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EXHIBIT 4.1
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LOAN AND GUARANTY AGREEMENT
AMONG
PUERTO RICO INDUSTRIAL, TOURIST
EDUCATIONAL, MEDICAL AND ENVIRONMENTAL CONTROL
FACILITIES FINANCING AUTHORITY,
DORAL PROPERTIES, INC.
AND
DORAL FINANCIAL CORPORATION
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DATED __________, 1999
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This Loan and Guaranty Agreement has been assigned to Citibank, N.A.,
as Trustee under a Trust Agreement dated __________, 1999, as amended or
supplemented from time to time, from Puerto Rico Industrial, Tourist,
Educational, Medical and Environmental Control Facilities Financing Authority
to such Trustee. A copy of such Trust Agreement may be inspected at the
corporate trust office of the Trustee at __________________ Building in San
▇▇▇▇, Puerto Rico.
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TABLE OF CONTENTS
PAGE
ARTICLE I - Definitions and Rules of Construction.................................................................1
Section 1.01. Definitions...............................................................................1
Section 1.02. Rules of Construction....................................................................10
ARTICLE II - Representations.....................................................................................11
Section 2.01. Representations by the Authority.........................................................11
Section 2.02. Representations, Warranties and Covenants
of the Borrower................................................................................12
Section 2.03. Representations, Warranties and Covenants
of the Guarantor...............................................................................14
ARTICLE III - Construction of the Project........................................................................15
Section 3.01. Construction of Project..................................................................15
Section 3.02. Revision of Plans and Specifications.....................................................15
Section 3.03. Disbursements from Construction Fund.....................................................15
Section 3.04. Borrower Required to Pay Cost of Project.................................................16
Section 3.05. Establishment of Completion Date.........................................................16
Section 3.06. Certificate of Independent Accountants...................................................16
ARTICLE IV - Loan by the Authority to the Borrower;Repayment; Maintenance; Indemnity.............................17
Section 4.01. Issuance of the Bonds to Fund the Loan;
Making of the Loan; Repayment..................................................................17
Section 4.02. No Set-Off...............................................................................19
Section 4.03. Covenant to Maintain the Project.........................................................19
Section 4.04. Expenses.................................................................................20
Section 4.05. Indemnification..........................................................................21
Section 4.06. Past Due Payments........................................................................24
Section 4.07. Payment of Costs upon Default............................................................24
Section 4.08. Guarantee................................................................................25
ARTICLE V - Further Agreements...................................................................................27
Section 5.01. Covenant to Maintain Existence;
Consolidation, Merger and Sale.................................................................27
Section 5.02. No Warranty by Authority.................................................................27
Section 5.03. Maintenance and Examination of Books
and Records of Borrower; Right of Inspection...................................................27
Section 5.04. Officers of Authority Not Liable.........................................................28
Section 5.05. Compliance with Applicable Law...........................................................28
Section 5.06. Authority's Performance of the
Borrower's Obligations.........................................................................29
Section 5.07. Indemnification with Respect to
Government Obligations.........................................................................29
Section 5.08. Annual Reports...........................................................................29
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Section 5.09. Covenant by Borrower as to Compliance
with Trust Agreement...........................................................................30
Section 5.10. Covenant as to Source of Income..........................................................30
Section 5.11. No Purchase of Bonds by Borrower or
Guarantor......................................................................................32
Section 5.12. No Interest of Authority in Project......................................................32
Section 5.13. Consent to Jurisdiction..................................................................32
Section 5.14. Limitation Upon Creation of Liens on
Voting Stock of Principal Mortgage Banking
Subsidiaries...................................................................................33
Section 5.15. Limitation upon Disposition of Voting
Stock of Principal Mortgage Banking Subsidiaries...............................................34
Section 5.16. Liens....................................................................................35
ARTICLE VI - Sale of the Project; Assignments....................................................................36
Section 6.01. Sale, Transfer or Encumbrance of
the Project....................................................................................36
Section 6.02. Assignment by Borrower...................................................................37
Section 6.03. Assignment by Authority..................................................................38
ARTICLE VII - Events of Default and Remedies.....................................................................39
Section 7.01. Events of Default........................................................................39
Section 7.02. Acceleration; Remedies...................................................................42
Section 7.03. Remedies Not Exclusive...................................................................43
Section 7.04. Attorneys' Fees and Expenses.............................................................44
Section 7.05. Waivers..................................................................................44
ARTICLE VIII - Prepayment of the Loan............................................................................44
Section 8.01. Optional Prepayment......................................................................44
Section 8.02. Mandatory Prepayment of Loan.............................................................45
Section 8.03. Extraordinary Optional Prepayment
of Loan........................................................................................46
Section 8.04. Relative Position of Loan Agreement
and Trust Agreement............................................................................48
ARTICLE IX - Miscellaneous.......................................................................................48
Section 9.01. Termination..............................................................................48
Section 9.02. Reference to Bonds Ineffective After
Bonds Paid.....................................................................................48
Section 9.03. No Additional Waiver Implied by
One Waiver.....................................................................................49
Section 9.04. Authority Representative.................................................................49
Section 9.05. Borrower Representative..................................................................49
Section 9.06. Confidential Information.................................................................49
Section 9.07. Notices..................................................................................50
Section 9.08. Binding Effect...........................................................................51
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Section 9.09. If Payment or Performance Date Not
a Business Day.................................................................................51
Section 9.10. Severability.............................................................................51
Section 9.11. Amendments, Changes and Modifications....................................................51
Section 9.12. Execution in Counterparts................................................................51
Section 9.13. Applicable Law...........................................................................52
Section 9.14. No Charge Against Authority Credit.......................................................52
Section 9.15. Authority Not Liable.....................................................................52
Section 9.16. Agreement Supersedes Prior Agreements....................................................52
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THIS LOAN AND GUARANTY AGREEMENT, dated __________, 1999, by and among
PUERTO RICO INDUSTRIAL, TOURIST, EDUCATIONAL, MEDICAL AND ENVIRONMENTAL CONTROL
FACILITIES FINANCING AUTHORITY, a public corporation and governmental
instrumentality of the Commonwealth of Puerto Rico (the "Authority"), DORAL
PROPERTIES, INC., a corporation organized and existing under the laws of the
Commonwealth of Puerto Rico (the "Borrower"), and DORAL FINANCIAL CORPORATION,
a corporation organized and existing under the laws of the Commonwealth of
Puerto Rico (the "Guarantor"), and its successors and assigns,
WITNESSETH:
In consideration of the respective representations and agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
SECTION 1.01. DEFINITIONS. Unless otherwise defined herein, all terms
used herein shall have the meanings assigned to such terms in Section 101 of
the Trust Agreement, dated ___________, 1999, between the Authority and
Citibank, N.A., San ▇▇▇▇, Puerto Rico, as Trustee, either as originally
executed or as amended or supplemented from time to time:
"ACT" means Act ▇▇. ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
approved June 27, 1977, as amended, and all future acts supplemental thereto or
amendatory thereof.
"ACT OF BANKRUPTCY" means the filing of a petition commencing
a case under the United States Bankruptcy Code by or against the Borrower or
the Guarantor.
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"ADMINISTRATIVE FEE" means the one time fee to the Authority
in the amount of one half of one percent (2 of 1%) of the principal amount of
the Bonds.
"AFFILIATE" means a corporation, partnership, joint venture,
association, business trust or similar entity organized under the laws of the
Commonwealth, the United States of America or any state or territory thereof
which (i) is directly or indirectly controlled by the Borrower or by any Person
which directly or indirectly controls the Borrower, or (ii) controls, directly
or indirectly, the Borrower. For purposes of this definition, control means the
power to direct the management and policies of a Person through the ownership
of not less than a majority of its voting securities or the right to designate
or elect not less than a majority of the members of its board of directors or
other governing board or body by contract or otherwise.
"AGREEMENT" or "THIS AGREEMENT" means this Loan and Guaranty
Agreement, including any amendments or supplements hereto as permitted by the
Trust Agreement.
"AMORTIZATION REQUIREMENT" shall have the meaning given to
that term in the Trust Agreement.
"APPLICABLE INTEREST PERIOD" means a taxable year of the
Borrower.
"AUTHORITY" means Puerto Rico Industrial, Tourist,
Educational, Medical and Environmental Control Facilities Financing Authority,
a body corporate and politic constituting a public corporation and governmental
instrumentality of the Commonwealth, and any successor thereto.
