EXHIBIT 10.28
CONTRACT
APPEAR
This Agreement is entered into by and between GM Group, Inc. ("GM"), represented
by ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, member of its Board of Directors, and ▇▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, of legal age, married and resident of Mexico City ("▇▇▇▇▇▇").
WITNESSETH
▇. ▇▇▇▇▇▇ is interested in joining GM as Chairman of the Board of
Directors and Chief Executive Officer of GM, a subsidiary of
Popular, Inc. ("Popular"). ▇▇▇▇▇▇ has made representations
indicating that he has significant experience in the field of
Payment Systems and Electronic Banking.
B. Based on ▇▇▇▇▇▇'▇ representations and commitments, GM agrees
to allow ▇▇▇▇▇▇ to join GM by executing a limited time
contract subject to following terms:
AGREEMENTS
1. SERVICES
▇▇▇▇▇▇ will perform the proper duties, as assigned to him from
time to time, of Chairman of the Board and Chief Executive Officer of
GM in an efficient, diligent and effective manner. ▇▇▇▇▇▇ will also be
a member of Popular's Senior Management Council, Popular's principal
managerial and executive body. ▇▇▇▇▇▇ agrees to faithfully comply with
Popular's and GM's policies, norms, directives, and tasks; and fulfill
the administrative and business objectives. ▇▇▇▇▇▇ recognizes that this
task requires his full attention, and dedication of his time and
energy, therefore, except as provided in the next paragraph, he shall
not be employed by, spend time for, or provide any form of compensated
services to any other person, entity, or own business, while being an
employee of GM.
As an exception, ▇▇▇▇▇▇ has expressed his interest in
continuing to serve as a consultant in banking related matters for an
entity dedicated to the formation of bank branch employees called
"▇▇▇▇▇ and ▇▇▇▇▇ Management Group." ▇▇▇▇▇▇ has expressed that this
entity requires minimal dedication and shall not present a conflict of
interest with GM or Popular.
GM agrees that ▇▇▇▇▇▇ may continue to provide these services,
and ▇▇▇▇▇▇ agrees to notify GM of any change in such entity that may
create a conflict of interest with GM and Popular.
2. COMPENSATION
▇▇▇▇▇▇'▇ compensation will be as follows:
(a.) A basic annual salary of $450,000 paid by GM, subject
to all the deductions required by the applicable
federal and local laws, which will also apply to
other applicable benefits.
(b.) Participation in the Annual Incentive of Popular's
Senior Management Council. The incentive can be
equivalent to the amount of one-year salary if all
the financial goals are achieved and the performance
is satisfactory.
(c.) Participation in Popular's Stock Option Plan, that
can be equivalent to the amount of one half of
one-year salary depending on performance.
(d.) Transfer expenses, including moving, flight and other
related expenses, up to $75,000. This commitment will
be satisfied by a one-time payment.
(e.) Automobile paid by GM for a cost of up to $65,000,
the appropriate maintenance and chauffeur.
(f.) Cellular phone.
(g.) Christmas bonus equivalent to a two-weeks salary.
(h.) Participation in the Deferred Stock and Savings Plan
(under section 1165(e) of the Puerto Rico Internal
Revenue Code). ▇▇▇▇▇▇ may make Plan contributions of
up to $8,000 before tax. GM will match up to 3% of
the $8,000. ▇▇▇▇▇▇ may also make after-tax plan
contributions of up to 10% of annual salary.
(i.) A contribution of 4% of annual salary, of which 20%
will be payable in cash and the be remaining portion
will be deferred under GM's Profit Sharing Plan, if
financial goals are met.
(j.) Monthly rent for housing of up to $7,500 and payment
of tax liability applicable to this taxable benefit.
(k.) Family Medical Plan of GM that includes prescription
drugs and dental plan. ▇▇▇▇▇▇ will pay 20% of the
premium, approximately $70 per month for 2002.
