EX-10.1






EXHIBIT 10.1




RESIGNATION AND TRANSITION AGREEMENT



THIS RESIGNATION AND TRANSITION AGREEMENT (“Agreement”) dated as of November 6, 2008, is made by
and among Popular, Inc.; Banco Popular de Puerto Rico (“BPPR”); Banco Popular North America
(“BPNA”), and Roberto R. Herencia (“Executive”).




RECITALS





	A.	 	Executive has been and is employed by BPPR acting in the capacity of President of BPNA;
	 
	B.	 	Executive has also served from time to time as an officer and as director of Popular, Inc.,
BPPR, BPNA and various of their subsidiaries or affiliates (collectively with the
subsidiaries, “Popular”)
	 
	C.	 	The parties desire to enter into this Agreement in order to provide for the orderly
resignation and transition of Executive from Popular.




NOW THEREFORE, in consideration of the premises and the covenants contained in this Agreement, the
sufficiency of which is hereby acknowledged, Executive and Popular agree as follows:





	1.	 	RESIGNATION






	 	a)	 	Resignation: The parties acknowledge and agree that effective on and as of
December 31, 2008 (the “Resignation Date”), Executive shall resign (i) as Executive Vice
President of Popular, Inc.; (ii) employee of BPPR; (iii) President of BPNA; and (iv) from
all other positions Executive currently holds as an officer, employee or director of
Popular.
	 
	 	b)	 	Transition Period: For the period commencing on the date hereof and ending on
the Resignation Date (the “Transition Period”), Executive shall continue to be employed by
Popular in his current capacity. Executive’s duties shall be performed during normal
business hours from Rosemont, Illinois and such other locations as are mutually acceptable
to Executive and Popular. During the Transition Period, Executive shall report directly to
Richard L. Carrión.
	 
	 	c)	 	Compliance. During the Transition Period, Executive shall comply in full with
(i) all applicable laws, orders and regulations, (ii) Popular’s Code of Ethics, Policies
and Guidelines; and (iii) the employee manual in effect.
	 
	 	d)	 	Payment of Salary/Benefits. During the Transition Period, Executive shall
continue to receive Executive’s current base salary paid in the normal course in accordance
with BPNA’s payroll policy, as well as other compensation and benefits to which Executive
is entitled in his current position (but not any accrued but unpaid bonus or other
incentive compensation) with BPNA. During the Transition Period, Executive shall be
entitled to




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	 	 	 	any Christmas Bonus awarded but will not participate in any other bonus or incentive
compensation program which may be in effect at BPNA or Popular.
	 
	 	e)	 	Resignation. On and as of the Resignation Date, (i) Executive’s employment
shall be terminated and Executive shall no longer be employed from and after such date and
(ii) Executive shall be deemed to have resigned as a director and/or officer of any Popular
entity and from any managing committee and supervisory boards on which Executive serves as
a nominee of any Popular entity. Executive hereby agrees to execute any documentation
requested by Popular to effect any of the foregoing resignations.
	 
	 	f)	 	Accrued Vacation Pay. On the Resignation Date, Executive shall be compensated
for all accrued but unused vacation and sick days in accordance with BPNA’s policy.
	 
	 	g)	 	Effect on Other Agreements. Upon the full execution of this Agreement, this
Agreement shall constitute the entire agreement with respect to the terms of Executive’s
employment and any compensation or benefits for which Executive may be entitled either
prior to or after the Resignation Date. This Agreement shall supersede any other or
earlier employment or benefits or other agreement.






	2.	 	PAYMENTS AND BENEFITS DUE TO RESIGNATION






	 	a)	 	Transition Payment. In exchange for Executive’s covenants and agreements
contained in this Agreement, Executive shall be paid a gross amount equal to $3,289,432,
which amount, after all applicable deductions (the “Transition Payment”) shall be paid to
Executive in two (2) lump sum payments. Subject to compliance with Section 4 below, the
first payment will be for 85% of the Transition Payment amount and will be payable seven
days after the date hereof; the remainder (less any required adjustments as indicated in
this Section 2) will be payable within seven days after the Resignation Date. Executive
acknowledges that he is not otherwise entitled to the Transition Payment and the Transition
Payment is being provided to Executive solely in consideration of the covenants and
agreements made by Executive under this Agreement.
	 
	 	b)	 	Medical Benefits. For a period of twelve (12) months following the Resignation
Date, Executive shall continue to be covered under BPNA’s group health care plans (medical,
dental and/or vision) under which Executive was covered as of the Resignation Date, at no
cost to Executive. This twelve (12) month period of coverage shall not count as COBRA
continuation coverage (i.e., shall not reduce the 18 months of COBRA coverage to
which Executive is otherwise entitled). The payment of any COBRA premiums may be subject
to applicable tax withholdings. Following the end of the 12-month coverage period,
Executive shall be entitled to elect COBRA continuation coverage subject Executive’s timely
payment of the full COBRA premium.
	 
	 	c)	 	Equity Grants. At various times during Executive’s employment, Executive was
awarded Stock Options, Restricted Stock and/or Performance Shares ( the “Equity Grants”)
under the Popular, Inc. 2001 Stock Option Plan and/or the Popular, Inc. 2004 Omnibus
Incentive Plan, as amended (the “Plans”). In consideration of Executive’s




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	 	 	 	resignation and other agreements and covenants of Executive made in this Agreement, Popular
will take all action to implement the following:






     (i) with regard to Restricted Stock: subject to the approval of the Popular, Inc.
Board of Directors Compensation Committee, Popular will accelerate the vesting of any
unvested portion of the Restricted Stock as of the Resignation Date;




     (ii) with regard to Performance Shares: Popular, Inc. will issue a payment in Popular,
Inc. common stock based on the target award pro-rated according to the number of months
worked during the performance cycle as a percentage of the total number of months in the
performance cycle;




     (iii) with regard to Stock Options awarded pursuant to the Popular, Inc. 2001 Stock
Option Plan: all options exercisable as of the date of Executive’s Resignation Date may be
exercised at any time prior to the expiration date of the option or six months following the
termination, whichever period is shorter.




