Document:

exv10w1

Exhibit 10.1

DORAL FINANCIAL CORPORATION

2008 STOCK INCENTIVE PLAN

 

Restricted Stock Award Agreement

 

     You (the “Participant”) are hereby awarded shares (“Shares”) of restricted
stock (“Restricted Stock”) subject to the terms and conditions set forth in this Restricted
Stock Award Agreement (this “Award Agreement” or “Share-Based Award”) and in the
Doral Financial Corporation 2008 Stock Incentive Plan (“Plan”). A copy of the Plan is
attached as Exhibit A. You should carefully review these documents and consult with your
personal financial advisor, in order to fully understand the implications of this Award Agreement,
including your tax consequences.

     By executing this Award Agreement, you agree to be bound by all of the Plan’s terms and
conditions as if they had been set out verbatim below. In addition, you recognize and agree that
all determinations, interpretations, or other actions respecting the Plan and this Award Agreement
will be made by the Committee, and shall be final, conclusive and binding on all parties, including
you and your heirs and representatives. Capitalized terms are defined in the Plan or in this Award
Agreement.

	1.	 	Specific Terms. Your Restricted Stock have the following terms:

	 	 	 

	Name of Participant

	 	[NAME]
	 
	 	 
	Number of Shares Subject to
Share-Based Award

	 	[AMOUNT OF SHARES]
	 
	 	 
	Grant Date

	 	June 25, 2010
	 
	 	 
	Vesting

	 	33% of the Number of Shares stated
above will vest twelve (12) calendar
months after the Grant Date, an
additional 33% will vest
twenty-four (24) calendar months
after the Grant Date and the
remaining 33% will vest thirty-six
(36) calendar months after the Grant
Date, provided that your Employment
has not ended before the vesting
date (subject to any employment
agreement between you and the
Company or any Subsidiary) for any
reason other than your death, by the
Company without Cause or by you for
Good Reason. In the event of your
death or termination of Employment
by the Company without Cause or by
you for Good Reason, vesting shall
accelerate to 100%.
	 
	 	 
	 

	 	In addition, 100% of the Number of
Shares stated above shall vest upon
the occurrence of any Change of
Control whether or not your
employment with the Company
terminates concurrently therewith.
For

 

 

Restricted Share Award Agreement

Doral Financial Corporation

2008 Stock Incentive Plan

Page 2

	 	 	 

	 

	 	purposes of this Award
Agreement, the definitions of Change
of Control, Cause and Good Reason
shall have the meanings ascribed to
them in the Employment Agreement
between you and the Company and any
Subsidiary. If your employment
agreement with the Company does not
define Change in Control, Cause or
Good Reason or you do not have an
employment agreement with the
Company, those terms will have the
meaning set forth in Schedule A
hereto but only to the extent of any
missing definitions (for sake of
clarity, if your employment
agreement has a definition of Good
Reason but not Change in Control
then Schedule A will apply only to
provide a definition of Change in
Control).
	 
	 	 
	 

	 	If at any time any Shares subject to
this Award Agreement vest, the
Company will also pay you at the
time of vesting a lump sum gross-up
payment equal to the federal, state
(including Puerto Rico) and local
employment and income taxes
(calculated at the then highest
marginal tax rates) (“Taxes”)
imposed on the vested Restricted
Stock plus such Taxes on the
gross-up payment, such that after
the payment by you of all Taxes
imposed on the vested Restricted
Stock and the gross-up payment you
retain an amount equal to the Fair
Market Value of the Restricted Stock
as of the date it vested.
	 
	 	 
	 

	 	In addition, if the granting or
vesting of the Shares, either alone
or in combination of any other
amount or benefit, whether payable
before, on or after a Change in
Control (“Covered Payments”), would
cause you to be subject to the
excise tax imposed by Section 4999
of the Code and/or any interest or
penalties with respect to such
excise tax (such excise tax is
hereinafter referred to as the
“Excise Tax”) in connection with a
Change in Control, the Company shall
pay to you an additional lump sum
payment (the “280G Gross-Up
Payment”) on the closing date of the
Change in Control in an amount such
that after payment by you of all
Taxes (including any Excise Tax)
imposed upon the 280G Gross-Up
Payment, you retain an amount of the
280G Gross-Up Payment equal to the
Excise Tax imposed upon the Covered
Payments. The calculation and
payment of the Gross-Up Payment
shall be subject to the additional
provisions set forth on Schedule B
hereto. The foregoing tax benefit
relating to Excise Tax shall only
apply to the extent such tax benefit
is not covered by another agreement
between the Company and you.
	 
	 	 
	 

	 	All Shares subject to this Award
Agreement shall be subject to
adjustment as provided in the Plan.

 

 

Restricted Share Award Agreement

Doral Financial Corporation

2008 Stock Incentive Plan

Page 3

2. Termination of Status as an Employee. Subject to the terms of any Employment Agreement
between you and the Company and any Subsidiary, prior to a Change in Control this Award Agreement
shall be canceled and become automatically null and void immediately after the termination of your
Employment for any reason other than your death, termination by the Company without Cause or
termination by you for Good Reason, but only to the extent you have not become vested, pursuant to
the foregoing terms, on or at the time your Employment ends.

3. Voting Rights. As the owner of record of any Restricted Stock you qualify to receive
pursuant to this Award Agreement, you will be entitled to vote such Restricted Stock, provided you
hold them on the particular record date for determining shareholders of record entitled to vote.

4. Dividends. You will be entitled to receive any cash dividends that are paid with
respect to your Shares of Restricted Stock between the date of this Award Agreement and your
receipt of Shares pursuant to a vesting event. With respect to any dividends that are paid in
shares with respect to your Shares of Restricted Stock between the date of this Award Agreement and
your receipt of Shares pursuant to a vesting event, such shares shall be issued to you as
additional Shares of Restricted Stock subject to the same terms, conditions and vesting
restrictions contained in Section 1 as the Restricted Stock with respect to which the dividend is
paid. To the extent that either (i) your Employment ends prior to a Change in Control for any
reason other than your death, termination by the Company without Cause or termination by you for
Good Reason before vesting of the Restricted Stock subject to this Award Agreement, or (ii) your
Employment does not result in full vesting of this Award Agreement, you will forfeit all
Share-based dividends (but not cash dividends) attributable to all such non-vested Shares of
Restricted Stock.

5. Issuance and Vesting of Restricted Stock. The Company will hold all Shares of
Restricted Stock in escrow, in book entry form, until vesting occurs. You will be reflected as the
owner of record on the Company’s books and records of any Shares of Restricted Stock credited to
you pursuant to this Award Agreement. If you forfeit any Shares of Restricted Stock, they will be
transferred back to the Company. If the Shares of Restricted Stock vest, upon satisfaction of any
tax withholding requirements, your Shares of Restricted Stock will be reflected on the Company’s
books and records as vested Shares.

