CHANGE IN CONTROL AGREEMENT
This
Agreement, effective as of the date the agreement is entered
into, by and between EuroBancshares, Inc. (the
“Company”), a registered bank holding company
which is the sole shareholder of Eurobank, a Puerto Rico
banking corporation, with main offices in San Juan, Puerto
Rico (the “Bank”), and Luis J. Berríos
López, Jr., a key employee and officer of the Bank and
the Company, and a resident of San Juan, Puerto Rico (the
“Executive”), provides as follows:
WITNESSETH:
WHEREAS,
Executive is currently the Executive Vice President and CLO of
the Bank, serving at the pleasure of the Board of Directors of
the Bank; and
WHEREAS,
the Company desires to provide an incentive to the Executive
to continue his employment with the Bank; and
WHEREAS,
the Company recognizes that at some point in the future the
possibility of a Change in Control (as hereinafter defined)
may exist, and that such possibility, and the uncertainty and
questions which it may raise among management, may result in
the departure or distraction of management personnel to the
detriment of the Company and its stockholders;
and
WHEREAS,
Executive is willing to continue to serve the Bank but desires
assurance that in the event of any Change in Control of the
Company or the Bank, he will continue to have the
responsibility and stature he has earned within the Bank, or
in the alternative, if terminated that he be adequately
compensated as herein provided; and
WHEREAS,
the Company desires to provide certain benefits to the
Executive in the event there is a Change in Control of the
Company or the Bank; and
WHEREAS,
the Company and the Executive now desire to enter into this
Agreement to establish the terms and conditions upon which
such payments will be made.
NOW,
THEREFORE, in consideration of the mutual undertakings set
forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Executive agree as
follows:
ARTICLE ONE — DEFINITIONS
1.
“Bank
Board” shall mean the Board of Directors of the
Bank.
2.
“Beneficiary”
shall mean the person(s) described in Article Four of
this Agreement.
3.
“Board”
shall mean the Board of Directors of the Company.
4.
“Change
in Control” shall mean and shall be deemed to have
occurred for purposes of this Agreement if and
when:
(A)
any
entity, person or group of persons acting in concert (other
than the current members of the Board of Directors of the
Company or any of their descendants) becomes beneficial owner
(within the meaning of Section 13(d) of the Securities
and Exchange Act of 1934), directly or indirectly, of
securities of the Company representing more than twenty-five
percent (25%) of the combined voting power of the Company or
any successor corporation;
(B)
any
entity, person or group of persons acting in concert (other
than the current members of the Board of Directors of the
Company or any of their descendants) becomes beneficial owner
(within the meaning of Section 13(d) of the Securities
and Exchange Act of 1934), directly or indirectly, of
securities of the Bank representing more than twenty-five
percent (25%) of the combined voting power of the Bank or any
successor;
(C)
the
effective date of a merger or consolidation of the Company or
the Bank with one or more other corporations or banks, as a
result of which the holders of the outstanding voting stock of
the Company immediately prior to the merger hold less than
sixty-six percent (66%) of the combined voting power of the
surviving or resulting corporation or bank; or
(D)
the
effective date of a transfer of all or substantially all of
the property of the Company or the Bank other than to an
entity of which the Company or the Bank owns at least eighty
(80%) of the combined voting power.
Notwithstanding
the above, no Change in Control shall be deemed to occur for
purposes of this Agreement as a result of any transaction or
series of transactions involving only the Company, the Bank,
any affiliate (within the meaning of Section 23A of the
Federal Reserve Act of 1913, as amended), or any of them or
their successors.
5.
“Compensation”
shall mean the Executive’s base annual salary (which is
intended to be total base salary without proration for actual
months worked), plus the highest performance or incentive
based remuneration, (herein the “Performance
Compensation”), as reported by the Bank on 499-R2/W-2
Form (or its equivalent) in any of the four fiscal years prior
to the termination of employment.
6.
“Constructive
Termination” shall mean that the Executive resigns from
his position(s) with the Company or the Bank as a result of
any of the following:
(A)
Without
his express written consent, the detrimental assignment to the
Executive of any duties inconsistent with his positions,
duties, responsibilities and status with the Bank or the
Company as in effect immediately before a Change in Control or
any removal of the Executive from or any failures to re-elect
the Executive to any of such positions, except in connection
with the termination of his employment for Cause or as a
result of his Disability or death; provided, however that a
change in title alone will not constitute a
“constructive termination” for purposes of this
provision;
(B)
A
reduction of the Executive’s Compensation without the
prior written consent of the Executive, which is not remedied
within thirty (30) calendar days after receipt by the Company
of written notice from the Executive of such
reduction;
(C)
A
determination by the Executive made in good faith that as a
result of a Change in Control, he has been rendered unable to
carry out, or has been hindered in the performance of, any of
the authorities, powers, functions, responsibilities or duties
attached to his position with the successors of the Company or
the Bank, which situation is not remedied within thirty (30)
calendar days after receipt by the Company of written notice
from the Executive of such determination;
(D)
The
Bank shall relocate its principal executive offices or require
Executive to have as his principal location of work any
location which is outside the Commonwealth of Puerto Rico or
to travel away from his office in the course of discharging
his responsibilities or duties hereunder more than thirty (30)
consecutive calendar days or an aggregate of more than ninety
(90) calendar days in any consecutive three hundred sixty-five
(365) calendar-day period without, in either, case his prior
written consent; or
(E)
Failure
by the Company to require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the
Company, by agreement in form and substance satisfactory to
the Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession
had taken place.
7.
“Director”
or “Directors” shall mean any member, or members,
of either the Board or the Bank Board, as
applicable.
8.
“ERISA”
shall mean the Employee Retirement Income Security Act of
1974, as amended.
9.
“Termination
for Cause” shall mean that the Executive is
involuntarily terminated from employment based upon his
commission of any of the following:
(A)
a
felony;
(B)
an
intentional act of fraud, embezzlement or theft in connection
with his duties or in the course of his employment with the
Company or the Bank;
(C)
the
removal of Executive from the performance of his duties by any
bank regulatory authority;
(D)
the
assessment of civil money penalties against Executive by any
bank regulatory authority as a result of a violation of any
rule, regulation or statute other than laws focused primarily
upon consumer lending;
(E)
intentional
breach of fiduciary duty owed to the Bank or to the Company,
as applicable, involving personal profit by Executive;
and
(F)
appointment
of a conservator or receiver for the Bank by applicable bank
regulatory authorities, unless the cause of such appointment
is fraud committed upon the Bank by a person or person(s)
other than Executive.
For
the purpose of this Agreement, no act, or failure to act, on
the part of the Executive shall be deemed
“intentional” unless done, or omitted to be done,
by the Executive not in good faith and without reasonable
belief that his action or omission was in the best interest of
the Company or the Bank. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for
“Cause” hereunder unless and until there shall
have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of a majority of the
Directors then in office at a meeting of either the Board or
the Bank Board, as applicable, called and held for such
purpose (after at least ten (10) days’
notic
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