"AUTHORITY REPRESENTATIVE" means each of the persons at the
time designated to act on behalf of the Authority in a written certificate
furnished to the Borrower, the Trustee and the
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Guarantor containing the specimen signature of such person and signed by an
authorized officer of the Authority.
"BOARD" means the board of directors of the Authority as
constituted from time to time and defined by the Act, or if said board shall be
abolished, then the board, body or officer succeeding to the principal
functions thereof or to whom the powers of the Authority shall be given by law.
"BOND FUND" means the fund created and so designated by
Section 501 of the Trust Agreement.
"BONDS" means the bonds issued under Section 208 of the Trust
Agreement.
"BORROWER" means Doral Properties, Inc., a corporation
organized and existing under the laws of the Commonwealth of Puerto Rico and
its successors and permitted assigns and any surviving, resulting or transferee
entity.
"BORROWER REPRESENTATIVE" means each of the persons at the
time designated to act on behalf of the Borrower in a written certificate
furnished to the Authority and the Trustee containing the specimen signature of
such person and signed by an authorized officer of the Borrower.
"BUSINESS DAY" means any day of the year other than a
Saturday, Sunday or other day in which commercial banks in the Commonwealth are
generally closed for business to the public.
"CLOSING" means the date on which this Agreement becomes
legally effective, the same being the date on which the Bonds are initially
issued and delivered against payment therefor.
"CODE" means the United States Internal Revenue Code of 1986,
as amended, and the rules and regulations thereunder.
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"COMMONWEALTH" means the Commonwealth of Puerto Rico.
"COMPLETION DATE" means the date of completion of the Project
as that date shall be certified as provided in Section 3.05 of this Agreement.
"CONSTRUCTION FUND" means the fund created and so designated
pursuant to Section 401 of the Trust Agreement.
"CORPORATION" AND "CORPORATION" includes corporations,
associations, companies (including joint stock companies and limited liability
companies) and business trusts.
"COST", as applied to the Project, without intending thereby
to limit or restrict any proper definition of such word under the Act, has the
meaning set forth in Section 403 of the Trust Agreement.
"EMINENT DOMAIN" or "TAKING" means the taking pursuant to
eminent domain or condemnation proceedings, or by any settlement or compromise
of such proceedings, or any voluntary conveyance of the Project or any part
thereof during the pendency of, or as a result of a threat of, such
proceedings.
"ENVIRONMENTAL CLAIM" means any claim, demand, notice of
violation, suit, applicable and binding administrative or judicial proceeding,
regulatory action, or order involving any Hazardous Substance, Environmental
Law, noise or odor pollution or any injury or threat of injury to human health
or the environment.
"ENVIRONMENTAL LAW" means any applicable federal, state,
Commonwealth, local law, regulation, applicable and binding order, decree,
opinion or agency requirement relating to: (i) the handling, use, disposal or
release of any Hazardous Substance, or (ii) the protection of the environment
or human health.
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"EVENT OF DEFAULT" means, with respect to this Agreement,
each of the events set forth in Section 7.01 of this Agreement.
"EVENT OF TAXABILITY" means (i) the failure by the Borrower
to comply during its immediately preceding taxable year with the covenants
provided in Section 5.10(a) or (b), or (ii) the failure by the Borrower to
comply with the representations made in Section 2.02(g). An Event of Taxability
shall be deemed to have occurred if any of the certificates or reports required
to be furnished under Section 5.10(c) indicate that the Borrower has failed to
comply with any of the covenants of Section 5.10(a) or (b) or the
representations made in Section 2.02(g).
"FEDERAL TAXES" means any income taxes imposed under the Code.
"GOVERNMENT OBLIGATIONS" means (i) direct obligations of, or
obligations the timely payment of the principal of and the interest on which
are unconditionally guaranteed by, the United States of America, and (ii) any
certificates or other evidences of ownership interest in obligations or in
specified portions thereof (which may consist of specified portions of the
principal thereof or the interest thereon) of the character described in clause
(i).
"GUARANTOR" means Doral Financial Corporation.
"HAZARDOUS SUBSTANCE" means any substance that is: (i)
listed, classified or regulated pursuant to any Environmental Law, or (ii) any
petroleum product or by-product, asbestos containing material, polichlorinated
byphenyls, radioactive materials or radon.
"INDEBTEDNESS" means (1) any obligation of a Person for (a)
the repayment of borrowed money, whether or not evidenced by bonds, debentures,
notes or other written instruments or for the payment of the deferred purchase
price of property or assets (other
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than Trade Payables), or (b) the payment of money relating to a lease that is
required to be classified as a capitalized lease obligation in accordance with
generally accepted accounting principles; (2) any liability of others described
in the preceding clause (1) that the Person has guaranteed, that is recourse to
such Person or that is otherwise its legal liability; and (3) any amendment,
supplement, modification, deferral, renewal, extension or refunding of any
liability of the types referred to in clauses (1) and (2) above.
"INDEPENDENT ACCOUNTANTS" means a firm of certified public
accountants experienced in federal tax matters that is recognized in the
Commonwealth, which may also be the firm which audits the books of the Borrower
and the Guarantor, which is in fact independent with respect to the Borrower
and the Guarantor within the meaning of the Code of Professional Ethics of the
American Institute of Certified Public Accountants and is employed by the
Borrower with the approval of the Authority (which approval shall not be
unreasonably delayed or withheld).
"INDUSTRIAL FACILITIES" shall have the meaning given to such
term by the Act.
"INTEREST PAYMENT DATE" means the first day of each calendar
month, commencing on ___________, 1999.
"LOAN" means the loan of the proceeds of the Bonds made by
the Authority to the Borrower pursuant to Section 4.01 of this Agreement.
"OFFICERS' CERTIFICATE" means a certificate signed by the
Chairman, the President, the Chief Financial Officer or an Executive Vice
President, and by the Treasurer, the Chief Accounting Officer, the Controller
or the Secretary of the Guarantor and delivered to the Trustee.
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"OPINION OF COUNSEL" means a written opinion of counsel, who
may be counsel to the Borrower or the Guarantor (including an employee of the
Borrower or the Guarantor) and who shall be satisfactory to the Authority,
which is delivered to the Authority.
"PAYMENT OF THE BONDS" means payment of the entire principal
of and premium, if any, and interest on all or a portion of the Bonds in
accordance with their terms, whether through payment at maturity, upon
acceleration, redemption or provision for such payment in such a manner that
such Bonds or such portion shall be deemed to have been paid under Article XIII
of the Trust Agreement.
"PERMITTED LIENS" has the meaning set forth in Section 5.16.
"PERSON" includes an individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or a government or an agency or a political subdivision thereof,
or any other entity.
"PLANS AND SPECIFICATIONS" means, collectively, the plans and
specifications prepared by the Borrower for the Project as the same may be
implemented and detailed from time to time and as the same may be revised from
time to time by the Borrower prior to the Completion Date.
"PRINCIPAL MORTGAGE BANKING SUBSIDIARY" means any Subsidiary,
including its Subsidiaries, which (1) is principally engaged in the mortgage
banking business, and (2) meets any of the following conditions: (i) the
Guarantor's and its other Subsidiaries' investments in and advances to the
Subsidiary exceed 30 percent of the total assets of the Guarantor and its
Subsidiaries consolidated as of the end of the most recently completed fiscal
year; (ii) the Guarantor's and its other Subsidiaries' proportionate share of
the total assets (after
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intercompany eliminations) of the Subsidiary exceeds 30 percent of the total
assets of the Guarantor and its Subsidiaries consolidated as of the end of the
most recently completed fiscal year; or (iii) the Guarantor's and its other
Subsidiaries' equity in the income from continuing operations before income
taxes, extraordinary items and cumulative effect of a change in accounting
principles of the Subsidiary exceeds 30 percent of such income of the Guarantor
and its Subsidiaries consolidated for the most recently completed fiscal year;
provided, however, that any Subsidiary chartered as a banking corporation or as
a savings association under the laws of the United States, any State or the
Commonwealth shall not be considered a Principal Mortgage Banking Subsidiary
unless the Guarantor shall, after the date of this Agreement, transfer the
mortgage banking business currently conducted by Doral Mortgage Corporation or
the Guarantor's HF Mortgage Bankers Division to such banking corporation or
savings association.