6. Section 83(b) Election Notice. If you make an election under Section 83(b) of the
Internal Revenue Code of 1986 (the “Code”), as amended, with respect to the Shares
underlying your Restricted Stock (a “Section 83(b) election”), you agree to provide a copy
of such election to the Company within 10 days after filing that election with the Internal Revenue
Service. Exhibit B contains a suggested form of Section 83(b) election.

7. Designation of Beneficiary. Notwithstanding anything to the contrary contained herein
or in the Plan, following the execution of this Award Agreement, you may expressly designate a
death beneficiary (the “Beneficiary”) to your interest, if any, in this Share-Based Award
and any underlying Shares. You shall designate the Beneficiary by completing and executing a
designation of beneficiary agreement substantially in the form attached hereto as Exhibit C
(the “Designation of Death Beneficiary”) and delivering an executed copy of the Designation
of Beneficiary to the Company. To the extent you do not duly designate a beneficiary who survives
you, your estate will automatically be your beneficiary.

 

 

Restricted Share Award Agreement

Doral Financial Corporation

2008 Stock Incentive Plan

Page 4

8. Restrictions on Transfer of Award. Your rights under this Award Agreement may not be
sold, pledged or otherwise transferred without the prior written consent of the Committee.

9. Notices. Any notice or communication required or permitted by any provision of this
Award Agreement to be given to you shall be in writing and shall be delivered electronically,
personally, or sent by certified mail, return receipt requested, addressed to you at the last
address that the Company had for you on its records. Each party may, from time to time, by notice
to the other party hereto, specify a new address for delivery of notices relating to this Award
Agreement. Any such notice shall be deemed to be given as of the date such notice is personally or
electronically delivered or properly mailed.

10. Binding Effect. Except as otherwise provided in this Award Agreement or in the Plan,
every covenant, term and provision of this Award Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, legatees, legal representatives,
successors, transferees and assigns.

11. Modifications. This Award Agreement may be modified or amended at any time, in
accordance with Section 4.2 of the Plan and provided that you must consent in writing to any
modification that adversely and materially affects any rights or obligations under this Award
Agreement.

12. Headings. Section and other headings contained in this Award Agreement are for
reference purposes only and are not intended to describe, interpret, define or limit the scope or
intent of this Award Agreement or any provision hereof.

13. Severability. Every provision of this Award Agreement and of the Plan is intended to
be severable. If any term hereof is illegal or invalid for any reason, such illegality or
invalidity shall not affect the validity or legality of the remaining terms of this Award
Agreement.

14. Counterparts. This Award Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same instrument.

15. Plan Governs. By signing this Award Agreement, you acknowledge that you have received
a copy of the Plan and that your Award Agreement is subject to all the provisions contained in the
Plan, the provisions of which are made a part of this Award Agreement and your Award is subject to
all interpretations, amendments, rules and regulations which from time to time may be promulgated
and adopted pursuant to the Plan. In the event of a conflict between the provisions of this Award
Agreement and those of the Plan, the provisions of the Plan shall control. This Award Agreement is
not an Option Contract as defined in the Plan but is a Share-Based Award and accordingly provisions
applicable to Option Contracts only in the Plan such as Section 3(b) do not apply to this
Share-Based Award.

16. Not a Contract of Employment. By executing this Award Agreement you acknowledge and
agree that (i) any person who is terminated before full vesting of an award, such as the one
granted to you by this Award Agreement, could claim that he or she was terminated to preclude

 

 

Restricted Share Award Agreement

Doral Financial Corporation

2008 Stock Incentive Plan

Page 5

vesting; (ii) you promise never to make such a claim; (iii) nothing in this Award Agreement or the
Plan confers on you any right to continue an employment, service or consulting relationship with
the Company, nor shall it affect in any way your right or the Company’s right to terminate your
employment, service, or consulting relationship at any time, with or without cause; and (iv) the
Company would not have granted this Award Agreement to you but for these acknowledgements and
agreements.

17. Securities Law Restrictions. Regardless of whether the offering and sale of Shares
under the Plan have been registered under the Securities Act of 1933, as amended (the
“Securities Act”), or have been registered or qualified under the securities laws of any
state, the Company at its discretion may impose restrictions upon the sale, pledge or other
transfer of such Shares (including the placement of appropriate legends on stock certificates or
the imposition of stop-transfer instructions) if, in the judgment of the Company, such restrictions
are necessary or desirable in order to achieve compliance with the Securities Act or the securities
laws of any state or any other law or to enforce the intent of this Award Agreement.

18. Governing Law. The laws of the Commonwealth of Puerto Rico shall govern the validity
of this Award Agreement, the construction of its terms, and the interpretation of the rights and
duties of the parties hereto.

     BY YOUR SIGNATURE BELOW, along with the signature of the Company’s representative, you and the
Company agree that the Restricted Stock are awarded under and governed by the terms and conditions
of this Award Agreement and the Plan.

	 	 	 	 	 	 	 

	 	 	DORAL FINANCIAL CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	PARTICIPANT	 	 
	 
	 	 	 	 	 	 
	 	 	The undersigned Participant hereby accepts the terms of this
Award Agreement and the Plan.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	Name of Participant:	 	 

 

 

EXHIBIT A

DORAL FINANCIAL CORPORATION

2008 STOCK INCENTIVE PLAN

 

Plan Document

 

 

 

DORAL FINANCIAL CORPORATION

2008 Stock Incentive Plan

EFFECTIVE MAY 7, 2008

SECTION 1. INTRODUCTION

1.1 Purpose.

     The purposes of the Doral Financial Corporation 2008 Stock Incentive Plan (the “Plan”) is to
provide Doral Financial Corporation (the “Company”) and its subsidiaries with an effective means to
attract and retain highly qualified personnel as well as to provide additional incentive to
non-employee directors and employees who provide services to the Company and its subsidiaries. The
Plan is expected to contribute to the attainment of these objectives by offering non-employee
directors and selected employees the opportunity to acquire stock ownership interests in the
Company.

1.2 Consideration to Company for Issuance of Options and Stock Appreciation Rights:
Employment Agreements by Employees.

     Each Employee by signing and accepting an Option Contract will, if the Committee so requires,
agree that the consideration to the Company for the issuance of Options or Stock Appreciation
Rights will be any employment agreements as well as the benefits to the Company from the added
incentive to the Employee of increased proprietorship in the Company. Nothing in the Plan or in any
Option Contract shall confer on any individual any right to continue employed by the Company or any
of its Subsidiaries or limit the right of the Company or any of its Subsidiaries to terminate
Employment of an Employee at any time, with or without cause.

1.3 Plan Subject to Ratification by Shareholders.

     The Plan shall become effective upon adoption by the Board of Directors, provided that the
Plan is approved, within one year following its adoption by the Board of Directors, by a vote of
the holders of a majority of the shares of Common Stock entitled to vote in a manner permitted
under applicable law and rules of the NYSE. No Option or Stock Appreciation Right under the Plan
may be granted more than 10 years after the date the Plan is approved by the shareholders of the
Company, without further approval by the shareholders of the Company.

