EXHIBIT 10.5
EMPLOYMENT CONTRACT
In the city of San Juan, Puerto Rico, today the ___ of ____________ of 2002.
APPEAR
FOR THE FIRST PART: Triple-S, INC., a corporation organized and engaged in
business in conformance with Commonwealth of Puerto Rico laws, represented here
by its Board of Directors' President, DR. FERNANDO J. YSERN BORRAS, of legal
age, married, a physician by trade, and residing in Caguas, Puerto Rico, and by
ATTY. JUAN JOSE LEON SOTO, of legal age, married, a licensed attorney, residing
in Caguas, Puerto Rico, and the Director of this Board of Directors whose
authorities and duties they are prepared to justify as soon as it is required
of them.
FOR THE SECOND PART: SOCORRO RIVAS RODRIGUEZ, of legal age, married, an
executive and a resident of San Juan, Puerto Rico.
The undersigned have the legal capacity to execute this document, and to that
effect, freely and voluntarily.
EXPOSE
FIRST: For purposes of abbreviation and ease in understanding and analyzing
this agreement of intentions, the following terms shall have the meaning stated
in these definitions:
a. "TRIPLE-S": Triple-S, Inc.;
b. The "CEO": The Chief Executive Officer, Socorro Rivas
Rodriguez;
c. The "BOARD": The Board of Directors of Triple-S, Inc.;
d. The "CONTRACT": This Employment Contract;
e. The "BUSINESS PLAN": The Business Plan or Annual Budget of
Triple-S, just as it is prepared in November each year, for
the following natural year and;
f. The "AAB": The Additional Annual Bonus, one of the CEO's
concepts for economic remuneration, as specified in the
seventh and eighth clauses in this CONTRACT
g. The "PBD"; President of the BOARD OF Triple-S, Inc.
SECOND: That Triple-S, Inc. is a company dedicated, among other activities, to
providing insurance coverage for the receipt of medical-hospital services
throughout the Commonwealth of Puerto Rico.
THIRD: That the CEO is a vastly experienced professional in the business field,
having obtained a Bachelors Degree in Business Administration from the
University of Puerto Rico, as well as the Certified Public Accountant
certification. The CEO also is knowledgeable about the business of insurance
having served in various capacities in Triple-S since January 2, 1982.
FOURTH: For purposes of establishing the internal relationship between both
contracting parts as herein stated, they agree to the present CONTRACT subject
to the following Clauses and Conditions.
GENERAL PROVISIONS
1. EXCELLENCE IN PERFORMANCE. Through this CONTRACT, the CEO is
under the obligation of dedicating and directing all of her
working time, intellect, attention, energy, experience and
knowledge towards the protection of Triple-S' best interests,
within the framework of excellence her capacity and ability
permit, according to industry norms.
2. OFFICER AND TITLE. The CEO will carry the Title of Chief
Executive Officer and Corporate President of Triple-S.
3. HIERARCHY. The CEO will respond to the President of Triple-S
Management as well as to the Board.
4. FIDUCIARY NORMS AND OBLIGATIONS. The CEO will be under the
obligation to conform loyally and fully with all
administrative guidelines, rules, regulations and norms
established by Triple-S, developing and establishing the
operational controls necessary to administer, direct and
protect Triple-S' best interests. The CEO will be loyal to
Triple-S and the rest of the companies within the Tripe-S
Corporate Group at all times, and will solemnly recognize the
obligation represented in her acceptance of the current
title.
SPECIFIC PROVISIONS
5. PRINCIPAL FUNCTIONS. The functions the CEO will undertake
through this contract will be all those necessary and proper
for the Chief Executive Officer of a corporation size,
complexity and nature of Triple-S. The CEO's functions will
invariably be performed in Triple-S' best interests and for
its protection.
6. INCIDENTAL OR ACCESSORY FUNCTIONS. The CEO should also
fulfill all those functions, tasks and commissions,
incidental or accessory, which the BOARD assigns her from
time to time.
7. ECONOMIC REMUNERATION. The CEO will be economically
remunerated in the following manner for the services that, in
keeping with this CONTRACT, she is under the obligation to
fulfill:
a. Salary. An monthly salary of $25,000.66, (equivalent
to an annual salary of $300,000.00) for the term of
this CONTRACT, and as may be modified in keeping
with the provisions of this CONTRACT's clause number
ten (10).
b. Christmas Bonus. A Christmas bonus equivalent to 5%
of her annual salary, plus half a month's salary,
plus any bonus Triple-S is obligated by law
provisions to pay. This Christmas bonus will be paid
in conformance to the Triple-S' policies and norms
applicable to their management employees and as
modified from time to time.
c. Additional Annual Bonus. The Additional Annual Bonus
(AAB) that will be computed each year as is
established in the following clause of this
CONTRACT.
