Document:

EX-10.10 EMPLOYMENT AGREEMENT

 

Exhibit 10.10

EMPLOYMENT AGREEMENT

          AGREEMENT between DORAL FINANCIAL CORPORATION, a corporation organized under the laws of the
Commonwealth of Puerto Rico (together with its successors and assigns, the “Company”), and
CHRISTOPHER POULTON (the “Executive”), dated as of
June 1, 2007.

           WHEREAS, the Board of Directors of the Company (the “Board”) has
determined that it is in the best interests of the Company to employ the Executive on the terms set
forth herein;

          WHEREAS, the Executive has agreed to be employed by the Company on the terms set forth
herein;

          WHEREAS, the Executive and the Company wish to set forth the terms and conditions of the
Executive’s employment in this Agreement;

          NOW THEREFORE, in consideration of the mutual promises and covenants
made herein and the mutual benefits to be derived from this Agreement, the parties hereto
agree as follows:

     1. Employment
Period. Subject to the terms of this Agreement, the Company hereby
agrees to employ the Executive, and the Executive hereby agrees to serve the Company and its
subsidiaries, for the period commencing on the Commencement Date (as defined herein) and
ending on the second anniversary of the Commencement Date; provided that the Executive’s
employment by the Company will automatically be extended by twelve (12) additional months
on the second anniversary of the Commencement Date and each annual anniversary thereafter
unless either party provides written notice to the other party no less than one hundred and
eighty (180) days prior to the date of any such scheduled extension of its or his intention not to
extend the term of the Executive’s employment (the original employment term plus any extension
thereof being referred to herein as the “Employment Period”). For purposes hereof, the
Commencement Date means the date the Executive commences employment with the Company
which in all events shall be no later than June 4, 2007. Notwithstanding the foregoing, the
Employment Period shall end on the date on which the Executive’s employment is terminated by
either party in accordance with the provisions of this Agreement.

     2. Position
and Duties.

          (a) During the Employment Period, the Executive shall serve as Executive Vice President -
Chief Business Develoment Strategy Officer, and shall have such duties and responsibilities as are
commensurate with such positions. During the Employment Period, the Executive shall report directly
to the Chief Executive Officer of the Company or the Board. During the Employment Period, and
excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote his full business attention and time to the business and affairs of the Company,
and to use his best efforts to perform faithfully and

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efficiently such responsibilities. During the Employment Period, the Executive shall be entitled
to engage in charitable and educational activities and to manage his personal and family
investments, to the extent such activities are not competitive with the business of the Company or
its subsidiaries and do not interfere in any way, in the reasonable judgment of the Board (or a
committee thereof), with the performance of his duties for the Company and are otherwise
consistent with the Company’s governance policies.

     3. Compensation.

          (a)
Annual Base Salary. During the Employment Period, the Executive shall
receive an annual base salary (“Annual Base Salary”) at a rate of $400,000.00, payable in
accordance with the Company’s normal payroll policies. The Executive’s Annual Base Salary
shall be prorated for 2007 and for any other partial year of employment during the Employment
Period based upon the portion of the year that the Executive is employed by the Company. The
Executive’s Annual Base Salary shall be subject to review for increase in the sole discretion
of the Board (or a committee thereof). Annual Base Salary, however, shall not be subject to
reduction without the Executive’s prior written consent.

          (b)
Annual Bonus. With respect to each fiscal year completed during the
Employment Period, the Executive shall have a target annual bonus opportunity including for
2007 equal to 60% of his Annual Base Salary (“Target Bonus”); provided that the maximum
bonus payable for any fiscal year shall not exceed 200% of Target Bonus. The Board shall
establish, in its sole discretion, the performance and payment conditions applicable to such
annual bonuses. Notwithstanding the foregoing, the Executive shall receive a bonus in respect
of 2007 of at least $240,000 guaranteed.

          (c)
Additional Compensation. The Executive will receive a one time signing
bonus of $250,000.00 in a lump sum payment upon his hiring date.

          (d)
Long-Term Incentive Plans. During the Employment Period, the Executive
shall be eligible to participate in the ongoing equity and other long-term awards and programs
of the Company as determined in the sole discretion of the Board or a committee thereof.

          (e)
Other Benefits and Perquisites. During the Employment Period, the Executive
shall be entitled to participate in the Company’s employee benefit plans, programs and
arrangements (including, without limitation, life, medical and dental insurance, 401(k), and
disability insurance, vacation and sick leave programs) and perquisite programs
and arrangements, if any, in each case, on the same basis as generally provided to other
similarly-situated executives of the Company. In all events, during the Employment Period, the Executive
shall be entitled to four (4) weeks of paid vacation per calendar year (pro-rated for any
partial year of employment).

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          (f) Certain Expenses. The Company shall reimburse the Executive for all appropriate
business expenses in accordance with the terms of the Company’s policies and procedures In effect
from time to time.

     4. Termination
of Employment.

          (a)
Death or Disability. The Executive’s employment shall terminate
automatically upon the Executive’s death during the Employment Period. In the event of the
Executive’s Disability (as defined in Exhibit A attached hereto), the Company may provide the
Executive with written notice in accordance with Section 12(c) of this Agreement of its
intention to terminate the Executive’s employment due to Disability. In such event, the Executive’s
employment with the Company shall terminate effective on the date the Company sends such
notice is given to the Executive (the “Disability Commencement Date”); provided that the
Executive’s employment hereunder shall immediately terminate on the first date the Executive
incurs a Disability as defined in clause (i) of the definition of Disability set forth on
Exhibit A.

          (b)
With or Without Cause. The Executive is an employee at will and the Company may
terminate the Executive’s employment either with or without Cause (as defined in Exhibit A attached
hereto). For purposes of this Agreement, a termination “without Cause” shall mean a termination by
the Company of the Executive’s employment other than due to Cause, death or Disability.

          (c)
With or Without Good Reason. The Executive’s employment may be
terminated by the Executive voluntarily with or without Good Reason (as defined in Exhibit A
attached hereto).

          (d)
Notice of Termination. Any termination of the Executive’s employment by
the Company or the Executive (other than death) shall be communicated by Notice of
Termination to the other party hereto given in accordance with
Section 12(c) of this Agreement.
For purposes of this Agreement, a “Notice of Termination” means a written notice which (i)
indicates the specific termination provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive’s employment under the provision so indicated and (iii) if
necessary, specifies the Date of Termination consistent with this Agreement (which date shall
be not more than thirty (30) days after the giving of such notice). The failure by the Executive
or the Company to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or
the Company, respectively, hereunder or preclude the Executive or the Company, respectively,
from asserting such fact or circumstance in enforcing the Executive’s or the Company’s rights
hereunder.

          (e)
Date of Termination. “Date of Termination” means (i) if the Executive’s
employment is terminated by the Company for Cause, the date of receipt of the Notice of
Termination or any later date specified therein within thirty (30) days of such notice, as the
case

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may be; provided that if the event giving rise to a termination for Cause is pursuant to clauses
(i), (iv), (v) or (vi) of the definition of Cause, the date on which there is delivered to the
Executive written notice of the requisite Board vote as set forth in the definition of “Cause” in
Exhibit A, (ii) if the Executive’s employment is terminated by the Company without Cause, the date
of receipt of the Notice of Termination or any later date specified therein within thirty (30)
days of such notice, as the case may be, (iii) if the Executive’s employment is terminated by the
Executive for Good Reason, thirty (30) days after the Company receives the Notice of Termination
unless the Company has cured the alleged grounds for such termination within 30 days after such
receipt or if the Executive’s employment is terminated by the Executive without Good Reason,
thirty (30) days after the Company receives the Notice of Termination, provided however, in either
case the Company may accelerate the Date of Termination to an earlier date by providing the
Executive notice of such action, and (iv) if the Executive’s employment is terminated by reason of
death or Disability, the date of the Executive’s death or the Disability Commencement Date, as the
case may be.

          (f)
Resignation. Upon termination of the Executive’s employment for any reason, the
Executive agrees to resign, effective as of the Date of Termination, from any positions that the
Executive holds with the Company and its subsidiaries, the Board (and any committees thereof) and
the board of directors (and any committees thereof) of any of the Company’s subsidiaries The
Executive hereby agrees to execute any and all documentation of such resignations upon request by
the Company, but he shall be treated for all purposes as having so resigned upon termination of his
employment, regardless of when or whether he executes any such documentation, or Executive is
terminated due to his death or Disability.

     5. Obligations
of the Company upon Termination of Employment.

          (a) Good Reason; Without Cause. If, during the Employment Period, the Company
terminates the Executive’s employment without Cause, or the Executive terminates his employment
for Good Reason, or if the Company fails to renew or extend this Agreement upon expiration of the
Employment Period, the Company shall have no further obligations to the Executive under this
Agreement or otherwise other than to pay or provide to the Executive the following amounts and
benefits (provided the Executive has executed, delivered to the Company and not revoked a general
release of claims against the Company in a form satisfactory to the Company (the “Release”) and
subject to Section 8(h) hereof):

          (i) An amount equal to Executive’s unpaid Annual Base Salary for services
through the Date of Termination;

          (ii) an amount equal to two (2) times his compensation (salary and bonus)
during the preceding year (the “Severance Payment”), and if such termination
occurs in the first year of employment, the Severance Payment shall be
$1,280,000.00 dollars;

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          (iii) continued participation until the second anniversary of the Date
of Termination in all Company medical and dental plans in which the
Executive and his eligible dependents were participating immediately prior
to the Date of Termination (subject to offset as set forth in Section 8
hereof);

          (iv) as long as the Executive uses such services prior to the first
anniversary of the Date of Termination, up to $25,000 in outplacement
services; and

          (v) payment of other amounts, entitlements or benefits, if any, in
accordance with applicable plans, programs, arrangements or other agreements
of the Company.