1.4 Limitations on Number of Shares Issuable Under the Plan.

     Subject to the following provisions of this Section 1.4, the aggregate number of shares of
Common Stock which may be issued under the Plan shall be limited to 6,750,000. The shares of Common
Stock for which Options and Stock Appreciation Rights may be granted may consist of either
authorized but unissued shares of Common Stock or shares of Common Stock which have

 

 

been issued and which shall have been heretofore or hereafter reacquired by the Company. The total
number of shares subject to Options and Stock Appreciation Rights authorized under the Plan shall
be subject to increase or decrease in order to give effect to the adjustment provisions of Section
3 hereof or any amendment adopted as provided in Section 4.2 hereof. If any Option or Stock
Appreciation Right granted under the Plan shall expire, terminate or be cancelled for any reason
without having been exercised in full, the corresponding number of unpurchased shares shall again
be available for purposes of the Plan. The number of shares of Common Stock for which Options and
Stock Appreciation Rights may be granted under this Plan shall be reduced by the number of shares
subject to an Option for which a Participant has exercised a related Stock Appreciation Right in
accordance with Section 2.3, Subsection (e), hereof.

1.5 Definitions.

     The following terms shall have the meanings set forth below:

          (a) Applicable Sponsor Entity. “Applicable Sponsor Entity” means (i) the Company,
(2) the Sponsor, or (iii) the Limited Partnership, as applicable.

          (b) Appreciation Date. The date designated by a grantee of a Stock Appreciation Right
for measurement of the appreciation in the value of the Common Stock subject to the Stock
Appreciation Right, which date shall not be earlier than the date notice of such designation is
received by the Secretary of the Company.

          (c) Board or Board of Directors. The Board of Directors of the Company.

          (d) Change in Control. A “Change in Control” shall be deemed to have occurred if:

(i) all or substantially all of the assets of the Applicable Sponsor Entity are sold,
liquidated or distributed to a Person that is not controlled, directly or indirectly, by
the entities (or their affiliates that control such entities) of Bear Stearns Merchant
Banking III AIV (Cayman), Ltd., Perry Capital, LLC, Marathon Special Opportunity Master
Fund, Ltd., D.E. Shaw Laminar Portfolios, L.L.C. and Tennenbaum Opportunities Partners
V, LP (collectively, the “Sponsoring Entities”); or

(ii) there occurs a reorganization, merger, consolidation or other corporate transaction
(a “Transaction”) involving (A) the Company, in each case, resulting in fifty
percent (50%) or more of the Common Stock held by the Sponsor, directly or indirectly,
determined on a fully diluted basis, on the date hereof, being held by a person that is
not controlled, directly or indirectly, by the Sponsoring Entities, (B) the Sponsor, in
each case, resulting in fifty percent (50%) or more of the equity interest of the
Sponsor, directly or indirectly, immediately subsequent to the Transaction, being held
by a person that is not controlled, directly or indirectly, by the Sponsoring Entities
or, or (C) the Limited Partnership, in each case, resulting in fifty percent (50%) or
more of the equity interest of the Limited Partnership, directly or indirectly, held as
of the effective date of this Plan, directly or indirectly, immediately subsequent to
the Transaction, being held by a person that is not controlled, directly or indirectly,
by the Sponsoring Entities;

 

 

if and only if any event listed in (i) or (ii) above results in (x) the inability of
the Sponsoring Entities to (directly or indirectly) appoint and/or elect in
combination a majority of the Board of Directors of the Company or the board of
directors of the resulting entity, or (y) Doral GP Ltd. ceasing to be controlled,
directly or indirectly, by the Sponsoring Entities. Notwithstanding the foregoing,
if, in one transaction or a series of transactions, Sponsor sells 80% or more of the
Common Stock held by the Sponsor on the Effective Date, the Limited Partnership
sells 80% or more of its interests in the Sponsor held by the Limited Partnership on
the Effective Date, or the Sponsoring Entities sell 80% or more of their interest in
the Limited Partnership held by the Sponsoring Entities on the Effective Date, then
a Change in Control shall be deemed to have occurred. In addition, in the event
that any sales of Common Stock by the Sponsor, sales of interests in the Sponsor by
the Limited Partnership, and sales of interests in the Limited Partnership by the
Sponsoring Entities, in the aggregate, equal or exceed 80% of all such equity
interests determined in relationship to the Common Stock held by the applicable
foregoing entities on the Effective Date, then a Change in Control shall also be
deemed to have occurred.

          (e) Committee. The Compensation Committee or such other committee or committees as
shall be appointed by the Board of Directors to administer the Plan pursuant to the provisions of
Section 4.1 hereof.

          (f) Common Stock or Shares. The Corporation’s presently authorized common stock, par
value $0.01 per share, except as this definition may be modified pursuant to the provisions of
Section 3 hereof.

          (g) Employee. Any salaried officer or common law employee of the Company or any
Subsidiary, or both, including any salaried officer or employee who is a member of the Board of
Directors.

          (h) Employment. The rendering of services by an Employee for the Company, or for any
Subsidiary, or both. Whether military, government or public service shall constitute termination of
employment for purposes of this Plan or any Option or Stock Appreciation Right granted hereunder
shall be determined in each case by the Committee in its sole discretion.

          (i) Exchange Act. The Securities Exchange Act of 1934, as amended.

          (j) Fair Market Value. The Committee shall determine the fair market value of the
Common Stock on the basis of available prices for such Common Stock or in such manner as may be
permitted by applicable regulations under the PRC or the IRC.

          (k) Incentive Stock Option. An option to purchase Common Stock granted by the Company
to an Employee under the Plan which satisfies the requirements of Section 422 of the IRC.

          (l) IRC. The Internal Revenue Code of 1986, as amended.

          (m) Limited Partnership. Doral Holdings, L.P., a Cayman Islands limited partnership.

 

 

          (n) Nonstatutory Stock Option. An option to purchase Common Stock granted by the
Company to a Participant under the Plan which does not satisfy the requirements of Section 1046 of
the PRC or Section 422 of the IRC.

          (o) Option. A Qualified Stock Option, an Incentive Stock Option or a Nonstatutory
Stock Option.

          (p) Option Expiration Date. The date on which an Option becomes unexercisable by
reason of the lapse of time or when a Nonstatutory Stock Option otherwise becomes unexercisable.

          (q) Participant. Any Employee or non-Employee member of the Board of Directors (a
“Non-Employee Director”) selected to receive awards under the Plan.

          (r) Person. Any person (within the meaning of Section 3(a)(9) of the Exchange Act),
including any group (within the meaning of Rule 13d-5(b) under the Exchange Act), but excluding any
of the Company, any subsidiary or any employee benefit plan sponsored or maintained by the Company
or any subsidiary.

