EXHIBIT 10.1
FIRST BANCORP 2008 OMNIBUS INCENTIVE PLAN
Section I
PURPOSE
The purpose of the First BanCorp 2008 Omnibus Incentive Plan (the “Plan”) is to
develop and provide long term incentive compensation benefits to First BanCorp’s
(the “Corporation” or the “Bank”) employees and directors, who are expected to
contribute significantly to the success of the Corporation and its Affiliates, a
proprietary interest in the continued growth and success of the Bank through the
grant of stock options, stock appreciation rights, restricted stock, restricted
stock units, performance shares, and other stock-based awards. The Plan is also
intended to encourage recipients to remain in the employ of the Bank and to
assist the Board of Directors and Management in the attraction and recruitment
of qualified officers to serve the Bank and/or its Subsidiaries. The Plan is
intended to comply with Section 1046 of the Puerto Rico Internal Revenue Code of
1994, as amended, and regulations promulgated thereunder, with respect to the
Puerto Rico directors and employees participating thereunder, and Section 422 of
the U.S. Internal Revenue Code of 1986, as amended, with respect to the U.S.
employees participating in the Plan.
On January 21, 2007 the Corporation’s 1997 Employee Stock Option Plan (the “1997
Option Plan”) expired, all outstanding award grants under the 1997 Option Plan
shall continue in full force and effect, subject to their original terms.
Section 2
DEFINITIONS
Whenever used herein, the following terms shall have the respective meanings set
forth below:

(a)   “Affiliate” means any organization controlling, controlled by or under
common control with the Corporation, or any corporation or other form of entity
of which the Corporation owns, from time to time, directly or indirectly, 50% or
more of the total combined voting power of all classes of stock. The term
“Control” means the power (direct or indirect) to direct the policies and
management of a company. In addition to the ownership of voting securities,
control may be through voting trusts, stock in escrow and management.

(b)   “Award” means the award of an Option, a SAR, Restricted Stock, Restricted
Stock Unit, Performance Share, or Other Stock-Based Award under the Plan.

(c)   “Award Agreement” shall mean an agreement which shall contain such terms
and conditions with respect to an Award as the Committee shall determine,
consistent with the Plan.

(d)   “Board” means the Board of Directors of the Corporation.

(e)   “Cause” means with respect to a Participant, any act or omission on the
part of the Participant which involves personal dishonesty, willful misconduct,
breach of fiduciary duty, a material violation of any law, rule or regulation of
any regulatory agency, commission of a crime, a violation of any policy or rule
of the Corporation or any Affiliates, or a material breach of any provision of
any written covenant or agreement with the Corporation or any Affiliate, such as
the willful and continued failure of the Participant to perform the duties set
forth therein. No act or failure to act on the Participant’s part shall be
considered “willful” unless done, or omitted to be done, by him/her not in good
faith and without reasonable belief that his/her action or omission was in the
best interest of the Bank. For purposes of this paragraph, any act or omission
to act on the part of the Participant in reliance upon an opinion of counsel to
the Bank or to the Participant shall not be deemed to be willful or without
reasonable belief that the act or omission to act was in the best interest of
the Bank.

(f)   “Change in Control” shall be deemed to have taken place if: (i) a third
person, including a “group” as defined in