     (iv) with regard to Stock Options awarded pursuant to the Popular, Inc. 2004 Omnibus
Incentive Plan: all options exercisable at the date of Executive’s termination of
employment may be exercised at any time prior to the expiration date of the option or the
90th day following the termination, whichever period is shorter.




	 	 	 	The certificates evidencing any Equity Grants payable to Executive will be delivered to
Executive as soon as administratively practicable after Executive’s Resignation Date.
Popular shall deduct from the final installment of the Transition Payment an amount
sufficient to cover the requisite tax withholding due upon vesting and delivery of the
Equity Grants. Upon delivery of such Equity Grants, Executive shall have no further rights
nor shall Executive be entitled to any further distribution under the Plans. All other
terms and provisions of the Equity Grants as set forth in the applicable agreements shall
remain in full force and effect.
	 
	 	d)	 	Retirement Benefits. Executive and Popular acknowledge and agree that
Executive has accrued benefits under the Popular, Inc. USA 401(k) Savings and Investment
Plan, the Banco Popular de Puerto Rico Retirement Plan and the Banco Popular de Puerto Rico
Benefit Restoration Plan (collectively the “Retirement Plans”) and that Executive’s
benefits under the Retirement Plans shall be determined in accordance with the provisions
thereof and any election related thereto. The Transition Payment shall be excluded from
eligible compensation for purposes of determining Retirement Plan deferral amounts or
benefit values.
	 
	 	e)	 	Preferred Mortgage Loan Interest Rate. Popular acknowledges and agrees that
from and after the Resignation Date, Executive shall continue to be entitled to participate
in the BPNA employee preferred interest rate program (the “Program”) solely with respect to
any existing residential mortgage loan that is outstanding as of the Resignation Date (the
“Mortgage Loan”), until such Mortgage Loan is repaid by refinancing or otherwise. Upon such
repayment of the Mortgage Loan, Executive shall have no further right to participate in the
Program.




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	 	f)	 	No Further Benefits, Payments, Etc. Executive acknowledges and agrees that
except as expressly provided herein, Executive’s coverage under any benefit plan, program,
policy or arrangement sponsored or maintained by Popular shall cease and be terminated as
of the Resignation Date. Executive further acknowledges and agrees that no payment made by
Popular pursuant to this Agreement is subject to any employer matching obligation or any
other employer contribution under any benefit or deferred compensation plan, whether or not
any such payment is characterized as wages or other compensation.
	 
	 	 	 	Notwithstanding the terms of this Section 2, at no time may the aggregate payments or
benefits in the nature of compensation due to resignation, whether provided under this
Agreement or otherwise, be considered an “excess parachute payment” under Section 280G of
the Internal Revenue Code of 1986, as amended (the “Code”), a golden parachute payment under
Section 111(b) of the Emergency Economic Stabilization Act of 2008, or a “golden parachute
payment” under Section 18(k) of the Federal Deposit Insurance Act or any other federal law
or any regulation implementing any federal law. If the value of payments or benefits under
this Agreement or otherwise would otherwise be deemed an excess parachute payment or a
golden parachute payment, as applicable, under any such statutes or regulation, then the
total payments and benefits will be reduced to the greatest amount that could be made to
Executive without there being a parachute payment. To the extent possible, Popular shall
give the Executive the opportunity to select the order in which payments or benefits are
reduced.






	3.	 	DEATH OR DISABILITY





     In the event that Executive dies or becomes disabled prior to the Resignation Date,
Executive’s heirs, representatives or Executive’s estate shall be entitled to the compensation
and benefits described in Section 2 of this Agreement.




	4.	 	RELEASE AND WAIVER





     As a condition to receive the Transition Payment, Executive shall execute and deliver, to
the extent applicable, (a) the release attached hereto as Annex A (the “Release”) and (b) the
waiver attached hereto as Annex D (the “Waiver”). In addition, Executive agrees to execute any
additional documentation as Popular deems necessary and appropriate and at such time or times as
requested by Popular consistent with documents being signed by other Senior Executive Officers
in connection with any participation in the US Treasury Troubled Asset Relief Program (“TARP”)
or any similar program, including but not limited to the TARP Capital Purchase Program executive
compensation letter attached hereto as Annex E (the “SEO Letter”).




	5.	 	ON-GOING RESTRICTIONS ON EXECUTIVE’S ACTIVITIES; COOPERATION






	 	a)	 	General Effect. The parties agree that the provisions of this Section 5 shall
apply while Executive is employed by Popular and for some periods after Executive shall
cease being employed by Popular. This Section uses the following defined terms:





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     “Competitive Enterprise” means any business enterprise that either (1) engages in
commercial or consumer financial services, retail banking, internet banking or other
financial services to either commercial or consumer customers in the municipality, town or
metropolitan area in which Executive may seek employment, or (2) holds a 5% or greater
equity, voting or profit participation interest in any enterprise that engages in such a
competitive activity.