          (s) PRC. The Puerto Rico Internal Revenue Code of 1994, as amended.

          (t) Qualified Stock Option. An option to purchase Common Stock granted by the Company
to an Employee under the Plan which satisfies the requirements of Section 1046 of the PRC.

          (u) Sponsor. Doral Holdings Delaware, LLC, a Delaware limited liability company.

          (v) Stock Appreciation Right. A Participant’s right to earn additional compensation
for the performance of future services, based on appreciation in the Fair Market Value of the
Common Stock pursuant to the formula set forth in Section 2.3, Subsection (c), hereof.

          (w) Stock Appreciation Right Expiration Date. The date on which a Stock Appreciation
Right becomes unexercisable by reason of the lapse of time or, except in the case of a Stock
Appreciation Right attached to a Qualified Stock Option or Incentive Stock Option, otherwise
becomes unexercisable.

          (x) Subsidiary. Any corporation in an unbroken chain of corporations beginning with
the Company, in which the Company owns, directly or indirectly through one or more subsidiaries,
50% or more of the outstanding voting stock or similar interests.

          (y) Total Disability. A Participant is unable to perform all of the material and
substantial duties of his/her occupation on a full-time basis because of a disability (i) caused by
injury or sickness and (ii) that started while the Participant was insured that continues for a
period of six (6) months in any twelve (12)-consecutive-month period.

          (z) The use of the singular shall also include within its meaning the plural or vice versa.

 

 

SECTION 2. Stock Options

2.1 Grant and Exercise of Options.

     (a) Grant. The Committee on behalf of the Company (and the Board, in the case of a
Non-Employee Director) may grant Options to purchase Common Stock to Participants selected by it in
its discretion.

     (b) Option Contracts. Options and any Stock Appreciation Rights shall be evidenced by
agreements (“Option Contracts”) in such form as the Committee (or the Board, in the case of
Non-Employee Directors) shall approve containing such terms and conditions, including the period of
their exercise, whether in installments or otherwise, as shall be contained therein, which need not
be the same for all Options.

     (c) Option Price. Unless an Option Contract provides otherwise, the purchase price
per share of Common Stock under each Option shall be not less than 100 percent of the Fair Market
Value per share of such Common Stock on the date the Option is granted, as determined by the
Committee (or the Board, in the case of Non-Employee Directors). The purchase price may be subject
to adjustment in accordance with the provisions of Section 3 hereof.

     (d) Term of Option. Unless an Option Contract provides otherwise, the term during
which each Option granted under the Plan may be exercised shall not exceed a period of ten years
from the date of its grant.

     (e) Options Nontransferable. Options granted under the Plan shall by their terms be
nontransferable by the Participant otherwise than by will or the laws of descent and distribution,
and, during the lifetime of the Participant, shall be exercisable only by the Participant or, in
the case of Total Disability, by a representative of the Participant on such Participant’s behalf.
No transfer of an Option by a Participant by will or by the laws of descent and distribution shall
be effective to bind the Company unless the Company shall have been furnished with written notice
thereof and a copy of the will and/or such other evidence as the Committee may determine necessary
to establish the validity of the transfer.

     (f) Payment. Each Option shall be exercised by delivery of a written notice to the
Company stating the number of whole shares of Common Stock as to which the Option is being
exercised and accompanied by payment therefor. No shares shall be issued on the exercise of an
Option unless paid for in full at the time of purchase. Payment for shares purchased upon the
exercise of an Option shall be made in cash or, with the approval of the Committee, in Common Stock
valued at the then Fair Market Value thereof as determined by the Committee, or by a combination of
cash and Common Stock, or any other method that is included in an Option Contract. Neither the
Company nor any Subsidiary may directly or indirectly lend money to any individual for the purpose
of assisting such individual to acquire or to carry shares issued upon the exercise of Options
granted under the Plan. No Participant shall have any rights as a shareholder with respect to any
share of Common Stock covered by an Option unless and until such individual shall have become the
holder of record of such share, and except as otherwise permitted by Section 3 hereof, no
adjustment shall
be made for dividends (ordinary or extraordinary, whether in cash, securities or other property or
distributions or other rights) in respect of such share for which the record date is prior to the
date

 

 

on which such individual shall have become the holder of record thereof.

     (g) Investment Purpose. If at the time of any exercise of any Option the Company does
not have a registration statement on Form S-8 covering the shares issuable upon exercise of such
Option effective under the Securities Act of 1933, as amended, the Company may, if it shall deem it
necessary for any reason, require the holder of the Option to represent in writing to the Company
that it is the intention of such holder to acquire the shares of Common Stock being acquired for
investment only and not with a view to the distribution thereof. In such event no shares of Common
Stock shall be issued to such holder unless and until the Company is satisfied with the correctness
of such representation.

2.2 Qualified Stock Options and Incentive Stock Options.

     In addition to meeting the requirements of Section 2.1, each Qualified Stock Option shall be
subject to the requirements of (a) and each Incentive Stock Option shall be subject to the
requirements of (a), (b) and (c) of this Section 2.2.

     (a) Annual Limitation of Options Which May Be Considered Qualified Stock Options and/or
Incentive Stock Options. Anything else in the Plan notwithstanding, if and to the extent that
the provisions of Section 1046 of the PRC and/or Section 422 of the IRC shall so require, the
aggregate Fair Market Value (determined as of the time the Option is granted) of the shares with
respect to which Qualified Stock Options and/or Incentive Stock Options are exercisable for the
first time by any Employee during any calendar year (under the Plan and any other plans of the
Company and its Subsidiaries) shall not exceed $100,000.

     (b) Incentive Stock Options Granted to Ten Percent Shareholders. Notwithstanding
anything to the contrary contained in this Plan, an Incentive Stock Option may not be granted to an
Employee who owns, directly or indirectly, stock possessing more than 10 percent of the total
combined voting power of all classes of stock of the Company or any Subsidiary unless, at the time
such Incentive Stock Option is granted, the exercise price of such Incentive Stock Option is at
least 110 percent of the Fair Market Value of the Common Stock subject to the Incentive Stock
Option, and such Incentive Stock Option, by its terms, is not exercisable after the expiration of
five (5) years from the date of grant of such Incentive Stock Option.

     (c) Notice. An Employee shall give prompt notice to the Company of any disposition of
shares acquired upon exercise of an Incentive Stock Option if such disposition occurs within either
two years after grant or one year after the receipt of such shares by the Employee.

2.3 Stock Appreciation Rights and Other Equity-Based Awards.

     (a) Grant. The Committee (or the Board, in the case of a Non-Employee Director) may
grant a Stock Appreciation Right with respect to any shares of Common Stock covered by any Option
granted under the Plan or separately from any Option grant, and may also grant such other awards
of, or based on, shares of Common Stock (e.g. restricted stock or restricted stock units)
(“Share-Based Awards”).

