Document:

EX-10.19 OPTION AGREEMENT

 

Exhibit
10.19

OPTION AGREEMENT

(Quisqueya 12, Inc.)

     This Option Agreement (“Agreement”) is executed as of this 21st day of December, 2006, among
CREFISA, INC., a Puerto Rico corporation (“Seller”), D&D INVESTMENT GROUP, S.E., a Puerto Rico
special partnership (“Buyer”) and QUISQUEYA 12, INC., a Puerto Rico corporation (the “Company,” and
together with Seller and Buyer, collectively, the “Parties”).

BACKGROUND

     WHEREAS, Seller owns one hundred (100) shares (the “Shares”) of common stock, par value $0.01
per share, of the Company, which represents fifty percent (50%) of the issued and outstanding
shares of common stock of the Company; and

     WHEREAS, Seller desires to grant to Buyer, and Buyer desires to obtain from Seller, an option
to purchase the Shares, on the terms and conditions hereinafter set forth.

     NOW, THEREFORE, in consideration of the respective covenants, representations and warranties
contained herein, Seller and Buyer, intending to be legally bound hereby, agree as follows:

ARTICLE I

CERTAIN DEFINITIONS

     1.1 “Closing” means the consummation of the purchase and sale of the Shares contemplated
hereby which shall be effected by delivery of the documents and instruments referred to in Sections
4.2 and 4.3 hereof, each in form and content satisfactory to Buyer, Seller and their respective
counsel and each dated or being effective as of the Closing Date.

     1.2 “Closing Date” means the date on which the Closing occurs.

     1.3 “Commencement Date” shall have the meaning set forth in Section 6.3 of this Agreement.

     1.4 “Commonwealth” means the Commonwealth of Puerto Rico.

     1.5 “Consent” means any consent, waiver, approval, authorization or permit.

     1.6 “Encumbrance” means any lien, charge, restriction, security interest or encumbrance of any
nature.

 

 

     1.7 “Governmental Entity” means any governmental or regulatory authority, department, board,
bureau, agency or commission, including courts of competent jurisdiction, domestic or foreign.

     1.8 “Order” means any order, writ, judgment, injunction, decree, statute, ordinance, rule or
regulation.

     1.9 “Parking Garage” shall have the meaning set forth in Section 6.3 of this Agreement.

     1.10 “Parking Spaces” shall have the meaning set forth in Section 6.3 of this Agreement.

     1.11 “Person” means any natural person or legal entity not a party to this Agreement.

     1.12 “Plans and Specifications” means the final plans and specifications for the construction
of the Parking Garage, as approved by all Government Entities, including, without limitation, the
architectural, structural, mechanical and electrical plans and specifications for the construction
of the Parking Garage.

     1.13 “Property” means that certain parcel of land with a superficial area equal to 2,054.0505
square meters, recorded in the Registry of Property of Puerto Rico, Second Section of San Juan at
page (folio) 282 of volume (tomo) 1,140, property number 32,442.

     1.14 “Public Disclosure” means any press release or public announcement or publicity statement
or other disclosure to the public, including any announcement to employees.

     1.15 “Purchase Price” means the aggregate purchase price for the Shares set forth in Section
3.2 hereof.

     1.16 “Regime” shall have the meaning set forth in Section 6.3 of this Agreement.

ARTICLE II

OPTION TO PURCHASE

     2.1 Grant of Option. Seller hereby grants to the Purchaser the exclusive, irrevocable,
first option (the “Option”) to purchase the Shares, in accordance with the terms and conditions of
this Agreement. In the event that the Buyer exercises the Option by sending written notice thereof
to Seller in accordance with Sections 2.4 and 12.6 of this Agreement, upon the terms and conditions
contained in this Agreement, Seller agrees to sell, assign and transfer to Buyer and Buyer agrees
to purchase and acquire from Seller at the Closing, for the consideration provided in Section 2.5
of this Agreement, the Shares, free and clear of any Encumbrances.

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     2.2 Term of Option. The term of the Option granted hereunder shall commence on the
date hereof and shall conclude ninety (90) days thereafter, or on any later date to which the
parties agree to in writing (the “Option Period”).

     2.3 Deposit. The consideration for the grant of the Option is TWO HUNDRED THOUSAND
DOLLARS ($200,000) (the “Deposit”) which shall be paid by Buyer to Seller as follows by wire
transfer or certified check:

          (a) ONE HUNDRED THOUSAND DOLLARS ($100,000) shall be paid by Buyer to Seller at the time of
the execution of this Agreement; and

          (b) ONE HUNDRED THOUSAND DOLLARS ($100,000) shall be paid by Buyer to Seller on or before the
thirtieth (30th) day after the payment referred to in paragraph 2.3(a).

     In the event that (i) Buyer does not exercise the Option at least five (5) days prior to the
last day of the Option Period in accordance with Sections 2.4 and 12.6 of this Agreement, the
Option shall terminate and the Deposit shall be forfeited to Seller as liquidated damages and as
the sole and exclusive remedy of Seller; or (ii) Buyer exercises the Option in accordance with
Sections 2.4 and 12.6 of this Agreement, Seller is willing and available to convey the Shares to
Buyer in accordance herewith, and Buyer fails to consummate the acquisition of the Shares as
contemplated herein on the Closing Date or such other date mutually agreed to by the Parties,
Seller shall be entitled to forfeit and retain the Deposit, in each case without prejudice to the
remedies afforded to Seller in Article VIII of this Agreement.

     2.4 Exercise of Option. The Option may be exercised by the Purchaser by giving written
notice to the Seller at least five (5) days prior to the end of the Option Period in the manner
provided in Section 12.6 of this Agreement.