"PROJECT" means the industrial facilities financed in part
with the proceeds from the sale of the Bonds and more fully described in
Exhibit A hereto.
"QUALIFYING BONDHOLDER" means (i) an individual who during
the entire taxable year in which an Event of Taxability occurred was a bona
fide resident of the Commonwealth or (ii) a Commonwealth or other foreign
corporation (for purposes of the Code) that is not engaged in any trade or
business in the United States.
"SIGNIFICANT SUBSIDIARY" means a Subsidiary, including its
Subsidiaries, which meets any of the following conditions: (i) the Guarantor's
and its other Subsidiaries' investments in and advances to the Subsidiary
exceed 10 percent of the total assets of the Guarantor and its Subsidiaries
consolidated as of the end of the most recently completed fiscal year; (ii) the
Guarantor's and its other Subsidiaries' proportionate share of the total assets
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(after intercompany eliminations) of the Subsidiary exceeds 10 percent of the
total assets of the Guarantor and its Subsidiaries consolidated as of the end
of the most recently completed fiscal year; or (iii) the Guarantor's and its
other Subsidiaries' equity in the income from continuing operations before
income taxes, extraordinary items and cumulative effect of a change in
accounting principles of the Subsidiary exceeds 10 percent of such income of
the Guarantor and its Subsidiaries consolidated for the most recently completed
fiscal year.
"SUBSIDIARY" means any Corporation of which at least a
majority of the outstanding stock having by the terms thereof ordinary voting
power to elect a majority of the directors of such Corporation, irrespective of
whether or not, at the time, stock of any other class or classes of such
Corporation shall have or might have voting power by reason of the happening of
any contingency, is at the time, directly or indirectly, owned or controlled by
the Guarantor or by one or more Subsidiaries thereof, or by the Guarantor and
one or more Subsidiaries thereof.
"TITLE POLICY" means the mortgagee title insurance policy
issued to the Authority and the Trustee on the date of issuance of the Bonds.
"TRADE PAYABLES" means accounts payable or any other
indebtedness or monetary obligations to trade creditors created or assumed in
the ordinary course of business in connection with the obtaining of materials
or services.
"TRUST AGREEMENT" means the Deed of Trust Agreement, dated
_____________, 1999, by and between the Authority and the Trustee, as the same
may be amended or supplemented in accordance with the terms thereof.
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"TRUSTEE" means the Trustee at the time serving as such under
the Trust Agreement, whether the original or successor trustee.
"VOTING STOCK" means capital stock the holders of which have
general voting power under ordinary circumstances to elect at least a majority
of the board of directors of a corporation, provided that, for the purposes of
such definition, capital stock which carries only the right to vote conditioned
on the happening of an event shall not be considered voting stock whether or
not such event shall have happened.
"WHOLLY-OWNED SUBSIDIARY" means a Subsidiary of which all of
the outstanding voting stock (other than directors' qualifying shares) is at
the time, directly or indirectly, owned by the Guarantor, or by one or more
Wholly-Owned Subsidiaries of the Guarantor, or by the Guarantor and one or more
Wholly-Owned Subsidiaries of the Guarantor.
SECTION 1.02. RULES OF CONSTRUCTION. (a) Words of the masculine gender
shall be deemed and construed to include correlative words of the feminine and
neuter genders.
(b) Unless the context shall otherwise indicate, the words
"Bond," "Bondholder," "owner," "Holder" and "Person" shall include the plural
as well as the singular number, and "Holder" and "Bondholder" when used herein
with respect to the Bonds shall mean the holder or registered owner, as the
case may be, of the Bonds at the time issued and outstanding.
(c) Words importing the redemption or calling for redemption
of the Bonds shall not be deemed to refer to or connote the payment of the
Bonds at their stated maturity.
(d) The captions or headings in this Agreement are for
convenience of reference only and in no way define, limit or
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describe the scope or intent of any provisions or sections of this Agreement.
(e) All references herein to particular articles, sections or
exhibits are references to articles, sections or exhibits of this Agreement
unless some other reference is established.
(f) Except as provided in Section 8.04, any inconsistency
between the provisions of this Agreement and the provisions of the Trust
Agreement shall be resolved in favor of the provisions of the Trust Agreement.
ARTICLE II
REPRESENTATIONS
SECTION 2.01. REPRESENTATIONS BY THE AUTHORITY. The Authority
represents that:
(a) The Authority was duly created and is validly existing
under the laws of the Commonwealth as a body corporate and politic constituting
a public corporation and governmental instrumentality of the Commonwealth.
(b) Under the provisions of the Act, the Authority is duly
authorized to enter into and to execute and deliver this Agreement, the Pledge
Agreement and the Trust Agreement, to undertake the transactions contemplated
by this Agreement and the Trust Agreement and to carry out its obligations
hereunder and thereunder.
(c) By duly adopted resolution, the Authority has duly
authorized the execution and delivery of this Agreement, the Trust Agreement
and the Pledge Agreement and the issuance, sale, execution and delivery of the
Bonds.
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(d) Under existing law all payments received by the Authority
pursuant to this Agreement are exempt from Commonwealth income taxation.
SECTION 2.02. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
BORROWER. The Borrower represents, warrants and covenants that:
(a) It is a duly constituted and validly existing corporation
under the laws of the Commonwealth, has elected to be treated as a special
partnership in accordance with the provisions of the Puerto Rico Internal
Revenue Code of 1994, as amended, and Act ▇▇. ▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
▇▇▇▇, approved September 27, 1985, and its proposed operations qualify under
the above provisions for treatment as a special partnership.
(b) It has the power and authority to enter into and perform
its obligations under this Agreement and the Collateral Documents.
(c) It has the necessary power and authority to develop,
construct and operate the Project, and to conduct its operations as presently
conducted or proposed to be conducted.
(d) It has duly authorized by proper corporate action the
execution, delivery and performance of this Agreement and the Collateral
Documents.
(e) The execution and delivery of this Agreement and the
Collateral Documents by the Borrower, and the consummation of the transactions
contemplated hereby and thereby and the fulfillment of or compliance with the
terms and conditions hereof and thereof do not and will not conflict with the
provisions of the certificate of incorporation or by-laws of the Borrower and
do not and will not conflict with, or constitute on the part of the Borrower a
breach of or default under any indenture, deed of trust, mortgage,
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agreement or other instrument to which the Borrower is a party or by which the
Borrower or any of its property is bound or conflict with, violate or result in
a breach of any existing law, public administrative rule or regulation,
judgment, court order or consent decree to which the Borrower or any of its
property is now a party or by which it is bound, or result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
of the property or assets of the Borrower under the terms of any instrument or
agreement other than this Agreement or the Trust Agreement.
(f) It will cause the Project to be operated as Industrial
Facilities within the meaning of the Act.
(g) At all times during each of the last three taxable years
(or for such part of such period as may be applicable) and up to and including
the date of execution and delivery of this Agreement, (i) the Borrower has not
been engaged in any trade or business in or outside the Commonwealth; and (ii)
the Borrower has not derived any gross income from sources within or without
the Commonwealth, as determined under the general source of income rules of the
Code.
(h) Except as set forth in Exhibit B hereto, all consents,
approvals, licenses and permits of any governmental authority having
jurisdiction, or of any other Person, that are required for the construction of
the Project are, and shall remain, in full force and effect.
(i) All consents, approvals, licenses and permits of any
governmental authority having jurisdiction, or of any other Person, that are
required for the development and construction of the Project and which are not
in effect on the date hereof or for the proposed operation of the Project shall
be obtained and, once obtained, shall remain in full force and effect.
(j) To the best of Borrower's knowledge: (i) the Project is
not in violation of any applicable Environmental Law and
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(ii) the Project has not received any Environmental Claims or threatened
Environmental Claims.
SECTION 2.03. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
GUARANTOR. The Guarantor represents, warrants and covenants that:
(a) It is a duly constituted and validly existing corporation
under the laws of the Commonwealth.
(b) It has the power and authority to enter into and perform
its obligations under this Agreement.
(c) It has duly authorized by proper corporate action the
execution, delivery and performance of this Agreement.
