------------------------- Jose E. Fernandez Richards Julian s. Inclan /s/ Alberto Richa ----------------------------- Alberto Richa /s/ Emilio Rodriguez ----------------------------- Emilio Rodriguez |
FORM APPROVED ON NOVEMBER 29, 2004
EXHIBIT 10.12
CHANGE IN CONTROL COMPENSATION AGREEMENT
BETWEEN
ORIENTAL FINANCIAL GROUP INC.
AND
JOSE R. FERNANDEZ
Agreement made as of the 15th day of December, 2004, by and between Oriental Financial Group Inc., a Puerto Rico corporation and a financial holding company with principal offices in San Juan, Puerto Rico (hereinafter referred to as "OFG") and Jose R. Fernandez, of legal age, married, business executive and resident of San Juan, Puerto Rico (hereinafter referred to as the "Executive Officer").
WITNESSETH:
WHEREAS, the Executive Officer is presently the Senior Executive Vice President and COO of OFG and, effective January 1, 2005, will become the President and CEO of OFG;
WHEREAS, it is in the best interest of OFG to promote the retention of the Executive Officer's services on behalf of OFG by reducing concerns that the Executive Officer may be adversely affected in the event of change in control of OFG as defined herein below;
WHEREAS, OFG and the Executive Officer wish to enter into this Agreement to set forth the terms and conditions for the payment by OFG of certain compensation to the Executive Officer
in the event of a termination of Executive Officer's employment as a result of a change in control of OFG;
NOW, THEREFORE, in consideration of the mutual covenants set forth herein, OFG and the Executive Officer do hereby agree as follows:
1. TERM.
This Agreement shall be in full force and effect so long as the Executive Officer is employed by the Company.
2. TERMINATION OF EMPLOYMENT DUE TO A CHANGE IN CONTROL
A. In the event there is a Change in Control of OFG (as defined herein below) while this Agreement is in effect and as a result thereof or within one (1) year after the Change in Control, the Executive Officer's employment with OFG is terminated by OFG or its successor in interest, the Executive Officer shall be entitled to the cash payment compensation determined as provided in subparagraph B below.
B. The cash payment compensation shall be in an amount equal to two
(2) times the sum of the Executive Officer's annual base salary at the time the
termination of his employment occurs and the last cash bonus paid to the
Executive Officer prior to the termination of his employment.
C. The cash payment compensation shall be in lieu of any other payments which the Executive Officer may be entitled to receive by law, contract or otherwise. The cash payment compensation shall be due and payable in a lump sum to
the Executive Officer on or before the thirtieth (30th) day following the termination of the Executive Officer employment. The receipt of the cash payment compensation shall not affect the rights of Executive Officer to any vested benefits or accrued compensation, including bonuses.
D. For purposes of this Agreement, a "Change in Control of OFG" shall be deemed to have occurred if any Person or persons acting as a group within the meaning of Sections 13 (d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is or becomes the Beneficial Owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of OFG representing 25% or more of either the then outstanding shares of common stocks of OFG or the combined voting power of OFG's then outstanding securities and if individuals who on the date hereof are members of OFG's Board of Directors cease for any reason to constitute at least a majority thereof, unless the appointment election or nomination of each new director who was not a director on the date hereof has been approved by at least two-thirds of the directors in office on the date hereof.
E. For purposes of this Agreement, "Person" shall have the meaning given in Section 3(a)(9) of the Exchange Act, except that such term shall not include (i) OFG or any of its subsidiaries; (ii) an individual who on the date of this Agreement is a director or officer of OFG or any of its subsidiaries, or a beneficial owner of more than ten percent (10%) of OFG's outstanding securities; (iii) a trustee or other fiduciary holding securities under an employee benefit plan of OFG or any of its subsidiaries; (iv) an underwriter temporarily holding securities pursuant to an offering of such securities; or
(v) a corporation or entity owned, directly or indirectly, by the stockholders of OFG in substantially the same proportion as their ownership of stock of OFG on the date of this Agreement.
F. Notwithstanding anything to the contrary herein, any event or transaction which would otherwise constitute a Change in Control of OFG (hereinafter referred to as a "Transaction") shall not constitute a Change in Control of OFG for purposes of this Agreement if the Executive Officer participates as an acquirer in the Transaction or as an equity investor or stockholder of the acquiring entity or any of its affiliates and thus, the Executive Officer shall not be entitled to receive the benefits provided for in this Agreement.
3. ASSIGNMENT.
This Agreement is personal to each of the parties hereto and 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.