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    Section 13(d)(3) of the Securities Exchange Act of 1934, becomes the
beneficial owner of shares of the Bank having 25% or more of the total number of
votes which may be cast for the election of directors of the Bank or which, by
cumulative voting, if permitted by the Bank’s charter or bylaws, would enable
such third person to elect 25% or more of the directors of the Bank; or (ii) as
the result of, or in connection with, any cash tender or exchange offer, merger
or any other business combination, sales of assets or contested election, or any
combination of the foregoing transactions, the persons who were directors of the
Bank before such transaction shall cease to constitute a majority of the Board
of the Bank or any successor institution.   (g)   “Committee” means the
Compensation and Benefits Committee of the Board or such other committee of the
Board as the Board shall designate from time to time, which committee shall
consist of two or more members, each of whom shall be a “Non Employee Director”
within the meaning of Rule 16b-3, as promulgated under the Exchange Act, an
“outside director” within the meaning of section 162(m) of the U.S. Code, and an
“independent director” under the rules of any exchange where the Common Stock
may be traded.   (h)   “Common Stock” means the common stock of the Corporation,
par value $1.00 per share.   (i)   “Corporation” means First BanCorp., a Puerto
Rico Corporation, and any successor thereto.   (j)   “Covered Employees” are any
Executive Officers or other Eligible Persons who are or the Committee determines
may be “covered employees” within the meaning of U.S. Code section 162(m).   (k)
  “Disability”, means permanently disabled or incapacitated, due to physical or
mental illness, if absent from his/her duties with the Bank on a full-time basis
for three consecutive months.   (l)   “Eligible Persons” means officers,
directors and other employees of the Corporation or its Affiliates. The
Committee will determine the eligibility of officers, directors and other
employees based on, among other factors, the position and responsibilities of
such individuals and the nature and value to the Corporation or its Affiliates
of such individual’s accomplishments and potential contribution to the success
of the Corporation or its Affiliates. However, for purposes of Section 1046 of
the P.R. Code, the stock option plan may cover only directors and employees in
Puerto Rico of the Corporation or its Affiliates. Whereas, for purposes of
Section 422 of the U.S. Code, the stock option plan may cover only employees of
the corporation or its affiliates.   (m)   “Exchange Act” means the Securities
Exchange Act of 1934, as amended.   (n)   “Fair Market Value” means, with
respect to stock or other property, the fair market value of such stock or other
property determined by such methods or procedures as shall be established from
time to time by the Committee. Unless otherwise determined by the Committee in
good faith, the per share Fair Market Value of stock as of a particular date
shall mean, (i) the closing sales price per share of stock on the national
securities exchange on which the stock is principally traded, for the date of
grant, or (ii) if the shares of stock are then traded in an over-the-counter
market, the average of the closing bid and asked prices for the shares of stock
in such over-the-counter market for the last preceding date on which there was a
sale of such stock in such market, or if the shares of stock are not then listed
on a national securities exchange or traded in an over-the-counter market, such
value as the Committee, in its sole discretion, shall determine in good faith.  
(o)   “ISO” means an Option that is an “incentive stock option” within the
meaning of U.S. Code section 422.   (p)   “Non Employee Director” means a member
of the Board of Directors of the Corporation or an Affiliate who is not an
employee of the Corporation or any Affiliate.   (q)   “Non-qualified Stock
Option” means an Option that is not an ISO or a QSO.   (r)   “Option” (including
ISOs, QSOs and Non-qualified Stock Options) means the right to purchase Common
Stock at a stated price for a specified period of time. For purposes of the
Plan, an Option may be either (i) an ISO, (ii) a QSO or (iii) a Non-qualified
Stock Option.

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(s)   “Other Stock-Based Award” means an Award granted pursuant to Section 10 of
the Plan.   (t)   “P.R. Code” means the Puerto Rico Internal Revenue Code of
1994, as amended, including, for these purposes, any regulations promulgated by
the Puerto Rico Department of the Treasury with respect to the provisions of the
P.R. Code, and any successor thereto.   (u)   “Participant” means those Eligible
Persons designed by the affirmative action of the Committee to participate in
the Plan.   (v)   “Performance Cycle” means the period selected by the Committee
during which the performance of the Corporation or any Affiliate or unit thereof
or any individual is measured for the purpose of determining the extent to which
an Award subject to Performance Goals has been earned.   (w)   “Performance
Goals” means the objectives for the Corporation, any Affiliate or business unit
thereof, or an Eligible Person that may be established by the Committee for a
Performance Cycle with respect to any performance based Awards contingently
granted under the Plan, provided that, for awards intended to qualify for the
performance-based compensation exception under Section 162(m) of the U.S. Code:

  (i)   The performance criteria that shall be used to establish Performance
Goals may include any or a combination of the following as determined by the
Committee: (i) net earnings (either before or after (A) interest, (B) taxes,
(C) depreciation and (D) amortization), (ii) gross or net sales or revenue,
(iii) net income (either before or after taxes), (iv) operating profit, (v) cash
flow (including, but not limited to, operating cash flow and free cash flow),
(vi) return on assets, (vii) return on capital, (viii) return on stockholders’
equity, (ix) return on sales, (x) gross or net profit or operating margin,
(xi) costs, (xii) funds from operations, (xiii) expense, (xiv) working capital,
(xv) earnings per share, and (xvi) price per share of Common Stock,
(xvii) regulatory ratings, (xviii) market share, (xix) growth in loans and/or
other assets, (xx) growth in deposits and (xxi) various measures of credit
quality, (xxii) customer satisfaction, satisfaction based on specified objective
goals or a Corporation-sponsored customer survey, (xxiii) employee satisfaction,
satisfaction based on specified objective goals or a Corporation-sponsored
employee survey, (xxiv) Economic value added measurements, or (xxv) market share
or market penetration with respect to specific designated products or services,
product or service groups and/or specific geographic areas (xxvi) total
shareholder return; (xxvii) increase in stock price; any of which may be
measured either in absolute terms or as compared to any incremental increase or
decrease or as compared to results of a peer group.     (ii)   The Committee
may, in its discretion, at the time of grant, specify in the Award that one or
more objectively determinable adjustments shall be made to one or more of the
Performance Goals. Such adjustments may include one or more of the following:
(i) items related to a change in accounting principle; (ii) items relating to
financing activities; (iii) expenses for restructuring or productivity
initiatives; (iv) other non-operating items; (v) items related to acquisitions;
(vi) items attributable to the business operations of any entity acquired by the
Corporation during the Performance Period; (vii) items related to the disposal
of a business or segment of a business; or (viii) items related to discontinued
operations that do not qualify as a segment of a business under United States
generally accepted accounting principles; (ix) non-cash valuation changes
related to financial instruments accounted at fair value; or (x) any other
extraordinary item as the Committee may consider appropriate.