          (b) Death or Disability. If the Executive’s employment is terminated by reason of
the Executive’s death or Disability during the Employment Period, the Company shall have no
further obligations to the Executive or his legal representatives, as applicable, under this
Agreement or otherwise other than for the payment of the amounts and provision of the benefits
set forth below:

          (i) payment of Annual Base Salary through the end of the month in which
the Executive’s Date of Termination occurs;

          (ii) payment of the Severance Payment provided in subsection (a)(ii)
above;

          (iii) except in the case of Executive’s death, continued participation
until the second anniversary of the Date of Termination in all Company
medical and dental plans in which the Executive and his eligible dependents
were participating immediately prior to the Date of Termination (subject to
offset as set forth in Section 8 hereof); and

          (iv) payment of other amounts, entitlements or benefits, if any, in
accordance with applicable plans, programs, arrangements or other agreements
of the Company.

          (c)
Cause or Voluntary Resignation Without Good Reason. If the Executive’s
employment shall be terminated by the Company for Cause or by the Executive for any reason
other than Good Reason at any time during the Employment Period, the Company shall have no
further obligations to the Executive under this Agreement or otherwise other than for the
payment of the amounts and provision of the benefits set forth below:

          (i) an amount equal to the Executive’s unpaid Annual Base Salary for
services through the Date of Termination;

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          (ii)
for a voluntary resignation (without Good Reason), continued exercisability for 90 days following the Date of Termination for the
portion of the Stock Option Award or any other equity awards, if any, that
was vested and outstanding as of the Date of Termination (but in no event
beyond the expiration of the original term of the award);

          (iii) for a termination for Cause, forfeiture and cancellation of all
stock option and any other equity awards (whether vested or unvested) as of
the Date of Termination;

          (iv) forfeiture and cancellation of the unvested portion of all stock
option and any other equity awards as of the Date of Termination; and

          (v) payment of other amounts, entitlements or benefits, if any, in
accordance with applicable plans, programs, arrangements or other agreements
of the Company.

          6.
Change in Control Protections.

          (a) Upon the occurrence of a Change in Control (as defined in Exhibit A attached
hereto) and all other equity awards then held by the Executive shall immediately vest and
become exercisable.

          (b) In the event, during the Employment Period, the Company terminates the
Executive’s employment without Cause or the Executive terminates his employment for Good
Reason, in both cases upon or within two (2) years immediately following a Change in Control,
the Company shall have no futher obligations to the Executive under the terms of this
Agreement or otherwise other than to pay or provide to the Executive the following amounts and benefits
(provided the Executive has executed, delivered to the Company and not revoked a general
release of claims against the Company in a form satisfactory to the Company (the “Release) and
subject to Section 8(h) hereof):

          (i) payment of Annual Base Salary through the end of the month in which
the Executive’s Date of Termination occurs;

          (ii) payment of the Severance Payment provided in Section (5)(a)(ii)
above;

          (iii) full vesting as of the Date of Termination of the Stock Option
Award (as defined in Section 3(c) hereof), and any other equity awards
granted to Executive, with continued exercisability of the outstanding
options for twelve (12) months following the Date of Termination (but in no
event beyond the end of the original term of the options);

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          (iv) continued participation until the second anniversary of the Date of
Termination in all Company medical and dental plans in which the Executive and his
eligible dependents were participating  immediately prior to the Date of
Termination (subject to offset as set forth in Section 7 hereof); and

          (v) as long as the Executive uses such services prior to the first
anniversary of the Date of Termination, up to $25,000 in outplacement
services; and

          (vi) payments of other amounts, entitlements or benefits, if any, in
accordance with applicable plans, programs, arrangements or other agreements
of the Company.

     7.
No Duplication; No Mitigation. In no event shall the Executive be entitled to
duplicate payments or benefits under different provisions of this Agreement or pursuant to the
terms of any other plan, program or arrangement of the Company or its subsidiaries. In the
event of any termination of the Executive’s employment, the Executive shall be under no obligation
to seek other employment, and there shall be no offset against amounts due the Executive under
this Agreement on account of any remuneration attributable to any subsequent employment except
with respect to the continuation of benefits under Section 5(a)(iii) and Section 6(b)(iv),
which shall terminate immediately upon obtaining comparable coverage from another employer.

     8. Restrictive
Covenants.

          (a)
Confidentiality. During the Employment Period and thereafter, other than in the
ordinary course of performing his duties for the Company, the Executive agrees that he shall not
disclose to anyone or make use of any trade secret or proprietary or confidential information of
the Company or any affiliate of the Company, including such trade secret or proprietary or
confidential information of any customer or other entity to which the Company owes an obligation
not to disclose such information, which he acquires during the course of his employment, including,
but not limited to, records kept in the ordinary course of business, except when required to do so
by a court of law, by any governmental agency having supervisory authority over the business of the
Company or by any administrative or legislative body (including a committee thereof) with apparent
or actual jurisdiction to order him to divulge, disclose or make accessible such information. In
the event the Executive is requested to disclose information as contemplated in the preceding
sentence, the Executive agrees, unless otherwise prohibited by law, to use his best efforts to give
the Company’s General Counsel prompt written notice of any request for disclosure in advance of the
Executive making such disclosure in order to permit the Company a reasonable opportunity to
challenge such disclosure. The foregoing shall not apply to information that (i) was known to the
public prior to its disclosure by the Executive, or (ii) becomes known to the public through no
wrongful disclosure by or act of the Executive or any representative of the Executive.

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     (b) Property
Rights. Whether during the Employment Period or thereafter, the
Executive agrees to hereby sell, assign and transfer to the Company all of his right, title
and interest in and to all inventions, discoveries, improvements and copyrightable subject matter
(the “Rights”) which during the period of his employment are made or conceived by him, alone or
with others, and which are within or arise out of any general field of the Company’s business
or arise out of any work he performs, or information he receives regarding the business of the
Company, while employed by the Company. The Executive shall fully disclose to the Company
as promptly as available all information known or possessed by him concerning any Rights, and
upon request by the Company and without any further remuneration in any form to him by the
Company, but at the expense of the Company, execute all applications for patents and for
copyright registration, assignments thereof and other instruments and do all things which the
Company may deem necessary to vest and maintain in it the entire right, title and interest in
and to all such Rights. The Executive agrees that at the time of the termination of employment,
whether at the instance of the Executive or the Company, and regardless of the reasons
therefor, he will promptly deliver to the Company’s General Counsel, and not keep or deliver to anyone
else, any and all of the following which is in his possession or control: (i) Company property
(including, without limitation, credit cards, computers, communication devices, home office
equipment and other Company tangible property) and (ii) notes, files, memoranda, papers and,
in general, any and all physical matter and computer files containing confidential or proprietary
information of the Company or any of its subsidiaries, including any and all documents
relating to the conduct of the business of the Company or any of its subsidiaries and any and all
documents containing confidential or proprietary information of the customers of the Company
or any of its subsidiaries, except for (x) any documents for which the Company’s General
Counsel has given written consent to removal at the time of termination of the Executive’s
employment and (y) any information necessary for the Executive to retain for his tax purposes.

     (c) Non-Competition. The Executive acknowledges that in his capacity in
management the Executive has had or will have a great deal of exposure and access of the
Company’s trade secrets and confidential and proprietary information. Therefore, during the
Executive’s employment and for twelve (12) months following termination of such employment
(whether during the Employment Period or thereafter) (the “Restricted Period”) (i) the
Executive shall protect the Company’s trade secrets and other confidential and proprietary information,
and (ii) the Executive agrees that he shall not, other than in the ordinary course of performing
his duties hereunder or as agreed by the Company in writing, engage in a “Competitive Business,”
directly or indirectly, as an individual, partner, shareholder, director, officer, principal,
agent, employee, trustee, consultant, or in any relationship or capacity. The Executive shall not
be deemed to be in violation of this Section 9(c) by reason of the fact that he owns or acquires,
solely as an investment, two percent (2%) or less of the outstanding equity securities
(measured by value) of any publicly traded company. “Competitive Business” shall mean (x) the
Executive’s participation in any unsolicited offer to purchase the stock or assets of the
Company or its subsidiaries or (y) any financial institution with a substantial presence in the
mortgage origination business in Puerto Rico. Notwithstanding the foregoing, if the Company provides
the Executive with notice that it is not renewing the Employment Period in accordance with Section

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1 hereof, the provisions of this Section 9(c) shall no longer be effective upon the expiration of
the Employment Period.

          (d)
Non-Interference. The Executive acknowledges that information regarding
the Company’s business and financial relations with its vendors and customers is Confidential
Information and proprietary to the Company and that any interference with such relations based
directly or indirectly on the use of such information would cause irreparable damage to the
Company. The Executive acknowledges that by virtue of his employment with the Company, he
has gained or may gain knowledge of such information concerning the Company’s vendors and
customers (respectively “Vendor Information” or “Customer Information”), and that he would
inevitably have to draw on this Vendor Information and Customer Information and on other
Confidential Information if he were to solicit or service the Company’s vendors or customers
on behalf of a competing business enterprise. Accordingly, and subject to the immediately
following sentence, the Executive agrees that, other than in the ordinary course of performing
his duties for the Company, during the Restricted Period, the Executive will not, on behalf of
himself or any other person or entity, directly or indirectly seek to encourage or induce any
vendor or customer of the Company to cease doing business with, or lessen its business with,
the Company, or otherwise interfere with or damage (or attempt to interfere with or damage) any of
the Company’s relationships with its vendors and customers. No action by another person or
entity shall be deemed to be a breach of this provision unless the Executive directly or
indirectly assisted, encouraged or otherwise counseled such person or entity to engage in such activity.