4. AMENDMENTS OR ADDITIONS.
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 OFG shall be required in order for OFG to authorize any amendments or additions to this Agreement, to give any consent or waivers of provisions of this Agreement, or to take any other action under this Agreement.
5. MISCELLANEOUS.
A. 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.
B. This Agreement shall be governed in all respects and be interpreted by and under the laws of the Commonwealth of Puerto Rico, except to the extent that such law may be preempted by applicable United States federal law, in which case this Agreement shall be governed and be interpreted by and under United States federal law. Venue for the litigation of any and all maters arising under or in connection with this Agreement shall be laid in the United States District Court for the District of Puerto Rico, at San Juan, in the case of federal jurisdiction, and in the Court of First Instance, Superior Part, the Commonwealth of Puerto Rico in San Juan, in the case of state court jurisdiction.
EXECUTIVE OFFICER ORIENTAL FINANCIAL GROUP INC. /s/ Jose R. Fernandez /s/ Julian S. Inclan ------------------------ ----------------------------- Jose R. Fernandez Julian S. Inclan /s/ Alberto Richa ----------------------------- Alberto Richa /s/ Emilio Rodriguez ----------------------------- Emilio Rodriguez |
FORM APPROVED ON NOVEMBER 29, 2004
EXHIBIT 10.13
CHANGE IN CONTROL COMPENSATION AGREEMENT
BETWEEN
ORIENTAL FINANCIAL GROUP INC.
AND
NORBERTO GONZALEZ
Agreement made as of the 15th day of December, 2004, by and between Oriental Financial Group Inc., a Puerto Rico corporation and a financial holding company with principal offices in San Juan, Puerto Rico (hereinafter referred to as "OFG") and Norberto Gonzalez, of legal age, married, business executive and resident of San Juan, Puerto Rico (hereinafter referred to as the "Executive Officer").
WITNESSETH:
WHEREAS, the Executive Officer is presently a Senior Executive Vice President and acting CFO of OFG;
WHEREAS, it is in the best interest of OFG to promote the retention of the Executive Officer's services on behalf of OFG by reducing concerns that the Executive Officer may be adversely affected in the event of change in control of OFG as defined herein below;
WHEREAS, OFG and the Executive Officer wish to enter into this Agreement to set forth the terms and conditions for the payment by OFG of certain compensation to the Executive Officer in the event of a termination of Executive Officer's employment as a result of a change in control of OFG;
NOW, THEREFORE, in consideration of the mutual covenants set forth herein, OFG and the Executive Officer do hereby agree as follows:
1. TERM.
This Agreement shall be in full force and effect so long as the Executive Officer is employed by the Company.
2. TERMINATION OF EMPLOYMENT DUE TO A CHANGE IN CONTROL
A. In the event there is a Change in Control ofOFG (as defined herein below) while this Agreement is in effect and as a result thereof or within one (1) year after the Change in Control, the Executive Officer's employment with OFG is terminated by OFG or its successor in interest, the Executive Officer shall be entitled to the cash payment compensation determined as provided in subparagraph B below.
B. The cash payment compensation shall be in an amount equal to two
(2) times the sum of the Executive Officer's annual base salary at the time the
termination of his employment occurs and the last cash bonus paid to the
Executive Officer prior to the termination of his employment.
C. The cash payment compensation shall be inlieu of any other payments which the Executive Officer may been titled to receive by law, contract or otherwise. The cash payment compensation shall be due and payable in a lump sum to the Executive Officer on or before the thirtieth (30th) day following the termination of the Executive Officer employment. The receipt of the cash payment compensation shall not affect the
rights of Executive Officer to any vested benefits or accrued compensation, including bonuses.
D. For purposes of this Agreement, a "Change in Control of OFG" shall be deemed to have occurred if any Person or persons acting as a group within the meaning of Sections13 (d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is or becomes the Beneficial Owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of OFG representing 25% or more of either the then outstanding shares of common stocks of OFG or the combined voting power of OFG's then outstanding securities and if individuals who on the date hereof are members of OFG's Board of Directors cease for any reason to constitute at least a majority thereof, unless the appointment election or nomination of each new director who was not a director on the date hereof has been approved by at least two-thirds of the directors in office on the date hereof.
E. For purposes of this Agreement, "Person" shall have the meaning
given in Section 3(a)(9) of the Exchange Act, except that such term shall not
include (i) OFG or any of its subsidiaries; (ii) an individual who on the date
of this Agreement is a director or officer of OFG or any of its subsidiaries, or
a beneficial owner of more than ten percent (10%) of OFG's outstanding
securities; (iii) a trustee or other fiduciary holding securities under an
employee benefit plan of OFG or any of its subsidiaries; (iv) an underwriter
temporarily holding securities pursuant to an offering of such securities; or
(v) a corporation or entity owned, directly or indirectly, by the stockholders
of OFG in substantially the same proportion as their ownership of stock of OFG
on the date of this Agreement.