(d) The execution and delivery of this Agreement by the
Guarantor, and the consummation of the transactions contemplated hereby and the
fulfillment of or compliance with the terms and conditions hereof do not and
will not conflict with the provisions of the certificate of incorporation or
by-laws of the Guarantor and do not and will not conflict with, or constitute
on the part of the Guarantor a breach of or default under any indenture, deed
of trust, mortgage, agreement or other instrument to which the Guarantor is a
party or by which the Guarantor or any of its property is bound or conflict
with, violate or result in a breach of any existing law, public administrative
rule or regulation, judgment, court order or consent decree to which the
Guarantor or any of its property is now a party or by which it is bound, or
result in the creation or imposition of any lien, charge or encumbrance of any
nature whatsoever upon any of the property or assets of the Guarantor under the
terms of any instrument or agreement other than this Agreement or the Trust
Agreement.
(e) The Company is registered as a bank holding company under
the Bank Holding Company Act of 1956 and is subject to the supervision and
regulation of the Board of Governors of the Federal Reserve System.
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ARTICLE III
CONSTRUCTION OF THE PROJECT
SECTION 3.01. CONSTRUCTION OF PROJECT. The Borrower will cause the
Project to be constructed and equipped substantially in accordance with the
Plans and Specifications and in accordance with Exhibit A hereto with all
reasonable dispatch; but if for any reason such construction and equipping
shall be delayed or shall not be completed, there shall be no resulting
diminution in or postponement of the payments required under this Agreement to
be paid by the Borrower.
SECTION 3.02. REVISION OF PLANS AND SPECIFICATIONS. The Borrower may
cause the description of the Plans and Specifications and the description of
the Project in Exhibit A hereto to be revised from time to time; provided,
however, no such revision shall be inconsistent with the representation made in
subsection (f) of Section 2.02 hereof, and in the case of any change that would
render materially inaccurate the description of the Project in Exhibit A, there
shall be delivered to the Trustee and the Authority (i) a revised description
of the Project as altered by the change in the Plans and Specifications, the
accuracy of which shall have been certified by a Borrower Representative and
(ii) the approvals and consents, if any, required by the Act and the Trust
Agreement.
SECTION 3.03. DISBURSEMENTS FROM CONSTRUCTION FUND. The Authority and
the Borrower hereby agree that the monies in the Construction Fund shall be
applied to the payment of the Cost of the Project and otherwise as provided in
accordance with Article IV of the Trust Agreement and substantially to the
extent of the estimates of Cost of the Project set forth in the application
filed with the Authority or otherwise approved by the Authority, and such
monies shall be invested and reinvested in accordance with Article VI of the
Trust Agreement.
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SECTION 3.04. BORROWER REQUIRED TO PAY COST OF PROJECT. If the monies
in the Construction Fund available for the payment of the Cost of the Project
should not be sufficient to pay or cause to be paid the Cost of the Project,
the Borrower agrees to cause the Project to be completed and to pay all that
portion of the Cost of the Project as may be in excess of the monies available
therefor in the Construction Fund. The Authority does not make any warranty,
either express or implied, that the monies which will be paid into the
Construction Fund, together with any other available monies of the Borrower,
will be sufficient to pay the Cost of the Project. The Borrower agrees that if,
after exhaustion of the monies in the Construction Fund, the Borrower should
pay or cause to be paid any portion of the Cost of the Project, it shall not be
entitled to any reimbursement therefor from the Authority or from the Trustee,
and that it shall not be entitled to any abatement, diminution or postponement
of the payments to be made pursuant to Article IV of this Agreement.
SECTION 3.05. ESTABLISHMENT OF COMPLETION DATE. The Completion Date
for the construction of the Project shall be evidenced to the Trustee by a
certificate delivered, after the review and approval of the Guarantor, to the
Trustee and signed by a Borrower Representative setting forth the Cost of the
Project and stating that, except for amounts not then due and payable or the
liability for the payment of which is being contested or disputed by the
Borrower, the construction of the Project has been completed in accordance with
the description thereof and the Plans and Specifications therefor and the Cost
of the Project has been paid. Such certificate shall state that it is given
without prejudice to any rights against third parties which exist at the date
of such certificate or which may subsequently come into being.
SECTION 3.06. CERTIFICATE OF INDEPENDENT ACCOUNTANTS. The Borrower
shall furnish to the Authority and the Trustee, within ninety (90) days after
the end of the Borrower's fiscal year during which the Completion Date occurs,
a written statement prepared by
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a firm of Independent Accountants, based upon a review of the Borrower's
financial records verifying the Cost of the Project and that all Bond proceeds
were used by the Borrower to pay the Cost of the Project.
ARTICLE IV
LOAN BY THE AUTHORITY TO THE BORROWER;
REPAYMENT; MAINTENANCE; INDEMNITY
SECTION 4.01. ISSUANCE OF THE BONDS TO FUND THE LOAN; MAKING OF THE
LOAN; REPAYMENT. Simultaneously with the delivery of this Agreement, the
Authority shall issue and deliver the Bonds to provide it with funds to be
loaned to the Borrower pursuant to this Agreement. The Bonds shall be issued in
accordance with the Trust Agreement. The approval of the terms of the Bonds and
the Trust Agreement by the Borrower shall be conclusively established by its
execution of this Agreement. Upon the terms and conditions of this Agreement,
the Authority shall loan the Borrower the proceeds of the Bonds. The Loan shall
be deemed to have been made when the proceeds of the sale of the Bonds are
delivered to the Trustee. The proceeds for the Loan shall be used by the
Borrower, together with other available funds, to (i) pay the Cost of the
Project, (ii) pay interest on the Bonds during the construction of the Project,
and (iii) pay certain expenses incurred in connection with the authorization
and issuance of the Bonds. The principal amount of the Loan shall be equal to
the aggregate principal amount of the Bonds.
The Borrower agrees to repay the Loan in accordance with the
provisions of this Agreement. The Borrower acknowledges that the proceeds of
the Loan will be delivered to the Trustee and applied on behalf of the Borrower
in accordance with this Agreement and the Trust Agreement.
With respect to each date on which the principal amount of,
redemption premium, if any, or the interest on the Bonds is
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payable (whether at maturity, upon acceleration, redemption or otherwise), the
Borrower will pay such additional amounts which, together with all other monies
available therefor in the Bond Fund, will be sufficient to pay:
(a) all interest which will become due and payable on the
Bonds on such date;
(b) the principal amount of the Bonds and redemption premium,
if any, which will become due and payable on such date; and
(c) amounts, if any, required to effect redemption or
purchase of the Bonds on the dates specified pursuant to Section 301 of the
Trust Agreement.
The Borrower will pay the amounts it is required to pay under
clauses (a), (b) and (c) above directly to the Trustee in immediately available
funds for deposit in the Bond Fund. The Borrower shall deposit or cause to be
deposited such amounts with the Trustee no later than the date on which the
corresponding amounts are due on the Bonds or are required to be deposited
under the Trust Agreement, if earlier, except as provided in Section 8.01, 8.02
and 8.03 hereof.
All payments required to be made by the Borrower under the
terms of this Loan Agreement shall be made in lawful money of the United States
of America.
For purposes of this Section 4.01 all payments made by the
Guarantor pursuant to Section 4.08 to the extent made and applied to the
payment of the principal amount of and interest on the Bonds will be deemed to
satisfy the corresponding obligation of the Borrower under this Section 4.01.
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Except as provided in Section 906 of the Trust Agreement, the
Trustee shall not use any of the amounts deposited in the Bond Fund pursuant to
this Section for any purpose other than the payment of the principal amount of
and redemption premium, if any, and interest on the Bonds.
SECTION 4.02. NO SET-OFF. The obligation of the Borrower to make the
payments required by Section 4.01 and all other payments required under this
Agreement and to perform and observe the other agreements contained in this
Agreement shall be absolute and unconditional. The Borrower shall pay without
abatement, diminution or deduction (whether for taxes or otherwise) all such
amounts regardless of any cause or circumstance whatsoever including, without
limitation, any defense, set-off, recoupment or counterclaim which the Borrower
may have or assert against the Authority, the Trustee, any holder of a Bond or
any other Person.
SECTION 4.03. COVENANT TO MAINTAIN THE PROJECT. The Borrower will at
all times, at its sole cost and expense, maintain, preserve and keep the
Project in good repair, working order and condition and cause to be made all
needed and proper repairs, replacements and renewals; provided, however, that
the Borrower will have no obligation to cause to be maintained, preserved,
repaired, replaced or renewed any element or unit of the Project, the
maintenance, repair, replacement or renewal of which becomes uneconomic to the
Borrower because of damage or destruction or obsolescence or change in economic
or business conditions, or change in government standards or regulations. The
Borrower covenants that it will not permit, commit or suffer any waste of the
whole or any major part of the Project and shall not use or permit the use of
the Project, or any part thereof, for any unlawful purpose or permit any
nuisance to exist thereon.