 

 

     (b) Terms and Conditions. Each Stock Appreciation Right and Share-Based Award shall
be subject to such terms and conditions as the Committee (or the Board, in the case of a
Non-Employee Director) may determine. When a Stock Appreciation Right is granted with respect to
shares of Common Stock covered by a Qualified Stock Option, such Stock Appreciation Right may be
exercised only when the Fair Market Value of the shares of Common Stock subject to the Option
exceeds the exercise price of such Option.

     (c) Amount of Stock Appreciation Right Compensation. The amount of compensation which
shall be payable to a Participant pursuant to the exercise of a Stock Appreciation Right
accompanying an Option is equal to the excess of the Fair Market Value of one share of Common Stock
on the Appreciation Date over the Fair Market Value of such share on the date the Stock
Appreciation Right was granted multiplied by the number of Option shares with respect to which the
Stock Appreciation Right is exercised (the “spread”). The amount of compensation which shall be
payable pursuant to the exercise of a Stock Appreciation Right shall not exceed 100 percent of the
spread. The amount paid upon exercise of Stock Appreciation Right shall be reduced by such amount
as the Company is required to withhold for tax purposes.

     (d) Termination of Related Options. Upon the exercise of a Stock Appreciation Right,
any related Option shall cease to be exercisable as to the shares with respect to which such Stock
Appreciation Right was exercised, and the related Option shall be considered to have been exercised
to that extent. Upon the exercise in full of any related Option, the Stock Appreciation Right
granted with respect thereto shall terminate.

     (e) Automatic Exercise Upon Expiration. Upon the Option Expiration Date of an Option,
an attached Stock Appreciation Right shall automatically be deemed to be exercised in full by the
Employee and cash or, in the discretion of the Committee, shares of Common Stock, or such other
property the Common Stock may be converted into, shall be paid to such Employee for 100% of the
spread. There shall be no automatic exercise of an attached Stock Appreciation Right if the
exercise price exceeds the Fair Market Value of the Corporation’s Common Stock on the Option
Expiration Date, on which date both the Option and attached Stock Appreciation Right shall expire
without payment.

SECTION 3. Adjustments Upon Changes in Capitalization; Change in Control; Dissolution.

     (a) Subject to any legally required action by the shareholders of the Company, each of (i) the
number of shares of Common Stock covered by each outstanding Option, Stock Appreciation Right or
Share-Based Award, (ii) the number of shares of Common Stock which have been authorized for
issuance under the Plan but as to which no Options, Stock Appreciation Rights or Share-Based Award,
have yet been granted or which have been returned to the Plan upon cancellation or expiration of an
Option, Stock Appreciation Right or Share-Based Award, (iii) the price per share of Common Stock
covered by each such outstanding Option, Stock Appreciation Right or Share-Based Award, and (iv)
the maximum number of shares with respect to which Options, Stock Appreciation
Rights or Share-Based Award, may be granted to any Participant, shall be proportionately adjusted
for any stock split, extraordinary cash dividend, the payment of a stock dividend with respect to
the Common Stock, or any other increase or decrease in the number of shares of Common Stock
effected in connection with any corporate event; provided, however, that (a) each such adjustment

 

 

with respect to an Incentive Stock Option or Qualified Stock Option shall comply with the rules of
Section 424(a) of the IRC (or any successor provision) or an applicable provision of the PRC and
(b) in no event shall any adjustment be made which would render any Qualified Stock Option granted
hereunder other than a “qualified option” under Section 1046 of the PRC or any Incentive Stock
Options other than an “incentive stock option” as defined in Section 422 of the IRC. Such
adjustment shall be made by the Committee, whose determination in that respect shall be final,
binding and conclusive.

     (b) Unless an Option Contract provides otherwise, if: (1) any Person acquires direct or
indirect ownership of 50% or more of the combined voting power of the then outstanding securities
of the Company, the Sponsor or the Limited Partnership as a result of a tender or exchange offer,
open market purchases, privately negotiated purchases or otherwise; or (2) the shareholders of the
Company or the members of the Sponsor or the partners of the Limited Partnership approve (A) any
consolidation or merger of the Company, the Sponsor or the Limited Partnership in which the
Company, the Sponsor or the Limited Partnership is not the surviving entity (other than a merger of
the Company, the Sponsor or Limited Partnership in which the holders of Common Stock or partnership
interest immediately prior to the merger have the same or substantially the same proportionate
ownership of the surviving entity immediately after the merger), (B) any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions) of all, or substantially
all, of the assets of the Company or the Sponsor or the Limited Partnership to an entity which is
not a wholly-owned subsidiary of the Company, the Sponsor, or the Limited Partnership or (C) in the
event of the proposed dissolution or liquidation of the Company, the Sponsor or the Limited
Partnership, then the exercisability of each Option outstanding under the Plan shall be
automatically accelerated so that each Option shall, for a reasonable period of time prior to the
specified effective date of any of the foregoing transactions, become fully exercisable with
respect to the total number of shares subject to such Option and may be exercisable for all or any
portion of such shares. Upon the consummation of any of such transactions, all outstanding Options
under the Plan shall, to the extent not previously exercised, terminate and cease to be outstanding
without any further action by the Company. In addition to the foregoing, the Committee may, in its
discretion, elect to provide, in connection with a Change in Control: (x) after reasonable advance
written notice to the Participant that the Company intends to terminate an Option upon the
effective date of the Change in Control, and if such determination is made, the Company will
provide a reasonable opportunity for the Participant to exercise his or her Options with respect to
vested shares of Common Stock prior to such termination; (y) that upon the effective date of the
Change in Control, an Option will be terminated, and if such determination is made, the Company
will provide (or cause to be provided) payment to the Participant in respect of the termination of
his or her Options in an amount equal to the excess, if any, of the consideration per share of
Common Stock paid or provided in the Change in Control to shareholders, over the Option’s per share
exercise price, multiplied by the number of shares of Common Stock subject to the then outstanding
Options (whether vested or nonvested); or (z) a reasonable opportunity for the Participant to elect
to roll over his or her Options into new stock options in connection with the new transaction;
provided, that this clause (z) will not eliminate any right the Optionee has to exercise any Option
in connection with or as a result of the Change in Control.