F. Notwithstanding anything to the contrary herein, any event or transaction which would otherwise constitute a Change in Control of OFG (hereinafter referred to as a "Transaction") shall not constitute a Change in Control of OFG for purposes of this Agreement if the Executive Officer participates as an acquirer in the Transaction or as an equity investor or stockholder of the acquiring entity or any of its affiliates and thus, the Executive Officer shall not be entitled to receive the benefits provided for in this Agreement.
3. ASSIGNMENT.
This Agreement is personal to each of the parties hereto and 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.
4. AMENDMENTS OR ADDITIONS.
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 OFG shall be required in order for OFG to authorize any amendments or additions to this Agreement, to give any consent or waivers of provisions of this Agreement, or to take any other action under this Agreement.
5. MISCELLANEOUS.
A. 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.
B. This Agreement shall be governed in all respects and be interpreted by and under the laws of the Commonwealth ofPuerto Rico, except to the extent that such law may be preempted by applicable United States federal law, in which case this Agreement shall be governed and be interpreted by and underUnited States federal law. Venue for the litigation of any and all maters arising under or in connection with this Agreement shall be laid in the United States District Court for the District of Puerto Rico, at San Juan, in the case of federal jurisdiction, and in the Court of First Instance, Superior Part,the Commonwealth of Puerto Rico in San Juan, in the case of statecourt jurisdiction.
EXECUTIVE OFFICER ORIENTAL FINANCIAL GROUP INC. /s/ Norberto Gonzalez /s/ Julian S. Inclan ------------------------ ----------------------------- Norberto Gonzalez Julian S. Inclan /s/ Alberto Richa ----------------------------- Alberto Richa /s/ Emilio Rodriguez ----------------------------- Emilio Rodriguez |
FORM APPROVED ON NOVEMBER 29, 2004
EXHIBIT 10.14
CHANGE IN CONTROL COMPENSATION AGREEMENT
BETWEEN
ORIENTAL FINANCIAL GROUP INC.
AND
GANESH KUMAR
Agreement made as of the 15th day of December, 2004, by and between Oriental Financial Group Inc., a Puerto Rico corporation and a financial holding company with principal offices in San Juan, Puerto Rico (hereinafter referred to as "OFG") and Ganesh Kumar, of legal age, married, business executive and resident of Guaynabo, Puerto Rico (hereinafter referred to as the "Executive Officer").
WITNESSETH:
WHEREAS, the Executive Officer is presently an Executive Vice President of
OFG;
WHEREAS, it is in the best interest of OFG to promote the retention of the Executive Officer's services on behalf of OFG by reducing concerns that the Executive Officer may be adversely affected in the event of change in control of OFG as defined herein below;
WHEREAS, OFG and the Executive Officer wish to enter into this Agreement to set forth the terms and conditions for the payment by OFG of certain compensation to the Executive Officer in the event of a termination of Executive Officer's employment as a result of a change in control of OFG;
NOW, THEREFORE, in consideration of the mutual covenants set forth herein, OFG and the Executive Officer do hereby agree as follows:
1. TERM.
This Agreement shall be in full force and effect so long as the Executive Officer is employed by the Company.
2. TERMINATION OF EMPLOYMENT DUE TO A CHANGE IN CONTROL
A. In the event there is a Change in Control of OFG (as defined herein below) while this Agreement is in effect and as a result thereof or within one (1) year after the Change in Control, the Executive Officer's employment with OFG is terminated by OFG or its successor in interest, the Executive Officer shall be entitled to the cash payment compensation determined as provided in subparagraph B below.
B. The cash payment compensation shall be in an amount equal to two (2) times the sum of the Executive Officer's annual base salary at the time the termination of his employment occurs and the last cash bonus paid to the Executive Officer prior to the termination of his employment.
C. The cash payment compensation shall be in lieu of any other payments which the Executive Officer may be entitled to receive by law, contract or otherwise. The cash payment compensation shall be due and payable in a lump sum to the Executive Officer on or before the thirtieth (30th) day following the termination of the Executive Officer employment. The receipt of the cash payment compensation shall not affect the
rights of Executive Officer to any vested benefits or accrued compensation, including bonuses.