8. COMPUTING THE ADDITIONAL ANNUAL BONUS. The Additional Annual
Bonus (AAB) will be an amount never to exceed FORTY PERCENT
(40%) of the annual salary for the year in question (MAXIMUM
BONUS). The AAB is determined annually by the Board of
Directors immediately after Triple-S receives its financial
statements for the pertinent economic year, certified by
their external auditors. The AAB will be credited to the CEO
as soon as the Board has determined it, which will never be
later than sixty (60) calendar days beginning on the date in
which the certified financial statements are received.
The AAB will vary depending on whether or not Triple-S
achieves ONE HUNDRED PERCENT (100%) or more of the budgeted
and audited year's BUSINESS PLAN, in the following manner:
A. In case Triple-S achieves ONE HUNDRED PERCENT (100%)
or more of the BUSINESS PLAN for the year in
question, the AAB will be EIGHTY PERCENT (80%) of
the MAXIMUM BONUS, plus:
1. An additional TEN PERCENT (10%), for NINETY
PERCENT (90%) of the maximum bonus,
considering the total effect of the
following factors:
a) A reduction (in percentages) of
the recurring administrative
expenses, in regards to the gross
income earned by Triple-S over the
consolidated budget.
b) A net income larger than the one
budgeted.
c) The volume of business from
Triple-S exceeds what was
budgeted.
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2. An additional TEN PERCENT (10%) in order to
reach the ONE HUNDRED PERCENT (100%) of the
MAXIMUM BONUS, at the Board's discretion.
B. If TRIPLE-S achieves less than ONE HUNDRED PERCENT
(100%) of its BUSINESS PLAN, the AAB will vary
between ZERO PERCENT (0%) up to SEVENTY NINE PERCENT
(79%) of the MAXIMUM BONUS, at the BOARD'S
discretion, considering the following factors:
1. The magnitude of an unfavorable deviation,
larger than TEN PERCENT (10%), from the
BUSINESS PLAN.
2. The magnitude of the annual increase of
recurrent administrative expenses, in
regards to the gross income earned by
Triple-S over the budget.
3. A net annual income lower than the budget.
4. The business volume from Triple-S does not
reach the amount budgeted.
5. Any other factors the BOARD deems, at its
discretion, should be considered.
9. DEFERRED COMPENSATION. The CEO will have the power to, from
time to time, defer payments for any of the before mentioned
economic remuneration concepts in keeping with her wishes, if
and when such action is in accordance to the applicable law
provisions and to good corporate practices.
10. ANNUAL SALARY REVISION. The CEO's SALARY will be reviewed
annually, effective January 1st of each year, beginning on
January 1, 2003. Said revision would take into account the
percentile increase in Puerto Rico's general economic
inflation rate, as determined by the Planning Board for the
previous year, and other factors regarding compensation of
other Officers of same or similar position and responsibility
within the local industry and commerce, and any other
relevant factor. The Compensation Committee shall do the
computing of the salary change for the Board's recommendation
and approval at the time it reviews compensation.
11. FRINGE BENEFITS. The CEO will have the right to all fringe
benefits such as: Retirement Plan, Health Plan, vacations,
sick leave, disability insurance and others, in conformance
to Triple-S' policies and norms as applicable to its
management employees, and as modified from time to time.
Triple-S will also reimburse or pay the CEO the following:
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a. Representation, travel and miscellaneous expenses
which are reasonably and necessarily incurred in
carrying out her official duties;
b. The right to use an automobile of a category in
keeping with the post she occupies;
c. Annual membership fees to a private club and two
business related clubs, i.e., Banker's Club and;
d. Annual membership fees to two professional
associations such as the College of Certified Public
Accountants, and the American Institute of Certified
Public Accountants;
e. Any other related expenses that the BOARD deems
necessary in carrying out her duties.
12. DEDUCTIONS. Triple-S will make all deductions from the CEO's
remuneration that the law requires such as: social security,
retained income taxes, and her spouse's and any other
optional dependent's life and disability insurance portion.
The CEO is authorized to acquire any life insurance coverage
in addition to the one currently held by Triple-S at her own
responsibility and cost.
13. EFFECTIVENESS AND TERM OF CONTRACT. This contract's effective
date is established to be May 1, 2002 and its ending date is
December 31, 2004. The Board of Directors must notify the CEO
no later than one year before the ending date of this
original contract term or of its renovation, of their
decision to renew or not renew it. In the same manner, the
CEO must notify Triple-S no later than one year before the
ending date, of her decision to renew or not renew it. If
Triple-S decides not to renew the Contract, it is under the
obligation to pay the CEO one year's salary. Triple-S must
also have fulfilled all obligations to the CEO, which
correspond to her contract's terms, including those regarding
compensation and fringe benefits. Disbursement of this amount
shall occur no later than the last effective date of this
contract. In case this contract is renewed and then
terminated before the renovation's ending date, Triple-S is
under the obligation of providing the CEO with the same
compensation.