(x)   “Performance Shares” means an Award made pursuant to Section 9 of the
Plan, which are units denominated in Common Stock, the number of such units
which may be adjusted over a Performance Cycle based upon the satisfaction of
Performance Goals.   (y)   “QSO” means an Option that is a “qualified stock
option” within the meaning of P.R. Code section 1046.   (z)   “Restricted
Period” means the period of time during which Restricted Stock Units or shares
of Restricted Stock are subject to forfeiture or restrictions on transfer.

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(aa)   “Restricted Stock” means Common Stock awarded to a Participant pursuant
to the Plan that is subject to forfeiture and restrictions on transferability in
accordance with Section 8 of the Plan.   (bb)   “Restricted Stock Unit” means a
Participant’s right to receive, pursuant to this Plan, one share of Common Stock
(or in the discretion of the Committee, its cash equivalent) at the end of a
specified period of time, which right is subject to forfeiture in accordance
with Section 8 of the Plan.   (cc)   “Retirement” means the voluntarily
termination of employment by a Participant after he or she has attained the age
of 65 or such other age as may be determined by the Committee in its sole
discretion or as otherwise may be set forth in the Incentive Award agreement or
other grant document with respect to a Participant and a particular Incentive
Award.   (dd)   “SAR” means a stock appreciation right granted under Section 7
in respect of one or more shares of Common Stock that entitles the holder
thereof to receive, in cash or Common Stock, or a combination thereof, at the
discretion of the Committee (which discretion may be exercised at or after
grant, including after exercise of the SAR), an amount per share of Common Stock
equal to the excess, if any, of the Fair Market Value on the date the SAR is
exercised over the Fair Market Value on the date the SAR is granted.   (ee)  
“Substitute Award” shall mean an Award granted under this Plan upon the
assumption of, or in substitution for, outstanding equity awards previously
granted by a company or other entity in connection with a corporate transaction,
such as a merger, combination, consolidation or acquisition of property or
stock; provided, however, that in no event shall the term “Substitute Award” be
construed to refer to an award made in connection with the cancellation and
repricing of an Option or SAR.   (ff)   “U.S. Code” means the U.S. Internal
Revenue Code of 1986, as amended, including, for these purposes, any regulations
promulgated by the Internal Revenue Service with respect to the provisions of
the U.S. Code (“Treasury Regulations”), and any successor thereto.

Section 3
ELIGIBILITY
Any Eligible Person shall be eligible to be selected to receive an Award under
the Plan, except that ISOs, under U.S. Code section 422 may be granted only to
employees of the Corporation or a subsidiary.
Section 4
ADMINISTRATION

(a)   The Plan shall be administered by the Committee. The Committee may issue
rules and regulations for administration of the Plan. It shall meet at such
times and places as it may determine.   (b)   Subject to the terms of the Plan
and applicable law, the Board, upon receiving the relevant recommendations of
the Committee, shall have power and authority to: (i) designate participants;
(ii) determine the type or types of Awards to be granted to each participant
under the Plan; (iii) determine the number of shares of Common Stock to be
covered by (or with respect to which payments, rights, or other matters are to
be calculated in connection with) Awards; (iv) determine the terms and
conditions of any Award; (v) adopt form of Award Agreements; (vi) determine
whether, to what extent, and under what circumstances Awards may be settled or
exercised in cash, shares of Common Stock, other securities, or other Awards, or
canceled, forfeited or suspended, and the method or methods by which Awards may
be settled, exercised, canceled, forfeited or suspended; (vii) correct any
defect, supply any omission or reconcile any inconsistency in or among the Plan,
an Award or an Award Agreement; (viii) determine whether, to what extent, and
under what circumstances cash, shares of Common Stock, other securities, other
Awards, and other amounts payable with respect to an Award under the Plan shall
be deferred either automatically or at the election of the holder thereof or of
the Board; (ix) interpret and administer the Plan and any instrument or
agreement relating to, or Award made under, the Plan; (x) establish,

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    amend, suspend or waive such rules and regulations and appoint such agents
as it shall deem appropriate for the proper administration of the Plan; and
(xi) make any other determination and take any other action that the Board deems
necessary or desirable for the administration of the Plan.   (c)   All decisions
of the Board shall be final, conclusive and binding upon all parties, including
the Corporation, the stockholders and the Participants.