D. For purposes of this Agreement, a "Change in Control of OFG" shall be deemed to have occurred if any Person or persons acting as a group within the meaning of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is or becomes the Beneficial Owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of OFG representing 25% or more of either the then outstanding shares of common stocks of OFG or the combined voting power of OFG's then outstanding securities and if individuals who on the date hereof are members of OFG's Board of Directors cease for any reason to constitute at least a majority thereof, unless the appointment election or nomination of each new director who was not a director on the date hereof has been approved by at least two-thirds of the directors in office on the date hereof.
E. For purposes of this Agreement, "Person" shall have the meaning given in Section 3(a) (9) of the Exchange Act, except that such term shall not include (i) OFG or any of its subsidiaries; (ii) an individual who on the date of this Agreement is a director or officer of OFG or any of its subsidiaries, or a beneficial owner of more than ten percent (10%) of OFG's outstanding securities; (iii) a trustee or other fiduciary holding securities under an employee benefit plan of OFG or any of its subsidiaries; (iv) an underwriter temporarily holding securities pursuant to an offering of such securities; or (v) a corporation or entity owned, directly or indirectly, by the stockholders of OFG in substantially the same proportion as their ownership of stock of OFG on the date of this Agreement.
F. Notwithstanding anything to the contrary herein, any event or transaction which would otherwise constitute a Change in Control of OFG (hereinafter referred to as a "Transaction") shall not constitute a Change in Control of OFG for purposes of this Agreement if the Executive Officer participates as an acquirer in the Transaction or as an equity investor or stockholder of the acquiring entity or any of its affiliates and thus, the Executive Officer shall not be entitled to receive the benefits provided for in this Agreement.
3. ASSIGNMENT.
This Agreement is personal to each of the parties hereto and 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.
4. AMENDMENTS OR ADDITIONS.
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 OFG shall be required in order for OFG to authorize any amendments or additions to this Agreement, to give any consent or waivers of provisions of this Agreement, or to take any other action under this Agreement.
5. MISCELLANEOUS.
A. 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.
B. This Agreement shall be governed in all respects and be interpreted by and under the laws of the Commonwealth of Puerto Rico, except to the extent that such law may be preempted by applicable United States federal law, in which case this Agreement shall be governed and be interpreted by and under United States federal law. Venue for the litigation of any and all maters arising under or in connection with this Agreement shall be laid in the United States District Court for the District of Puerto Rico, at San Juan, in the case of federal jurisdiction, and in the Court of First Instance, Superior Part, the Commonwealth of Puerto Rico in San Juan, in the case of state court jurisdiction.
EXECUTIVE OFFICER ORIENTAL FINANCIAL GROUP INC. /s/ Ganesh Kumar /s/ Julian S. Inclan ---------------------- ------------------------------- Ganesh Kumar Julian S. Inclan /s/ Alberto Richa ------------------------------- Alberto Richa /s/ Emilio Rodriguez ------------------------------- Emilio Rodriguez |
FORM APPROVED ON NOVEMBER 29, 2004
EXHIBIT 10.15
CHANGE IN CONTROL COMPENSATION AGREEMENT
BETWEEN
ORIENTAL FINANCIAL GROUP INC.
AND
CARLOS VELEZ
Agreement made as of the 15th day of December, 2004, by and between Oriental Financial Group Inc., a Puerto Rico corporation and a financial holding company with principal offices in San Juan, Puerto Rico (hereinafter referred to as "OFG") and Carlos Velez, of legal age, married, business executive and resident of Guaynabo, Puerto Rico (hereinafter referred to as the "Executive Officer").
WITNESSETH:
WHEREAS, the Executive Officer is presently an Executive Vice President of
OFG;
WHEREAS, it is in the best interest of OFG to promote the retention of the Executive Officer's services on behalf of OFG by reducing concerns that the Executive Officer may be adversely affected in the event of change in control of OFG as defined herein below;
WHEREAS, OFG and the Executive Officer wish to enter into this Agreement to set forth the terms and conditions for the payment by OFG of certain compensation to the Executive Officer in the event of a termination of Executive Officer's employment as a result of a change in control of OFG;
NOW, THEREFORE, in consideration of the mutual covenants set forth herein, OFG and the Executive Officer do hereby agree as follows:
1. TERM.
This Agreement shall be in full force and effect so long as the Executive Officer is employed by the Company.
2. TERMINATION OF EMPLOYMENT DUE TO A CHANGE IN CONTROL
A. In the event there is a Change in Control of OFG (as defined herein below) while this Agreement is in effect and as a result thereof or within one (1) year after the Change in Control, the Executive Officer's employment with OFG is terminated by OFG or its successor in interest, the Executive Officer shall be entitled to the cash payment compensation determined as provided in subparagraph B below.