     2.5 Purchase Price and Payment of Land Loan. In consideration of the Sale of the
Shares at the Closing in the event Buyer exercises the Option in accordance with Section 2.4 of
this Agreement, Buyer will pay to Seller at the Closing [ONE MILLION NINE HUNDRED EIGHTEEN THOUSAND
SIX HUNDRED TWENTY-SIX DOLLARS ($1,918,626)] (the “Purchase Price”), less the amounts paid by Buyer
to Seller pursuant to Section 2.3 of this Agreement, payable in cash by wire transfer of
immediately available funds to an account designated by Seller to Buyer prior to the Closing or by
certified check. At the Closing, Buyer agrees to pay in full to Seller the outstanding principal
amount as of the date hereof plus accrued and unpaid interest and all other amounts owed under the
Promissory Note (Land Loan) made by Buyer on February 2, 2004 in the principal amount of $1,541,000
(the “Land Loan”) and any other amount owed by the Buyer to the Seller in connection with the
development of the Parking Garage.

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ARTICLE III

CLOSING

     3.1 Closing. In the event that Buyer exercises the Option by sending notice thereof to
the Seller in accordance with the provisions of Section 12.6 of this Agreement at least five (5)
days prior to the expiration date of the Option Period, the closing (the “Closing”) hereunder shall
take place at the offices of Seller’s counsel in the Commonwealth of Puerto Rico no later than
thirty (30) days succeeding the date of such notice (provided, however, that the Closing must occur
on or before March 15, 2007) (the “Closing Date”) or such other date or place as may be mutually
agreed to by the parties.

     Closing shall occur by delivery of the documents and instruments by Seller and Buyer described
in Sections 3.2 and 3.3 hereof, each in form and content satisfactory to Buyer, Seller and their
respective counsel and each dated or being effective as of the Closing Date.

     3.2 Seller’s Deliveries at the Closing. At the Closing, Seller will deliver to Buyer:

          (a) stock certificate(s) representing the Shares, duly endorsed in blank or accompanied by
stock transfer powers;

          (b) a certified copy of the resolutions adopted by the Board of Directors of Seller
authorizing the execution, delivery and performance by Seller of this Agreement and the
transactions contemplated hereby;

          (c) the original demand mortgage note in the principal amount of $1,541,000, made by Buyer to
the order of bearer on February 2, 2004;

          (d) certificate No. 002 representing 100 shares of common stock of the Company owned by Buyer
and which were pledged to Seller pursuant to that certain Stock Pledge and Security Agreement dated
February 2, 2004 between Seller and Buyer (the “Stock Pledge Agreement”);

          (e) a written release by Seller in connection with the cancellation of the Stock Pledge
Agreement; and

          (f) such other documents, instruments and certificates as may be provided for under this
Agreement or reasonably requested by Buyer prior to Closing, including, without limitation, UCC-3
termination statements with respect to financing statements, if any, filed in the Puerto Rico
Department of State covering the collateral described in clauses (c) and (d) above.

     3.3 Buyer’s Deliveries at the Closing At the Closing, Buyer will deliver to Seller:

          (a) payment in full of the Purchase Price (less the amounts paid by Buyer to Seller pursuant
to Section 2.3);

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          (b) a certified copy of the resolutions adopted by the Board of Directors of Buyer authorizing
the execution, delivery and performance by Buyer of this Agreement and the transactions
contemplated hereby;

          (c) the officer’s certificate referred to in Section 7.3;

          (d) payment in full by Buyer to Seller of all amounts owed with respect to the Land Loan;

          (e) a public deed in recordable form duly executed by the Company, in form and substance
satisfactory to the Seller, whereby a restrictive covenant is constituted upon the Property for the
benefit of the Seller (or any adjoining parcel of land owned by an affiliate of the Seller)
limiting the construction of improvements thereon to the Parking Garage in accordance with the
specifications set forth in the Plans and Specifications, including, without limitation, the
specifications relating to location, dimensions, setbacks, height and number of floors;

          (f) a written commitment executed by the Buyer and the Company wherein they agree (i) that
with respect to any commercial or other project that may be constructed by the Company, the Buyer
or any affiliate thereof over and above the Parking Garage (which project shall require the prior
written approval of the Seller), the Seller shall be entitled to two thirds of the economic
interest of such project, and (ii) to execute any and all private and public documents that may be
necessary and convenient to implement the agreement described in this clause (f); and

          (g) such other documents, instruments and certificates as may be provided for under this
Agreement or reasonably requested by Seller prior to Closing.

     3.4 Termination of Joint Venture. Upon the exercise by Buyer of the Option, the sale
of the Shares to the Buyer on the Closing Date and the payment of amounts and delivery of the
documents described in Sections 3.2 and 3.3, the Parties agree that the Joint Venture and
Stockholders Agreement dated February 2, 2004 between Seller and Buyer (the “Joint Venture
Agreement”) shall automatically terminate and cease to be in effect, whereupon the Parties shall be
released of all liabilities and obligations thereunder. In addition to the foregoing, and as
additional consideration for the sale of the Shares by Seller to Buyer, the parties hereto agree
that upon the termination of the Joint Venture Agreement as set forth in this Section 3.4, the
provisions of Section 17.4.1 of the Joint Venture Agreement with respect to Seller’s air rights
over and above the last floor of parking space in the Parking Garage (as hereinafter defined) are
terminated in exchange for the economic interest to be granted by the Company, the Buyer or any
affiliate thereof to the Seller as set forth in Section 3.3(f) hereof, which economic interest is
to be granted to the Seller without requiring any payment or other consideration whatsoever.

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF SELLER

     Seller represents and warrants to Buyer as follows:

     4.1 Organization and Authority. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth. Seller has full corporate power
and authority to execute and deliver this Agreement and to perform its obligations hereunder. The
execution, delivery and performance by Seller of this Agreement have been duly authorized by all
necessary corporate action on the part of Seller. This Agreement has been duly executed and
delivered by Seller and, assuming due execution thereof by Buyer, constitutes a valid and binding
agreement of Seller enforceable against Seller in accordance with its terms, except as may be
limited by bankruptcy, insolvency, and similar laws affecting the rights of creditors generally and
by the availability of equitable remedies.