Section 5
COMMON STOCK SUBJECT TO PLAN; OTHER LIMITATIONS

(a)   Subject to adjustment as provided in (d) below, (i) the maximum number of
shares of Common Stock available for delivery under the Plan is 3,800,000
Shares, (ii) the maximum number of shares of Common Stock that may be subject to
grant of ISOs is 3,800,000 and (iii) the maximum number of shares of Common
Stock that are available for Awards under 8, 9 and 10 is 1,900,000.   (b)   No
participant may receive Options, SARs or any Award granted in accordance with
Section 11 below in any fiscal year that relate to more than 650,000 shares of
Common Stock.   (c)   If, after the effective date of the Plan, any shares of
Common Stock covered by an Award, or to which such an Award relates, are
forfeited, or if such an Award otherwise terminates without the delivery of
shares of Common Stock, then the shares of Common Stock covered by such Award,
or to which such Award relates, to the extent of any such forfeiture or
termination, shall again be, or shall become, available for issuance under the
Plan. Notwithstanding the foregoing, the following shares of Common Stock shall
not become available for purposes of the Plan: (1) shares of Common Stock
previously owned or acquired by the participant that are delivered to the
Corporation, or withheld from an Award, to pay the exercise price, (2) shares of
Common Stock that are delivered or withheld for purposes of satisfying a tax
withholding obligation, or (3) shares of Common Stock reserved for issuance upon
the grant of a SAR that exceed the number of shares actually issued upon
exercise.   (d)   Any Shares delivered pursuant to an Award may consist, in
whole or in part, of authorized and unissued shares of Common Stock or shares of
Common Stock acquired by the Corporation.   (e)   In the event that the
Committee shall determine that any dividend or other distribution (whether in
the form of cash, shares of Common Stock or other securities), recapitalization,
stock split, reverse stock split, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase or exchange of shares of Common
Stock or other securities of the Corporation, issuance of warrants or other
rights to purchase shares of Common Stock or other securities of the
Corporation, or other similar corporate transaction or event affects the shares
such that an adjustment is determined by the Committee to be appropriate in
order to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, then the Committee shall, in such
manner as it may deem equitable, adjust any or all of (i) the number and type of
shares of Common Stock (or other securities) which thereafter may be made the
subject of Awards, including the aggregate and individual limits specified
above, (ii) the number and type of shares of common Stock (or other securities)
subject to outstanding Awards, and (iii) the grant, purchase, or exercise price
with respect to any Award or, if deemed appropriate, make provision for a cash
payment to the holder of an outstanding Award; provided, however, that the
number of shares of Common Stock subject to any Award denominated in shares
shall always be a whole number. Notwithstanding the foregoing, to the extent
applicable, adjustments to Awards will be made only to the extent permitted
under Section 409A of the U.S. Code.   (f)   Shares of Common Stock underlying
Substitute Awards, and Awards settled in cash, shall not reduce the number of
shares of Common Stock remaining available for issuance under the Plan.

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Section 6
STOCK OPTIONS

(a)   The Board, upon receiving the relevant recommendations of the Committee,
may grant Options to Eligible Persons in the following forms: (1) ISOs; (2) QSOs
and (3) Non-qualified stock options. ISOs and QSOs may only be granted to those
who meet the requirements of U.S. or P.R. Code, respectively. Each Option will
be evidenced by an Award Agreement.   (b)   Except in the case of Substitute
Awards, Non-qualified Stock Options and QSOs and ISOs granted pursuant to the
Plan shall have an exercise price of no less than the Fair Market Value of a
share of Common Stock on the date the Option is granted. Except as provided in
Section 5(e), the Board shall not have the ability or authority to reduce the
exercise price of outstanding Options nor to grant any new Options or other
Awards in substitution for or upon the cancellation of Options previously
granted which shall have the effect of reducing the exercise price of any
outstanding Option without the approval of a majority of the Corporation’s
shareholders.   (c)   Each Option granted pursuant to the Plan shall become
exercisable as determined by the Board at the time of grant. The Board shall
determine the time or times at which an Option may be exercised in whole or in
part.   (d)   The term of each Option shall be fixed by the Board but shall not
exceed 10 years from the date of grant thereof.   (e)   Pursuant to the
provisions of Section 1046 of the P.R. Code and/or Section 422 of the U.S. Code,
the aggregate Fair Market Value of the shares (determined as of the time the
Option is granted) with respect to which QSO’s and/or ISO’s are exercisable for
the first time by any Optionee during any calendar year (under the Plan and any
other plans of the Corporation and its Affiliates) shall not exceed one hundred
thousand dollars ($100,000).   (f)   Payment of the exercise price shall be made
in cash or check. However, the Committee may, in its discretion, (i) allow
payment, in whole or in part, through the delivery of shares of Common Stock
which have been owned by the participant for at least six months, duly endorsed
for transfer to the Corporation with a Fair Market Value on the date of delivery
equal to the aggregate exercise price of the Option or exercised portion
thereof; (ii) allow payment, in whole or in part, through the surrender of
shares of Common Stock then issuable upon exercise of the Option having a Fair
Market Value on the date of Option exercise equal to the aggregate exercise
price of the Option or exercised portion thereof; (iii) allow payment, in whole
or in part, through the delivery of a notice that the participant has placed a
market sell order with a broker with respect to shares of Common Stock then
issuable upon exercise of the Option, and the broker timely pays a sufficient
portion of the net proceeds of the sale to the Corporation in satisfaction of
the Option exercise price; or (iv) allow payment through any combination of the
consideration provided in the foregoing subparagraphs (i), (ii), (iii) and (iv);
provided, however, that the payment in the manner prescribed in the preceding
paragraphs shall not be permitted to the extent that the Committee determines
that payment in such manner shall result in an extension or maintenance of
credit, an arrangement for the extension of credit, or a renewal or an extension
of credit in the form of a personal loan to or for any Director or executive
officer of the Corporation that is prohibited by Section 13(k) of the Exchange
Act or other applicable law.   (g)   Upon exercise of a SAR, the holder shall be
entitled to receive payment, in cash, in shares of common stock or in a
combination thereof.