 

 

SECTION 4. ADMINISTRATION

4.1 Independent Committee to Administer the Plan.

     (a) Composition and Functions of Committee. A Committee consisting of at least two
directors (who shall be “Non-Employee Directors” as defined in Rule 16b-3 of the Securities and
Exchange Commission) shall be appointed by the Board of Directors and will have, subject to the
express provisions of the Plan, general authority to administer the Plan, to grant Options, Stock
Appreciation Rights and Share-Based Awards hereunder, subject to the approval of the Board of
Directors if such approval is required hereunder, and to perform such other functions as may be
assigned to it by the Board of Directors in connection with the Plan, including, among other
things, determining the form of Option Contracts to be issued under the Plan and the terms and
conditions to be included in such Option Contracts and adopting from time to time such rules and
regulations as it may deem appropriate for the proper administration of the Plan. The Committee may
also make such determinations under, and such interpretations of, and take such steps in connection
with, the Plan, the rules and regulations or Options, Stock Appreciation Rights and Share-Based
Awards granted thereunder as it may deem necessary or advisable. The Committee may, in its
discretion or in accordance with a direction from the Board of Directors, waive any provisions of
any Option Contract, provided such waiver is not inconsistent with the terms of the Plan as then in
effect.

     (b) Authorization of Actions Taken by the Committee and Board of Directors. Vacancies
in the Committee shall be filled by the Board of Directors. The Committee may act by a majority of
its members either at a meeting or in writing without a meeting. All questions arising under the
Plan or under the rules and regulations or under the Option Contracts, whether such questions
involve interpretation thereof or otherwise, shall be determined by the Committee and its
determination, unless disapproved by the Board of Directors, shall be conclusive and binding in all
cases. To the extent that any such action would not adversely affect the status of Qualified Stock
Options and Incentive Stock Options under the PRC and IRC, respectively, all matters provided in
the Plan, in the Option Contracts, or in such rules and regulations to be determined or performed
by the Committee may be determined or performed by the entire Board of Directors. No member of the
Board of Directors or of the Committee shall be liable for any action taken or any determination
made in good faith with respect to the Plan or any Option Contract.

     (c) Findings of the Board of Directors and Committee Are Conclusive. Each
determination, interpretation, or other action made or taken pursuant to the provisions of this
Plan by the Board of Directors or the Committee shall be final and shall be binding and conclusive
for all purposes and upon all persons, including, without limitation thereto, the Company, the
shareholders, the Committee and each of the members thereof, and the Participants, and their
respective successors in interest.

4.2 Amendment and Discontinuance of the Plan.

     The Board of Directors may at any time amend, modify, suspend or terminate the Plan, without
shareholder approval, except to the extent such approval is required by the PRC or the IRC to
permit the granting of Qualified Stock Options or Incentive Stock Options, or by the rules of any
securities exchange or automated quotation system on which the shares of Common Stock of the

 

 

Company trade at such time; provided, that no change shall be made which will have a material
adverse effect upon any Option, Stock Appreciation Right or Share-Based Award previously granted
unless the consent of the affected Participant is obtained.

4.3 Withholding Taxes.

     Whenever shares of Common Stock are to be issued pursuant to the Plan, the Company shall have
the right to require that there be remitted to the Company an amount sufficient to satisfy all
applicable federal, state, commonwealth and local withholding tax requirements prior to the
delivery of any certificate or certificates for such shares. The Corporation reserves the right to
satisfy the applicable federal, state, commonwealth and local withholding tax requirements through
the retention of shares of Common Stock otherwise transferable upon exercise of an Option. Whenever
payments are to be made in cash by the Company, such payments shall be net of an amount sufficient
to satisfy federal, state and local withholding tax requirements and authorized deductions.

4.4 Funding.

     Funding. No provision of the Plan shall require or permit the Company, for the
purpose of satisfying any obligations under the Plan, to purchase assets or place any assets in a
trust or other entity to which contributions are made or otherwise to segregate any assets, nor
shall the Company maintain separate bank accounts, books, records or other evidence of the
existence of a segregated or separately maintained or administered fund for such purposes.
Participants shall have no rights under the Plan other than as unsecured general creditors of the
Company, except that insofar as they may have become entitled to payment of additional compensation
by performance of services, they shall have the same rights as other employees under general law.
This section shall not prevent the Company from purchasing its Common Stock for the purpose of
meeting its requirements to issue Common Stock pursuant to the Plan.

4.5 Other.

     (a) To the extent applicable, this Plan is intended to permit the issuance of Qualified Stock
Options in accordance with the provisions of Section 1046 of the PRC and Incentive Stock Options in
accordance with Section 422 of the IRC. This Plan may be modified or amended at any time, both
prospectively and retroactively, and in such manner as to affect Qualified Stock Options or
Incentive Stock Options previously granted, if such amendment or modification is necessary for this
Plan and the Qualified Stock Options or Incentive Stock Options granted hereunder to qualify under
said provisions of the PRC and the IRC.

     (b) The existence of the Plan shall not be deemed to constitute a contract of employment
between the Company or any Subsidiary and any Employee, nor shall it constitute a right to remain
in the employ of the Company or any Subsidiary. The terms or existence of this Plan, as in effect
at any time or from time to time, or any award granted under the Plan, shall not interfere with or
limit
in any way the right of the Company or any Subsidiary to terminate any Employee’s employment at any
time, nor confer upon any Employee any right to continue in the employ of the Company or any
Subsidiary or any other affiliate of the Company. Each employee of the Company or any Subsidiary
remains at will. Except to the extent expressly selected by the Committee to receive an

 

 

award
under this Plan, no person (whether or not an Employee) shall at any time have a right to be
selected for initial or additional participation in the Plan, despite having previously
participated in an incentive or bonus plan of the Company or an affiliate.

     (c) The granting of awards and the issuance of shares of Common Stock under this Plan shall
be subject to all applicable laws, rules, and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.

     (d) The Plan, and all agreements hereunder, shall be construed in accordance with and
governed by the laws of the Commonwealth of Puerto Rico, without regard to principles of conflict
of laws.

 

 

EXHIBIT B

DORAL FINANCIAL CORPORATION

2008 STOCK INCENTIVE PLAN

 

Section 83(b) Election Form

 

Attached is an Internal Revenue Code Section 83(b) Election Form. IF YOU WISH TO MAKE A SECTION
83(b) ELECTION, YOU MUST DO SO WITHIN 30 DAYS AFTER THE DATE THE RESTRICTED SHARES COVERED BY THE
ELECTION WERE TRANSFERRED TO YOU. In order to make the election, you must completely fill out the
attached form and file one copy with the Internal Revenue Service office where you file your tax
return. In addition, one copy of the statement also must be submitted with your income tax return
for the taxable year in which you make this election. Finally, you also must submit a copy of the
election form to the Company within 10 days after filing that election with the Internal Revenue
Service. A Section 83(b) election normally cannot be revoked.

 

 

DORAL FINANCIAL CORPORATION

DORAL FINANCIAL CORPORATION 2008 STOCK INCENTIVE PLAN

 

Election to Include Value of Restricted Stock in Gross Income

in Year of Transfer Under Internal Revenue Code Section 83(b)

 

     Pursuant to Section 83(b) of the Internal Revenue Code, I hereby elect within 30 days after
receiving the property described herein to be taxed immediately on its value specified in item 5
below.