B. The cash payment compensation shall be in an amount equal to two (2) times the sum of the Executive Officer's annual base salary at the time the termination of his employment occurs and the last cash bonus paid to the Executive Officer prior to the termination of his employment.
C. The cash payment compensation shall be in lieu of any other payments which the Executive Officer may be entitled to receive by law, contract or otherwise. The cash payment compensation shall be due and payable in a lump sum to the Executive Officer on or before the thirtieth (30th) day following the termination of the Executive Officer employment. The receipt of the cash payment compensation shall not affect the
rights of Executive Officer to any vested benefits or accrued compensation, including bonuses.
D. For purposes of this Agreement, a "Change in Control of OFG" shall be deemed to have occurred if any Person or persons acting as a group within the meaning of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is or becomes the Beneficial Owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of OFG representing 25% or more of either the then outstanding shares of common stocks of OFG or the combined voting power of OFG's then outstanding securities and if individuals who on the date hereof are members of OFG's Board of Directors cease for any reason to constitute at least a majority thereof, unless the appointment election or nomination of each new director who was not a director on the date hereof has been approved by at least two-thirds of the directors in office on the date hereof.
E. For purposes of this Agreement, "Person" shall have the meaning given in Section 3(a) (9) of the Exchange Act, except that such term shall not include (i) OFG or any of its subsidiaries; (ii) an individual who on the date of this Agreement is a director or officer of OFG or any of its subsidiaries, or a beneficial owner of more than ten percent (10%) of OFG's outstanding securities; (iii) a trustee or other fiduciary holding securities under an employee benefit plan of OFG or any of its subsidiaries; (iv) an underwriter temporarily holding securities pursuant to an offering of such securities; or (v) a corporation or entity owned, directly or indirectly, by the stockholders of OFG in substantially the same proportion as their ownership of stock of OFG on the date of this Agreement.
F. Notwithstanding anything to the contrary herein, any event or transaction which would otherwise constitute a Change in Control of OFG (hereinafter referred to as a "Transaction") shall not constitute a Change in Control of OFG for purposes of this Agreement if the Executive Officer participates as an acquirer in the Transaction or as an equity investor or stockholder of the acquiring entity or any of its affiliates and thus, the Executive Officer shall not be entitled to receive the benefits provided for in this Agreement.
3. ASSIGNMENT.
This Agreement is personal to each of the parties hereto and 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.
4. AMENDMENTS OR ADDITIONS.
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 OFG shall be required in order for OFG to authorize any amendments or additions to this Agreement, to give any consent or waivers of provisions of this Agreement, or to take any other action under this Agreement.
5. MISCELLANEOUS.
A. 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.
B. This Agreement shall be governed in all respects and be interpreted by and under the laws of the Commonwealth of Puerto Rico, except to the extent that such law may be preempted by applicable United States federal law, in which case this Agreement shall be governed and be interpreted by and under United States federal law. Venue for the litigation of any and all maters arising under or in connection with this Agreement shall be laid in the United States District Court for the District of Puerto Rico, at San Juan, in the case of federal jurisdiction, and in the Court of First Instance, Superior Part, the Commonwealth of Puerto Rico in San Juan, in the case of state court jurisdiction.
EXECUTIVE OFFICER ORIENTAL FINANCIAL GROUP INC. /s/ Carlos Velez /s/ Julian S. Inclan --------------------------- --------------------------- Carlos Velez Julian S. Inclan /s/ Alberto Richa --------------------------- Alberto Richa /s/ Emilio Rodriguez --------------------------- Emilio Rodriguez |
FORM APPROVED ON NOVEMBER 29, 2004
EXHIBIT 10.16
CHANGE IN CONTROL COMPENSATION AGREEMENT
BETWEEN
ORIENTAL FINANCIAL GROUP INC.
AND
NESTOR VALE
Agreement made as of the 15th day of December, 2004, by and between Oriental Financial Group Inc., a Puerto Rico corporation and a financial holding company with principal offices in San Juan, Puerto Rico (hereinafter referred to as "OFG") and Nestor Vale, of legal age, married, business executive and resident of Guaynabo, Puerto Rico (hereinafter referred to as the "Executive Officer").