     4.2 Ownership of Shares. Seller has good and marketable title to the Shares and,
except as set forth in the Joint Venture Agreement, has full and unrestricted power and authority
to sell, assign, transfer and deliver to Buyer valid title to the Shares. Upon delivery of the
certificates representing the Shares on the Closing Date as provided herein, Buyer will acquire
good and marketable title to the Shares, free and clear of any and all Encumbrances.

     4.3 Consents and Approvals. Neither the execution and delivery of this Agreement by
Seller nor the consummation of the transactions contemplated hereby will violate any provision of
the Certificate of Incorporation or By-Laws (or other comparable governing documents) of Seller,
require any Consent of, or filing with or notification to, any Governmental Entity, require any
consent under, or result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination, cancellation or
acceleration of any obligation to repay) under, any contract to which the Seller is a party or by
which they or any of their property or assets may be bound, violate any Order of any Governmental
Entity applicable to Seller or the Company, or (e) violate any constitution, statute, regulation,
rule, injunction, judgment, Order, decree, ruling, charge or other restriction of any Governmental
Entity.

     4.4 Disclaimer of Other Representations and Warranties. Except as set forth in this
Article IV, Seller makes no representation or warranty, express or implied, in respect of the
Property, the Company or any of its assets, properties, liabilities or operations, including,
without limitation, with respect to merchantability or fitness for any particular purpose, and any
such other representations or warranties are hereby expressly disclaimed. Buyer hereby
acknowledges and agrees that, in the event it exercises the Option in accordance herewith, Buyer
will be purchasing and acquiring the Shares on an “as-is, where-is” basis, except to the extent
specifically set forth in this Article IV.

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ARTICLE V

REPRESENTATIONS AND WARRANTIES BY BUYER AND THE COMPANY

     The Company and Buyer represent and warrant to Seller as follows:

     5.1 Organization and Standing. Buyer is a special partnership duly organized, validly
existing and in good standing under the laws of the Commonwealth and has full power and authority
to enter into and perform this Agreement. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth and has full corporate power and
authority to enter into and perform this Agreement.

     5.2 Authority. The execution, delivery and performance by each of the Company and
Buyer of this Agreement has been duly authorized by all necessary corporate or partnership action,
as applicable. This Agreement has been duly executed and delivered by each of the Company and
Buyer and, assuming due execution by Seller, constitutes a valid and binding agreement of each of
the Company and Buyer enforceable against them in accordance with its terms, except as limited by
bankruptcy, insolvency, reorganization and similar laws affecting creditors generally and by the
availability of equitable remedies.

     5.3 Consents and Approvals; No Violations. Neither the execution and delivery of this
Agreement by each of the Company and Buyer nor the consummation of the transactions contemplated
hereby by each of the Company and Buyer will violate any provision of the partnership agreement or
corporate charter and by-laws of such persons, as applicable, require any Consent of, or filing
with or notification to, any Governmental Entity, or violate any Order of any Governmental Entity.

ARTICLE VI

CERTAIN COVENANTS AND AGREEMENTS OF SELLER AND BUYER

     6.1 Further Assurances. Subject to the terms and conditions herein provided, each of
the Parties agree to use its best efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable under applicable laws and regulations
to consummate and make effective the transactions contemplated by this Agreement to the extent that
the Option is properly exercised by the Buyer. If at any time after the Closing Date any further
action is necessary or desirable to carry out the purposes of this Agreement, the Parties shall
take or cause to be taken all such necessary action, including, without limitation, the execution
and delivery of such further instruments and documents as may be reasonably requested by any party
for such purposes or otherwise to consummate and make effective the transactions contemplated
hereby.

     6.2 Public Disclosure. The Parties will consult with each other and agree on
desirability, timing and substance of any Public Disclosure, relating to the transactions
contemplated hereby. Subject to applicable law, neither party will make any Public Disclosure

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without the prior written agreement of the other party as to the time of the issuance, extent
of distribution, and form and substance of the Public Disclosure.

     6.3 Parking Spaces. In the event that Buyer exercises the Option in accordance
herewith and consummates the purchase of the Shares as contemplated herein, Buyer, Seller and the
Company agree to the following, in consideration for the mutual premises and covenants contained
herein:

          (a) Within ninety (90) days from the Closing Date, the Company shall (and Buyer shall cause
the Company to) commence the construction on the Property of a commercial multi-story parking
building containing no less than 495 parking spaces and up to 20,000 square feet of commercial
retail space on the ground floor (the “Parking Garage”).

          (b) The Company agrees to (and Buyer shall cause the Company to) complete, at the Company’s
sole cost and expense, the Parking Garage not later than seven hundred and twenty (720) days from
the Commencement Date (the “Completion Date”); provided, however, that the Company
shall be entitled to a ninety (90) day grace period to complete the Parking Garage in the event of
a delay caused by a flooding which directly affects the construction of the Parking Garage, a
hurricane which affects the northeastern portion of the island of Puerto Rico, or any other
unavoidable casualty or other causes beyond the control and without the fault or negligence of the
Company and which by the exercise of reasonable diligence the Company is unable to prevent or
provide against.

          (c) In the event that the Parking Garage is not completed on or before the Completion Date or
within the 90 day grace period referred to in clause (b) of this Section 6.3, Seller shall be
entitled to a $1,000 credit per each day until completion of the Parking Garage, to be credited
against the Parking Purchase Price (as hereinafter defined); provided, however,
that the total amount to be credited against the Parking Purchase Price in accordance with this
clause (c) shall not exceed $720,000. In the event that the $720,000 ceiling is reached and the
Company has not yet completed the Parking Garage, then Seller, at its sole option, may be excused
from compliance with its obligation to purchase the Seller Parking Spaces (as hereinafter defined).