     “Solicit” means any direct or indirect communication, initiation, advice, encouragement
or request of any person to take or refrain from taking any action (regardless of who
initiated the communication in which the preceding occurs).




	 	b)	 	Executive’s Importance to Popular and the Effect of this Section 5. Executive
acknowledges that:






	 	i.	 	In the course of Executive’s involvement in Popular’s activities, Executive
has and has had access to Proprietary Information and Popular’s client base and will
profit from the goodwill associated with Popular. On the other hand, in view of
Executive’s access to Proprietary Information and Executive’s importance to Popular,
if Executive competes with Popular for some time after Executive’s employment,
Popular will likely suffer significant harm (but the amount of the loss to Popular
would be uncertain and not readily ascertainable). This Agreement provides Executive
with substantial additional benefits over Executive’s prior arrangements with
Popular, including the substantial additional compensation referred to in Section 2
hereof. In return for the benefits Executive will receive from Popular and to induce
Popular to enter into this Agreement, and in light of the potential harm Executive
could cause Popular, Executive agrees to the provisions of this Section 5. Popular
would not have entered into this Agreement if Executive did not agree to this Section
5.
	 
	 	ii.	 	This Section 5 limits Executive’s ability to earn a livelihood in a
Competitive Enterprise. Executive acknowledges, however, that complying with this
Section 5 will not result in economic hardship for Executive or Executive’s family.






	 	c)	 	Non-Solicitation of Popular Employees. During Executive’s employment and for
one (1) year after the Resignation Date, Executive agrees that he will not directly or
indirectly attempt to Solicit anyone who is then an employee of BPNA (or who was an
employee of BPNA within the prior six months) to resign from BPNA or accept employment with
any Competitive Enterprise. The term “Solicit” when used in this subsection shall not be
deemed to include solicitation of employment of individuals who respond to public
advertisement media of general distribution (i.e., not targeted to present BPNA employees)
without specific instruction or direction by Executive.
	 
	 	d)	 	Non-Solicitation of Popular Customers. During Executive’s employment and for
one (1) year after the Resignation Date, Executive agrees that he will not directly or
indirectly attempt to Solicit anyone who is then a customer of BPNA to transact business
with a Competitive Enterprise or to cease or refrain from conducting business with BPNA.
The term “Solicit” when used in this subsection shall not be deemed to include solicitation
by




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	 	 	 	public advertisement media of general distribution (i.e., not targeted to existing BPNA
customers) without specific instruction or direction by Executive.
	 
	 	 	 	In the event BPNA is sold, or a BPNA region is sold, or a BPNA business is eliminated, the
non-solicitation under c) and d) above shall not apply to the portion of BPNA that is sold
or eliminated.
	 
	 	e)	 	Executive’s Payment Obligations/Off-sets. If Executive fails to comply with
this Section 5, other than any isolated, insubstantial and inadvertent failure that is not
in bad faith, Executive will pay Popular any Transition Payment that Executive shall have
received in connection with this Agreement. Popular will have the right to offset
Executive’s obligations under this Section against any amounts otherwise owed to Executive
by any member of Popular, including under this Agreement. This payment obligation is in
addition to any rights Popular may have under this Section 5. In no event shall
Executive’s liability under this section 5(e) exceed the amount of the Transition Payment.
	 
	 	f)	 	Notice to New Employers. Before Executive shall accept employment with any
other person or entity while any of Section 5(c) or Section 5(d) is in effect, Executive
will provide the prospective employer with written notice of the provisions of this Section
5 and will deliver a copy of the notice to Popular.
	 
	 	g)	 	Cooperation. During the transition period and thereafter, Executive hereby
agrees to make himself reasonably available and to cooperate with reasonable requests from
Popular with respect to legal and regulatory matters as arise from time to time with
respect to Executive’s duties for Popular, including any investigation, litigation,
government or regulatory proceeding, examination or other proceeding or dispute. Such
cooperation shall include, but not be limited to, preparing for and giving testimony if and
when required by Popular. Popular shall reimburse Executive for all reasonable expenses
incurred with respect to such cooperation, including legal fees and disbursements.
	 
	 	h)	 	D&O Policy. For events or acts occurred prior to the Resignation Date,
Executive will be indemnified under the D&O Policy applicable to directors and officers to
the extent provided in the By-Laws and policies of Popular that are in effect as of the
Executive’s Resignation Date or, if greater, under applicable law.






	6.	 	PROPRIETARY INFORMATION





     Executive agrees to the proprietary information provisions set forth on Annex B, which is a
part of this Agreement.




	7.	 	DISPUTES





     Executive agrees to the dispute resolution provisions, including mandatory arbitration, set
forth on Annex C, which is a part of this Agreement.



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	8.	 	GENERAL PROVISIONS






	 	a)	 	Consideration. This Agreement is entered into as a material inducement to
Popular in consideration of the mutual covenants contained in this Agreement. Executive and
Popular acknowledge the receipt and sufficiency of the consideration to this Agreement and
intend this Agreement to be legally binding.
	 
	 	b)	 	Amendments and Waivers. Any provision of this Agreement may be amended or
waived but only if the amendment or waiver is in writing and signed, in the case of an
amendment, by all of the parties, in the case of a waiver, by the party that would have
benefited from the provision waived.
	 
	 	c)	 	Severability. If any provision of this Agreement is found by any court of
competent jurisdiction (or legally empowered agency) to be illegal, invalid or
unenforceable for any reason, then (1) the provision will be amended automatically to the
minimum extent necessary to cure the illegality or invalidity and permit enforcement and
(2) the remainder of this Agreement will not be affected. In particular, if any provision
of Section 5 is so found to violate law or be unenforceable because it applies for longer
than a maximum permitted period or to greater than a maximum permitted area, or otherwise,
it will be automatically amended to apply for the maximum permitted period and maximum
permitted area, or otherwise.
	 