          (e)
No Hire; Non-Solicitation. The Executive agrees that, during the Restricted
Period (other than in the ordinary course of performing his duties for the Company), he will
not, without the prior written consent of the Company, directly or indirectly, (i) hire any
employee of the Company or any of its subsidiaries who is then an employee of the Company or such
affiliate or was an employee during the prior six (6) month period, or (ii) solicit or encourage any
such employee to leave the employ of the Company or such affiliate, as the case may be. No action
by another person or entity shall be deemed to be a breach of this provision unless the
Executive directly or indirectly assisted, encouraged or otherwise counseled such person or entity to
engage in such activity.

          (f)
Public Comment. Following the Employment Period, the Executive shall notat any time (i) make any public derogatory comment concerning the Company or its subsidiaries
or anyone whom the Executive knows to be a current or former director, officer, stockholder or
employee of the Company or (ii) without the prior written consent of the Company, which
consent shall not be unreasonably withheld, publish or produce any information or write any
book, article, screenplay, teleplay or similar type of publication relating to the Company or
its subsidiaries or anyone whom the Executive knows to be a current or former director, officer,
stockholder or employee; provided that no such consent shall be necessary for an academic work
relating to Executive’s employment with the Company. Following the Employment Period, the
Company shall not at any time make any public derogatory comment concerning the Executive.
Notwithstanding the foregoing, nothing in this Section 8(f) shall prohibit any person from (x)
responding publicly to incorrect, disparaging or derogatory public statements about the
Company

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or the Executive relating to his employment with the Company, (y) providing truthful testimony in
any judicial or administrative matter, or (z) making truthful statements required by law, by any
regulatory authority or organization, or in connection with any public filing required by the
Securities and Exchange Commission or any other regulatory authority.

          (g)
Blue Penciling. If any restrictions on competitive or other activities contained
in this Section 8 shall for any reason be held by a court of competent jurisdiction to be
excessively broad as to duration, geographical scope, activity or subject, such restrictions shall
be construed so as thereafter to be limited or reduced to be enforceable to the extent compatible
with the applicable law; it being understood that by the execution of this Agreement, (i) the
parties hereto regard such restrictions as reasonable and compatible with their respective rights
and (ii) the Executive acknowledges and agrees that the restrictions will not prevent him from
obtaining gainful employment subsequent to the termination of his employment.

          (h)
Remedies; Injunctive Relief.

          (i) The Executive acknowledges and agrees that the covenants and
obligations of the Executive set forth in this Section 8 relate to special,
unique and extraordinary services rendered by the Executive to the Company
and that a violation of any of the terms of such covenants and obligations
will cause the Company irreparable injury for which adequate remedies are
not available at law. Therefore, the Executive agrees that the Company shall
be entitled to seek an injunction, restraining order or other temporary or
permanent equitable relief (without the requirement to post bond)
restraining the Executive from committing any violation of the covenants and
obligations contained herein. These injunctive remedies are cumulative and
are in addition to any other rights and remedies the Company may have at law
or in equity. The existence of any claim or cause of action by the Executive
against the Company shall not constitute a defense to the enforcement by the
Company of the foregoing restrictive covenants, but such claim or cause of
action shall be determined separately.

          (ii) If at any time the Executive materially breaches any of the
covenants in Section 8, and fails to cure such breach within ten (10) days
after receipt of written notice from the Company, then (x) the Company shall
have the right to cease to pay or provide to the Executive any payment,
benefit or entitlement due (or accrued) under this Agreement and (y) the
Executive shall be required to repay to the Company the net after-tax amount
(such after-tax amount to be determined after taking into account tax
deductions, tax credits, and the like attributable to the repayment) of any
severance paid to the Executive under this Agreement. Such repayment to be
made within 15 days after written notice from the Company to the Executive
requesting such repayment.

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          (iii) If at any time following the Restricted Period but prior to the
second anniversary of the termination of the Executive’s . employment, the
Executive takes any action or engages in any conduct that would have
constituted a material breach of Section 8(d) or 8(e) if it had occurred during
the Restricted Period, then clauses (x) and (y) of Section 8(h)(ii) — as
limited by Section 8(h)(ii) — shall apply as if such material breach had
occurred during the Restricted Period.

          (i)
Survival. The provisions of this Section 8 shall remain in full force and effect
until the expiration of the periods specified herein notwithstanding the earlier termination of
the Executive’s employment hereunder or the expiration of the Employment Period. For purposes of
this Section 8, “Company” shall mean the Company and any affiliate of the Company or any successor
thereto.

     9. Mandatory
Arbitration. Except to the extent necessary to enforce the provisions of
Section 8 hereof in accordance with Section 8(g) or 8(h), the Executive (on behalf of himself
and his beneficiaries) and the Company agree that any controversy or claim arising out of, or
relating to this Agreement, or the breach thereof, or the Executive’s employment with the Company or
any affiliate, or any termination of such employment, shall be settled by confidential
arbitration in Puerto Rico in accordance with the Commercial Arbitration Rules of the American Arbitration
Association. Any award entered shall be final, binding and nonreviewable except on such
limited grounds for review of arbitration awards as may be permitted by applicable law. Judgment upon
the award rendered by the arbitrator(s) may be entered into any court having jurisdiction
thereof.

     10. Successors.

          (a) This Agreement is personal to the Executive and without the prior written
consent of the Company shall not be assignable by the Executive. This Agreement shall inure to
the benefit of and be enforceable by the Executive’s legal representatives, heirs or legatees.

          (b) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns. No rights or obligations of the Company under this
Agreement may be assigned or transferred by the Company without the Executive’s prior written
consent except that such rights or obligations may be assigned or transferred pursuant to a
merger or consolidation in which the Company is not the continuing entity, or a sale,
liquidation or other disposition of all or substantially all of the assets of the Company, provided that
the assignee or transferee is the successor to all or substantially all of the assets of the
Company and assumes the liabilities, obligations and duties of the Company under this Agreement, either
contractually or as a matter of law.

     11. Miscellaneous.

          (a) The Executive represents and warrants that he has the free and unfettered right to enter
into this Agreement and to perform his obligations under it and that he knows of no agreement
between him and any other person, firm or organization, or any law or regulation, that

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would be violated by the performance of his obligations under this Agreement. The Executive agrees
that he will not use or disclose any confidential or proprietary information of any prior
employer in the course of performing his duties for the Company or any of its subsidiaries.

          (b) This Agreement shall be governed by and construed in accordance with its
express terms, and otherwise in accordance with the laws of the Commonwealth of Puerto Rico,
without reference to principles of conflict of laws. The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect. This Agreement may not be amended
or modified otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives. In the event of any conflict or
inconsistency between the provisions of this Agreement and any other Company plan, program, policy or
agreement, the provisions of this Agreement shall control.

          (c) All notices and other communications hereunder shall be in writing and shall
be given (i) when delivered personally (provided that a written acknowledgement of receipt is
obtained), (ii) three (3) days after being sent by certified or registered mail, postage
prepaid, return receipt requested or (iii) two (2) days after being sent by overnight courier (provided
that a written acknowledgement of receipt is obtained by the overnight courier), with any such notice
duly addressed to the party concerned at the address indicated below:

	 	 	 	 	 
	 

	 	If to the Executive:
	 	At the most recent address on file at the Company
	 
	 	 	 	 
	 

	 	If to the Company:
	 	At the address of its principal
executive offices
	 

	 	 	 	Attention: General Counsel

or to such other address as either party shall have furnished to the other in writing in
accordance herewith.

          (d) The invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement.

          (e) The Company may withhold from any amounts payable under this Agreement
such federal, Puerto Rico, state, local or foreign taxes as shall be required to be withheld
pursuant to any applicable law or regulation. In addition, this Agreement is intended to
comply with the requirements of Section 409A of the Code and the regulations promulgated thereunder
(“Section 409A”) so as not to subject the Executive to the payment of interest or any
additional tax under Section 409A. In furtherance thereof, if payment or provision of any amount or
benefit hereunder at the time specified in this Agreement would subject such amount or benefit to any
additional tax under Section 409A, the payment or provision of such amount or benefit shall be
postponed to the earliest commencement date on which the payment or the provision of such
amount or benefit could be made without incurring such additional tax (including paying any

12

 

severance
that is delayed in a lump sum upon the earliest possible payment date which is
consistent with Section 409A).

          (f) Following the Executive’s termination of employment for any reason
(whether during or after the expiration of the Employment Period), upon reasonable request of
the Company, the Executive shall cooperate with the Company or any of its subsidiaries with
respect to any legal or investigatory proceeding, including any government or regulatory
investigation, or any litigation or other dispute relating to matters in which he was involved
or had knowledge (or reasonably should have had knowledge) during his employment with the
Company, subject to his reasonable personal and business schedules. The Company shall
reimburse the Executive for all reasonable out-of-pocket travel and meal expenses associated
with any cooperation provided hereunder.

          (g) No waiver shall be valid unless in writing signed by the party against whom
the waiver is being enforced (that is, by the Executive or an authorized officer of the
Company, as the case may be).