(l.) Basic Life Insurance Policy of $150,000. ▇▇▇▇▇▇ may
acquire additional coverage for a reasonable cost.
(m.) Social Club membership.
(n.) Corporate card for business expenses and preferential
rates on loans.
(o.) Short and Long-Term Disability Plans.
(p.) 20 vacations days and 19 holidays per year.
3. TERM OF CONTRACT
The term of this contract is three (3) years, starting on
August 1, 2002 and ending on July 31, 2005. After the termination date,
both parties may, upon mutual consent, extend the term of this Contract
on an annual basis. If a party is interested in such extension, it
shall notify such interest to the other party within the first thirty
(30) days of the last sixty (60) days of the term of this Contract and,
if the other party agrees with the extension a written agreement will
be subscribed extending the term of the Contract before its expiration.
4. RIGHT TO TERMINATE THE CONTRACT BEFORE ITS EXPIRATION DATE
▇▇▇▇▇▇ may terminate this Contract at any time before its
expiration date, by providing GM a sixty-day (60) prior notice. GM may
terminate this Contract at any time before its expiration date, with or
without cause.
If this Contract is terminated before its expiration date by
▇▇▇▇▇▇, or by GM for just cause, all GM and Popular obligations will
terminate, including payment of salary and benefits, provided in
paragraph 2.
If the Contract is terminated without just cause by GM before
the expiration date, GM and/or Popular's responsibility under this
Contract will be limited to the payment of:
- During the first year after the effective date: $400,000
- During the second year after the effective date: $300,000
- During the third year after the effective date: $100,000
Such payment shall also include any GM and/or Popular
obligation under any law regarding termination of the employment
contract.
Except for the services described in Section 1, ▇▇▇▇▇▇'▇
obligations under this Contract will survive the termination of this
Contract, regardless of the fact that the Contract is terminated on the
termination date or prior to the termination date, or with or without
cause.
5. JUST CAUSE
"Termination or discharge for just cause," for purpose of this
Contract, includes ▇▇▇▇▇▇'▇ termination of employment by GM for any of
the following reasons: not complying with his duties and obligations in
the form described in this Contract; not complying with the norms,
policies and directives of GM and/or Popular; acting negligently;
violating any federal or local law or regulation; dishonesty;
incompetence that is detrimental to GM and/or Popular; violation of
fiduciary duties; indiscipline or other reasons of similar importance
or nature; termination due to an order of a federal or local authority;
any action or omission by ▇▇▇▇▇▇ that adversely affects the proper and
normal functioning of GM and/or Popular.
6. DEVOLUTION OF PROPERTY
At the time of termination of this Contract, regardless of the
fact that the termination is with or without cause, or due to a
decision of GM or Colino, Colino will return to GM all property of GM
that ▇▇▇▇▇▇ is utilizing to provide his services and that is under his
possession, custody or control.
7. CONFIDENTIALITY
▇▇▇▇▇▇ recognizes that, due to the essentially confidential
nature of the functions and duties that he will perform under this
Contract, he will have access to data, matters, plans, strategies,
methodologies and other secret and confidential information of GM
and/or Popular, in addition to financial and client information of GM
and/or Popular. Therefore, ▇▇▇▇▇▇ agrees to maintain such information
under strict confidentiality and discretion, and not to disclose and
utilize this information for any other purpose during or after the term
of this Contract.
8. NON-COMPETE AGREEMENT
In consideration and for having granted this Contract to
Colino, Colino expressly agrees that, during the term of this Contract,
and the term of any agreed extension, and during a term of one year
after termination of the Contract, he will not provide any services in
the field of payment systems or Electronic Banking, to any competitor
of GM or its parent company, affiliates, sister companies, subsidiaries
or successors (the "Corporations"), either as employee, owner or
consultant or in any other capacity, personally or through a
partnership, company or corporation. This non-compete agreement is
limited to the Puerto Rico geographical area.