	 	d)	 	Mutual Non-Disparagement. Popular agrees, except as may be required by law, to
refrain from making or publishing any statements, claims, allegations or assertions which
they believe have or may reasonably be expected to have the effect of demeaning the name or
business reputation of Executive and shall cause their employees, officers, directors,
agents or advisors to be similarly bound when serving in such capacity. Executive agrees
to refrain from performing any act, engaging in any conduct or course of action or making
or publishing any statements, claims, allegations or assertions which have or may
reasonably have the effect of demeaning the name or business reputation of Popular or any
of its respective employees, officers, directors, agents or advisors in their capacities as
such or which adversely affects (or may reasonably be expected to adversely affect) the
best interests (economic or otherwise) of any of them. The parties agree that nothing in
this Section 8(d) shall preclude either party or any other person referenced in this
Section 8(d) from fulfilling any duty or obligation that he, she or it may have at law,
from responding to any subpoena or official inquiry from any court or government agency,
including providing truthful testimony, documents subpoenaed or requested or otherwise
cooperating in good faith with any proceeding or investigation, or from taking any
reasonable actions to enforce such party’s rights under this Agreement in accordance with
the dispute resolution provisions specified in Annex C annexed hereto.
	 
	 	e)	 	Entire Agreement. This Agreement, together with the Annexes attached thereto,
sets forth the entire agreement between the parties, and, except as otherwise provided
herein, fully supersedes any and all prior agreements, understandings, or representations
between the parties pertaining to the subject matter of this Agreement.





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	 	f)	 	Governing Law. This Agreement shall in all respects be governed by and
construed under the internal laws of the State of New York applicable to agreements made
and wholly to be performed in such state.
	 
	 	g)	 	Jurisdiction and Venue. Subject to the provisions of Section 7 above, this
Agreement shall be deemed performable by all parties in, and venue shall exclusively be in
the state or federal courts located in New York, New York. The parties hereby consent to
the personal jurisdiction of these courts and waive any objection that such venue is
objectionable or improper.
	 
	 	h)	 	Counterparts. This Agreement may be executed as counterparts, each of which
will constitute an original and all of which, when taken together, will constitute one
agreement.






Please confirm your acceptance of the terms of this Agreement by signing where indicated below.



	 	 	 	 	 	 	 	 	 
	DATED:
	 	 	 	 	 	 	 	 
	Executive	 	Popular, Inc.  
	 
	 	 	 	 	 	 	 	 
	 	 	/s/ Richard L. Carrión
	 	 	 	 	 
	/s/ Roberto R. Herencia	 	Printed Name	 	Richard L. Carrión	 	 
	 

	 	 	 	 	 	 	 	 
	Roberto R. Herencia	 	Title:	 	Chairman, President and Chief Executive Officer
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Banco Popular de Puerto Rico
	 
	 	 	 	 	 	 	 	 
	 	 	/s/ Richard L. Carrión
	 	 	 	 	 
	 	 	Printed Name	 	Richard L. Carrión	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	Title:	 	Chief Executive Officer
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Banco Popular North America
	 
	 	 	 	 	 	 	 	 
	 	 	/s/ Richard L. Carrión
	 	 	 	 	 
	 	 	Printed Name	 	Richard L. Carrión	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	Title:	 	Chief Executive Officer
	 	 	 	 	 	 	 





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Annex A




GENERAL RELEASE




     GENERAL RELEASE (this “Release”), by Roberto R. Herencia (the “Executive”) in favor
of Popular, Inc., Banco Popular de Puerto Rico and Banco Popular North America and any of their
respective subsidiaries and affiliates (collectively “Popular”) and any of their respective past or
present shareholders, principals, directors, officers, employees, managers, agents, attorneys,
trustees, fiduciaries, representatives, insurers, assigns or benefit plan administrators
(collectively the “Released Parties”).



RECITALS





	A.	 	Executive has been employed by Banco Popular de Puerto Rico in the capacity of President of
Banco Popular North America, and from time to time has served as an officer and/or as director
of Popular, Inc. and various of its subsidiaries or affiliates.
	 
	B.	 	Executive is seeking payments under the Resignation and Transition Agreement dated as of
November 6, 2008 (the “Agreement”) that are conditioned on the execution and effectiveness of
this Release.





     NOW, THEREFORE, in consideration of the covenants and agreements hereinafter set forth, the
parties agree as follows:




	 	1.	 	General Release. Executive knowingly and voluntarily waives, terminates, cancels,
releases and discharges forever the Released Parties from any and all actions, causes of
action, claims, allegations, rights, obligations, liabilities, or charges (collectively the
“Claims”) that he has or may have, whether known or unknown, by reason of any matter, cause
or thing occurring at any time before and including the date of this Release, including,
without limitation, claims for compensation or bonuses (including, without limitation, any
claim for an award under any compensation plan or arrangement); breach of contract; tort;
wrongful, abusive, unfair, constructive, or unlawful discharge or dismissal; impairment of
economic opportunity; defamation; age and national origin discrimination; sexual harassment
or discrimination; discrimination based on marital status; back pay; front pay; benefits;
attorney’s fees; whistleblower claims; emotional distress; intentional infliction of
emotional distress; assault; battery, pain and suffering; punitive or exemplary damages;
all claims under Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1866,
42 U.S.C. 1981, the Civil Rights Act of 1991, the Americans with Disabilities Act of 1991,
the Age Discrimination in Employment Act of 1967, as amended by the Older Workers’ Benefit
Protection Act, the Employee Retirement Income Security Act of 1974, as amended (except as
otherwise expressly provided in paragraph 2(iv) below), the Family and Medical Leave Act of
1993, or any other state, country or city law or ordinance regarding employment
discrimination, harassment or retaliation, any claim under the Workers Adjustment
Retraining and Notification Act, 29 U.S.C. 2101 et seq., and any claims for unpaid
compensation, wages