The Borrower covenants that it will promptly notify the
Trustee and the Authority if the Project ceases to be operated as
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an Industrial Facility within the meaning of the Act as in effect on the date
hereof.
SECTION 4.04. EXPENSES. The Borrower shall pay, when due and payable,
certain costs and expenses (without duplication), exclusive of costs and
expenses payable from the proceeds of the Bonds, as follows:
(a) the fees and other costs payable to the Trustee,
including the reasonable compensation and the reasonable expenses and
disbursements of Trustee's counsel and the reasonable costs and expenses of
indemnifying the Trustee for, and holding the Trustee harmless against, any
loss, liability or expense (including the reasonable costs and Trustee expenses
of defending against any claim of liability) incurred without negligence or
willful misconduct by the Trustee and arising out of or in connection with its
acting as Trustee under the Trust Agreement;
(b) all costs incurred by the Authority or the Trustee in
connection with the purchase or redemption of Bonds to the extent money is not
otherwise available therefor;
(c) the fees and other costs incurred for services of such
attorneys, management consultants and accountants as are employed by the
Authority or the Trustee to make examinations, provide services, render
opinions or prepare reports required under this Agreement or the Trust
Agreement;
(d) reasonable fees and other costs that the Borrower is
obligated to pay, not otherwise paid under this Agreement or the Trust
Agreement, incurred by the Authority in connection with its administration and
enforcement of, and compliance with, this Agreement or the Trust Agreement,
including, but not limited to, the Administrative Fee; and
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(e) fees and other costs incurred at the request or with the
consent of the Borrower in connection with the issuance of the Bonds to the
extent such fees and other costs are not paid from the proceeds of the Bonds;
provided, however, that in no event shall the total amount of such fees and
other costs paid from the proceeds of the Bonds exceed two percent (2%) of the
proceeds of the Bonds, less amounts paid to the underwriters of the Bonds as
underwriters' discount.
SECTION 4.05. INDEMNIFICATION.
(a) The Borrower and the Guarantor shall at all times
indemnify and hold harmless the Authority against any and all losses, costs,
damages, expenses and liabilities (individually, a "Loss" or collectively
referred to hereinafter as "Losses") of whatsoever nature (including but not
limited to reasonable attorneys' fees, litigation and court costs, amounts paid
in settlement consented to in writing by the Borrower or the Guarantor, and
amounts paid to discharge judgments) directly or indirectly resulting from,
arising out of, or related to one or more Claims, as hereinafter defined. The
word "Claims" as used herein shall mean all claims, lawsuits, causes of action
and other legal actions and proceedings of whatsoever nature, including bodily
or personal injury or death of any person or damage to any property (including
but not limited to persons employed by the Authority, the Borrower or any other
Person) brought against the Authority or to which the Authority is a party,
that directly or indirectly result from, arise out of, or relate to (i) the
design, construction, transfer, sale, operation, use, occupancy, maintenance or
ownership of the Project or any part thereof, (ii) the execution, delivery or
performance of this Agreement, the Trust Agreement, the Collateral Documents,
or any related instruments or documents or (iii) any untrue statement or
alleged untrue statement of a material fact contained in the official statement
relating to the Bonds, or any amendment or supplement thereto, or any
preliminary official statement relating to the Bonds, or arise out of or
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are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
in light of the circumstances under which they were made not misleading;
provided, however, that the Borrower and the Guarantor will not be liable in
any such case to the extent that any such Loss or Claim arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any of such documents in reliance upon and in
conformity with written information furnished to the Borrower or the Guarantor
by the Authority specifically for use therein (it being understood that the
information in said official statement under the captions "AFICA" and
"Government Development Bank for Puerto Rico" has been so furnished to the
Borrower and the Guarantor by the Authority specifically for use therein). The
obligations of the Borrower and the Guarantor under this Section 4.05 shall
apply to all Losses or Claims, or both, that result from, arise out of, or are
related to any event, occurrence, condition or relationship existing prior to
termination of this Agreement, whether such Losses or Claims, or both, are
asserted prior to termination of this Agreement or thereafter. The Authority
shall reimburse the Borrower or the Guarantor, as applicable, for payments made
by the Borrower or the Guarantor pursuant to this Section 4.05 to the extent of
any proceeds, net of all expenses of collection, actually received by the
Authority from any insurance covering such Claims with respect to the Losses
sustained. The Authority shall have the duty to claim any such insurance
proceeds and the Authority shall assign its rights to such proceeds, to the
extent of such required reimbursement, to the Borrower. In case any action
shall be brought against the Authority in respect of which indemnity may be
sought against the Borrower and the Guarantor, the Authority shall promptly
notify the Borrower and the Guarantor in writing and the Borrower and the
Guarantor shall have the right to assume the investigation and defense thereof
including the employment of counsel and the payment of all expenses. The
Authority shall have the right to employ separate counsel in any such action
and participate in the
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investigation and defense thereof, but the fees and expenses of such counsel
shall be paid by the Authority unless the employment of such counsel has been
authorized by the Borrower or the Guarantor. The Borrower and the Guarantor
shall not be liable for any settlement of any such action without the written
consent of the Borrower or the Guarantor but, if any such action is settled
with the written consent of the Borrower or the Guarantor or if there be a
final unappealable judgment for the plaintiff in any such action, the Borrower
and the Guarantor agree to indemnify and hold harmless the Authority from and
against any such Losses or Claims by reason of such settlement or judgment.
Nothing herein shall be construed as requiring the Authority to acquire or
maintain insurance of any form or nature with respect to the Project or any
portion thereof or with respect to any phrase, term, provision, condition or
obligation of this Agreement or any other matter in connection herewith so long
as this Agreement is in effect.
(b) The Borrower and the Guarantor do hereby agree to
indemnify and hold harmless the Authority and the Trustee from and against all
reasonable losses, costs, damages, Environmental Claims expenses (including
reasonable attorneys and consultants fees), liabilities, fines, enforcement
actions, remedial costs, and third party cost recovery actions that the Trustee
may sustain by reason of the Trustee becoming liable as an operator (and/or as
an owner if, in its function as a lender, the Trustee or the Authority is
deemed to be an owner) under CERCLA or other applicable Environmental Law or
related to the presence in, under or at the Project of any Hazardous Substance
or related to the Borrower's failure to comply with any applicable
Environmental Law.
The above notwithstanding, the Trustee and the Authority shall not be
entitled to the foregoing indemnity if any such losses, costs, damages,
expenses (including reasonable attorneys fees), liabilities, fines, enforcement
actions, remedial costs, and third party cost recovery actions are a result of,
or in any way related
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to, the negligent or reckless acts or omissions of Trustee, the Authority,
their agents, representatives, employees, officers or directors. Furthermore,
in the event the Borrower or the Guarantor has indemnified the Trustee or the
Authority pursuant to the above indemnity provisions, and the Trustee or the
Authority have received any monies from insurance or other similar source for
the above indemnifiable situations, then the Trustee and the Authority shall
reimburse the Borrower or the Guarantor, as applicable, any amounts received by
any of them from the Borrower or the Guarantor pursuant to the above indemnity
which has otherwise been covered by insurance or a similar source.
(c) The provisions of this Section 4.05 shall survive the
expiration or termination of this Agreement.
SECTION 4.06. PAST DUE PAYMENTS. In the event the Borrower shall fail
to pay any amounts required to be paid under Section 4.01 or any other amounts
payable under this Agreement, any such amounts shall continue to bear interest
until their payment (to the extent permitted by law) from the maturity date,
redemption date or interest payment date to which such defaulted amounts relate
at the then current rate of interest on such Bonds.
SECTION 4.07. PAYMENT OF COSTS UPON DEFAULT. The Borrower shall pay,
and shall indemnify the Authority against, all costs and charges, including
reasonable counsel fees, lawfully and reasonably incurred in enforcing any
covenant or agreement of the Borrower contained in this Agreement. The Borrower
shall reimburse the Trustee for any funds advanced by the Trustee for the
performance of any of its duties hereunder or under the Trust Agreement, or in
the exercise of any of its rights or powers and shall pay interest on any funds
so advanced at rates customarily charged by the Trustee, which rates shall
never be more than two percent over the prime rate of Citibank, N.A. or the
maximum rate permitted by law, whichever is lower.