Section 7
SARs

(a)   The Board, upon receiving relevant recommendations from the Committee, may
grant SARs to Eligible Persons with terms and conditions that are not
inconsistent with the provisions of the Plan. Each SAR shall be evidenced by an
Award Agreement which includes the terms and conditions recommended by the
Committee.   (b)   SARs may be granted hereunder to Participants either alone
(“freestanding”) or in addition to other Awards granted under the Plan
(“tandem”) and may, but need not, relate to a specific Option granted under
Section 6.

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(c)   Any tandem SAR related to an Option may be granted at the same time such
Option is granted or at any time thereafter before exercise or expiration of
such Option. In the case of any tandem SAR related to any Option, the SAR or
applicable portion thereof shall not be exercisable until the related Option or
applicable portion thereof is exercisable and shall terminate and no longer be
exercisable upon the termination or exercise of the related Option, except that
a SAR granted with respect to less than the full number of Shares covered by a
related Option shall not be reduced until the exercise or termination of the
related Option exceeds the number of Shares not covered by the SAR. Any Option
related to any tandem SAR shall no longer be exercisable to the extent the
related SAR has been exercised.   (d)   A freestanding SAR shall not have a term
of greater than 10 years or, unless it is a Substitute Award, an exercise price
less than the Fair Market Value of the Share on the date of grant. Except as
provided in Section 5(e), the Board shall not have the ability or authority to
reduce the exercise price of outstanding SARs nor to grant any new SARs or other
Awards in substitution for or upon the cancellation of SARs previously granted
which shall have the effect of reducing the exercise price of any outstanding
SAR without the approval of a majority of the Corporation’s shareholders.

Section 8
RESTRICTED STOCK AND RESTRICTED STOCK UNITS

(a)   The Board, upon receiving the relevant recommendations of the Committee,
may grant Awards to Eligible Persons of Restricted Stock or Restricted Units.
Each Award of Restricted Stock and Restricted Stock Units shall be evidenced by
an Award Agreement which shall set forth the conditions, if any, which will need
to be satisfied before the grant will be effective and the conditions, if any,
under which the participant’s Award will be forfeited or become vested,
including Performance Goals, if any, that must be achieved as a condition to
vesting.   (b)   Shares of Restricted Stock may not be sold, assigned,
transferred, pledged, hypothecated or otherwise encumbered by the participant
during the Restricted Period, except as hereinafter provided.   (c)   Unless
otherwise stated, holders of Restricted Stock or Restricted Stock Units shall
have the rights to dividends or dividend equivalents, as applicable, during the
Restriction Period. Such dividends or dividend equivalents will accrue during
the Restriction Period, but not be paid until restrictions lapse.   (d)   In the
case of Restricted Stock, the participant will have the right to vote shares.  
(e)   For Restricted Stock and Restricted Stock Unit Awards intended to vest
solely on the basis of the passage of time, the Awards will not vest more
quickly than ratably over a three-year period beginning on the first anniversary
of the award. Awards may vest more quickly in the event of (a) death, Disability
or Retirement, (b) job loss due to workforce reduction, job elimination or
divestiture or (c) a Change in Control. Also, Awards necessary in the
recruitment of new key employees or for the retention of key employees acquired
in a business combination will not be subject to a minimum time-based vesting
requirement.   (f)   The restricted period shall commence upon the date of the
grant by the Board and shall lapse with respect to the shares of Restricted
Stock and Restricted Stock Units on such date the vesting period of the Award
elapses.

Section 9
PERFORMANCE SHARES
The Board, upon receiving the relevant recommendations of the Committee, may
grant Performance Shares to Eligible Persons. Performance Shares shall represent
the right of a participant to receive shares of Common Stock (or their cash
equivalent) at a future date upon the achievement of Performance Goals
established by the Committee, during a specified Performance Cycle. Performance
Shares may include the right to receive dividend equivalents thereon, on a
current, reinvested and/or restricted basis. Each Award of Performance Shares
shall be evidenced by an Award Agreement which shall set forth the terms and
conditions of the Award.