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	 	 	 	and bonuses under the federal Fair Labor Standards Act, 29 U.S.C. 201, et seq., or any
state, county or city law ordinance regarding wages or compensation, retaliation,
negligence, loss of consortium, intentional infliction of emotional distress, negligent
infliction of emotional distress, or any other claim and any alleged injuries he may have
suffered up to and including the Resignation Date as defined in the Agreement. In addition,
in consideration of the provisions of this Release, the Executive further agrees to waive
any and all rights under the laws of any jurisdiction in the United States, or any other
country, that limit a general release to those claims that are known or suspected to exist
in Executive’s favor as of the Effective Date (as defined below).
	 
	 	2.	 	Surviving Claims. Notwithstanding anything herein to the contrary, this Release shall
not:






	 	i.	 	release any Claims relating to the payments and benefits set forth in
Section 2 of the Agreement;
	 
	 	ii.	 	release any Claims arising after the date of this Release;
	 
	 	iii.	 	limit or prohibit in any way Executive’s (or his beneficiaries’ or legal
representatives’) ability to bring an action to enforce the terms of this Release;
	 
	 	iv.	 	release any claim for Executive benefits under plans covered by the
Employee Retirement Income Security Act of 1974, as amended, to the extent that such
claims may not lawfully be waived or for any payments or benefits under any plans of
Popular that have vested according to the terms of those plans;
	 
	 	v.	 	release any claims for indemnification in accordance with applicable laws
and the corporate governance documents of Popular, including any right to
contribution, in accordance with their terms as in effect from time to time or
pursuant to any applicable directors and officers insurance policy with respect to
any liability incurred by Executive as an officer or director of Popular or any
member of Popular or any right Executive may have to obtain contribution as permitted
by law in the event of entry of judgment; or
	 
	 	vi.	 	release any obligations from any individual who is a Released Party arising
from any personal business relationship with Executive outside of the employment
relationship, including, without limitation, any mortgages or loans.






	 	3.	 	Additional Representations. Executive further represents and warrants that he has not
filed any civil action, suit, arbitration, administrative charge, or legal proceeding
against any Released Party nor has he assigned, pledged, or hypothecated as of the
Effective Date his claim to any person and no other person has an interest in the claims
that he is releasing.
	 
	 	4.	 	Acknowledgements by Executive. Executive acknowledges and agrees that he has read this
Release in its entirety and that this Release is a general release of all known and unknown
claims, including, without limitation, to rights and claims arising under the Age




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	 	 	 	Discrimination in Employment Act (ADEA). Executive further acknowledges and agrees that:






	 	i.	 	This Release does not release, waive or discharge any rights or claims that
may arise for actions or omissions after the date of this Release;
	 
	 	ii.	 	Executive is entering into this Release and releasing, waiving and
discharging rights or claims only in exchange for consideration which he is not
already entitled to receive;
	 
	 	iii.	 	Executive has been advised, and is being advised by the Release, to consult
with an attorney before executing this Release; Executive acknowledges that he has
consulted with counsel of his choice concerning the terms and conditions of this
Release;
	 
	 	iv.	 	Executive has been advised, and is being advised by this Release, that he
has twenty-one (21) days within which to consider the Release; and
	 
	 	v.	 	Executive is aware that this Release shall become null and void if he
revokes his agreement to this Release within seven (7) days following the date of
execution of this Release. Executive may revoke this Release at any time during such
seven-day period by delivering (or causing to be delivered) to Popular, Inc., 209
Muñoz Rivera Avenue, Hato Rey, PR 00918, Attention: Eduardo J. Negrón, Executive Vice
President; Corporate People and Communication, written notice of his revocation of
this Release no later than 5:00 p.m. eastern time on the seventh (7th)
full day following the date of execution of this Release (the “Effective Date”). The
Executive agrees and acknowledges that a letter of revocation that is not received by
such date and time will be invalid and will not revoke this Release.






	 	5.	 	Additional Agreements. Executive agrees that should any person or entity file or cause
to be filed any civil action, suit, arbitration, or other legal proceeding seeking
equitable or monetary relief concerning any claim released by Executive herein, Executive
shall not seek or accept any personal relief from or as the result of such civil action,
suit, arbitration, or other legal proceeding.





     IN WITNESS WHEREOF, Executive has signed this Release on the date set forth on the first page
hereof.



/s/ Roberto R. Herencia




Roberto R. Herencia




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Annex B




Proprietary information




     (a) Definition. “Proprietary Information” means confidential or proprietary information,
knowledge or data concerning (1) Popular’s businesses, strategies, operations, financial affairs,
organizational matters, personnel matters, budgets, business plans, marketing plans, studies,
policies, procedures, products, ideas, processes, software systems, trade secrets and technical
know-how, (2) any other matter relating to Popular, and (3) any matter relating to clients of
Popular or other third parties having relationships with Popular. Proprietary Information includes
(1) information regarding any aspect of your tenure as an Executive of Popular or the termination
of your employment, (2) the names, addresses, and phone numbers and other information concerning
clients and prospective clients of Popular, (3) investment techniques and trading strategies used
in, and the performance records of, client accounts or other investment products, and (4)
information and materials concerning the personal affairs of employees of Popular. In addition,
Proprietary Information may include information furnished to you orally or in writing (whatever the
form or storage medium) or gathered by inspection, in each case before or after the date of this
Agreement. However, Proprietary Information does not include information (1) that was or becomes
generally available to you on a non-confidential basis, if the source of this information was not
reasonably known to you to be bound by a duty of confidentiality, (2) that was or becomes generally
available to the public, other than as a result of a disclosure by you, directly or indirectly, or
(3) that you can establish was independently developed by you without reference to any Proprietary
Information.