          (d) The Company shall (and Buyer shall cause the Company to) construct the Parking Garage (i)
in conformity with the Plans and Specifications and with all applicable present and future laws,
ordinances, orders, rules, regulations and requirements of all Governmental Entities which may be
applicable to the Parking Garage and/or the construction thereof; and (ii) in a good and
workmanlike manner with materials of good quality. The Company shall (and Buyer shall cause the
Company to) submit the Plans and Specifications to the Seller for its review and approval prior to
commencing construction of the Parking Garage. The Company shall obtain Seller’s prior written
consent to any and all material changes to the Plans and Specifications. .

          (e) Upon completion of the Parking Garage by the Company, the Company shall (and Buyer agrees
to cause the Company to), at its sole cost and expense, within sixty (60) days after the Completion
Date, submit the Property, the Parking Garage and all other

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improvements on the Property to the Puerto Rico Condominium Act (31 L.P.R.A. § 1291 et
seq.) to create a condominium regime (the “Regime”) containing at least 495 separate and
individual parking space units (the “Parking Spaces”), provided that the form and substance of the
deed of constitution of condominium regime, by-laws and all other documents and instruments
relating to the Regime shall subject to Seller’s approval, which approval shall not be unreasonably
withheld by Seller.

          (f) Within thirty (30) days after the constitution of the Regime at the offices of Seller’s
counsel in the Commonwealth of Puerto Rico at ten (10) o’clock in the morning (the “Parking Closing
Date”), or such other date or place as may be mutually agreed to by the Parties, the Company agrees
to (and Buyer shall cause the Company to) sell to Seller (or to any entity designated by Seller)
and Seller agrees to purchase from the Company, two hundred (200) Parking Spaces (the “Seller
Parking Spaces”) for a purchase price equal to TWENTY-SEVEN THOUSAND FIVE HUNDRED DOLLARS ($27,500)
per individual parking space, for a total aggregate purchase price equal to FIVE MILLION FIVE
HUNDRED THOUSAND DOLLARS ($5,500,000) (the “Parking Purchase Price”), pursuant to a separate
purchase agreement which shall include the terms and conditions set forth in this Section 6.3. As
a condition to Seller’s obligation to purchase the Seller Parking Spaces as contemplated in this
Section 6.3, Seller and Buyer shall agree to the specific individual parking spaces to be sold to
Seller. On the date of the sale of the Seller Parking Spaces to Seller, the Company and Seller
agree to (and Buyer shall cause the Company to) execute and deliver a deed of individualization and
sale containing the following terms and conditions:

               (i) the Company shall transfer and convey the Seller Parking Spaces to Seller free and clear
of all liens and encumbrances (other than the provisions of all documents relating to the
governance of the Regime and recorded in the Registry of Property) and Seller shall pay to the
Company the Parking Purchase Price, less the Escrow Parking Deposit (as hereinafter defined);

               (ii) the Company shall undertake and accept with respect to the Seller Parking Spaces the
warranties of title and against latent defects imposed on sellers of real property by the Puerto
Rico Civil Code;

               (iii) real property taxes and assessments relating to the Seller Parking Spaces as of the date
of sale for the then current fiscal year shall be deemed to accrue on a daily basis and shall be
apportioned between Seller and the Company as of such date of sale;

               (iv) the deed of individualization and sale shall be executed before a Notary Public selected
by Seller and Seller shall pay the notarial tariff applicable to such deed;

               (v) the Company shall pay the cost of all internal revenue and legal assistance stamps
required to be cancelled on the original of the deed of individualization and sale and Seller shall
pay the cost of all internal revenue and legal assistance stamps required to be cancelled on the
first certified copy of such deed as well as the cost of the recordation of such certified copy in
the Registry of Property; and

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               (g) On the Closing Date Seller shall deliver to Banco Popular de Puerto Rico, as escrow agent
(the “Escrow Agent”) for Seller and Buyer, an amount equal to FOUR HUNDRED THOUSAND DOLLARS
($400,000) (the “Escrow Parking Deposit”). The Escrow Agent shall hold the Escrow Parking Deposit
in a segregated interest-bearing escrow account. In the event that the Seller acquires the Seller
Parking Spaces as contemplated in this Section 6.3, the Escrow Parking Deposit and all income
earned thereon shall be applied to the Parking Purchase Price (and Seller may so instruct the
Escrow Agent in writing). In the event that Seller elects to terminate its obligation to purchase
the Seller Parking Spaces as contemplated in clause (c) of this Section 6.3, the Escrow Parking
Deposit and all income earned thereon shall be reimbursed to Seller (and Seller may so instruct the
Escrow Agent in writing).

               (h) Seller and its representatives and agents shall be entitled, at any reasonable time and
upon reasonable notice, from time to time after the Completion Date and prior to the Parking
Closing Date, to enter the Parking Garage and inspect all work done, labor performed and materials
furnished with respect to the Parking Garage and the Seller Parking Spaces. Seller shall prepare
and sign an inspection statement listing any defect in workmanship or materials which Seller
discovers. If such defects listed in the inspection statement are not corrected on or prior to the
Parking Closing Date, Seller, at its sole option, may (i) extend the Parking Closing Date for such
additional time as Seller elects until such defects are corrected, or (ii) require that the Company
agree to a provision in the deed of individualization and sale whereby the Company covenants to
correct such defects within a reasonable period of time, but nevertheless within ninety (90) days
from the date of execution of the Parking Closing Date, and an amount reasonably estimated to equal
the cost of such correction is withheld from the purchase price and placed in “escrow”.

ARTICLE VII

CONDITIONS PRECEDENT OF SELLER

     The obligation of Seller to consummate the sale of the Shares to Buyer as contemplated hereby
is subject to the fulfillment or written waiver by Seller of each of the following conditions prior
to or at the Closing:

     7.1 Representations and Warranties. The representations and warranties of the Company
and Buyer made hereunder shall be true and correct in all material respects as of the date hereof
and as of the Closing Date, with the same force and effect as though made at and as of the Closing
Date, except for changes permitted or contemplated by this Agreement.