WITNESSETH:
WHEREAS, the Executive Officer is presently a Senior Executive Vice President of OFG;
WHEREAS, it is in the best interest of OFG to promote the retention of the Executive Officer's services on behalf of OFG by reducing concerns that the Executive Officer may be adversely affected in the event of change in control of OFG as defined herein below;
WHEREAS, OFG and the Executive Officer wish to enter into this Agreement to set forth the terms and conditions for the payment by OFG of certain compensation to the Executive Officer in the event of a termination of Executive Officer's employment as a result of a change in control of OFG;
NOW, THEREFORE, in consideration of the mutual covenants set forth herein, OFG and the Executive Officer do hereby agree as follows:
1. TERM.
This Agreement shall be in full force and effect so long as the Executive Officer is employed by the Company.
2. TERMINATION OF EMPLOYMENT DUE TO A CHANGE IN CONTROL
A. In the event there is a Change in Control of OFG (as defined herein below) while this Agreement is in effect and as a result thereof or within one (1) year after the Change in Control, the Executive Officer's employment with OFG is terminated by OFG or its successor in interest, the Executive Officer shall be entitled to the cash payment compensation determined as provided in subparagraph B below.
B. The cash payment compensation shall be in an amount equal to two (2) times the sum of the Executive Officer's annual base salary at the time the termination of his employment occurs and the last cash bonus paid to the Executive Officer prior to the termination of his employment.
C. The cash payment compensation shall be in lieu of any other payments which the Executive Officer may be entitled to receive by law, contract or otherwise. The cash payment compensation shall be due and payable in a lump sum to the Executive Officer on or before the thirtieth (30th) day following the termination of the Executive Officer employment. The receipt of the cash payment compensation shall not affect the
rights of Executive Officer to any vested benefits or accrued compensation, including bonuses.
D. For purposes of this Agreement, a "Change in Control of OFG" shall be deemed to have occurred if any Person or persons acting as a group within the meaning of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is or becomes the Beneficial Owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of OFG representing 25% or more of either the then outstanding shares of common stocks of OFG or the combined voting power of OFG's then outstanding securities and if individuals who on the date hereof are members of OFG's Board of Directors cease for any reason to constitute at least a majority thereof, unless the appointment election or nomination of each new director who was not a director on the date hereof has been approved by at least two-thirds of the directors in office on the date hereof.
E. For purposes of this Agreement, "Person" shall have the meaning given in Section 3(a) (9) of the Exchange Act, except that such term shall not include (i) OFG or any of its subsidiaries; (ii) an individual who on the date of this Agreement is a director or officer of OFG or any of its subsidiaries, or a beneficial owner of more than ten percent (10%) of OFG's outstanding securities; (iii) a trustee or other fiduciary holding securities under an employee benefit plan of OFG or any of its subsidiaries; (iv) an underwriter temporarily holding securities pursuant to an offering of such securities; or (v) a corporation or entity owned, directly or indirectly, by the stockholders of OFG in substantially the same proportion as their ownership of stock of OFG on the date of this Agreement.
F. Notwithstanding anything to the contrary herein, any event or transaction which would otherwise constitute a Change in Control of OFG (hereinafter referred to as a "Transaction") shall not constitute a Change in Control of OFG for purposes of this Agreement if the Executive Officer participates as an acquirer in the Transaction or as an equity investor or stockholder of the acquiring entity or any of its affiliates and thus, the Executive Officer shall not be entitled to receive the benefits provided for in this Agreement.
3. ASSIGNMENT.
This Agreement is personal to each of the parties hereto and 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.
4. AMENDMENTS OR ADDITIONS.
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 OFG shall be required in order for OFG to authorize any amendments or additions to this Agreement, to give any consent or waivers of provisions of this Agreement, or to take any other action under this Agreement.
5. MISCELLANEOUS.
A. 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.
B. This Agreement shall be governed in all respects and be interpreted by and under the laws of the Commonwealth of Puerto Rico, except to the extent that such law may be preempted by applicable United States federal law, in which case this Agreement shall be governed and be interpreted by and under United States federal law. Venue for the litigation of any and all maters arising under or in connection with this Agreement shall be laid in the United States District Court for the District of Puerto Rico, at San Juan, in the case of federal jurisdiction, and in the Court of First Instance, Superior Part, the Commonwealth of Puerto Rico in San Juan, in the case of state court jurisdiction.
EXECUTIVE OFFICER ORIENTAL FINANCIAL GROUP INC. /s/ Nestor Vale /s/ Julian S. Inclan ------------------------ ------------------------------- Nestor Vale Julian S. Inclan /s/ Alberto Richa ------------------------------- Alberto Richa /s/ Emilio Rodriguez -------------------------------- Emilio Rodriguez |
FORM APPROVED ON NOVEMBER 29, 2004
EXHIBIT 10.17
CHANGE IN CONTROL COMPENSATION AGREEMENT
BETWEEN
ORIENTAL FINANCIAL GROUP INC.