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Section 10
OTHER STOCK-BASED AWARDS
The Board, upon receiving the relevant recommendations of the Committee, may
grant Other Stock-Based Awards to Eligible Persons. An Other Stock-Based Award
means any other type of equity-based or equity-related Award not otherwise
described by the terms of this Plan (including the grant or offer for sale of
unrestricted Shares) in such amount and subject to such terms and conditions as
the Administrator shall determine. Such Awards may involve the transfer of
actual shares of Common Stock, or payment in cash or otherwise of amounts based
on the value of shares of Common Stock. Each Other Stock-Based Award shall be
evidenced by an Award Agreement which shall set forth the terms and conditions
of the Award.
Section 11
QUALIFIED PERFORMANCE-BASED AWARDS

(a)   The Board, upon receiving the relevant recommendations of the Committee,
may determine whether an Award is to qualify as performance-based compensation
(as described in Section 162(m)(4)(C) of the U.S. Code).   (b)   To the extent
necessary to comply with the performance-based compensation requirements of
Section 162, no later than ninety (90) days following the commencement of any
Performance Cycle (or such earlier time as may be required under
Section 162(m)), the Committee shall, in writing, (i) designate one or more
Covered Employees, (ii) select the Performance Goals applicable to the
Performance Cycle (including any applicable adjustments), (iii) establish the
various performance targets, in terms of an objective formula or standard, and
amounts of such Awards, as applicable, which may be earned for such Performance
Cycle, and (iv) specify the relationship between the performance targets and the
amounts of such Awards, as applicable, to be earned by each Covered Employee for
such Performance Cycle. Following the completion of each Performance Cycle, the
Committee shall certify in writing whether the applicable performance targets
have been met. In determining the amount earned by a Covered Employee, the
Committee shall have the right to reduce (but not to increase) the amount
payable at a given level of performance to take into account additional factors
that the Committee may deem relevant to the assessment of individual or
corporate performance for the Performance Cycle.   (c)   Furthermore,
notwithstanding any other provision of the Plan, any Award which is granted to a
Covered Employee and is intended to qualify as performance-based compensation
shall be subject to any additional limitations set forth in Section 162(m) of
the U.S. Code (including any amendment to Section 162(m) or any regulations or
rulings issued thereunder that are requirements for qualification as
performance-based compensation and the Plan shall be deemed amended to the
extent necessary to conform to such requirements.

Section 12
TERMINATION OF EMPLOYMENT; CHANGE OF CONTROL

(a)   In the event of the death of a participant while in the employ or service
of the Bank, Awards held by such participant which have not been exercised or
which have not vested, shall vest and may be exercised, as the case may be
(irrespective of whether the vesting period has been completed), by the estate
of the participant or by any person who acquired the right to exercise such
Award by bequest or inheritance from such participant, within one year after the
date of such death but not later that the date on which the Award would
otherwise expire.   (b)   If the employment or service of a participant is
terminated by reason of Disability, Awards held by such participant which have
not been exercised or which have not vested, shall vest and may be exercised, as
the case may be (irrespective of whether the vesting period has been
completed),, within one year after such termination but not later than the date
on which such Award would otherwise expire.

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(c)   In the event a Participant’s employment or service is terminated by the
Corporation or any Affiliate for Cause, Awards held by such Participant which
have not been exercised or which have not vested shall be forfeited and canceled
upon such termination and shall not thereafter be exercisable.   (d)   Unless
otherwise determined by the Committee, in the event a Participant’s employment
or service ends as a result of such participants resignation from the
Corporation or an Affiliate, any Award held by such Participant which has not
been exercised or which have not vested, shall be forfeited and canceled upon
such termination and shall not thereafter be exercisable.   (e)   If the
employment or service of the participant is terminated for any reason other than
described in Section 13 (a) through (d), Awards held by such participant which
have not been exercised or which have not vested shall vest and may be
exercised, as the case may be, at any time prior to the expiration of the term
of the Award or the ninetieth (90th) day following the Participants termination
of employment, whichever period is shorter, and any Awards that are not
exercisable at the time of the termination of employment shall be canceled upon
such termination and shall not thereafter be exercisable; provided, however,
that a participant whose employment is terminated by reason of Retirement, or
who is voluntarily or involuntarily terminated within one year after a Change in
Control, Awards held by such participant shall vest and may be exercised, as the
case may be (irrespective of whether the vesting period has been completed),
within four months after the date of such termination but not later than the
date on which the Awards would otherwise expire.   (f)   Based on particular
circumstances evaluated by the Committee as they may relate to the termination
of a Participant, the Board may, with the recommendation of the Committee, grant
the full vesting of any Award held by the participant upon termination of
employment.   (g)   If awards are accelerated for reasons other than death,
disability, retirement, or change in control, those discretionarily accelerated
shares will be limited to 10% of the total number of shares authorized under
Section 5(a) of the Plan.