          (h) This Agreement contains the entire agreement between the parties concerning the subject
matter hereof and supersedes all prior agreements, understandings, discussions, negotiations and
undertakings, whether written or oral, between the parties with respect thereto (including,
without limitation, the term sheet previously negotiated by the parties). In the event of any
inconsistency between the provisions of this Agreement and the provisions of any other agreement
or plan relating to the Stock Option Award or any other equity award granted to Executive, the
provisions of this Agreement shall control. Any provision of this Agreement, to the extent
necessary to carry out the intent of such provision, shall survive after the expiration of the
Employment Period.

          (i) The Executive shall be entitled to indemnification in connection with any litigation or
proceeding arising out of the Executive’s acting as Executive Vice President — Chief Business
Develoment Strategy Officer or as an employee, officer or director of the Company, to the fullest
extent permitted under the Company’s charter and by-laws and by applicable law. In addition, the
Executive shall, during the Employment Period and for ten (10) years thereafter, be entitled to
liability insurance coverage pursuant to a Company-purchased directors’ and officers’ liability
insurance policy on the same basis as other directors and officers of the Company to whom such
coverage (if any) is then provided.

          (j) Notwithstanding any other provision of this Agreement or otherwise, the Company will make
no payment pursuant to this Agreement or otherwise which would be prohibited by 12 USC Section
1828(k) or any implementing regulations thereunder.

          (k) This Agreement may be executed in one or more counterparts, each of which shall be deemed
to be an original but all of which together shall constitute one and the same instrument.
Signatures delivered by facsimile shall be effective for all purposes.

13

 

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day
and year first above written.

	 	 	 	 	 	 	 
	 	 	DORAL FINANCIAL CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Lesbia Blanco	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	Name: Lesbia Blanco	 	 
	 
	 	 	 	 	 	 
	 	 	Title: Executive Vice President Chief Talent &

Administration Officer	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Christopher Poulton	 	 
	 	 	 	 	 
	 

	 	 	Christopher Poulton	 	 

 

 

EXHIBIT A

          For all purposes of this Agreement, the following terms shall have the meanings set forth
below:

          “affiliate” of a person or other entity shall mean a person or other entity controlled by,
controlling or under common control with the person or other entity specified.

          “Disability” shall mean (i) the Executive becomes eligible for full benefits under a long-term
disability policy provided by the Company or (ii) the Executive has been unable, due to physical or
mental illness or incapacity, to substantially perform the essential duties of his employment with
reasonable accommodation for a continuous period of ninety (90) days or an aggregate of one-hundred
eighty (180) days during any consecutive twelve (12)-month period.

          “Cause” shall mean:

          (i) the Executive’s act of fraud, misappropriation, or embezzlement
with respect to the Company or any material affiliate;

          (ii) the Executive’s indictment for, conviction of, or plea of guilty
or no contest to any felony (other than a minor traffic violation);

          (iii) the Executive’s admission of liability of, or a finding by a
court or the applicable regulatory agency or body of liability for, the
violation of any “Securities Laws” (but excluding any technical violations
of any Securities Laws which are not criminal in nature) or the violation of
any “Banking Laws” (but excluding any technical violations of any Banking
Laws which are not criminal in nature); as used herein, the term “Securities
Laws” means any federal or state law, rule or regulation governing the
issuance or exchange of securities, including without limitation the
Securities Act of 1933, the Securities Exchange Act of 1934 and the rules
and regulations promulgated thereunder and “Banking Laws” means any federal
or state banking law, rule or regulation governing the Company or its
subsidiaries;

          (iv) the Executive engages in conduct that constitutes willful gross
neglect or willful misconduct, in either case, resulting in significant harm
to the Company’s or its subsidiaries’ business or reputation;

          (v) the Executive’s intentional failure after reasonable prior written
notice from the Company to comply with any valid and legal directive of the
Board; or

 

 

          (vi) the Executive’s material breach of any covenant set forth in
Section 8 of this Agreement.

          For purposes of this definition of “Cause,” an action or failure to act by the Executive shall
not be considered “willful” if the Executive believed in good faith that his action or failure to
act was in, or not opposed to, the best interests of the Company and its subsidiaries.

          Anything notwithstanding to the contrary, the Executive’s employment shall not be terminated
for “Cause” within the meaning of clauses (i), (iv), (v) or (vi) above, unless the Executive has
been given written notice by the Board stating the basis for such termination and he is given
fifteen (15) days to cure the neglect or conduct that is the basis of any such claim and, if he
fails to cure such conduct, or such conduct cannot be cured, the Executive has an opportunity to be
heard before the full Board and after such hearing, the Board gives the Executive written notice
confirming that in the judgment of a majority of the members of the Board (other than the
Executive, if applicable) “Cause” for terminating the Executive’s employment exists.

          “Good Reason” shall mean the occurrence of any of the following without the Executive’s
written consent:

(i) a reduction in the Executive’s then current Annual Base Salary
or target bonus opportunity;

(ii) a material diminution in the Executive’s positions, duties or
authorities as Executive Vice President — Chief Business Develoment
Strategy Officer, including, without limitation, removing him from
such positions; provided, that Good Reason shall also exist if at any
time following a Change in Control involving an entity of smaller or
similar size to the Company (measured on the basis of assets),
Executive does not hold the positions set forth above at the ultimate
parent entity resulting from such Change in Control;
provided, further, the consummation of the
transactions contemplated by the Stock Purchase Agreement, by and
between the Company and Doral Holdings Delaware, LLC (the
“Transactions”) and the fact that (a) Doral Holdings Delaware, LLC
(“LLC”) will, following consummation of the Transactions, own a
majority interest in the Company will not, in and of itself,
constitute, and (b) the Executive does not hold at the LLC or its
parent, Doral Holdings L.P. the title or position that is identified
in this Agreement (or that the Executive now holds at the Company, if
different), also will not constitute, a material diminution in the
Executive’s positions, duties or authorities for purposes of this
clause (ii); and, provided, further, that the Company
and the

16

 

Executive agree that nothing in the immediately preceding proviso is
intended to interfere with the Executive’s right to terminate his
employment for “Good Reason” for any other reason following the
consummation of the Transactions, including the occurrence of a
material diminution in his positions, duties or authorities following
consummation of the Transactions based on events other than those
described in such proviso;

(iii) Executive’s principal work location is moved more than
twenty-five (25) miles from New York City, NY;

(iv) a change in reporting structure so that the Executive reports
to someone other than the Chief Executive Officer of the Company or
the Board; or

(v) the failure of any successor to all or substantially all of the
Company’s assets to assume this Agreement, whether in writing or by
operation of law.

          Anything notwithstanding to the contrary, the Executive may only terminate his employment for
“Good Reason” upon thirty (30) days’ written notice to the Company (provided the Company does not
cure the event or events giving rise to Good Reason prior to the expiration of such thirty (30)-day
notice period).

          “Change in Control” will be deemed to have taken place if:

(i) any “person” (as such term is used in Sections 3(a)(9) and
Section 13(d) of the Securities Exchange Act of 1934) other than the
Company or any employee benefit plan of the Company or any of its
subsidiaries, (x) becomes the “beneficial owner” (as such term is
used in Rule 13d-3 promulgated under the Securities Exchange Act of
1934) of Company securities having more than 50% of the combined
voting power of the then outstanding securities of the Company that
may be cast for the election of directors of the Company (other than
as a result of the issuance of securities initiated by the Company in
the ordinary course of business) (“Voting Securities”) or (y) becomes
the “beneficial owner” of Company of 25% or more of the Voting
Securities of the Company and such person has the power to appoint or
elect a majority of the members of the Board; or

(ii) persons who, as of the effective date of this Agreement
constitute the Board (the “Incumbent Directors”) cease for any
reason, including without limitation, as a result of a tender offer,

17

 

proxy contest, merger or similar transaction, to constitute at least a majority thereof, provided
that any person becoming a director of the Company subsequent to the effective date of this
Agreement shall be considered an Incumbent Director if such person’s election or nomination for
election was approved by a vote of at least 50% of the Incumbent Directors; but provided
further, that any such person whose initial assumption of office is in connection with an
actual or threatened election contest relating to the election of members of the Board or other
actual or threatened solicitation of proxies or consents by or on behalf of a “person” (as defined
in Section 13(d) and 14(d) of the Exchange Act) other than the Board, including by reason of
agreement intended to avoid or settle any such actual or threatened contest or solicitation, shall
not be considered an Incumbent Director; or

(iii) as the result of, or in connection with, any cash tender or exchange offer, merger or other
business combination, or any combination of the foregoing transactions, the holders of all the
Company’s securities entitled to vote generally in the election of directors of the Company
immediately prior to such transaction constitute, following such transaction, less than a majority
of the combined voting power of the then-outstanding securities of the surviving entity (or in the
event each entity survives, the ultimate parent entity resulting from such transaction) (the
“Surviving Entity”) entitled to vote generally in the election to elect directors of the Surviving
Entity after such transaction.

18EX-10.11 EMPLOYMENT AGREEMENT DATED JUNE 1, 2007

 

Exhibit 10.11

EMPLOYMENT AGREEMENT

          AGREEMENT between DORAL FINANCIAL CORPORATION, a corporation organized under the laws of the
Commonwealth of Puerto Rico (together with its successors and assigns, the “Company”), and PAUL
MAKOWSKI (the “Executive”), dated as of June 25, 2007.