AND
CARLOS J. NIEVES
Agreement made as of the 15th day of December, 2004, by and between Oriental Financial Group Inc., a Puerto Rico corporation and a financial holding company with principal offices in San Juan, Puerto Rico (hereinafter referred to as "OFG") and Carlos J. Nieves, of legal age, married, business executive and resident of San Juan, Puerto Rico (hereinafter referred to as the "Executive Officer").
WITNESSETH:
WHEREAS, the Executive Officer is presently a Senior Executive Vice President of OFG;
WHEREAS, it is in the best interest of OFG to promote the retention of the Executive Officer's services on behalf of OFG by reducing concerns that the Executive Officer may be adversely affected in the event of change in control of OFG as defined herein below;
WHEREAS, OFG and the Executive Officer wish to enter into this Agreement to set forth the terms and conditions for the payment by OFG of certain compensation to the Executive Officer in the event of a termination of Executive Officer's employment as a result of a change in control of OFG;
NOW, THEREFORE, in consideration of the mutual covenants set forth herein, OFG and the Executive Officer do hereby agree as follows:
1. TERM.
This Agreement shall be in full force and effect so long as the Executive Officer is employed by the Company.
2. TERMINATION OF EMPLOYMENT DUE TO A CHANGE IN CONTROL
A. In the event there is a Change in Control of OFG (as defined herein below) while this Agreement is in effect and as a result thereof or within one (1) year after the Change in Control, the Executive Officer's employment with OFG is terminated by OFG or its successor in interest, the Executive Officer shall be entitled to the cash payment compensation determined as provided in subparagraph B below.
B. The cash payment compensation shall be in an amount equal to two (2) times the sum of the Executive Officer's annual base salary at the time the termination of his employment occurs and the last cash bonus paid to the Executive Officer prior to the termination of his employment.
C. The cash payment compensation shall be in lieu of any other payments which the Executive Officer may be entitled to receive by law, contract or otherwise. The cash payment compensation shall be due and payable in a lump sum to the Executive Officer on or before the thirtieth (30th) day following the termination of the Executive Officer employment. The receipt of the cash payment compensation shall not affect the
rights of Executive Officer to any vested benefits or accrued compensation, including bonuses.
D. For purposes of this Agreement, a "Change in Control of OFG" shall be deemed to have occurred if any Person or persons acting as a group within the meaning of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is or becomes the Beneficial Owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of OFG representing 25% or more of either the then outstanding shares of common stocks of OFG or the combined voting power of OFG's then outstanding securities and if individuals who on the date hereof are members of OFG's Board of Directors cease for any reason to constitute at least a majority thereof, unless the appointment election or nomination of each new director who was not a director on the date hereof has been approved by at least two-thirds of the directors in office on the date hereof.
E. For purposes of this Agreement, "Person" shall have the meaning given in Section 3(a) (9) of the Exchange Act, except that such term shall not include (i) OFG or any of its subsidiaries; (ii) an individual who on the date of this Agreement is a director or officer of OFG or any of its subsidiaries, or a beneficial owner of more than ten percent (10%) of OFG's outstanding securities; (iii) a trustee or other fiduciary holding securities under an employee benefit plan of OFG or any of its subsidiaries; (iv) an underwriter temporarily holding securities pursuant to an offering of such securities; or (v) a corporation or entity owned, directly or indirectly, by the stockholders of OFG in substantially the same proportion as their ownership of stock of OFG on the date of this Agreement.
F. Notwithstanding anything to the contrary herein, any event or transaction which would otherwise constitute a Change in Control of OFG (hereinafter referred to as a "Transaction") shall not constitute a Change in Control of OFG for purposes of this Agreement if the Executive Officer participates as an acquirer in the Transaction or as an equity investor or stockholder of the acquiring entity or any of its affiliates and thus, the Executive Officer shall not be entitled to receive the benefits provided for in this Agreement.
3. ASSIGNMENT.
This Agreement is personal to each of the parties hereto and 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.
4. AMENDMENTS OR ADDITIONS.
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 OFG shall be required in order for OFG to authorize any amendments or additions to this Agreement, to give any consent or waivers of provisions of this Agreement, or to take any other action under this Agreement.
5. MISCELLANEOUS.
A. 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.
B. This Agreement shall be governed in all respects and be interpreted by and under the laws of the Commonwealth of Puerto Rico, except to the extent that such law may be preempted by applicable United States federal law, in which case this Agreement shall be governed and be interpreted by and under United States federal law. Venue for the litigation of any and all maters arising under or in connection with this Agreement shall be laid in the United States District Court for the District of Puerto Rico, at San Juan, in the case of federal jurisdiction, and in the Court of First Instance, Superior Part, the Commonwealth of Puerto Rico in San Juan, in the case of state court jurisdiction.