     7.2 Covenants. Buyer shall have performed and complied in all material respects with
all covenants and agreements required by this Agreement to be performed or complied with by Buyer
prior to or at the Closing.

     7.3 Officer’s Certificate. Seller shall have received a certificate of an authorized
officer of each of the Company and Buyer, dated the Closing Date, certifying that the conditions
contained in Sections 7.1 and 7.2 have been fulfilled and confirming and ratifying the agreements
set forth in Sections 3.4 and 6.3 of this Agreement.

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     7.4 No Order or Proceeding. No Order shall have been enacted, entered or promulgated
(and remain in effect) or shall have been enforced by any Governmental Entity which prohibits or
restricts the consummation of the transactions contemplated hereby. No action or proceeding by any
Governmental Entity shall have been commenced (and remain pending) against Buyer, Seller or the
Company seeking to prevent, delay or materially change the transactions contemplated hereby or
challenging any of the terms or provisions of this Agreement or seeking material damages in
connection therewith.

     7.5 Consents. All Consents of Governmental Entities necessary for consummation of the
transactions contemplated hereby, if any, shall have been obtained.

     7.6 Miscellaneous Closing Deliveries. Seller shall have received each of the
following:

          (a) all documents, instruments and other closing deliveries specified in Section 3.3; and

          (b) such other evidence as Seller may reasonably request in order to establish compliance with
the conditions of Closing set forth herein.

ARTICLE VIII

SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION

     8.1 Survival. All representations, warranties, indemnities and other covenants and
agreements made by Seller or Buyer shall survive the Closing for a period of one (1) year, except
for the obligations of the Parties contained in Sections 6.1, 6.2, 6.3, 9.1 and 9.9, all of which
shall survive the Closing and continue in full force and effect thereafter.

     8.2 Indemnification.

          (a) By Seller. Seller shall indemnify and hold harmless Buyer and its officers,
directors, employees or partners against any loss, liability, damage or expense (including
reasonable counsel fees) which any of them may suffer, sustain or become subject to as a result of
any breach of any of the warranties, covenants or agreements of, or any misrepresentations made by
Seller under this Agreement.

          (b) By Buyer. Buyer shall indemnify and hold harmless Seller and its officers,
directors or employees against any loss, liability, damage or expense (including reasonable counsel
fees) which any of them may suffer, sustain or become subject to as a result of any breach of any
of the warranties, covenants or agreements of, or any misrepresentations made by Buyer under this
Agreement.

     8.3 Exclusive Remedy. The Parties agree that the foregoing indemnification provisions
shall be the exclusive remedy of each of the Parties with respect to transactions

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contemplated in this Agreement; provided, however, that Seller shall be entitled to request
specific performance and/or damages in the event that Buyer exercises the Option and (i) Buyer
fails to consummate the acquisition of the Shares as contemplated herein on the Closing Date or
such other date mutually agreed to by the Parties or (ii) the Company and the Buyer fail to comply
with their obligations set forth in Section 6.3 of this Agreement.

ARTICLE IX

MISCELLANEOUS

     9.1 Expenses of the Parties. Each Party will pay its own expenses, including the
expenses of their respective accountants, if any, and attorneys, in connection with the
negotiation, execution and consummation of the transactions contemplated by this Agreement.

     9.2 Parties in Interest. This Agreement will inure to the benefit of and be binding on
and enforceable against the Parties hereto and their respective successors and permitted assigns.

     9.3 Governing Law. This Agreement will be governed by and construed in accordance with
the laws of the Commonwealth, regardless of the laws that might otherwise govern under applicable
principles of conflict of laws thereof.

     9.4 Captions. The captions and section numbers appearing in this Agreement are
inserted only as a matter of convenience and in no way define, limit, or construe the scope and
intent of such sections nor in any way affect the interpretation of this Agreement.

     9.5 Entire Agreement; Amendments. This Agreement and the documents and other
agreements referred to herein, set forth the entire agreement of the parties with respect to the
subject matter hereof, and supersede any prior oral or written agreement or understanding among any
of the parties. No modification or amendment of this Agreement may be made except in writing
signed by all parties.

     9.6 Notices. Any notices or communications required or permitted hereunder will be
deemed sufficiently given by any of the parties hereto to the other parties if such notice or
communication is in writing and delivered in person or by a nationally recognized overnight
delivery service, sent via facsimile, or mailed (postage prepaid), by registered or certified mail,
return receipt requested, as follows:

If to Seller, to:

CREFISA, Inc.

207 Ponce de León Avenue

San Juan, Puerto Rico 00917

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Fax: (787) 777-4147

Attention: General Counsel

If to Buyer, to:

D&D Investment Group, S.E.

654 Plaza, Suite 933

654 Muñoz Rivera Avenue

San Juan, Puerto Rico 00918

Fax: (787) 758-2529

Attention: Mr. Henry A. Orlinsky

or to such other address or addresses as hereafter will be furnished as provided in this Section
9.6 by any of the parties hereto to the other parties hereto. Each such notice will be deemed to
have been given as of the date received. A return receipt, or evidence of refusal, obtained by the
Post Office authorities at the request of the sender, or the expiration of ten days after mailing,
will be conclusive as of the fact of receipt.

     9.7 Counterparts. This Agreement may be executed in counterparts, each of which will
be deemed to be an original, and together will constitute one and the same instrument.

     9.8 Assignment. This Agreement may not be assigned by either party hereto without the
prior written consent of the other party.

     9.9 Brokers. Buyer and Seller each represent and warrant to the other that all
negotiations between them have been carried out by them directly, without the intervention of any
third person, and that there are no broker’s commissions, finder’s fees or other payment payable to
any person in connection with the transactions contemplated hereby.