Section 13
AMENDMENT, MODIFICATION, AND TERMINATION OF PLAN

(a)   The Board may, at any time and from time to time amend, modify, suspend,
or terminate this Plan, in whole or in part, without notice to or the consent of
any participant or employee; provided, however, that any amendment which would
(i) increase the number of shares available for issuance under the Plan,
(ii) lower the minimum exercise price at which an Option or SAR may be granted
or (iii) change the Award limits as set forth in Section 5(a) or 5(b) or (iv)
require shareholder approval under the rules of any exchange where the Common
Stock may be traded, shall be subject to the approval of the Corporation’s
shareholders. No amendment, modification or termination of the Plan shall in any
manner adversely affect any Award theretofore granted under the Plan, without
the consent of the Participant Award (for this purpose, actions that alter the
timing of federal income taxation of a participant will not be deemed material
unless such action results in an income tax penalty on the Participant).   (b)  
The effective date and date of adoption of the Plan shall be March 13, 2008, the
date of adoption of the Plan by the Board, provided that such adoption of the
Plan by the Board is approved by a majority of the votes cast at a duly held
meeting of stockholders held on or prior to April 29, 2008 at which a quorum
representing a majority of the outstanding voting stock of the Corporation is,
either in person or by proxy, present and voting. No Award may be granted
subsequent to March 13, 2018. Absent additional stockholder approval, no Award
intended to qualify as performance-based under Section 162(m) of the U.S. Code
may be granted under the Plan subsequent to the Corporation’s annual meeting of
stockholders in April 29, 2013.

Section 14
MISCELLANEOUS
 

(a)   The Corporation may, to the extent deemed necessary or advisable by the
Committee postpone the issuance or delivery of shares of Common Stock or payment
of other benefits under any Award until completion of such

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    registration or qualification of such shares or other required action under
any federal or state law, rule or regulation, listing or other required action
with respect to any stock exchange or automated quotation system upon which the
shares of Common Stock or other securities of the Corporation are listed or
quoted, or compliance with any other obligation of the Corporation, as the
Committee may consider appropriate, and may require any participant to make such
representations, furnish such information and comply with or be subject to such
other conditions as it may consider appropriate in connection with the issuance
or delivery of shares of Common Stock or payment of other benefits in compliance
with applicable laws, rules, and regulations, listing requirements, or other
obligations.   (b)   No Award or other right or interest of a participant under
the Plan shall be pledged, hypothecated or otherwise encumbered or subject to
any lien, obligation or liability of such participant to any party (other than
the Corporation or an Affiliate), or assigned or transferred by such participant
otherwise than by will or the laws of descent and distribution or to a
beneficiary upon the death of a participant, and such Awards or rights that may
be exercisable shall be exercised during the lifetime of the participant only by
the participant or his or her guardian or legal representative.   (c)   The
Corporation and any Affiliate is authorized to withhold from any Award granted,
any payment relating to an Award under the Plan, including from a distribution
of shares of Common Stock, or any payroll or other payment to a participant,
amounts of withholding and other taxes due or potentially payable in connection
with any transaction involving an Award, and to take such other action as the
Committee may deem advisable to enable the Corporation and participants to
satisfy obligations for the payment of withholding taxes and other tax
obligations relating to any Award. This authority shall include authority to
withhold or receive shares of Common Stock or other property and to make cash
payments in respect thereof in satisfaction of a participant’s withholding
obligations, either on a mandatory or elective basis in the discretion of the
Committee, or in satisfaction of other tax obligations if such withholding will
not result in additional accounting expense to the Corporation. Other provisions
of the Plan notwithstanding, only the minimum amount of shares of Common Stock
deliverable in connection with an Award necessary to satisfy statutory
withholding requirements will be withheld, unless withholding of any additional
amount of shares of Common Stock will not result in additional accounting
expense to the Corporation.   (d)   No election under Section 83(b) of the U.S.
Code (to include in gross income in the year of transfer the amounts specified
in Code Section 83(b)) or under a similar provision of the laws of a
jurisdiction outside the United States may be made unless expressly permitted by
the terms of the Award document or by action of the Committee in writing prior
to the making of such election. In any case in which a participant is permitted
to make such an election in connection with an Award, the participant shall
notify the Corporation of such election within ten days of filing notice of the
election with the Internal Revenue Service or other governmental authority, in
addition to any filing and notification required pursuant to regulations issued
under Section 83(b) or other applicable provision.   (e)   If any participant
shall make any disposition of shares of shares of Common Stock delivered
pursuant to the exercise of an ISO under the circumstances described in Code
Section 421(b) (relating to certain disqualifying dispositions), such
Participant shall notify the Corporation of such disposition within ten days
thereof.   (f)   The Corporation or any Affiliate may, to the extent permitted
by applicable law, deduct from and set off against any amounts the Corporation
or an Affiliate may owe to the participant from time to time, including amounts
payable in connection with any Award, owed as wages, fringe benefits, or other
compensation owed to the participant, such amounts as may be owed by the
participant to the Corporation, including but not limited to amounts owed under
Section (c) above, although the participant shall remain liable for any part of
the participant’s payment obligation not satisfied through such deduction and
setoff. By accepting any Award granted hereunder, the participant agrees to any
such deduction or setoff.   (g)   The Plan is intended to constitute an
“unfunded” plan for incentive and deferred compensation. With respect to any
payments not yet made to a participant or obligation to deliver shares of Common
Stock pursuant to an Award, nothing contained in the Plan or any Award shall
give any such Participant any rights that are greater than those of a general
creditor of the Corporation; provided that the Committee may authorize the
creation of trusts and deposit therein cash, shares of Common Stock, other
Awards or other property, or make other