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SECTION 4.08. GUARANTEE. The Guarantor hereby unconditionally and
irrevocably guarantees, jointly and severally with the Borrower, to each holder
of a Bond authenticated and delivered by the Trustee, and to the Authority, (1)
the due and punctual payment of the principal of (including any amount in
respect of original issue discount), and any premium and interest on, such Bond
and the due and punctual payment of the Amortization Requirements, if any, and
analogous obligations, if any, provided for pursuant to the terms of such Bond,
when and as the same shall become due and payable, whether at stated maturity
or upon redemption or upon declaration of acceleration or otherwise according
to the terms of such Bond and of the Trust Agreement, (2) the full payment to
each holder of a Bond of any amount required to be returned by the holders as a
result of an order by a court having lawful jurisdiction that any payment by
the Borrower to any holder is a preferential transfer as defined in Section
547(b) of the United States Bankruptcy Code, and (3) the payment of all other
amounts payable by the Borrower and the performance of all other obligations of
the Borrower under this Agreement and the Collateral Documents. In case of
default by the Borrower in the payment of any principal (including any amount
in respect of original issue discount), interest, Amortization Requirements, or
analogous obligation, or in the payment of any other amounts payable by the
Borrower or the performance of any other obligations of the Borrower under this
Agreement, the Guarantor agrees duly and punctually to pay or perform the same.
The Guarantor hereby agrees that its obligations hereunder shall rank pari
passu with all other unsecured and unsubordinated obligations of the Guarantor,
whether now existing or hereafter incurred, shall be as principal and not
merely as surety, and shall be absolute and unconditional irrespective of any
extension of the time for payment of any such Bond or other obligation, any
modification of any such Bond, this Agreement or the Trust Agreement, any
invalidity, irregularity or unenforceability of any such Bond, this Agreement
or the Trust Agreement, any failure to enforce the same or any waiver,
modification, consent or indulgence granted to the Borrower with
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respect thereto by the Holder of such Bond or the Trustee, or any other
circumstances which may otherwise constitute a legal or equitable discharge of
a surety or guarantor. The Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of merger or
bankruptcy of the Borrower, any right to require a demand or proceeding first
against the Borrower, protest or notice with respect to any such Bond or the
indebtedness evidenced thereby and all demands whatsoever, and covenants that
this guarantee will not be discharged except by payment in full of the
principal of (including any amount payable in respect of original issue
discount), and any premium and interest on all Bonds and of all other amounts
payable by the Borrower and performance of all other obligations of the
Borrower under this Agreement. The Guarantor agrees that any and all rights
under this guarantee may be enforced by any Bondholder, by the Authority and by
the Trustee in accordance with the terms of the Trust Agreement and this
Agreement.
Until such time as the Bonds are paid in full, the Guarantor
irrevocably waives any and all rights to which it may be entitled, by operation
of law or otherwise, upon making any payment hereunder (i) to be subrogated to
the rights of a Holder against the Borrower with respect to such payment or
otherwise to be reimbursed, indemnified or exonerated by the Borrower in
respect thereof or (ii) to receive any payment, in the nature of contribution
or for any other reason, from any other obligor with respect to such payment.
The guarantee set forth in this Section shall not be valid or become
obligatory for any purpose with respect to a Bond until the certificate of
authentication on such Bond shall have been signed by the Trustee.
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ARTICLE V
FURTHER AGREEMENTS
SECTION 5.01. COVENANT TO MAINTAIN EXISTENCE; CONSOLIDATION, MERGER
AND SALE. The Borrower and the Guarantor covenant that so long as any Bonds are
outstanding they will maintain their existence, will not dispose of all or
substantially all of their assets and will not acquire, consolidate with or
merge into another Person; provided, however, that the Borrower or the
Guarantor may acquire, consolidate with or merge into another Person, or
transfer to another Person all or substantially all their assets and thereafter
dissolve, if (i) the successor or transferee is solvent and irrevocably and
unconditionally assumes in writing all the obligations of the Borrower or the
Guarantor, as the case may be, herein and under the Trust Agreement and the
Collateral Documents; (ii) such consolidation, merger or transfer shall not
cause the Borrower to fail to comply with any of the covenants of Section
5.10(a) or (b) or the representations made in Section 2.02(g) of this
Agreement; and (iii) immediately after such consolidation, merger or transfer
none of the Borrower, such successor or transferee (if other than the Borrower)
or Doral Financial shall be in default in the performance or observance of any
duties, obligations or covenants under this Agreement or the Collateral
Documents.
SECTION 5.02. NO WARRANTY BY AUTHORITY. The Authority makes no
warranty, either express or implied, as to the condition of the Project or its
suitability for the Borrower's purposes or needs or that the proceeds of the
Bonds will be sufficient for the purposes set forth above.
SECTION 5.03. MAINTENANCE AND EXAMINATION OF BOOKS AND RECORDS OF
BORROWER; RIGHT OF INSPECTION. The Borrower covenants that it will keep
accurate records, books and accounts of all items of cost and of all
expenditures relating to the Project, whether or not financed under the
provisions of this Agreement. The Authority
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and the Trustee and their duly authorized agents shall have the right at all
reasonable times during business hours to enter upon and examine and inspect
the Project, to determine whether the Project continues to constitute
Industrial Facilities. The Authority and the Trustee shall also be permitted,
at all reasonable times during business hours, to (i) examine the Plans and
Specifications and the other books and records (other than confidential
personnel records) of the Borrower, including any accountants' work papers,
with respect to the Project in connection with the transactions contemplated by
this Agreement and the Trust Agreement, and (ii) to make copies of those
portions of such books and records as the Authority and the Trustee or such
agents shall reasonably request. Any proprietary or confidential information
obtained by the Authority or the Trustee pursuant to this Section 5.03 shall
not be disclosed to third parties unless such disclosure is required in order
to comply with its obligations hereunder or under the Trust Agreement or the
Collateral Documents.
SECTION 5.04. OFFICERS OF AUTHORITY NOT LIABLE. All covenants,
stipulations, promises, agreements and obligations of the Authority contained
herein shall be deemed to be covenants, stipulations, promises, agreements and
obligations of the Authority and not of any member of the Board of the
Authority or any officer, agent, servant or employee of the Authority in his
individual capacity, and no recourse shall be had for the payment of the
principal amount of or redemption premium or interest on the Bonds or for any
claim based thereon or hereunder against any member of the Board of the
Authority or any officer, agent, servant or employee of the Authority or any
natural person executing the Bonds. Neither any member of the Board of the
Authority nor any person executing the Bonds shall be liable personally on the
Bonds or be subject to any personal liability or accountability by reason of
the issuance of the Bonds.
SECTION 5.05. COMPLIANCE WITH APPLICABLE LAW. The Borrower covenants
that the Plans and Specifications shall comply with all
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provisions of applicable laws, ordinances, orders, rules, regulations and
requirements of all federal, Commonwealth and municipal governments, and
appropriate departments, commissions, boards and officers thereof, whether now
or hereafter in force.
SECTION 5.06. AUTHORITY'S PERFORMANCE OF THE BORROWER'S OBLIGATIONS.
In the event the Borrower at any time neglects, refuses or fails to perform any
of its obligations under this Agreement, the Authority or the Trustee, at their
respective options and following at least thirty (30) days' written notice to
the Borrower and the Guarantor (except where a shorter period of notice is
necessary to avoid a default in the Bonds or to avoid endangering the interest
of the Authority or the Trustee in the Project, or any part thereof, or to
prevent any loss or forfeiture thereof), may perform or cause to be performed
such obligations, and all reasonable expenditures incurred by the Authority or
the Trustee thereby shall be promptly paid or reimbursed by the Borrower to the
Authority or the Trustee, as the case may be.
SECTION 5.07. INDEMNIFICATION WITH RESPECT TO GOVERNMENT OBLIGATIONS.
If the Borrower shall elect to cause Government Obligations to be deposited
with the Trustee pursuant to Section 1301 of the Trust Agreement, the Borrower
shall pay and shall indemnify and hold harmless the Trustee, the Authority and
each holder of the Bonds against any tax, fee or other charge imposed upon or
assessed against such Government Obligations or the principal thereof, or
premium, if any, and interest received thereon.
