EXHIBIT 10.12
PAYMENT AGREEMENT
IN THE EVENT OF A CHANGE OF CONTROL
This PAYMENT AGREEMENT IN THE EVENT OF A CHANGE OF CONTROL (the “Agreement”) is
dated January 31, 2006 between W Holding Company, Inc. and Westernbank Puerto
Rico (the “Company” and “Bank”) and Mr. Ricardo Cortina (the “Employee”).
     WHEREAS, the Employee is currently serving as First Vice-President and the
Chief Lending Officer of the Bank; and
     WHEREAS, the Board believes that it is in the best interests of the Company
and the Bank to encourage the Employee’s continued employment with dedication to
the Bank in the face of potentially distracting circumstances arising from the
remote possibility of a change in control of the Company and or Bank, although
no such change is now thought of or contemplated; and
     WHEREAS, the parties desire to enter into this Agreement setting forth the
terms and conditions for the payment of special compensation to the Employee in
the event of a termination of the Employee’s employment in connection with or as
a result of a change in control;
     NOW THEREFORE, it is AGREED as follows:

1.   Term. The initial term of this Agreement shall be for a two (2) year period
commencing on the date hereof. This Agreement shall be automatically renewed for
one (1) additional year on the first and each subsequent anniversary date of
this Agreement, unless the Company and or Bank gives contrary written notice to
the Employee sixty (60) days prior to such renewal date. References herein to
the term of this Agreement shall include the initial term and any additional
years for which this Agreement is renewed.   2.   Termination of Employment in
Connection with a Change in Control.

  (a)   If during the term of this Agreement there is a change in control of the
Company and or the Bank, the Employee shall be entitled to receive as a special
compensation a lump sum cash payment as provided for herein, in connection with
or within one (1) year after a “Change in Control” (as defined below) in the
event the Employee’s employment is terminated voluntarily by the Employee or
involuntarily by the Company and or the Bank without cause in connection with or
within one (1) year after a change in control has occurred. The amount of this
payment shall be equal to three (3) times the annual base compensation, year-end
Christmas bonus, and special bonuses, if any, paid to the Employee by the
Company and or Bank during the calendar year preceding the year in which the
Change in Control occurs. Payment under this Section 2(a) shall be in lieu of
any amount that may be otherwise owed to the

 

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      employee as damages for the loss of employment, in the event that such
loss occurs. Payment under this Section 2(a) shall not be reduced by any
compensation which the Employee may receive from other employment with another
employer after termination of the Employee’s employment with the Company and or
Bank, if such termination occurs. No payment hereunder shall affect the
Employee’s entitlement to any vested benefits or other compensation payments.

(b)   For purposes of this Agreement, a “Change in Control” shall be deemed to
have occurred if:

  (i)   Twenty-five (25) percent or more of ownership, control, power to vote,
or beneficial ownership of any class of voting securities of the Company and or
Bank is acquired by any person, either directly or indirectly or acting through
one or more other persons;     (ii)   any person (other than any person named as
a proxy in connection with any solicitation on behalf of the Board) holds
revocable or irrevocable proxies, as to the election or removal of three (3) or
more Directors of the Company and or Bank, for twenty-five (25) percent or more
of the total number of voting shares of the Company and or Bank;     (iii)   any
person has received all applicable regulatory approvals to acquire control of
the Company and or Bank;     (iv)   any person has commenced a cash tender or
exchange offer, or entered into an agreement or received an option, to acquire
beneficial ownership of twenty-five (25) percent or more of the total number of
voting shares of the Company and or Bank, whether or not any requisite
regulatory approval for such acquisition has been received, provided that a
Change in Control will not be deemed to have occurred under this clause
(iv) unless the Board has made a determination that such action constitutes or
will constitute a Change in control; or     (v)   as the result of, or in
connection with, any cash tender or Exchange offer, merger, or other business
combination, sale of assets or contested election, or any combination of the
foregoing transaction, (A) the persons who were directors of the Company and or
Bank before such transaction shall cease to constitute at least a majority of
the Board or its successor, or (B) the persons who were stockholders of the
Company and or Bank immediately before such transaction do not own more than
fifty (50) percent of the outstanding voting stock of the Company and or Bank or
its successor immediately after such transaction.

 

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      For purposes of this Section, a “person” includes an individual,
corporation, partnership, trust, association, joint venture, pool, syndicate,
unincorporated organization, joint-stock company or similar organization or
entity or group acting in concert. A person for these purposes shall be deemed
to be a “beneficial owner” as that term is used in Rule 13d-3 under the
Securities Exchange Act of 1934.

3.   No Assignments. This Agreement is personal to each of the parties hereto.
No party may assign or delegate any rights or obligations hereunder without
first obtaining the written consent of the other party hereto. However, in the
event of the death of the Employee, all rights to receive payments hereunder
shall become rights of the Employee’s estate claimable within a twelve
(12) month period following the date of death of the Employee.   4.   Amendments
or Additions: Action by Board of Directors. No amendments or additions to this
Agreement shall be binding unless in writing and signed by both parties hereto.
The prior approval by a majority affirmative vote of the full Board shall be
required in order for the Bank to authorize any amendments or additions to this
Agreement.   5.   Section Headings. The section headings used in this Agreement
are included solely for convenience and shall not affect, or be used in
connection with, the interpretation of this Agreement.   6.   Compensation. The
special compensation to be received as agreed to herein shall not exceed in any
event $1.5 million.   7.   Governing Law. This Agreement shall be governed by
the laws of the United States to the extent applicable because of the Bank’s
status as a federally insured financial institution and otherwise by the laws of
the Commonwealth of Puerto Rico.

                                WESTERNBANK Puerto Rico

 
               
Attest:
  /s/ César Ruiz       By:   /s/ Frank C. Stipes
 
               
 
  (Secretary)           (Chairman of the Board)
 
  César Ruiz           Frank C. Stipes
 
  W Holding Company, Inc.           W Holding Company, Inc.
 
  Westernbank Puerto Rico           Westernbank Puerto Rico
 
                              Employee:

 
               
 
              /s/ Ricardo Cortina
 
               
 
              Ricardo Cortina