     9.10 Extension; Waiver. At any time prior to the Closing Date, the party entitled to
the benefits of the respective term or provision may extend the time for the performance of any of
the obligations or other acts of the other parties hereto, waive any inaccuracies in the
representations and warranties contained herein or in any document, certificate or writing
delivered pursuant hereto or waive compliance with any obligation, covenant, agreement or condition
contained herein. Any agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of the party entitled to the
benefits of such extended or waived term or provision.

     9.11 Validity. The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this Agreement, each of
which shall remain in full force and effect.

     9.12 Force Majeure. The parties may be excused from compliance with their obligations
under this Agreement for so long as and to the extent that the required performance is prevented or
delayed by an event of force majeure, which will include acts of God; fire; explosion; flood;
tornado; category 3 or higher storm; acts of public enemies; war or civil disturbance; sabotage;
epidemic and/or quarantine; or any other unavoidable casualty or other

13

 

causes beyond the control and without the fault or negligence of the Company and which by the
exercise of reasonable diligence the Company is unable to prevent or provide against.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written
above.

	 	 	 	 	 
	SELLER: 

CREFISA, INC. 

 	 	 
	By:  	 	 	 
	 	Name:  	Carlos M. García 	 	 
	 	Title:  	Director 	 	 
	 
	 	 	 
	By:  	 	 	 
	 	Name:  	María Calero 	 	 
	 	Title:  	Director 	 	 
	 
	COMPANY:

QUISQUEYA 12, INC.

 	 	 
	By:  	 	 	 
	 	Name:  	Henry A. Orlinsky 	 	 
	 	Title:  	Director 	 	 
	 
	 	 	 
	By:  	 	 	 
	 	Name:  	Carlos M. García 	 	 
	 	Title:  	Director 	 	 
	 

BUYER:

D&D INVESTMENT GROUP, S.E.,

Represented herein by its managing partner

221 Ponce de León Realty, Inc.

	 	 	 	 	 
	 	 	 
	By:  	 	 	 
	 	Name:  	Henry A. Orlinsky                              	 	 
	 	Title:  	President 	 	 
	 

Affidavit No.            

     Acknowledged and subscribed before me in San Juan, Puerto Rico this 21st day of December,
2006, by the following persons, personally known to me: Henry A. Orlinsky, married, of legal age,
executive, and resident of Teanick, New Jersey.

	 	 	 	 	 
	 	 	 
	 	 	 
	 	NOTARY PUBLIC 	 
	 	 	 
	 

14EX-10.20 MERGE AGREEMENT

 

Exhibit 10.20

MERGER AGREEMENT

     MERGER AGREEMENT dated as of October 15, 2007 (the “Agreement” or “Merger Agreement”), among
BANCO SANTANDER PUERTO RICO (the “Bank”), a bank organized under the laws of the Commonwealth of
Puerto Rico (the “Commonwealth”) and SANTANDER MORTGAGE CORPORATION (“Santander Mortgage”), a
corporation organized under the laws of the Commonwealth and a wholly-owned subsidiary of the Bank.

     WHEREAS, the Bank is a bank organized under the Banking Law of the Commonwealth, Act No. 55 of
May 12, 1933, as amended (the “Banking Law”), with its principal office and place of business at
207 Ponce de Leon Avenue, San Juan, Puerto Rico, with an authorized capital of 200,000,000 shares
of common stock, par value $2.50 per share, and 10,000,000 shares of preferred stock, par value
$25.00 per share;

     WHEREAS, Santander Mortgage is corporation organized under the laws of the Commonwealth that
is duly licensed to engage in mortgage banking in the Commonwealth of Puerto Rico, and having an
authorized capital of 120,000 shares of common stock, par value $100.00 per share; and

     WHEREAS, Section 15(a) (7 L.P.R.A. sec. 91a) of the Puerto Rico Banking Law, as amended (the
“Banking Law”), provides that if a Puerto Rico bank owns more than ninety percent (90%) of the
issued and outstanding stock of a corporation, said corporation may be merged with and into the
bank;

     WHEREAS, the Bank owns one hundred percent (100%) of the issued and outstanding common stock
of Santander Mortgage;

     WHEREAS, the Boards of Directors of the Bank and Santander Mortgage have determined that is in
the best interests of the Bank and Santander Mortgage and of their respective stockholders that
Santander Mortgage be merged with and into the Bank (the “Merger”) and that the Bank continues with
all of the existing operations of Santander Mortgage after the effective date of the Merger;

     NOW, THEREFORE, in consideration of the premises, the Bank and Santander Mortgage hereby make
this Agreement and prescribe the terms and conditions of the Merger and the mode of carrying it
into effect as follows:

ARTICLE I

DEFINITIONS

     Section 1.01 Definitions. The following terms, as used herein, have the following respective
meanings:

“Bank” means Banco Santander Puerto Rico prior to the Effective Date, and Banco
Santander Puerto Rico (including all of the assets and liabilities of Santander

 

 

Mortgage) on and after the Effective Date.

“Banking Law” means the Banking Law of the Commonwealth, Act No. 55 of May 12, 1933,
as amended.

“Bank Shares” means the shares of common stock of the Bank, par value $2.50 per share.

“Commissioner” means the Commissioner of Financial Institutions of the Commonwealth.

“Commonwealth” means the Commonwealth of Puerto Rico.

“Effective Date” shall have the meaning set forth in Section 4.02.

“FDIC” means the Federal Deposit Insurance Corporation.

“Regulatory Approvals” shall have the meaning set forth in Section 3.03.

“Santander Mortgage” means Santander Mortgage Corporation, a corporation organized
under the laws of the Commonwealth and a wholly-owned subsidiary of the Bank prior to
the Effective Date.

“Santander Mortgage Shares” means the shares of common stock of the Santander
Mortgage, par value $100.00 per share.

ARTICLE II

THE MERGER

     Section 2.01 Merger. On the Effective Date, Santander Mortgage shall be merged with and into
the Bank and the Bank shall receive into itself Santander Mortgage pursuant to the provisions of
and with the effects provided in Section 15(a) of the Banking Law.