     (b) Use and Disclosure. You will obtain or create Proprietary Information in the course of
your involvement in Popular’s activities and may already have Proprietary Information. You agree
that the Proprietary Information is the exclusive property of Popular, and that, while you are
employed by a member of Popular, you will use and disclose Proprietary Information only for
Popular’s benefit and in accordance with any restrictions placed on its use or disclosure by
Popular. After you cease being employed by a member of Popular, you will not use or disclose any
Proprietary Information. In addition, nothing in this Agreement will operate to weaken or waive any
rights Popular may have under statutory or common law, or any other agreement, to the protection of
trade secrets, confidential business information and other confidential information.



     (c) Disputes. The existence of, and any information concerning, a dispute between you and
Popular will be Proprietary Information. However, you may disclose information concerning the
dispute to the arbitrator or court that is considering the dispute and to your legal counsel (so
long as your counsel agrees not to disclose any such information other than as necessary to the
prosecution or defense of the dispute).



     (a) Return of Proprietary Information. When your employment terminates, you agree to return to
the Company all Proprietary Information, including all notes, mailing lists, rolodexes and computer
files that contain any Proprietary Information. You agree to do anything reasonably requested by
the Company in furtherance of perfecting Popular’s possession of, and title to, any Proprietary
information that was at any time in your possession.



     (b) Limitations. Nothing in this Agreement prohibits you from providing truthful testimony
concerning Popular to governmental, regulatory or self-regulatory authorities.



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Annex C




DISPUTE RESOLUTION AGREEMENT



In exchange for the consideration set forth in the Amended Agreement, Roberto R. Herencia
(“Executive”), Popular, Inc. (“PI”), Banco Popular de Puerto Rico (“BPPR”) and Banco Popular North
America (“BPNA”; PI , BPPR and BPNA, collectively, the “Company”) agree that in the event
employment disputes arise between them, they will be bound by the dispute resolution procedures set
forth below. Further, if there is any conflict or ambiguity between this Dispute Resolution
Agreement (“DR Agreement”) and any other Company policy, procedure or rule, the terms and
conditions of this DR Agreement shall govern.



In order to establish and gain the benefits of a timely, impartial and cost-effective dispute
resolution procedure, the Company and Executive desire to enter into this DR Agreement.




     A. Complaints Covered by the Agreement.



     Except for those disputes identified in paragraph B of this DR Agreement, the Company and
Executive shall settle by arbitration all statutory, contractual and/or common law complaints or
controversies (“Complaints”) that the Company may have against the Executive or that the Executive
may have against the Company or any of its officers, directors, employees, or its agents, that
arise out of, or are related to, the employment relationship between the Company and the Executive.
Complaints subject to arbitration include but are not limited to (1) complaints of illegal
discrimination (including, but not limited to, age, disability, marital status, medical conditions,
national origin, race, religion, retaliation, sex, sexual harassment or sexual orientation); (2)
complaints for breach of any contract (express or implied) or breach of the covenant of good faith
and fair dealing; (3) complaints for violation of any federal, state, or other governmental law,
statute, regulation or ordinance; and (4) tort complaints (including but not limited to negligent
or intentional injury, defamation and termination of employment in violation of public policy.)




B. Complaints Not Covered by this Agreement/Violations of Sections 5 and 6 of
the Resignation and Transition Agreement (the “Agreement”).



     This DR Agreement does not cover the following types of disputes: (1) complaints by the
Executive for workers’ compensation or unemployment insurance; (2) complaints which in the absence
of this DR Agreement could not have been litigated in court or before any administrative proceeding
under applicable federal, state, or local law; (3) claims for equitable or legal relief that arise
from Executive’s improper disclosure of any trade secret or confidential information, or that arise
from Executive’s improper or unfair competition against the Company or solicitation of customers or
employees of the Company, including but not limited to claims for violations of Sections 5 and 6 of
the Agreement; (4) claims for wages due; and (5) alleged criminal violations.



     Executive further agrees that (1) Executive’s violating any part of Sections 5 and 6 of the
Agreement would cause damage to the Company that cannot be measured or repaired, (2) the Company
therefore is entitled to an injunction, restraining order or other equitable relief restraining any
actual or threatened violation of those Sections, (3) no bond will need to be



13









 







posted for the Company to receive such an injunction, order or other relief and (4) no proof
will be required that monetary damages for violations of those Sections would be difficult to
calculate and that remedies at law would be inadequate.



     C. Required Notice of Complaint and Statute of Limitations.



     Arbitration must be initiated by serving or mailing a written notice to the other party.
Written notice must be provided to the other party within one year (365 days) after the day the
complaining party first knew or should have known of the events giving rise to the complaint. If
the complaint is not properly submitted within the appropriate time frame, all rights and claims
that the complaining party has or may have against the other party shall be waived and void. Any
notice sent to the Company shall be delivered to: Popular, Inc., 209 Muñoz Rivera Avenue, Hato
Rey, PR 00918, Attention: Executive Vice President for Corporate People and Communication. The
notice must identify and describe the nature of all complaints asserted and the facts upon which
such complaints are based. Notice will be deemed given according to the date of any postmark or
the date or time of any personal delivery.