          WHEREAS, the Board of Directors of the Company (the “Board”) has determined that it is in the
best interests of the Company to employ the Executive on the terms set forth herein;

          WHEREAS, the Executive has agreed to be employed by the Company on the terms set forth
herein;

          WHEREAS, the Executive and the Company wish to set forth the terms and conditions of the
Executive’s employment in this Agreement;

          NOW THEREFORE, in consideration of the mutual promises and covenants made herein and the
mutual benefits to be derived from this Agreement, the parties hereto agree as follows:

     1. Employment
Period. Subject to the terms of this Agreement, the Company hereby
agrees to employ the Executive, and the Executive hereby agrees to serve the Company and its
subsidiaries, for the period commencing on the Commencement Date (as defined herein) and ending on
the second anniversary of the Commencement Date; provided that the Executive’s employment by the
Company will automatically be extended by twelve (12) additional months on the second anniversary
of the Commencement Date and each annual anniversary thereafter unless either party provides
written notice to the other party no less than one hundred and eighty (180) days prior to the date
of any such scheduled extension of its or his intention not to extend the term of the Executive’s
employment (the original employment term plus any extension thereof being referred to herein as
the “Employment Period”). For purposes hereof, the Commencement Date means the date the Executive
commences employment with the Company which in all events shall be no later than June 25, 2007.
Notwithstanding the foregoing, the Employment Period shall end on the date on which the
Executive’s employment is terminated by either party in accordance with the provisions of this
Agreement.

     2. Position
and Duties.

          (a) During the Employment Period, the Executive shall serve as Executive Vice President -
Chief Enterprise Risk Officer, and shall have such duties and responsibilities as are commensurate
with such positions. During the Employment Period, the Executive shall report directly to the Chief
Executive Officer of the Company or the Board. During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to
devote his full business attention and time to the business and affairs of the Company, and to use
his best efforts to perform faithfully and efficiently such

1

 

responsibilities. During the Employment Period, the Executive shall be entitled to engage in
charitable and educational activities and to manage his personal and family investments, to
the extent such activities are not competitive with the business of the Company or its
subsidiaries and do not interfere in any way, in the reasonable judgment of the Board (or a
committee thereof), with the performance of his duties for the Company and are otherwise
consistent with the Company’s governance policies.

          (b) The Executive’s principal work location, subject to travel on Company business, shall
be the Company’s headquarters in Puerto Rico. Beginning no later than June 25, 2007, and at
all times thereafter during the Employment Period, the primary place of residence of the
Executive shall be Puerto Rico. The Executive’s family will relocate to Puerto Rico by June,
2008.

     3. Compensation.

          (a)
Annual Base Salary. During the Employment Period, the Executive shall
receive an annual base salary (“Annual Base Salary”) at a rate of $400,000.00, payable in
accordance with the Company’s normal payroll policies. The Executive’s Annual Base Salary
shall be prorated for 2007 and for any other partial year of employment during the
Employment
Period based upon the portion of the year that the Executive is employed by the Company.
The
Executive’s Annual Base Salary shall be subject to review for increase in the sole
discretion of
the Board (or a committee thereof). Annual Base Salary, however, shall not be subject to
reduction without the Executive’s prior written consent.

          (b)
Annual Bonus. With respect to each fiscal year completed during the
Employment Period, the Executive shall have a target annual bonus opportunity including
for
2007 equal to 60% of his Annual Base Salary (“Target Bonus”); provided that the maximum
bonus payable for any fiscal year shall not exceed 200% of Target Bonus with a $240,000.00
guaranteed. The Board shall establish, in its sole discretion, the performance and payment
conditions applicable to such annual bonuses and (i) for the year 2007 the annual bonus should
be pro-rated by months of employment.

          (c)
Additional Compensation: The Executive will receive a one time signing
bonus of $150,000.00 in a lump sum payment upon his hiring date.

          (d)
Long-Term Incentive Plans. During the Employment Period, the Executive
shall be eligible to participate in the ongoing equity and other long-term awards and
programs of
the Company for employees at the executive’s level as determined in the sole discretion of
the
Board or a committee thereof.

          (e)
Other Benefits and Perquisites. During the Employment Period, the
Executive
shall be entitled to participate in the Company’s employee benefit plans, programs and
arrangements (including, without limitation, life, medical and dental insurance, 401(k),
and
disability insurance, vacation and sick leave programs) and perquisite
programs and
arrangements, if any, in each case, on the same basis as generally provided to other
similarly-

2

 

situated executives of the Company. In all events, during the Employment Period, the
Executive shall be entitled to four (4) weeks of paid vacation per calendar year (pro-rated
for any partial year of employment).

          (f)
Certain Expenses. The Company shall reimburse the Executive for all
appropriate business expenses in accordance with the terms of the Company’s policies and
procedures in effect from time to time.

          (g) Car Allowance: After the relocation benefit, the Company will provide the
Executive with a monthly car allowance under the Company’s policy of $630.00 per month
to be
used to lease or purchase an automobile for use in the affairs and business of the
Company and to
cover related gasoline and insurance expenses related to the use of such automobile.

          (h) The Company shall reimburse the Executive for cost of housing in the amount of
$3,000.00 per month, from commencement date but in no event longer than twelve (12) months.

     4. Termination
of Employment.

          (a)
Death or Disability. The Executive’s employment shall terminate
automatically upon the Executive’s death during the Employment Period. In the event of the
Executive’s Disability (as defined in Exhibit A attached hereto), the Company may provide the
Executive with written notice in accordance with Section 12(c) of this Agreement of its intention
to terminate the Executive’s employment due to Disability. In such event, the Executive’s
employment with the Company shall terminate effective on the date the
Company sends such notice is given to the Executive (the “Disability Commencement Date”); provided
that the
Executive’s employment hereunder shall immediately terminate on the first date the Executive
incurs a Disability as defined in clause (i) of the definition of Disability set forth on Exhibit A.

          (b)
With or Without Cause. The Executive is an employee at will and the
Company may terminate the Executive’s employment either with or without Cause (as defined in
Exhibit A attached hereto). For purposes of this Agreement, a termination “without Cause”
shall mean a termination by the Company of the Executive’s employment other than due to
Cause, death or Disability.

          (c)
With or Without Good Reason. The Executive’s employment may be
terminated by. the Executive voluntarily with or without Good Reason (as defined in
Exhibit A
attached hereto).

          (d)
Notice of Termination. Any termination of the Executive’s employment by
the Company or the Executive (other than death) shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 12(c) of this
Agreement.
For purposes of this Agreement, a “Notice of Termination” means a written notice which
(i) indicates the specific termination provision in this Agreement relied upon, (ii) to the
extent
applicable, sets forth in reasonable detail the facts and circumstances claimed to
provide a basis

3

 

for termination of the Executive’s employment under the provision so indicated and (iii) if
necessary, specifies the Date of Termination consistent with this Agreement (which date shall be
not more than thirty (30) days after the giving of such notice). The failure by the Executive or
the Company to set forth in the Notice of Termination any fact or circumstance which contributes
to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company, respectively, from asserting
such fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder.

          (e)
Date of Termination. “Date of Termination” means (i) if the Executive’s
employment is terminated by the Company for Cause, the date of receipt of the Notice of
Termination or any later date specified therein within thirty (30) days of such notice, as the
case may be; provided that if the event giving rise to a termination for Cause is pursuant to
clauses (i), (iv), (v) or (vi) of the definition of Cause, the date on which there is delivered to
the Executive written notice of the requisite Board vote as set forth in the definition of “Cause”
in Exhibit A, (ii) if the Executive’s employment is terminated by the Company without Cause, the
date of receipt of the Notice of Termination or any later date specified therein within thirty
(30) days of such notice, as the case may be, (iii) if the Executive’s employment is terminated by
the Executive for Good Reason, thirty (30) days after the Company receives the Notice of
Termination unless the Company has cured the alleged grounds for such termination within 30 days
after such receipt or if the Executive’s employment is terminated by the Executive without Good
Reason, thirty (30) days after the Company receives the Notice of Termination, provided however,
in either case the Company may accelerate the Date of Termination to an earlier date by providing
the Executive notice of such action, and (iv) if the Executive’s employment is terminated by
reason of death or Disability, the date of the Executive’s death or the Disability Commencement
Date, as the case may be.

          (f)
Resignation. Upon termination of the Executive’s employment for any reason, the
Executive agrees to resign, effective as of the Date of Termination, from any positions that the
Executive holds with the Company and its subsidiaries, the Board (and any committees thereof) and
the board of directors (and any committees thereof) of any of the Company’s subsidiaries. The
Executive hereby agrees to execute any and all documentation of such resignations upon request by
the Company, but he shall be treated for all purposes as having so resigned upon termination of his
employment, regardless of when or whether he executes any such documentation, or Executive is
terminated due to his death or Disability.

     5. Obligations
of the Company upon Termination of Employment.

          (a)
Good Reason; Without Cause. If, during the Employment Period, the Company
terminates the Executive’s employment without Cause, or the Executive terminates his employment
for Good Reason, or if the Company fails to renew or extend this Agreement upon expiration of the
Employment Period, the Company shall have no further obligations to the Executive under this
Agreement or otherwise other than to pay or provide to the Executive the following amounts and
benefits (provided the Executive has executed, delivered to the Company

4

 

and not revoked a general release of claims against the Company in a form satisfactory to the
Company (the “Release”) and subject to Section 8(h) hereof):

          (i) An amount equal to Executive’s unpaid Annual Base Salary for
services through the Date of Termination;

          (ii)
an amount equal to two (2) times his compensation (salary and
bonus) during the preceding year (the “Severance Payment”), and if such
termination occurs in the first year of employment, the Severance
Payment shall be $1,280,000.00 dollars;

          (iii) continued participation until the second anniversary of the
Date of Termination in all Company medical and dental plans in which the
Executive and his eligible dependents were participating immediately
prior to the Date of Termination (subject to offset as set forth in
Section 8 hereof);

          (iv) as long as the Executive uses such services prior to the first
anniversary of the Date of Termination, up to $25,000 in outplacement
services; and

          (v) payment of other amounts, entitlements or benefits, if any, in
accordance with applicable plans, programs, arrangements or other
agreements of the Company.