	1.	 	My General Information:

	 	 	 	 	 	 	 

	 

	 	Name:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Address:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 

	 	 	 	 

	 	 
	 

	 	S.S.N.
or T.I.N.:	 	 	 	 
	 

	 	 	 	 

	 	 

	2.	 	Description of the property with respect to which I am making this election:
	 
	 	 	                                         shares of                      stock of Doral Financial Corporation (the
“Restricted Stock”).
	 
	3.	 	The Restricted Stock were transferred to me on                                               , 20     . This election
relates to the 20      calendar taxable year.
	 
	4.	 	The Restricted Stock are subject to the following restrictions:

	 	 	 	The Restricted Stock are forfeitable until they are earned in accordance with
Section 1 the Restricted Share Award Agreement (“Award Agreement”) made
under the Doral Financial Corporation 2008 Stock Incentive Plan. The Restricted
Stock generally are not transferable until my interest becomes vested and
nonforfeitable, pursuant to the Award Agreement and the Plan.

	5.	 	Fair market value:

	 	 	 	The fair market value at the time of transfer (determined without regard to any
restrictions other than restrictions which by their terms never will lapse) of the
Restricted Stock with respect to which I am making this election is
$______ per
share.

	6.	 	Amount paid for Restricted Stock:

	 	 	 	The amount I paid for the Restricted Stock is $_____ per share.

	7.	 	Furnishing statement to employer:

 

 

	 	 	 	A copy of this statement has been furnished to my employer,                                         . If the
transferor of the Restricted Stock is not my employer, that entity also has been
furnished with a copy of this statement.

	8.	 	Award Agreement or Plan not affected:

	 	 	 	Nothing contained herein shall be held to change any of the terms or conditions of
the Award Agreement or the Plan.

Dated:                                               , 20     .

	 	 	 	 	 

	 

	 	 

Taxpayer
	 	 

 

 

EXHIBIT C

DORAL FINANCIAL CORPORATION

2008 STOCK INCENTIVE PLAN

 

Designation of Death Beneficiary

 

     In connection with the Awards designated below that I have received pursuant to the Doral
Financial Corporation 2008 Stock Incentive Plan, I hereby designate the person specified below as
the beneficiary upon my death of my interest in such Awards. This designation shall remain in
effect until revoked in writing by me.

	 	 	 	 	 	 	 

	 

	 	Name of Beneficiary:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Address:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Social Security No.:	 	 	 	 
	 

	 	 	 	 

	 	 

     This beneficiary designation relates to any and all of my rights under the following Award or
Awards:

	 	o	 	any Award that I have received or ever receive under the Plan.
	 
	 	o	 	the                                          Award that I received pursuant to an award agreement
dated                                               ,       between myself and the Company.

     I understand that this designation operates to entitle the above named beneficiary, in the
event of my death, to any and all of my rights under the Award(s) designated above from the date
this form is delivered to the Company until such date as this designation is revoked in writing by
me, including by delivery to the Company of a written designation of beneficiary executed by me on
a later date.

	 	 	 	 	 	 	 

	 

	 	Date:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	Name of Participant
	 	 
	 

	 	 	 	 	 	 

	 

	Sworn to before me this                       
day of                                         , 20    
 

	Notary Public County of                                                  

	State of                                                             

 

 

Schedule A

“Cause” shall mean:

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

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

(iii) the grantee’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, as amended, the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) 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 affiliates;

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

(v) the grantee’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 grantee’s material breach of any covenant relating to confidentiality, no-hire,
non-completion, non-interference or property rights set forth in any agreement between the
grantee and the Company.

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

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

 

 

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

(i) a reduction in the grantee’s then current annual base salary or target bonus
opportunity;

(ii) a material diminution in the grantee’s positions, duties, authorities or titles,
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 small
or similar size to the Company (measured on the basis of assets), the grantee does not hold
the positions set forth above at the ultimate parent entity resulting from such Change in
Control;

(iii) the grantee’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 grantee reports to someone other than the
position (such as CEO or Executive Vice President) to whom the grantee directly reports as
of the date of grant of this award; 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 grantee may only terminate his or her 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 Section 3(a)(9) and Section 13(d) of the Exchange
Act) other than the Company or any employee benefit plan of the Company or any of it
subsidiaries, (x) becomes the “beneficial owner” (as such term is used in Rule 13d-3
promulgated under the Exchange Act) 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 the 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 member 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, 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.

 

 

Schedule B

All determinations regarding the 280G Gross-Up payment, including whether a 280G Gross-Up payment
is required and the amount of such 280G Gross-Up payment and the assumptions to be utilized in
arriving at such determination, shall be made by the Company’s outside legal counsel (based on
calculations made by a benefits consulting firm or by independent certified public accountants
appointed by the Company) or by independent certified public accountants appointed by the Company
(collectively the “Tax Advisor”). The Company shall be responsible for all charges of the Tax
Advisor.

The Company shall use its best efforts to cause the Tax Advisor to promptly deliver the initial
determination required hereunder within sixty (60) days prior to the change in ownership covered by
Code Section 280G(b)(2). The Company shall pay the 280G Gross-Up payment at the Closing. The
amount of such payment shall be subject to later adjustment in accordance with the determination of
the Tax Advisor as provided herein. Notwithstanding the foregoing, in no event shall payment of the
280G Gross-Up payment occur later than the end of the calendar year in which you remit the taxes to
the U.S. Treasury Department.

In the event that the Tax Advisor determines, for any reason whatsoever, the correct amount of the
280G Gross Up payment to be less than the amount determined at the time the 280G Gross-Up payment
was paid to you, you shall repay to the Company, within thirty days after the time that the amount
of such reduction in 280G Gross-Up payment is determined by the Tax Advisor, plus interest on the
amount of such repayment at the rate provided in Section 6621(a)(1) of the Internal Revenue Code of
1986, as amended (“Section 6621(a)(1)”).

In the event that the Excise Tax is later determined by the Tax Advisor or the Internal Revenue
Service to exceed the amount taken into account hereunder at the time the 280G Gross-Up payment is
paid to you, the Company shall make an additional Gross-Up payment in respect of such excess (plus
any interest or penalties payable to the Internal Revenue Service with respect to such excess) once
the amount of such excess is finally determined together with interest on the amount of such
payment at the rate provided in Section 6621(a)(1).