     D. Exhaustion of Internal Employee Complaint Resolution Procedure.



     Before proceeding to arbitration on a complaint, the Executive must initiate and participate
in any complaint resolution procedure identified in the Company’s Handbook or policies and
procedures, if any. If the Executive has not initiated the complaint resolution procedure with
regard to that complaint before initiating arbitration on a complaint, the initiation of the
arbitration shall be deemed to begin the complaint resolution procedure. No arbitration hearing
shall be held on a complaint until the complaint resolution procedure has been completed.



     E. Arbitration Procedures and Authority of Arbitrator.



     All arbitrations will be conducted by a single arbitrator according to the Employment Dispute
Arbitration Rules of the American Arbitration Association (“AAA”). The arbitrator will have
authority to award any remedy or relief that a court of competent jurisdiction could order or grant
including, without limitation, specific performance of any obligation created under policy, the
awarding of punitive damages, the issuance of any injunction, costs and attorney’s fees to the
extent permitted by law, or the imposition of sanctions for abuse of the arbitration process. The
arbitrator’s award must be rendered in a writing that sets forth the essential findings and
conclusions upon which the arbitrator’s award is based.



     F. Representation and Arbitrator Fees and Costs.



     Each party may be represented in the arbitration by an attorney or other representative
selected by the party. The Company shall be responsible for its own costs, the AAA filing fee and
all other fees, costs and expenses of the arbitrator and AAA for administering the arbitration.
The Executive shall be responsible for his/her attorney’s or representative’s fees, if any.
However, if any party prevails on a statutory claim which allows the prevailing party costs and/or
attorneys’ fees, the arbitrator may award costs and reasonable attorneys’ fees as provided by
applicable statute.



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     H. Location of the Arbitration.



     Arbitrations will be held at a location selected by the Company.



     I. Evidence.



     AAA rules notwithstanding, the admissibility of evidence offered at the arbitration shall be
determined by the arbitrator who shall be the judge of its materiality and relevance. Legal rules
of evidence will not be controlling, and the standard for admissibility of evidence will generally
be whether it is the type of information that responsible people rely upon in making important
decisions.



     J. Confidentiality.



     The existence, content or results of any arbitration may not be disclosed by a party or
arbitrator without the prior written consent of both parties. Witnesses who are not a party to the
arbitration shall be excluded from the hearing except to testify.



     K. Knowing Waiver of Trial by Jury or Judge.



     The Company and Executive understand that this Agreement will result in the waiver of their
respective rights to a trial by a judge or jury. In consideration of the benefits of this
Agreement, and after the opportunity to consider it fully, Executive and the Company freely waive
that right in favor of the dispute mechanism set forth in the Agreement.



     L. Modification.



     This DR Agreement may only be modified by a written agreement signed by the Company’s Chief
Executive Officer and Executive.



     M. Construction.



     The provisions of this DR Agreement are severable. If any one or more provisions are
determined to be legally unenforceable, in whole or part, the remaining provisions are binding and
enforceable.



     N. Entire Agreement.



     Both parties acknowledge that they have carefully read this Agreement and understand its
terms. This Agreement constitutes the entire agreement between the parties on the subject of
arbitration of any and all disputes between the Executive and the Company specified in section A of
this Agreement. This Agreement supersedes any prior or contemporaneous oral or written
understandings, agreements, negotiations or representations on these subjects. Both parties
acknowledge that no other party or agent or attorney of any other party has made any promises,
representations or warranties whatsoever, express or implied, which are not expressly contained in
this Agreement. Each party further acknowledges that they have not executed this



15









 







Agreement in reliance upon a collateral promise, representation or warranty, or in reliance
upon any belief as to any fact not expressly stated in this Agreement.



     Both parties acknowledge that they have carefully read this DR Agreement and understand its
terms. Both parties acknowledge that they have had an opportunity to negotiate the terms of this
DR Agreement. Both parties have voluntarily entered into this agreement without reliance on any
provision or representation by the other party except those contained in this Agreement. BOTH
PARTIES UNDERSTAND THAT BY SIGNING THIS AGREEMENT, THEY ARE WAIVING THEIR RIGHT TO A TRIAL BY JURY
WITH REGARD TO ANY OF THE MATTERS ADDRESSED IN SECTION A OF THIS DR AGREEMENT. Both parties
understand that they have the opportunity to consult with legal counsel, to the extent desired,
before executing the Agreement.



	 	 	 	 	 	 	 	 	 
	DATED:
	 	 	 	 	 	 	 	 
	Executive	 	Popular, Inc.  
	 
	 	 	 	 	 	 	 	 
	 	 	/s/ Richard L. Carrión
	 	 	 	 	 
	/s/ Roberto R. Herencia	 	Printed Name	 	Richard L. Carrión	 	 
	 

	 	 	 	 	 	 	 	 
	Roberto R. Herencia	 	Title:	 	Chairman, President and Chief Executive Officer
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Banco Popular de Puerto Rico
	 
	 	 	 	 	 	 	 	 
	 	 	/s/ Richard L. Carrión
	 	 	 	 	 
	 	 	Printed Name	 	Richard L. Carrión	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	Title:	 	Chief Executive Officer
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Banco Popular North America
	 
	 	 	 	 	 	 	 	 
	 	 	/s/ Richard L. Carrión
	 	 	 	 	 
	 	 	Printed Name	 	Richard L. Carrión	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	Title:	 	Chief Executive Officer
	 	 	 	 	 	 	 





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Annex D




WAIVER



In consideration for the benefits I will receive as a result of my employer’s participation in the
United States Department of the Treasury’s TARP Capital Purchase Program, I hereby voluntarily
waive any claim against the United States or my employer for any changes to my compensation or
benefits that are required to comply with the regulation issued by the Department of the Treasury
as published in the Federal Register on October 20, 2008.