          (b)
Death or Disability. If the Executive’s employment is terminated by reason of the
Executive’s death or Disability during the Employment Period, the Company shall have no
further obligations to the Executive or his legal representatives, as applicable, under this
Agreement or otherwise other than for the payment of the amounts and provision of the benefits set
forth below:

          (i) payment of Annual Base Salary through the end of the month in
which the Executive’s Date of Termination occurs;

          (ii) payment of the Severance Payment provided in subsection
(a)(ii) above;

          (iii) except in the case of Executive’s death, continued
participation until the second anniversary of the Date of Termination in
all Company medical and dental plans in which the Executive and his
eligible dependents were participating immediately prior to the Date of
Termination (subject to offset as set forth in Section 8 hereof); and

5

 

          (iv) payment of other amounts, entitlements or benefits, if any, in
accordance with applicable plans, programs, arrangements or other
agreements of the Company.

          (c)
Cause or Voluntary Resignation Without Good Reason. If the Executive’s employment
shall be terminated by the Company for Cause or by the Executive for any reason other than Good
Reason at any time during the Employment Period, the Company shall have no further obligations to
the Executive under this Agreement or otherwise other than for the payment of the amounts and
provision of the benefits set forth below:

          (i) an amount equal to the Executive’s unpaid Annual Base Salary for
services through the Date of Termination;

          (ii) for a voluntary resignation (without Good Reason), continued
exercisability for 90 days following the Date of Termination for the
portion of the Stock Option Award or any other equity awards, if any, that
was vested and outstanding as of the Date of Termination (but in no event
beyond the expiration of the original term of the award);

          (iii) for a termination for Cause, forfeiture and cancellation of all
stock option and any other equity awards (whether vested or unvested) as of
the Date of Termination;

          (iv) forfeiture and cancellation of the unvested portion of all stock
option and any other equity awards as of the Date of Termination; and

          (v) payment of other amounts, entitlements or benefits, if any, in
accordance with applicable plans, programs, arrangements or other agreements
of the Company.

          6.
Change in Control Protections.

          (a) Upon the occurrence of a Change in Control (as defined in Exhibit A attached
hereto) and all other equity awards then held by the Executive shall immediately vest and
become exercisable.

          (b) In the event, during the Employment Period, the Company terminates the
Executive’s employment without Cause or the Executive terminates his employment for Good
Reason, in both cases upon or within two (2) years immediately following a Change in Control,
the Company shall have no futher obligations to the Executive under the terms of this
Agreement
or otherwise other than to pay or provide to the Executive the following amounts and benefits
(provided the Executive has executed, delivered to the Company and not revoked a general
release of claims against the Company in a form satisfactory to the Company (the “Release) and
subject to Section 8(h) hereof):

6

 

          (i) payment of Annual Base Salary through the end of the month in which
the Executive’s Date of Termination occurs;

          (ii) payment of the Severance Payment provided in Section (5)(a)(ii)
above;

          (iii) full vesting as of the Date of Termination of the Stock Option
Award (as defined in Section 3(c) hereof), and any other equity awards
granted to Executive, with continued exercisability of the outstanding
options for twelve (12) months following the Date of Termination (but in no
event beyond the end of the original term of the options);

          (iv) continued participation until the second anniversary of the Date
of Termination in all Company medical and dental plans in which the
Executive and his eligible dependents were participating immediately prior
to the Date of Termination (subject to offset as set forth in Section 7
hereof); and

          (v) as long as the Executive uses such services prior to the first
anniversary of the Date of Termination, up to $25,000 in outplacement
services; and

          (vi) payments of other amounts, entitlements or benefits, if any, in
accordance with applicable plans, programs, arrangements or other agreements
of the Company.

     7. No
Duplication; No Mitigation. In no event shall the Executive be entitled to

duplicate payments or benefits under different provisions of this Agreement or pursuant to the
terms of any other plan, program or arrangement of the Company or its subsidiaries. In the
event
of any termination of the Executive’s employment, the Executive shall be under no obligation
to
seek other employment, and there shall be no offset against amounts due the Executive under
this
Agreement on account of any remuneration attributable to any subsequent employment except
with respect to the continuation of benefits under Section 5(a)(iii) and Section 6(b)(iv),
which
shall terminate immediately upon obtaining comparable coverage from another employer.

     8. Restrictive
Covenants.

          (a) Confidentiality. During the Employment Period and thereafter, other than in the ordinary
course of performing his duties for the Company, the Executive agrees that he shall not disclose to
anyone or make use of any trade secret or proprietary or confidential information of the Company or
any affiliate of the Company, including such trade secret or proprietary or confidential
information of any customer or other entity to which the Company owes an obligation not to disclose
such information, which he acquires during the course of his employment, including, but not limited
to, records kept in the ordinary course of business, except

7

 

when required to do so by a court of law, by any governmental agency having supervisory authority
over the business of the Company or by any administrative or legislative body {including a
committee thereof) with apparent or actual jurisdiction to order him to divulge, disclose or make
accessible such information. In the event the Executive is requested to disclose information as
contemplated in the preceding sentence, the Executive agrees, unless otherwise prohibited by law,
to use his best efforts to give the Company’s General Counsel prompt written notice of any request
for disclosure in advance of the Executive making such disclosure in order to permit the Company a
reasonable opportunity to challenge such disclosure. The foregoing shall not apply to information
that (i) was known to the public prior to its disclosure by the Executive, or (ii) becomes known
to the public through no wrongful disclosure by or act of the Executive or any representative of
the Executive.

          (b)
Property Rights. Whether during the Employment Period or thereafter, the
Executive agrees to hereby sell, assign and transfer to the Company all of his right, title
and
interest in and to all inventions, discoveries, improvements and copyrightable subject matter
(the
“Rights”) which during the period of his employment are made or conceived by him, alone or
with others, and which are within or arise out of any general field of the Company’s business
or
arise out of any work he performs, or information he receives regarding the business of the
Company, while employed by the Company. The Executive shall fully disclose to the Company
as promptly as available all information known or possessed by him concerning any Rights, and
upon request by the Company and without any further remuneration in any form to him by the
Company, but at the expense of the Company, execute all applications for patents and for
copyright registration, assignments thereof and other instruments and do all things which the
Company may deem necessary to vest and maintain in it the entire right, title and interest in
and
to all such Rights. The Executive agrees that at the time of the termination of employment,
whether at the instance of the Executive or the Company, and regardless of the reasons
therefor,
he will promptly deliver to the Company’s General Counsel, and not keep or deliver to anyone
else, any and all of the following which is in his possession or control: (i) Company
property
(including, without limitation, credit cards, computers, communication devices, home office
equipment and other Company tangible property) and (ii) notes, files, memoranda, papers and,
in
general, any and all physical matter and computer files containing confidential or proprietary
information of the Company or any of its subsidiaries, including any and all documents
relating
to the conduct of the business of the Company or any of its subsidiaries and any and all
documents containing confidential or proprietary information of the customers of the Company
or any of its subsidiaries, except for (x) any documents for which the Company’s General
Counsel has given written consent to removal at the time of termination of the Executive’s
employment and (y) any information necessary for the Executive to retain for his tax purposes.

          (c)
Non-Competition. The Executive acknowledges that in his capacity in
management the Executive has had or will have a great deal of exposure and access of the
Company’s trade secrets and confidential and proprietary information. Therefore, during the
Executive’s employment and for twelve (12) months following termination of such employment
(whether during the Employment Period or thereafter) (the “Restricted Period”) (i) the
Executive
shall protect the Company’s trade secrets and other confidential and proprietary information,
and

8

 

(ii) the Executive agrees that he shall not, other than in the ordinary course of performing his
duties hereunder or as agreed by the Company in writing, engage in a “Competitive Business,”
directly or indirectly, as an individual, partner, shareholder, director, officer, principal,
agent, employee, trustee, consultant, or in any relationship or capacity. The Executive shall not
be deemed to be in violation of this Section 9(c) by reason of the fact that he owns or acquires,
solely as an investment, two percent (2%) or less of the outstanding equity securities (measured
by value) of any publicly traded company. “Competitive Business” shall mean (x) the Executive’s
participation in any unsolicited offer to purchase the stock or assets of the Company or its
subsidiaries or (y) any financial institution with a substantial presence in the mortgage
origination business in Puerto Rico. Notwithstanding the foregoing, if the Company provides the
Executive with notice that it is not renewing the Employment Period in accordance with Section 1
hereof, the provisions of this Section 9(c) shall no longer be effective upon the expiration of
the Employment Period.