     Section 2.02 Conversion. Upon the Effective Date:

     (a) Each Bank Share issued and outstanding immediately prior to the Effective
Date shall not be affected by the Merger and shall remain issued in the name of
Santander BanCorp, without any further action on the part of the Bank, Santander
Mortgage or any other person.

     (b) Each share of Santander Mortgage issued prior to the Effective
Date shall be cancelled.

2

 

     Section 2.03 Certificates after the Effective Date.

     (a) Upon the Effective Date, each outstanding certificate that prior to the
Effective Date had represented Bank Shares shall remain issued and outstanding, and
shall continue to represent the number of issued and outstanding Bank Shares stated in
such certificate.

     Section 2.04 Effects of the Merger. Upon the Effective Date:

     (a) The name of the Bank after the Effective Date shall continue to be Banco
Santander Puerto Rico. The main office, principal place of business, officers and
other personnel of the Bank after the Effective Date shall be the same as the main
office, principal place of business, officers and other personnel of the Bank
immediately prior to the Effective Date;

     (b) The articles of incorporation of the Bank after the Effective Date shall be
the articles of incorporation of the Bank prior to the Effective Date, and the by-laws
of the Bank after the Effective Date shall be the by-laws of the Bank prior to the
Effective Date. The authorized capital of the Bank after the Effective Date shall be
authorized capital of the Bank prior to the Effective Date, consisting of 200,000,000
shares of common stock, par value $2.50 per share, and 10,000,000 shares of preferred
stock, par value $25.00 per share;

     (c) The Bank and Santander Mortgage shall be considered as one sole corporate
entity under the name of the Bank after the Effective Date, and the Bank shall enjoy
after the Effective Date all the rights, privileges and franchises and shall be
subject to all the restrictions, obligations and duties of the Bank and Santander
Mortgage prior to the Effective Date;

     (d) Each and all the property, shares, rights, franchises, powers and privileges
of the Bank and Santander Mortgage prior to the Effective Date shall be the property
of the Bank after the Effective Date, and the Bank after the Effective Date shall
have, as regards such property, shares, rights, franchises, powers and privileges, the
same rights as Santander Mortgage and the Bank each possessed prior to the Effective
Date;

     (e) The Bank after the Effective Date shall assume each and every obligation of
the Bank and Santander Mortgage prior to the Effective Date, and shall have all the
obligations and shall be liable for all debts and the fulfillment of all contracts and
obligations of the Bank and Santander Mortgage, just as they were prior
to the Effective Date. Any reference to the Bank or Santander Mortgage in any
contract, will or document, whether executed or taking effect before or after the
Merger, shall be considered a reference to the Bank after the Effective Date if not

3

 

inconsistent with the other provision of the contract, will or document;

     (f) All suits, actions or other proceedings pending in any court on the Effective
Date shall continue to their termination just as if no merger had taken place;
provided, however, that the Bank after the Effective Date may be substituted in place
of Santander Mortgage by order of the court taking cognizance of the proceedings;

     (g) Any employees of Santander Mortgage immediately prior to the Effective Date
shall become employees of the Bank on the Effective Date; and

     (h) The directors and senior executive officers of the Bank after the Effective
Date shall consist of the directors and senior executive officers of the Bank on and
as of the Effective Date (the names and addresses of the current directors and senior
executive officers of the Bank as of the date hereof are listed in Appendix I attached
hereto), which directors and senior executive officers shall continue to hold office
in the Bank after the Effective Date, unless sooner removed or disqualified, until
their successors are elected at the next annual meeting of the stockholders of the
Bank or are appointed in accordance with the by-laws of the Bank and have been
qualified.

ARTICLE III

UNDERTAKINGS

     Section 3.01. Bank Stockholder Approval. The Bank undertakes to submit this Agreement for
consideration and approval by its sole shareholder, Santander BanCorp, pursuant to Section 15 of
the Banking Law, or in any other manner permitted or required by law.

     Section 3.02. Santander Mortgage Stockholder Approval. The Bank, as the sole shareholder of
Santander Mortgage, agrees to vote all of its shares of common stock of Santander Mortgage in favor
of the approval of this Agreement or otherwise approve or consent in writing to the approval of
this Agreement.

     Section 3.03. Regulatory Approvals. Each of the Bank and Santander Mortgage shall (i) proceed
expeditiously and cooperate fully in determining which filings are required to be made prior to the
Effective Date with, and which consents, approvals, permits or authorizations are required to be
obtained prior to the Effective Date from governmental or regulatory authorities of the
Commonwealth and the United States, including the approvals of the Commissioner and the FDIC
(collectively, the “Regulatory Approvals”) in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby; and (ii) timely make all
such filings and timely seek all Regulatory Approvals; and take all other action and do all things
necessary, prior or appropriate to consummate and make effective all transactions contemplated
by this Agreement as soon as possible.

     Section 3.04. Other Undertakings. If at any time (whether before or after the Effective

4

 

Date)
the Bank considers that any further assignments, conveyances or assurances in law are necessary or
desirable to vest, perfect or confirm of record in the Bank after the Effective Date the title to
any property or rights of Santander Mortgage, or otherwise to carry out the provisions hereof, the
Bank and Santander Mortgage hereby undertake through their proper officers and directors to execute
and deliver immediately any and all proper deeds, assignments and assurances on law, and to do all
things necessary or proper to vest, perfect or confirm title to such property or rights in the Bank
after the Effective Date and otherwise to carry out the provisions hereof.

ARTICLE IV

CONDITIONS PRECEDENT

     Section 4.01 Conditions Precedent to the Merger. The consummation of the Merger contemplated
by this Agreement is subject to the satisfaction of the following conditions:

     (a) The approval of the shareholders of the Bank and Santander Mortgage shall
have been obtained;

     (b) All Regulatory Approvals (or waiver or exemption therefrom) and satisfaction
of all other requirements prescribed by law which are necessary to the consummation of
the transactions contemplated by this Agreement shall have been obtained and all
statutory waiting periods shall have expired, without the imposition of any condition
or requirements that would materially and adversely affect the operations or business
prospects of the Bank following the Effective Date so as to render inadvisable the
consummation of such transaction.