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    arrangements to meet the Corporation’s obligations under the Plan. Such
trusts or other arrangements shall be consistent with the “unfunded” status of
the Plan unless the Committee otherwise determines with the consent of each
affected participant.   (h)   Neither the adoption of the Plan by the Board nor
its submission to the shareholders of the Corporation for approval shall be
construed as creating any limitations on the power of the Board or a committee
thereof to adopt such other incentive arrangements, apart from the Plan, as it
may deem desirable, including incentive arrangements and awards which do not
qualify under Section 162(m) of the U.S. Code, and such other arrangements may
be either applicable generally or only in specific cases.   (i)   No fractional
shares of Common Stock shall be issued or delivered pursuant to the Plan or any
Award. The Committee shall determine whether cash, other Awards or other
property shall be issued or paid in lieu of such fractional shares or whether
such fractional shares or any rights thereto shall be forfeited or otherwise
eliminated.   (j)   It is the intent of the Corporation that Options and SARs
granted to Covered Employees and other designated Awards shall constitute
qualified “performance-based compensation” within the meaning of Section 162(m)
of the U.S. Code and regulations thereunder, unless otherwise determined by the
Committee at the time of allocation of an Award. If any provision of the Plan or
any Award document relating to an Award that is designated as intended to comply
with Section 162(m) does not comply or is inconsistent with the requirements of
Section 162(m) or regulations thereunder, such provision shall be construed or
deemed amended to the extent necessary to conform to such requirements, and no
provision shall be deemed to confer upon the Committee or any other person
discretion to increase the amount of compensation otherwise payable in
connection with any such Award upon attainment of the applicable performance
objectives.   (k)   Other provisions of the Plan notwithstanding, to the extent
applicable, the terms of any Award, including any authority of the Corporation
and rights of the participant with respect to the Award, shall be limited to
those terms permitted under Section 409A, and any terms not permitted under
Section 409A shall be automatically modified and limited to the extent necessary
to conform with Section 409A. For this purpose, other provisions of the Plan
notwithstanding, the Corporation shall have no authority to accelerate
distributions relating to Awards subject to Section 409A in excess of the
authority permitted under Section 409A, and any distribution subject to
Section 409A(a)(2)(A)(i) (separation from service) to a “key employee” as
defined under Section 409A(a)(2)(B)(i), shall not occur earlier than the
earliest time permitted under Section 409A(a)(2)(B)(i).   (l)   The validity,
construction, and effect of the Plan, any rules and regulations relating to the
Plan and any Award Agreement shall be determined in accordance with the laws of
the Commonwealth of Puerto Rico, without giving effect to principles of
conflicts of laws, and applicable provisions of federal law.   (m)   Neither the
Plan nor any action taken hereunder shall be construed as (i) giving any
Eligible Person or participant the right to continue as an Eligible Person or
participant or in the employ or service of the Corporation or an Affiliate,
(ii) interfering in any way with the right of the Corporation or an Affiliate to
terminate any Eligible Person’s or participant’s employment or service at any
time, (iii) giving an Eligible Person or participant any claim to be granted any
Award under the Plan or to be treated uniformly with other participants and
employees, or (iv) conferring on a participant any of the rights of a
shareholder of the Corporation unless and until the participant is duly issued
or transferred shares of Common Stock in accordance with the terms of an. Except
as expressly provided in the Plan and an Award Agreement, neither the Plan nor
any Award Agreement shall confer on any person other than the Corporation and
the participant any rights or remedies thereunder.   (n)   If any of the
provisions of this Plan or any Award Agreement is finally held to be invalid,
illegal or unenforceable (whether in whole or in part), such provision shall be
deemed modified to the extent, but only to the extent, of such invalidity,
illegality or unenforceability, and the remaining provisions shall not be
affected thereby; provided, that, if any of such provisions is finally held to
be invalid, illegal, or unenforceable because it exceeds the maximum scope
determined to be acceptable to permit such provision to be enforceable, such
provision shall be deemed to be modified to the minimum extent necessary to
modify such scope in order to make such provision enforceable hereunder. The
Plan and any Award Agreements contain the entire agreement

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    of the parties with respect to the subject matter thereof and supersede all
prior agreements, promises, covenants, arrangements, communications,
representations and warranties between them, whether written or oral with
respect to the subject matter thereof.

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