          (d) Non-interference. The Executive acknowledges that information regarding
the Company’s business and financial relations with its vendors and customers is Confidential
Information and proprietary to the Company and that any interference with such relations based
directly or indirectly on the use of such information would cause irreparable damage to the
Company. The Executive acknowledges that by virtue of his employment with the Company, he
has gained or may gain knowledge of such information concerning the Company’s vendors and
customers (respectively “Vendor Information” or “Customer Information”), and that he would
inevitably have to draw on this Vendor Information and Customer Information and on other
Confidential Information if he were to solicit or service the Company’s vendors or customers
on
behalf of a competing business enterprise. Accordingly, and subject to the immediately
following sentence, the Executive agrees that, other than in the ordinary course of performing
his
duties for the Company, during the Restricted Period, the Executive will not, on behalf of
himself or any other person or entity, directly or indirectly seek to encourage or induce any
vendor or customer of the Company to cease doing business with, or lessen its business with,
the
Company, or otherwise interfere with or damage (or attempt to interfere with or damage) any of
the Company’s relationships with its vendors and customers. No action by another person or
entity shall be deemed to be a breach of this provision unless the Executive directly or
indirectly
assisted, encouraged or otherwise counseled such person or entity to engage in such activity.

          (e)
No Hire; Non-Solicitation. The Executive agrees that, during the Restricted
Period (other than in the ordinary course of performing his duties for the Company), he will
not,
without the prior written consent of the Company, directly or indirectly, (i) hire any
employee of
the Company or any of its subsidiaries who is then an employee of the Company or such
affiliate
or was an employee during the prior six (6) month period, or (ii) solicit or encourage any
such
employee to leave the employ of the Company or such affiliate, as the case may be. No action
by another person or entity shall be deemed to be a breach of this provision unless the
Executive
directly or indirectly assisted, encouraged or otherwise counseled such person or entity to
engage
in such activity.

9

 

          (f)
Public Comment. Following the Employment Period, the Executive shall not
at any time (i) make any public derogatory comment concerning the Company or its subsidiaries
or anyone whom the Executive knows to be a current or former director, officer, stockholder or
employee of the Company or (ii) without the prior written consent of the Company, which
consent shall not be unreasonably withheld, publish or produce any information or write any
book, article, screenplay, teleplay or similar type of publication relating to the Company or
its
subsidiaries or anyone whom the Executive knows to be a current or former director, officer,
stockholder or employee; provided that no such consent shall be necessary for an academic work
relating to Executive’s employment with the Company. Following the Employment Period, the
Company shall not at any time make any public derogatory comment concerning the Executive.
Notwithstanding the foregoing, nothing in this Section 8(f) shall prohibit any person from (x)
responding publicly to incorrect, disparaging or derogatory public statements about the
Company
or the Executive relating to his employment with the Company, (y) providing truthful testimony
in any judicial or administrative matter, or (z) making truthful statements required by law,
by any
regulatory authority or organization, or in connection with any public filing required by the
Securities and Exchange Commission or any other regulatory authority.

          (g)
Blue Penciling. If any restrictions on competitive or other activities contained
in this Section 8 shall for any reason be held by a court of competent jurisdiction to be
excessively broad as to duration, geographical scope, activity or subject, such restrictions
shall
be construed so as thereafter to be limited or reduced to be enforceable to the extent
compatible
with the applicable law; it being understood that by the execution of this Agreement, (i) the
parties hereto regard such restrictions as reasonable and compatible with their respective
rights
and (ii) the Executive acknowledges and agrees that the restrictions will not prevent him from
obtaining gainful employment subsequent to the termination of his employment.

          (h)
Remedies; Injunctive Relief.

          (i) The Executive acknowledges and agrees that the covenants and
obligations of the Executive set forth in this Section 8 relate to special,
unique and extraordinary services rendered by the Executive to the Company
and that a violation of any of the terms of such covenants and obligations
will cause the Company irreparable injury for which adequate remedies are
not available at law. Therefore, the Executive agrees that the Company shall
be entitled to seek an injunction, restraining order or other temporary or
permanent equitable relief (without the requirement to post bond)
restraining the Executive from committing any violation of the covenants and
obligations contained herein. These injunctive remedies are cumulative and
are in addition to any other rights and remedies the Company may have at law
or in equity. The existence of any claim or cause of action by the Executive
against the Company shall not constitute a defense to the enforcement by the
Company of the foregoing restrictive covenants, but such claim or cause of
action shall be determined separately.

10

 

          (ii) If at any time the Executive materially breaches any of the
covenants in Section 8, and fails to cure such breach within ten (10) days
after receipt of written notice from the Company, then (x) the Company
shall have the right to cease to pay or provide to the Executive any
payment, benefit or entitlement due (or accrued) under this Agreement and
(y) the Executive shall be required to repay to the Company the net
after-tax amount (such after-tax amount to be determined after taking into
account tax deductions, tax credits, and the like attributable to the
repayment) of any severance paid to the Executive under this Agreement.
Such repayment to be made within 15 days after written notice from the
Company to the Executive requesting such repayment.

          (iii) If at any time following the Restricted Period but prior to the
second anniversary of the termination of the Executive’s employment, the
Executive takes any action or engages in any conduct that would have
constituted a material breach of Section 8(d) or 8(e) if it had occurred
during the Restricted Period, then clauses (x) and (y) of Section 8(h)(ii)
 — as limited by Section 8(h)(ii) — shall apply as if such material breach
had occurred during the Restricted Period.

          (i)
Survival. The provisions of this Section 8 shall remain in full force and effect
until the expiration of the periods specified herein notwithstanding the earlier termination of
the Executive’s employment hereunder or the expiration of the Employment Period. For purposes of
this Section 8, “Company” shall mean the Company and any affiliate of the Company or any successor
thereto.

     9. Mandatory
Arbitration. Except to the extent necessary to enforce the provisions of
Section 8 hereof in accordance with Section 8(g) or 8(h), the Executive (on behalf of himself
and
his beneficiaries) and the Company agree that any controversy or claim arising out of, or
relating
to this Agreement, or the breach thereof, or the Executive’s employment with the Company or
any affiliate, or any termination of such employment, shall be settled by confidential
arbitration
in Puerto Rico in accordance with the Commercial Arbitration Rules of the American Arbitration
Association. Any award entered shall be final, binding and nonreviewable except on such
limited
grounds for review of arbitration awards as may be permitted by applicable law. Judgment upon
the award rendered by the arbitrator(s) may be entered into any court having jurisdiction
thereof.

     10. Successors.

          (a) This Agreement is personal to the Executive and without the prior written
consent of the Company shall not be assignable by the Executive. This Agreement shall inure to
the benefit of and be enforceable by the Executive’s legal representatives, heirs or legatees.

          (b) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns. No rights or obligations of the Company under this

11

 

Agreement may be assigned or transferred by the Company without the Executive’s prior written
consent except that such rights or obligations may be assigned or transferred pursuant to a merger
or consolidation in which the Company is not the continuing entity, or a sale, liquidation or
other disposition of all or substantially all of the assets of the Company, provided that the
assignee or transferee is the successor to all or substantially all of the assets of the Company
and assumes the liabilities, obligations and duties of the Company under this Agreement, either
contractually or as a matter of law.

     11.
Miscellaneous.

          (a) The Executive represents and warrants that he has the free and unfettered right
to enter into this Agreement and to perform his obligations under it and that he knows of no
agreement between him and any other person, firm or organization, or any law or regulation,
that
would be violated by the performance of his obligations under this Agreement. The Executive
agrees that he will not use or disclose any confidential or proprietary information of any
prior
employer in the course of performing his duties for the Company or
any of its subsidiaries.

          (b) This Agreement shall be governed by and construed in accordance with its
express terms, and otherwise in accordance with the laws of the Commonwealth of Puerto Rico,
without reference to principles of conflict of laws. The captions of this Agreement are not
part
of the provisions hereof and shall have no force or effect. This Agreement may not be amended
or modified otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives. In the event of any conflict or
inconsistency
between the provisions of this Agreement and any other Company plan, program, policy or
agreement, the provisions of this Agreement shall control.

          (c) All notices and other communications hereunder shall be in writing and shall
be given (i) when delivered personally (provided that a written acknowledgement of receipt is
obtained), (ii) three (3) days after being sent by certified or registered mail, postage
prepaid,
return receipt requested or (iii) two (2) days after being sent by overnight courier (provided
that a
written acknowledgement of receipt is obtained by the overnight courier), with any such notice
duly addressed to the party concerned at the address indicated below:

	 	 	 
	If to the Executive:

	 	At the most recent address
	 

	 	on file at the Company
	 
	 	 
	If to the Company:

	 	At the address of its principal
	 

	 	executive offices
	 

	 	Attention: General Counsel

or to such other address as either party shall have furnished to the other in writing in
accordance herewith.

          (d) The invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement.

12

 

          (e) The Company may withhold from any amounts payable under this Agreement
such federal, Puerto Rico, state, local or foreign taxes as shall be required to be withheld
pursuant to any applicable law or regulation. In addition, this Agreement is intended to
comply
with the requirements of Section 409A of the Code and the regulations promulgated thereunder
(“Section 409A”) so as not to subject the Executive to the payment of interest or any
additional
tax under Section 409A. In furtherance thereof, if payment or provision of any amount or
benefit
hereunder at the time specified in this Agreement would subject such amount or benefit to any
additional tax under Section 409A, the payment or provision of such amount or benefit shall be
postponed to the earliest commencement date on which the payment or the provision of such
amount or benefit could be made without incurring such additional tax (including paying any
severance that is delayed in a lump sum upon the earliest possible payment date which is
consistent with Section 409A).