▇▇▇▇▇▇ recognizes that GM and Popular have a legitimate
interest in this non-compete clause, that the reach of this prohibition
is reasonable in terms of purpose, term and place, that the term of one
year is reasonable, and that the value received in return is adequate.
In addition, ▇▇▇▇▇▇ agrees that, since the damages for
violating the agreements under this Article are difficult to determine,
he hereby consents to the determination of any equity remedy issued by
a competent court by means of a restriction order, "injunction", or
other similar remedy, to implement these dispositions.
9. INTELLECTUAL PROPERTY
Any work, study, document, idea, design, organizational or
operational scheme, or other recommendation or advice offered or
provided by ▇▇▇▇▇▇ to GM and/or Popular, Inc.:
i. will not obligate GM and/or Popular, but may
be used or implemented by GM and/or Popular
at its sole discretion; and
ii. will constitute and turn into the exclusive
property of GM and/or Popular whether or not
adopted or implemented, free of any
authorship rights. ▇▇▇▇▇▇ hereby transfers
and assigns to GM and/or Popular any
authorship rights with respect to such work,
studies, documents, ideas, designs, schemes,
recommendations or advice.
10. DISABILITY OR DEATH
If, during the term of this Contract, ▇▇▇▇▇▇ becomes disabled
and cannot conduct the services specified in this Contract, or dies,
all the obligations of GM and/or Popular under this Contract, including
payment of salaries, benefits and bonuses, will cease at the end of the
month in which such disability or death occurs, except that in the case
of disability, ▇▇▇▇▇▇ will receive the benefit of short or long-term
disability insurance according to the terms of such insurance coverage.
11. TOTAL COMPENSATION
▇▇▇▇▇▇ is aware that he has a right only to those benefits or
compensation that are established in paragraph 2 of this Contract.
12. APPLICABLE LAW
The Contract will be governed by the laws of the Commonwealth
of Puerto Rico, except for laws that are preempted by a federal law,
regulation or order that is applicable to GM and/or Popular. In such
case, the federal law, order or regulation will be applicable to this
Contract.
13. ARBITRATION
Any dispute over any interpretation, validity, compliance,
extension or termination of this Contract that has not been resolved by
the parties, shall be submitted to compulsory arbitration in the city
of San ▇▇▇▇, Puerto Rico, in accordance with the laws of the American
Arbitration Association. The party that is interested in arbitration
shall notify the other party no later than ten (10) days from the date
on which such dispute arises. The arbitration costs,
including the arbitrator's fees, shall be borne in equal parts, by
▇▇▇▇▇▇ and GM. Each party will pay its own attorney's fees and the
costs of evidence preparation and presentation.
Any GM and/or Popular cause of action filed against ▇▇▇▇▇▇ as
a result of his failure to comply with paragraphs 7, 8, and 9 of this
Contract are expressly excluded from arbitration, and may filed and
reviewed by any competent court of justice.
14. CONFLICT OF INTEREST
▇▇▇▇▇▇ agrees to notify GM of any personal, business or
investment circumstance that may create a conflict of interest with GM
or Popular. In case of a conflict of interest, the conflict of interest
shall constitute just cause for GM to terminate this Contract without
any further obligation.
15. GENERAL TERMS
A. AMENDMENTS
Any modification or amendment to the terms and conditions of
this Contract shall not be effective unless agreed in writing by both
parties.
B. COMPLETE AGREEMENT
This Contract includes the complete agreement between the
parties and supersedes any proposal, negotiation, representation,
conversation or discussion between the parties prior to its execution.
C. VOLUNTARY AGREEMENT
Both parties have had the opportunity to consult their
respective attorneys and advisors prior to the execution of this
Contract and express that the Contract is drafted to their satisfaction
and that they have executed the Contract freely and voluntarily.
KNOW ALL MEN BY THESE PRESENTS, that the parties sign this Contract, in
duplicate original, today June 3, 2002, in San ▇▇▇▇, Puerto Rico.
GM GROUP, INC.
By: s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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