     Section 4.02 Effective Date. The Merger provided for herein shall become effective on the date
as soon as practicable after each condition precedent listed in Section 4.01 shall have been
satisfied. The Merger shall become effective at the time this Agreement is properly perfected and
filed together with the required Certificate of Title of Ownership and Merger with the Puerto Rico
State Department in accordance with the applicable requirements of Section 15(a) of the Banking Law
(the “Effective Date”).

ARTICLE V

TERMINATION AND DEFERRAL

     Section 5.01 Termination of the Merger. Prior to the Effective Date, this Agreement may be
terminated at any time by written notice by either the Bank or Santander Mortgage to the other that
its Board of Directors is of the opinion that:

     (a) Any action, suit, proceeding, or claim is commenced or threatened or any
claim is made that could make consummation of the Merger, in the sole opinion of such
Board of Directors, inadvisable;

5

 

     (b) It is likely that a Regulatory Approval, in the sole opinion of such Board of
Directors, will not be obtained, or if obtained, will contain or impose any condition
or requirement that would materially and adversely affect the operations or business
prospects of the Bank following the Effective Date so as to render inadvisable the
consummation of the Merger; or

     (c) Any other reason exists that makes consummation of the Merger in the sole
opinion of such Board of Directors, inadvisable.

     Upon such determination, this Agreement shall be void and there shall be no liability
hereunder or on account of such termination on the part of the Bank or Santander Mortgage or the
directors, officers, employees, agents or stockholders or any of them.

     Section 5.02 Deferral of Effective Date. Consummation of the Merger herein provided may be
deferred by the Board of Directors of the Bank for a reasonable period of time if the Board of
Directors of the Bank determines, in its sole discretion, that such deferral would be in the best
interest of the Bank and the shareholder of the Bank.

ARTICLE VI

MISCELLANEOUS

     Section 6.01 Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Puerto Rico.

     Section 6.02 Amendment. This Agreement and Appendix I hereto may be amended by the parties
hereto, by action taken by or on behalf of their respective Board of Directors at any time before
or after approval by the stockholders of the parties.

     Section 6.03 Counterparts. For the convenience of the parties, this Agreement may be executed
in one or more counterparts, each of which shall be deemed an original but all of which together
shall constitute one and the same document.

     Section 6.04 Severability. If any provision of this Agreement shall be held invalid under any
applicable law, such invalidity shall not affect any other provision of this Agreement, and, to
this end, the provisions hereof are severable.

     Section 6.05 Headings. The headings of the various Articles and Sections of this
Agreement have been included for convenience of reference only and shall not affect in any way
the express provisions of this Agreement.

     IN WITNESS WHEREOF, the Bank and Santander Mortgage have caused this Merger Agreement to be
executed by their duly authorized officers as of the date first above written.

6

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	BANCO SANTANDER PUERTO RICO	 	 	 	SANTANDER MORTGAGE CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	\s\ José R. González	 	 	 	By:	 	\s\ María Calero	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	José R. González
	 	 	 	 	 	Name:
	 	María Calero	 	 
	 

	 	Title:
	 	President and Chief Executive Officer
	 	 	 	 	 	Title:
	 	Executive Vice President	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:	 	\s\ Carlos M. García	 	 	 	By:	 	\s\ Rafael S. Bonilla	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Carlos M. García
	 	 	 	 	 	Name:
	 	Rafael S. Bonilla	 	 
	 

	 	Title:
	 	Senior Executive Vice President
	 	 	 	 	 	Title:
	 	Senior Vice President	 	 

7

 

APPENDIX I

Banco Santander Puerto Rico

Directors and Senior Executive Officers

	 	 	 
	Name and Title	 	Address
	 
	 	 
	Gonzalo de las Heras
	 	 
	Chairman of the Board of Directors 

Occupation: General Director 

Banco Santander, S.A

	 	333 East 57th St. Apt. 3A 

New York, NY 10022
	 
	 	 
	Roberto H. Valentín
	 	 
	Director 

Occupation: Private Investor 

President & Chairman 

Puerto Rico Box Corp 

Eric’s Products, Inc. 

VIE Development Corp. 

Dianissa Development Corp. 

RHV Investment Co. 

Desarrolladora Roosevelt, Inc. 

Costa Córcega S.E. 

Nico Development Corp

	 	Urb. Garden Hills GA-21

Paseo del Parque 

Guaynabo, PR 00966
	 
	 	 
	Jesús M. Zabalza
	 	 
	Director 

Occupation: Director Banco Santander S.A

	 	Urb. La Finca Po Del Rio No 4 Chalet 12 28223 
Somosagua Pozuelo 

Madrid, España
	 
	 	 
	José R. González
	 	 
	Director 

President 

Chief Executive Officer

	 	Parque de Santa Maria

Q8 Calle Petunia

San Juan, PR 00927
	 
	 	 
	Carlos M. García
	 	 
	Director 

Senior Executive Vice President and

Chief Operating Officer

	 	Villas Reales

333 Via Louvre

Guaynabo, PR 00969
	 
	 	 
	María Calero
	 	 
	Director 

Executive Vice President and
 Chief
Accounting Officer

	 	Urb. Paseo del Parque 

14 Parque Las Ramblas 

San Juan, PR 00926
	 
	 	 
	José Alvarez
	 	 
	Executive Vice President

	 	Urb. Paseo del Parque 
13 Parque Las Ramblas 
San Juan, PR 00926
	 
	 	 
	Tomás E. Torres
	 	Urb. Mansión del Mar 

8

 

	 	 	 
	Name and Title	 	Address
	Executive Vice President

	 	Calle Pelicano MM 111 
Toa Baja, PR 00949

9

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