          (f) Following the Executive’s termination of employment for any reason
(whether during or after the expiration of the Employment Period), upon reasonable request of
the Company, the Executive shall cooperate with the Company or any of its subsidiaries with
respect to any legal or investigatory proceeding, including any government or regulatory
investigation, or any litigation or other dispute relating to matters in which he was involved
or
had knowledge (or reasonably should have had knowledge) during his employment with the
Company, subject to his reasonable personal and business schedules. The Company shall
reimburse the Executive for all reasonable out-of-pocket travel and meal expenses associated
with any cooperation provided hereunder.

          (g) No waiver shall be valid unless in writing signed by the party against whom
the waiver is being enforced (that is, by the Executive or an authorized officer of the
Company,
as the case may be).

          (h) This Agreement contains the entire agreement between the parties concerning the subject
matter hereof and supersedes all prior agreements, understandings, discussions, negotiations and
undertakings, whether written or oral, between the parties with respect thereto (including, without
limitation, the term sheet previously negotiated by the parties). In the event of any inconsistency
between the provisions of this Agreement and the provisions of any other agreement or plan relating
to the Stock Option Award or any other equity award granted to Executive, the provisions of this
Agreement shall control. Any provision of this Agreement, to the extent necessary to carry out the
intent of such provision, shall survive after the expiration of the Employment Period.

          (i) The Executive shall be entitled to indemnification in connection with any litigation or
proceeding arising out of the Executive’s acting as Executive Vice President — Chief Enterprise
Risk Officer or as an employee, officer or director of the Company, to the fullest extent permitted
under the Company’s charter and by-laws and by applicable law. In addition, the Executive shall,
during the Employment Period and for ten (10) years thereafter, be entitled to liability insurance
coverage pursuant to a Company-purchased directors’ and officers’ liability

13

 

insurance policy on the same basis as other directors and officers of the Company to whom such
coverage (if any) is then provided.

          (j) Notwithstanding any other provision of this Agreement or otherwise, the Company will make
no payment pursuant to this Agreement or otherwise which would be prohibited by 12 USC Section
1828(k) or any implementing regulations thereunder.

          (k) This Agreement may be executed in one or more counterparts, each of which shall be deemed
to be an original but all of which together shall constitute one and the same instrument.
Signatures delivered by facsimile shall be effective for all purposes.

14

 

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day
and year first above written.

	 	 	 	 	 	 	 
	 	 	DORAL FINANCIAL CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Lesbia Blanco	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	Name: Lesbia Blanco	 	 
	 
	 	 	 	 	 	 
	 	 	Title: Executive Vice President Chief Talent &	 	 
	 	 	Administration Officer	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Paul Makowski	 	 
	 	 	 	 	 
	 	 	Paul Makowski	 	 

 

 

EXHIBIT A

          For all purposes of this Agreement, the following terms shall have the meanings set forth
below:

          “affiliate” of a person or other entity shall mean a person or other entity controlled by,
controlling or under common control with the person or other entity specified.

          “Disability” shall mean (i) the Executive becomes eligible for full benefits under a long-term
disability policy provided by the Company or (ii) the Executive has been unable, due to physical or
mental illness or incapacity, to substantially perform the essential duties of his employment with
reasonable accommodation for a continuous period of ninety (90) days or an aggregate of one-hundred
eighty (180) days during any consecutive twelve (12)-month period.

          “Cause” shall mean:

          (i) the Executive’s act of fraud, misappropriation, or embezzlement
with respect to the Company or any material affiliate;

          (ii) the Executive’s indictment for, conviction of, or plea of guilty
or no contest to any felony (other than a minor traffic violation);

          (iii) the Executive’s admission of liability of, or a finding by a court
or the applicable regulatory agency or body of liability for, the violation
of any “Securities Laws” (but excluding any technical violations of any
Securities Laws which are not criminal in nature) or the violation of any
“Banking Laws” (but excluding any technical violations of any Banking Laws
which are not criminal in nature); as used herein, the term “Securities Laws”
means any federal or state law, rule or regulation governing the issuance or
exchange of securities, including without limitation the Securities Act of
1933, the Securities Exchange Act of 1934 and the rules and regulations
promulgated thereunder and “Banking Laws” means any federal or state banking
law, rule or regulation governing the Company or its subsidiaries;

          (iv) the Executive engages in conduct that constitutes willful gross
neglect or willful misconduct, in either case, resulting in significant harm
to the Company’s or its subsidiaries’ business or reputation;

          (v) the Executive’s intentional failure after reasonable prior written
notice from the Company to comply with any valid and legal directive of the
Board; or

 

 

          (vi) the Executive’s material breach of any covenant set forth in
Section 8 of this Agreement.

          For purposes of this definition of “Cause,” an action or failure to act by the Executive shall
not be considered “willful” if the Executive believed in good faith that his action or failure to
act was in, or not opposed to, the best interests of the Company and its subsidiaries.

          Anything notwithstanding to the contrary, the Executive’s employment shall not be terminated
for “Cause” within the meaning of clauses (i), (iv), (v) or (vi) above, unless the Executive has
been given written notice by the Board stating the basis for such termination and he is given
fifteen (15) days to cure the neglect or conduct that is the basis of any such claim and, if he
fails to cure such conduct, or such conduct cannot be cured, the Executive has an opportunity to be
heard before the full Board and after such hearing, the Board gives the Executive written notice
confirming that in the judgment of a majority of the members of the Board (other than the
Executive, if applicable) “Cause” for terminating the Executive’s employment exists.

          “Good Reason” shall mean the occurrence of any of the following without the Executive’s
written consent:

(i) a reduction in the Executive’s then current Annual Base Salary
or target bonus opportunity;

(ii) a material diminution in the Executive’s positions, duties or
authorities as Executive Vice President — Chief Enterprise Risk
Officer, including, without limitation, removing him from such
positions; provided, that Good Reason shall also exist if at any time
following a Change in Control involving an entity of smaller or
similar size to the Company (measured on the basis of assets),
Executive does not hold the positions set forth above at the ultimate
parent entity resulting from such Change in Control; provided,
further, the consummation of the transactions contemplated by the
Stock Purchase Agreement, by and between the Company and Doral
Holdings Delaware, LLC (the “Transactions”) and the fact that (a)
Doral Holdings Delaware, LLC (“LLC”) will, following consummation of
the Transactions, own a majority interest in the Company will not, in
and of itself, constitute, and (b) the Executive does not hold at the
LLC or its parent, Doral Holdings L.P. the title or position that is
identified in this Agreement (or that the Executive now holds at the
Company, if different), also will not constitute, a material
diminution in the Executive’s positions, duties or authorities for
purposes of this clause (ii); and, provided, further, that
the Company and the

17

 

Executive agree that nothing in the immediately preceding proviso is
intended to interfere with the Executive’s right to terminate his
employment for “Good Reason” for any other reason following the
consummation of the Transactions, including the occurrence of a
material diminution in his positions, duties or authorities following
consummation of the Transactions based on events other than those
described in such proviso;

(iii) Executive’s principal work location is moved more than
twenty-five (25) miles from San Juan, Puerto Rico;

(iv) a change in reporting structure so that the Executive reports
to someone other than the Chief Executive Officer of the Company or
the Board; or

(v) the failure of any successor to all or substantially all of the
Company’s assets to assume this Agreement, whether in writing or by
operation of law.

          Anything notwithstanding to the contrary, the Executive may only terminate his employment for
“Good Reason” upon thirty (30) days’ written notice to the Company (provided the Company does not
cure the event or events giving rise to Good Reason prior to the expiration of such thirty (30)-day
notice period).

          “Change in Control” will be deemed to have taken place if:

(i) any “person” (as such term is used in Sections 3(a)(9) and
Section 13(d) of the Securities Exchange Act of 1934) other than the
Company or any employee benefit plan of the Company or any of its
subsidiaries, (x) becomes the “beneficial owner” (as such term is
used in Rule 13d-3 promulgated under the Securities Exchange Act of
1934) of Company securities having more than 50% of the combined
voting power of the then outstanding securities of the Company that
may be cast for the election of directors of the Company (other than
as a result of the issuance of securities initiated by the Company in
the ordinary course of business) (“Voting Securities”) or (y) becomes
the “beneficial owner” of Company of 25% or more of the Voting
Securities of the Company and such person has the power to appoint or
elect a majority of the members of the Board; or

(ii) persons who, as of the effective date of this Agreement
constitute the Board (the “Incumbent Directors”) cease for any
reason, including without limitation, as a result of a tender offer,

18

 

proxy contest, merger or similar transaction, to constitute at least a majority thereof, provided
that any person becoming a director of the Company subsequent to the effective date of this
Agreement shall be considered an Incumbent Director if such person’s election or nomination for
election was approved by a vote of at least 50% of the Incumbent Directors; but provided
further, that any such person whose initial assumption of office is in connection with an
actual or threatened election contest relating to the election of members of the Board or other
actual or threatened solicitation of proxies or consents by or on behalf of a “person” (as defined
in Section 13(d) and 14(d) of the Exchange Act) other than the Board, including by reason of
agreement intended to avoid or settle any such actual or threatened contest or solicitation, shall
not be considered an Incumbent Director; or

(iii) as the result of, or in connection with, any cash tender or exchange offer, merger or other
business combination, or any combination of the foregoing transactions, the holders of all the
Company’s securities entitled to vote generally in the election of directors of the Company
immediately prior to such transaction constitute, following such transaction, less than a majority
of the combined voting power of the then-outstanding securities of the surviving entity (or in the
event each entity survives, the ultimate parent entity resulting from such transaction) (the
“Surviving Entity”) entitled to vote generally in the election to elect directors of the Surviving
Entity after such transaction.

19

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