SECTION 5.08. ANNUAL REPORTS. Within 90 days following the completion
of each of their fiscal years, the Borrower and the Guarantor shall furnish a
copy of their year-end audited financial statements to the Trustee and the
Authority, together with a certificate signed by the chief financial officer
(or other executive officer performing similar functions) of the Borrower and
the Guarantor certifying that no default has occurred under this
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Agreement, and that no fact or circumstance exists which, with the lapse of
time or the giving of notice or both, would result in an Event of Default
hereunder.
SECTION 5.09. COVENANT BY BORROWER AS TO COMPLIANCE WITH TRUST
AGREEMENT. The Borrower and the Guarantor approve all the terms of the Trust
Agreement and consent to the assignment made by the Authority to the Trustee
therein, covenant and agree that they will comply with the provisions of the
Trust Agreement with respect to the Borrower and the Guarantor and recognize
that the Trustee shall have the power and authority provided in the Trust
Agreement. The Borrower and the Guarantor further agree to cooperate with the
Authority and the Trustee in providing any information or documentation that is
necessary or convenient for the rendering of any legal opinion that may be
required under the Trust Agreement.
SECTION 5.10. COVENANT AS TO SOURCE OF INCOME.
(a) The Borrower covenants that: (i) during the three taxable
years (or for such part of such period as may be applicable) immediately
preceding the taxable year during which interest is paid on the Bonds, more
than 20% of its total gross income will be attributable to its trade or
business in the Commonwealth, as determined under Section 861(c)(1)(B) of the
Code as in effect on the Closing and will be derived from sources within the
Commonwealth under the general source of income rules of the Code, as in effect
on the Closing; and (ii) no part of the interest paid on the Bonds will be
treated under the Code, as paid by a trade or business of the Borrower
conducted outside the Commonwealth, such determination to be made in accordance
with Section 884(f)(1)(A) of the Code and Treas. Regs. Section
1.884-4(b)(1)(i)(A) or (B) issued thereunder, as in effect on the Closing.
(b) The Borrower covenants that all interest paid or accrued
on the Bonds will constitute income from sources within the
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Commonwealth under the general sourcing rules of the Code as in effect on the
Closing.
(c) The Borrower covenants that for each taxable year, up to
and including the taxable year when all interest on and principal of the Bonds
are paid in full, not later than the 120th day following the close of each such
taxable year, beginning with the first taxable year ending after the Closing,
it will (1) deliver to the Trustee, the Independent Accountant and the
Authority, a certificate (the "Borrower's Certificate") addressed to the
Trustee, the Independent Accountant and the Authority: (i) stating for the
three immediately preceding taxable years of the Borrower (or for such part of
such period as may be applicable), the percentage of the Borrower's gross
income that was derived from sources within the Commonwealth under the general
sourcing rules of the Code as in effect on the Closing; (ii) stating the
percentage of the Borrower's gross income that was attributable to, the active
conduct of (A) its trade or business in the Commonwealth and (B) any trade or
business outside the Commonwealth, in each case as determined under Section
861(c)(1)(B) of the Code as in effect on the Closing; (iii) making an assertion
as to whether or not the Borrower has complied with each of the covenants of
Section 5.10(a) and the representation of Section 2.02(g) and, accordingly,
whether or not an Event of Taxability has occurred; and (iv) making an
assertion as to whether the Borrower or the Guarantor has taken any other
action which shall cause interest on the Bonds to become subject to federal
taxation for Puerto Rico residents; and, (2) cause an Independent Accountant to
deliver to the Trustee, the Guarantor and the Authority, an Independent
Accountant's Report stating (i) that they have examined (such examination being
made in accordance with standards established by the American Institute of
Certified Public Accountants) management's assertion included in the Borrower's
Certificate as to the Borrower's compliance with the covenants of Section
5.10(a) and the representation of Section 2.02(g) and (ii) whether in their
opinion the Borrower's assertion as to compliance with each of such covenants
and representation is
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correct. If the Borrower's Certificate or the Independent Accountant's Report
indicates that the Borrower has failed to comply with any of the covenants of
Section 5.10(a) or the representations made in Section 2.02(g), or that the
Borrower or the Guarantor has taken any other action which shall cause interest
on the Bonds to become subject to federal taxation for Puerto Rico residents,
an Event of Taxability shall have occurred and the Trustee shall cause a copy
of such report to be mailed to each Bondholder together with a notice to each
Bondholder that an Event of Taxability has occurred, within five (5) Business
Days of the receipt of such report. Upon the occurrence of an Event of
Taxability, the Borrower shall cause the Independent Accountants or tax counsel
acceptable to the Trustee and the Authority, to provide an opinion as to what
would be the Applicable Interest Period in which a Qualifying Bondholder would
be subject to Federal Taxes with respect to the interest paid or accrued on the
Bonds.
SECTION 5.11. NO PURCHASE OF BONDS BY BORROWER OR GUARANTOR. Except as
permitted by the Trust Agreement with respect to the purchase of Bonds for
cancellation in connection with the Amortization Requirement, the Borrower and
the Guarantor covenant that none of the Bonds will be purchased by the Borrower
or the Guarantor, or their respective Affiliates, other than Doral Securities
in the ordinary course of their broker-dealer business.
SECTION 5.12. NO INTEREST OF AUTHORITY IN PROJECT. The Authority shall
not have any rights to or interest in the Project, which shall be the sole and
exclusive property of the Borrower.
SECTION 5.13. CONSENT TO JURISDICTION. The Borrower and the Guarantor
consent to the jurisdiction of the courts of the Commonwealth for causes of
action arising under or related to the terms of this Agreement, the Trust
Agreement, or any related documents.
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SECTION 5.14. LIMITATION UPON CREATION OF LIENS ON VOTING STOCK OF
PRINCIPAL MORTGAGE BANKING SUBSIDIARIES. The Guarantor will not, and it will
not permit any Subsidiary at any time directly or indirectly to, incur, issue,
assume or guarantee any Indebtedness for borrowed money secured by a pledge of,
lien on or security interest in any shares of Voting Stock of any Principal
Mortgage Banking Subsidiary without making effective provision whereby the
Bonds (and, if the Guarantor so elects, any other Indebtedness of the Guarantor
ranking on a parity with the Bonds) shall be secured equally and ratably with
such secured Indebtedness; provided, however, that the foregoing covenant shall
not apply to any Indebtedness secured by a pledge of, lien on or security
interest in any shares of Voting Stock of any corporation at the time it
becomes a Principal Mortgage Banking Subsidiary; and provided further, however,
that the foregoing covenant shall not be applicable to liens for taxes or
assessments or governmental charges or levies not then due and delinquent or
the validity of which is being contested in good faith or which are less than
$5,000,000 in amount, liens created by or resulting from any litigation or
legal proceeding which is currently being contested in good faith by
appropriate proceedings or which involve claims of less than $5,000,000, or
deposits to secure (or in lieu of) surety, stay, appeal or customs bonds.
If the Guarantor shall hereafter be required to secure the
Bonds equally and ratably with any other Indebtedness of the Guarantor pursuant
to this Section, (i) the Guarantor will promptly deliver to the Trustee an
Officers' Certificate stating that the foregoing covenant has been complied
with, and an Opinion of Counsel stating that in the opinion of such counsel the
foregoing covenant has been complied with and that any instruments executed by
the Guarantor or any Subsidiary in the performance of the foregoing covenant
comply with the requirements of the foregoing covenant and (ii) the Authority
is hereby authorized to enter into an agreement supplemental hereto and to take
such action, if any,
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as it may deem advisable to enable the Trustee to enforce the rights of the
holders of the Bonds so secured.