I acknowledge that this regulation may require modification of the compensation, bonus, incentive
and other benefit plans, arrangements, policies and agreements (including so-called “golden
parachute” agreements) that I have with my employer or in which I participate as they relate to the
period the United States holds any equity or debt securities of my employer acquired through the
TARP Capital Purchase Program.



This waiver includes all claims I may have under the laws of the United States or any state related
to the requirements imposed by the aforementioned regulation, including without limitation a claim
for any compensation or other payments I would otherwise receive, any challenge to the process by
which this regulation was adopted and any tort or constitutional claim about the effect of these
regulations on my employment relationship.




	 	 	 
	   /s/ Roberto R. Herencia

	 	 
	 	 	 
	Roberto R. Herencia
	 	 






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Annex E




Roberto R. Herencia,




     [Street Address],



          [City], [St] [Zip].



Dear Mr. Herencia,




     [Company] (the “Company”) has entered into a Securities Purchase Agreement, dated [DATE] (the
“Participation Agreement”), with the United States Department of Treasury (“Treasury”) that
provides for the Company’s participation in the Treasury’s TARP Capital Purchase Program (the
“CPP”).



     For the Company to participate in the CPP and as a condition to the closing of the investment
contemplated by the Participation Agreement, the Company is required to establish specified
standards for incentive compensation to its senior executive officers and to make changes to its
compensation arrangements. To comply with these requirements, and in consideration of the benefits
that you will receive as a result of the Company’s participation in the CPP, you agree as follows:




	 	(1)	 	No Golden Parachute Payments. The Company is prohibiting any golden parachute
payment to you during any “CPP Covered Period”. A “CPP Covered Period” is any period
during which (A) you are a senior executive officer and (B) Treasury holds an equity or
debt position acquired from the Company in the CPP.
	 
	 	(2)	 	Recovery of Bonus and Incentive Compensation. Any bonus and incentive compensation
paid to you during a CPP Covered Period is subject to recovery or “clawback” by the
Company if the payments were based on materially inaccurate financial statements or any
other materially inaccurate performance metric criteria.
	 
	 	(3)	 	Compensation Program Amendments. Each of the Company’s compensation, bonus,
incentive and other benefit plans, arrangements and agreements (including golden
parachute, severance and employment agreements) (collectively, “Benefit Plans”) with
respect to you is hereby amended to the extent necessary to give effect to provisions (1)
and (2). [These Benefit Plans are set forth in Appendix A to this letter.]
	 
	 	 	 	In addition, the Company is required to review its Benefit Plans to ensure that they do
not encourage senior executive officers to take unnecessary and excessive risks that
threaten the value of the Company. To the extent any such review requires revisions to
any Benefit Plan with respect to you, you and the Company agree to [negotiate such
changes promptly and in good faith] [or] [agree to execute such additional documents as
the Company deems necessary to effect such revisions].
	 
	 	(4)	 	Definitions and Interpretation. This letter shall be interpreted as follows:





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	 	•	 	“Senior executive officer” means the Company’s “senior executive officers” as
defined in subsection 111(b)(3) of EESA.
	 
	 	•	 	“Golden parachute payment” is used with the same meaning as in subsection
111(b)(2)(C) of EESA.
	 
	 	•	 	“EESA” means the Emergency Economic Stabilization Act of 2008 as implemented by
guidance or regulation that has been issued and is in effect as of the “Closing
Date” as defined in the Participation Agreement.
	 
	 	•	 	The term “Company” includes any entities treated as a single employer with the
Company under 31 C.F.R. § 30.1(b) (as in effect on the Closing Date). You are also
delivering a waiver pursuant to the Participation Agreement, and, as between the
Company and you, the term “employer” in that waiver will be deemed to mean the
Company as used in this letter.
	 
	 	•	 	The term “CPP Covered Period” shall be limited by, and interpreted in a manner
consistent with, 31 C.F.R. § 30.11 (as in effect on the Closing Date).
	 
	 	•	 	Provisions (1) and (2) of this letter are intended to, and will be interpreted,
administered and construed to, comply with Section 111 of EESA (and, to the maximum
extent consistent with the preceding, to permit operation of the Benefit Plans in
accordance with their terms before giving effect to this letter).
	 
	 	•	 	This letter shall in all respects be governed by and construed under the internal
laws of the State of New York without regard to its conflict of laws principles.
	 
	 	•	 	This letter shall be deemed performable by all parties in, and venue shall
exclusively be in the state or federal courts located in New York, New York. The
parties hereby consent to the personal jurisdiction of these courts and waive any
objection that such venue is objectionable or improper.
	 
	 	•	 	This letter shall be subject to the dispute resolution provisions, including
mandatory arbitration, set forth on Annex C.





*                    *                    *




19









 





     The Board appreciates the concessions you are making and looks forward to your continued
leadership during these financially turbulent times.



	 	 	 	 	 
	 	Very truly yours,


[Financial Institution].

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



Intending to be legally bound, I agree

with and accept the foregoing terms.




	 	 	 
	 
	 	 
	 	 	 
	Roberto R. Herencia

	 	 







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