EXECUTIVE OFFICER ORIENTAL FINANCIAL GROUP INC. /s/ Carlos J. Nieves /s/ Julian S. Inclan -------------------------- ------------------------------ Carlos J. Nieves Julian S. Inclan /s/ Alberto Richa ------------------------------ Alberto Richa /s/ Emilio Rodriguez ------------------------------ Emilio Rodriguez |
FORM APPROVED ON NOVEMBER 29, 2004
EXHIBIT 21.0
LIST OF SUBSIDIARIES
A) ORIENTAL BANK AND TRUST - an insured non-member commercial bank organized and existing under the laws of the Commonwealth of Puerto Rico.
SUBSIDIARIES OF ORIENTAL BANK AND TRUST:
1. ORIENTAL INTERNATIONAL BANK INC. - an international banking entity organized and existing under the laws of the Commonwealth of Puerto Rico.
2. ORIENTAL MORTGAGE CORPORATION - a mortgage bank organized and existing under the laws of the Commonwealth of Puerto Rico. This corporation is currently not in operation.
B) ORIENTAL FINANCIAL SERVICES CORP. - a registered securities broker-dealer organized and existing under the laws of the Commonwealth of Puerto Rico.
C) ORIENTAL INSURANCE, INC. - a registered insurance agency organized and existing under the laws of the Commonwealth of Puerto Rico.
D) CARIBBEAN PENSION CONSULTANTS, INC - a corporation organized and existing under the laws of the State of Florida that offers third party pension plan administration in the continental U.S., Puerto Rico and the Caribbean.
E) ORIENTAL FINANCIAL (PR) STATUTORY TRUST I - a special purpose statutory trust organized under the laws of the State of Connecticut.
F) ORIENTAL FINANCIAL (PR) STATUTORY TRUST II - a special purpose statutory trust organized under the laws of the State of Connecticut.
EXHIBIT 23.0
I. CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statements No. 333-102696, No. 333-57052 and No. 333-84473 on Form S-8 of our reports dated September 9, 2005, relating to the financial statements of Oriental Financial Group Inc. and management's report on the effectiveness of internal control over financial reporting, appearing in this Annual Report on Form 10-K of Oriental Financial Group Inc. for the year ended June 30, 2005.
DELOITTE & TOUCHE LLP
San Juan, Puerto Rico
September 9, 2005
Stamp No. 2088061
affixed to original.
EXHIBIT 31.1
MANAGEMENT CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, JOSE RAFAEL FERNANDEZ, President and Chief Executive Officer of Oriental Financial Group Inc., certify that:
1. I have reviewed this annual report on Form 10-K of Oriental Financial Group Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: September 13, 2005. By: /s/ Jose Rafael Fernandez ------------------------------------- Jose Rafael Fernandez President and Chief Executive Officer |
EXHIBIT 31.2
MANAGEMENT CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, HECTOR MENDEZ, Senior Executive Vice President, Treasurer and Chief Financial Officer of Oriental Financial Group Inc., certify that:
1. I have reviewed this annual report on Form 10-K of Oriental Financial Group Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: September 13, 2005. By: /s/ Hector Mendez -------------------------------------- Hector Mendez Senior Executive Vice President, Treasurer and Chief Financial Officer |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. Section 1350)
In connection with Oriental Financial Group Inc.'s ("Oriental") annual report on
Form 10-K for the year ended June 30, 2005, as filed with the Securities and
Exchange Commission on the date hereof (the "Report"), I, Jose Rafael Fernandez,
President and Chief Executive Officer of Oriental, hereby certify, pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Oriental.
In witness whereof, I execute this certification in San Juan, Puerto Rico, this 13th day of September, 2005.
By: /s/ Jose Rafael Fernandez -------------------------------------- Jose Rafael Fernandez President and Chief Executive Officer |
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. Section 1350)
In connection with Oriental Financial Group Inc.'s ("Oriental") annual report on Form 10-K for the year ended June 30, 2005, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Hector Mendez, Senior Executive Vice President, Treasurer and Chief Financial Officer of Oriental, hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Oriental.
In witness whereof, I execute this certification in San Juan, Puerto Rico, this 13th day of September, 2005.
By: /s/ Hector Mendez ---------------------------------------- Hector Mendez Senior Executive Vice President, Treasurer and Chief Financial Officer |