In the event you have any controversy with the Internal Revenue Service (or other taxing authority)
involving the Excise Taxes, you shall promptly notify the Company of such controversy and provide
all documents provided by the Internal Revenue Service (or other taxing authority) to the Company
within 10 days of receipt of such documents. You shall permit the Company to control issues related
to the Excise Tax, provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection with such contest and
shall indemnify and hold you harmless, on an after-tax basis, for any Excise Tax or income tax
thereon, including interest and penalties. In the event you have any conference with any taxing
authority as to the Excise Tax or associated income taxes, you shall permit a representative of the
Company to accompany you, and you and your representative shall cooperate with the Company and its
representative.exv10w2

Exhibit 10.2

June 25, 2010

[NAME]

[POSITION]

Doral Financial Corporation

[ADDRESS]

     Re:    Retention Bonus

Dear                                                             :

We are pleased to offer you the retention bonus described below in exchange for your agreement to
remain employed with Doral Financial Corporation
(“Doral”) through June 25, 2013. Your retention
bonus amount will be [$AMOUNT] (the “Bonus Amount”), less applicable tax withholdings. The Bonus
Amount is in addition to all other compensation paid to you but by your accepting the terms of this
retention bonus you hereby agree that the Bonus Amount shall not be considered part of your “Annual
Base Salary” or “Bonus” under your employment agreement with Doral such that upon your termination
of employment by Doral without Cause or by you for Good Reason the Bonus Amount (either before,
after or in connection with a Change in Control) would be included in the severance payment
calculation to be made to you.

If your
employment with Doral terminates prior to the earlier of June 25, 2013 or the occurrence of
a Change in Control for any reason other than (i) your death, (ii) termination by Doral without
Cause, or (iii) termination by you for Good Reason, you must repay a percentage of the Bonus
Amount, determined according to the following schedule:

	 	 	 
	 	 	Repayment
	Termination Date	 	Percentage
	Before December 25, 2010
	 	100%
	On or after December 25, 2010 and before June 25, 2011
	 	83.4%
	On or after June 25, 2011 and before December 25, 2011
	 	66.8%
	On or after December 25, 2011 and before June 25, 2012
	 	50.2%
	On or after June 25, 2012 and before December 25, 2012
	 	33.6%
	On or after December 25, 2012 and before June 25, 2013
	 	   17%
	On or after June 25, 2013
	 	    0%

For example, assuming you voluntarily left employment with the Company without Good Reason after
December 25, 2010 and before June 25, 2011 and there has not occurred a Change in Control, you
would have to repay 83.4% of your Bonus Amount or $[AMOUNT].

 

 

Conversely,
if prior to June 25, 2013, (i) you die, (ii) there is a Change in Control, or (iii)
your employment with Doral is terminated by Doral without Cause, or by you for Good Reason, you
will not have to repay any portion of your Bonus Amount. After
June 25, 2013, all forfeiture
provisions terminate.

In addition, to the extent the following tax benefit in respect of the Bonus Amount is not covered
by another agreement between Doral and you, if the Bonus Amount, either alone or in combination of
any other amount or benefit, whether payable before, on or after a Change in Control (“Covered
Payments”), would cause you to be subject to the excise tax imposed by Section 4999 of the Code
and/or any interest or penalties with respect to such excise tax (such excise tax is hereinafter
referred to as the “Excise Tax”) in connection with a Change in Control, the Company shall pay to
you an additional lump sum payment (the “280G Gross-Up Payment”) on the closing date of the Change
in Control in an amount such that after payment by you of all taxes (including any Excise Tax)
imposed upon the 280G Gross-Up Payment, you retain an amount of the 280G Gross-Up Payment equal to
the Excise Tax imposed upon the Covered Payments. The calculation and payment of the Gross-Up
Payment shall be subject to the additional provisions set forth on Schedule A. In the event
that any provisions such as the ones set forth in this paragraph are instituted in Puerto Rico at
any time on or before June 25, 2013, the calculation and payment shall be subject to the terms set
forth in Schedule A.

This retention bonus does not modify your employment relationship with Doral. Your employment with
us will continue to be at-will and you may be terminated for any reason, with or without notice.

If the terms of the retention bonus as outlined in this letter are acceptable to you, please
indicate your acceptance of them by signing both originals of this letter in the space provided
below, retaining one original for your files, and returning the other
original to me in the envelope
provided. We are very pleased to offer you this incentive and look forward to your continued
achievement and success with Doral.

Very truly yours,

DORAL FINANCIAL CORPORATION

	 	 	 	 	 

	By:
	 	 	 	 
	Name:

	 	 

	 	 
	Title:
	 	 	 	 

	 	 	 	 	 

	Agreed to and accepted by:
	 	 	 	 
	 

	 	 

[EXECUTIVE]

	 	 
	 

	 	Date: June 25, 2010	 	 

 

 

Schedule A

All determinations regarding the 280G Gross-Up payment, including whether a 280G Gross-Up payment
is required and the amount of such 280G Gross-Up payment and the assumptions to be utilized in
arriving at such determination, shall be made by the Company’s outside legal counsel (based on
calculations made by a benefits consulting firm or by independent certified public accountants
appointed by the Company) or by independent certified public accountants appointed by the Company
(collectively the “Tax Advisor”). The Company shall be responsible for all charges of the Tax
Advisor.

The Company shall use its best efforts to cause the Tax Advisor to promptly deliver the initial
determination required hereunder within sixty (60) days prior to the change in ownership covered by
Code Section 280G(b)(2). The Company shall pay the 280G Gross-Up payment at the Closing. The
amount of such payment shall be subject to later adjustment in accordance with the determination of
the Tax Advisor as provided herein. Notwithstanding the foregoing, in no event shall payment of the
280G Gross-Up payment occur later than the end of the calendar year in which you remit the taxes to
the U.S. Treasury Department.

In the event that the Tax Advisor determines, for any reason whatsoever, the correct amount of the
280G Gross Up payment to be less than the amount determined at the time the 280G Gross-Up payment
was paid to you, you shall repay to the Company, within thirty days after the time that the amount
of such reduction in 280G Gross-Up payment is determined by the Tax Advisor, plus interest on the
amount of such repayment at the rate provided in Section 6621(a)(1) of the Internal Revenue Code of
1986, as amended (“Section 6621(a)(1)”).

In the event that the Excise Tax is later determined by the Tax Advisor or the Internal Revenue
Service to exceed the amount taken into account hereunder at the time the 280G Gross-Up payment is
paid to you, the Company shall make an additional Gross-Up payment in respect of such excess (plus
any interest or penalties payable to the Internal Revenue Service with respect to such excess) once
the amount of such excess is finally determined together with interest on the amount of such
payment at the rate provided in Section 6621(a)(1).

In the event you have any controversy with the Internal Revenue Service (or other taxing authority)
involving the Excise Taxes, you shall promptly notify the Company of such controversy and provide
all documents provided by the Internal Revenue Service (or other taxing authority) to the Company
within 10 days of receipt of such documents. You shall permit the Company to control issues related
to the Excise Tax, provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection with such contest and
shall indemnify and hold you harmless, on an after-tax basis, for any Excise Tax or income tax
thereon, including interest and penalties. In the event you have any conference with any taxing
authority as to the Excise Tax or associated income taxes, you shall permit a representative of the
Company to accompany you, and you and your representative shall cooperate with the Company and its
representative.

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