14. UNILATERAL RESOLUTION. The parties agree that Triple-S has
the right to dissolve this contract at any time before the
agreed ending date. To exercise this right, the PBD will
notify the CEO thirty (30) days before the effective date of
said unilateral dissolution. As a condition for Triple-S to
exercise this right, it must proceed immediately with the
total cash liquidation of the balance of this professional
employment contract, in addition to the one year salary
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specified in paragraph 13, including the fringe benefits, and
subtracting the discounts applicable by law. Triple-S will
have the option of continuing monthly payments until the
contract is completed.
15. UNILATERAL RESOLUTION- JUST CAUSE. It is understood that
Triple-S is assisted by just cause for unilaterally
dissolving this CONTRACT when the CEO incurs in any of the
following behaviors:
a. negligence in carrying out her duties, or their late,
inadequate or inept performance;
b. conviction of a felony or misdemeanor involving moral
depravation;
c. insubordination;
d. material non-conformance to corporate norms, rules and
agreements, or those of this CONTRACT;
e. improper or disorderly conduct;
f. existence of a conflict of interests;
g. substantial reduction of Triple-S` operations;
16. PRIVILEGED MATERIAL- CONFIDENTIALITY. Except as formerly
stated, all the information Triple-S and all the companies
under the Triple-S Corporate Group share with the CEO, or
that she is privy to as a consequence of her employee
relationship with Triple-S, in the guise of any chores,
relationships, contacts, businesses, clients and duties, will
constitute privileged and confidential material.
Consequently, the CEO will not divulge said information to
third parties, including Triple-S employees, functionaries or
officers who do not have a legitimate reason to know this
information. The confidentiality and privilege obligation
discussed here shall survive the conclusion, unilateral
resolution or termination of this CONTRACT.
17. DOCUMENTS. At the end of this contract, the CEO will keep or
return all documents, objects, materials and the rest of the
information she has obtained through Triple-S business, in
the Triple-S offices, recognizing at the same time that said
documents, objects, materials and related information are the
exclusive property of Triple-S.
18. TRIPLE-S PERSONNEL. The CEO will not solicit or encourage the
Triple-S and subsidiary personnel to quit their jobs and join
her or a third party in other activities that are not to
Triple-S's benefit during the duration of her contract with
Triple-S and for one year after the contract with Triple-S
ends.
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THIS CONTRACT IS AGREED UPON BY THE UNDERSIGNED IN CONSIDERATION OF THE
FOLLOWING:
MISCELLANEOUS PROVISIONS
19. CONTRACT CONSTRUCTION. Triple-S wrote this contract,
therefore its intellectual property and author's rights are
theirs. At the same time, the contract is a product of
negotiations between both parties, so no assumption or
inference should be made in favor of any of them.
20. CEDING. The CEO may not totally or partially cede the
obligations and responsibilities assumed through this
CONTRACT to a third party.
21. PACT TOTALITY. This document constitutes the total and
complete pact agreed to by the contracting parts. No other
former agreement, contract or pact should be considered valid
or effective.
22. AMENDMENTS. In case the undersigned wish to amend the content
of any clause in this CONTRACT, this should be done in
writing, clearly stating which clause is being amended and
what the amendment consists of.
23. HEADINGS. The headings included in this CONTRACT have been
added to aid in reading and analyzing it. At no time should
these headings be interpreted as the pact agreed upon by the
undersigned, or that they amend the content of the clauses
each one heads.
28. LIMITED INVALIDITY. In case any clause in this CONTRACT is
declared null or illegal, the rest of the clauses will
continue with full effectiveness and force.
29. INTERPRETATION. This CONTRACT will be interpreted according
to the prevailing judicial order in the Commonwealth of
Puerto Rico.
30. JURISDICTION AND COMPETENCE. If it were necessary to
judicially annul any controversy related to this CONTRACT,
the parties will submit voluntarily to the jurisdiction of
the Puerto Rico Court of First Instance and would choose the
San Juan Halls of the Superior or District Court, as were the
case, to void it.
SUCH IS THE PACT agreed upon by contracting parties, which they recognize and
sign in San Juan, Puerto Rico on the date stated above.
Triple-S, Inc. Mrs. Socorro Rivas Rodriguez
Signed Signed
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By: Dr. Fernando J. Ysern Borras By: Mrs. Socorro Rivas Rodriguez
Signed
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By: Atty. Juan Jose Leon Soto