SECTION 5.15. LIMITATION UPON DISPOSITION OF VOTING STOCK OF PRINCIPAL
MORTGAGE BANKING SUBSIDIARIES. Subject to Section 5.01, the Guarantor will not
sell, assign, transfer or otherwise dispose of any shares of, securities
convertible into or options, warrants or rights to subscribe for or purchase
shares of, Voting Stock (other than directors' qualifying shares) of any
Principal Mortgage Banking Subsidiary and will not permit any Principal
Mortgage Banking Subsidiary to issue (except to the Guarantor ) any shares of,
securities convertible into or options, warrants or rights to subscribe for or
purchase shares of, Voting Stock of any Principal Mortgage Banking Subsidiary,
except for sales, assignments, transfers or other dispositions that:
(1) are for fair market value on the date thereof, as determined by
the Board of Directors of the Guarantor (which determination shall be
conclusive) and, after giving effect to such disposition and to any possible
dilution, the Guarantor will own not less than 80% of the shares of Voting
Stock of such Principal Mortgage Banking Subsidiary then issued and outstanding
free and clear of any security interest;
(2) are made in compliance with an order of a court or regulatory
authority of competent jurisdiction, as a condition imposed by any such court
or authority permitting the acquisition by the Guarantor, directly or
indirectly, of any other mortgage banking institution or entity the activities
of which are legally permissible for a bank holding company or a subsidiary
thereof to engage in, or as an undertaking made to such authority in connection
with such an acquisition;
(3) are made where such Principal Mortgage Banking Subsidiary, having
obtained any necessary regulatory approvals, unconditionally
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guarantees payment when due of the principal of and premium, if any, and
interest on the Bonds; or
(4) are made to the Guarantor or any Wholly-Owned Subsidiary if such
Wholly-Owned Subsidiary agrees to be bound by this covenant and the Guarantor
agrees to maintain such Wholly-Owned Subsidiary as a Wholly-Owned Subsidiary.
Notwithstanding the foregoing, any Principal Mortgage Banking
Subsidiary may be merged into or consolidated with another mortgage banking
institution organized under the laws of the United States, any State thereof,
the Commonwealth or the District of Columbia if, after giving effect to such
merger or consolidation, the Guarantor or any Wholly-Owned Subsidiary owns at
least 80% of the Voting Stock of such other mortgage banking institution then
issued and outstanding free and clear of any security interest and if,
immediately after giving effect thereto and treating any such resulting
institution thereafter as a Principal Mortgage Banking Subsidiary and as a
Subsidiary for purposes of this Agreement, no Event of Default, and no event
that, after the giving of notice or lapse of time or both, would become an
Event of Default, has occurred and is continuing.
SECTION 5.16. LIENS. The Borrower shall not create, incur, assume or
permit to exist any lien on the Property, other than (i) the lien under the
Mortgage, the Mortgage Note and the Pledge Agreement, (ii) liens, charges,
encumbrances and rights identified as subsisting liens on the Mortgage or
listed as exceptions in the Title Policy, (iii) liens for real estate taxes or
assessments not yet due and payable or which are being contested in good faith
by appropriate proceedings and for which adequate reserves are maintained by
the Borrower, (iv) zoning restrictions, easements, rights of way, licenses,
exceptions, reservations, restrictions on use, minor defects and irregularities
in title, and other similar encumbrances incurred in the ordinary course of
business which, in the aggregate, are not substantial in amount and do not
materially
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detract from the value of the Property or interfere with the ordinary conduct
of the business of the Borrower; (v) carriers', warehousemen's, mechanic's,
materialmen's, repairmen's or other like liens arising in the ordinary course
of business and securing obligations that are not due or which are being
contested in good faith; (vi) pledges and deposits made in the ordinary course
of business in compliance with workmen's compensation, unemployment insurance
and other social security laws or regulations; and (vii) deposits to secure the
performance of bids, trade contracts, leases (other than capital lease
obligations), statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature incurred in the ordinary course of
business (the Liens listed in clauses (i) through (vii) being referred to as
"Permitted Liens").
ARTICLE VI
SALE OF THE PROJECT; ASSIGNMENTS
SECTION 6.01. SALE, TRANSFER OR ENCUMBRANCE OF THE PROJECT. Without
the necessity of obtaining the consent of the Authority or the Trustee, the
Project may be sold, leased or otherwise transferred or encumbered as a whole
or in part and any proceeds thereof retained by the Borrower, subject, however,
to the following conditions:
(a) the Borrower shall, prior to such sale, lease, transfer
or encumbrance of the Project, notify the Authority and the Trustee thereof;
(b) prior to the proposed sale, lease or other transfer of
the Project as a whole or substantially as a whole, the Trustee and the
Authority are provided with proof satisfactory to them by the Borrower (which
may include an opinion from counsel approved by the Trustee) that as a result
of such transfer or the terms thereof, interest payable on the Bonds will
continue to constitute
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Commonwealth source income under the Code as in effect on the Closing;
(c) the Person to whom the Project is sold, leased or
transferred, or in favor of whom the Project is encumbered, shall, in a
certificate delivered to the Authority and the Trustee, which certificate shall
be in a form reasonably satisfactory to the Authority and the Trustee,
expressly agree to perform all of the obligations of the Borrower under the
Collateral Documents; and
(d) no sale, lease or other transfer or encumbrance of the
Project shall relieve the Borrower or the Guarantor of its obligations
hereunder, including the obligation to make the payments required by Sections
4.01 and 4.08 hereof.
SECTION 6.02. ASSIGNMENT BY BORROWER. Without the necessity of
obtaining the consent of the Authority or the Trustee, the Borrower may assign
its interest in this Agreement or the Collateral Documents, in whole or in
part, subject, however, to the following conditions:
(a) the Borrower shall, prior to such assignment of this
Agreement, notify the Authority and the Trustee thereof;
(b) prior to the proposed assignment the Trustee is provided
with proof satisfactory to it by the Borrower (which may include an opinion
from counsel approved by the Trustee) that as a result of such assignment or
the terms thereof, interest payable on the Bonds will continue to constitute
Commonwealth source income under the Code as in effect on the Closing;
(c) no assignment of this Agreement shall relieve the
Borrower or the Guarantor of its obligations hereunder, including the
obligation to make the payments required by Sections 4.01 and 4.08 hereof;
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(d) the assignee shall, in a certificate delivered to the
Authority and the Trustee, which certificate shall be in a form reasonably
satisfactory to the Authority and the Trustee, expressly assume, and agree to
pay and to perform, all of the obligations of the Borrower under this Agreement
and the Collateral Documents which shall have been assigned to it; and
(e) the assignee shall deliver to the Authority and the
Trustee a certificate executed by its chief financial officer (or other
executive officer performing similar functions) stating that none of the
obligations, covenants and performances under this Agreement and the Collateral
Documents assumed by it will conflict with or constitute on the part of such
assignee a breach of, or default under, any indenture, mortgage, agreement or
other instrument to which such assignee is a party or by which it is bound, or
under any existing law, rule, regulation, judgment, order or decree to which
such assignee is subject.
The provisions of subsections (d) and (e) of this Section
6.02 shall not apply to any assignment of this Agreement in which all the
parties consist of the Borrower or the Guarantor, or any of their respective
Subsidiaries.
SECTION 6.03. ASSIGNMENT BY AUTHORITY. By the provisions of the Trust
Agreement, the Authority will assign its rights under and interest in this
Agreement (except its rights to receive notices, reports and other statements
given both to the Authority and the Trustee, its rights under Sections 4.04,
4.05, 5.07, 7.02 and 7.04 hereof to payment of certain costs and expenses and
to indemnification, and its right to individual and corporate exemption from
liability under Sections 5.04, 9.14 and 9.15 hereof) and will pledge and assign
any payments, receipts and revenues receivable by it (except as aforesaid)
under or pursuant to this Agreement and income earned by the investment of
funds held under the Trust Agreement, to the Trustee as security for the
payment of the principal of and premium, if any, and interest on the Bonds.
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Except as provided in this Section 6.03, the Authority will not sell, assign,
transfer, convey or otherwise dispose of its interest in this Agreement or the
payments, receipts and revenues of the Authority derived hereunder.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
SECTION 7.01. EVENTS OF DEFAULT. The term "Events of Default" shall
mean, whenever used with reference to this Agreement, any one or more of the
following occurrences:
(a) failure to pay the amounts required to be paid with
respect to principal of or redemption premium, if any, or interest on the Bonds
when the same shall become due and payable, at maturity, upon acceleration,
redemption or otherwise, and, in the case of failure to pay interest, the
continuation of such failure for a period of five (5) days; or
(b) failure by the Borrower to pay when due any payment
required to be made under this Agreement (other than payments under subsection
(a) of this Section 7.01) or the Collateral Documents, which failure shall
continue for a period of thirty (30) days after written notice, specifying such
failure and requesting that it be remedied, is given to the Borrower by the
Authority or the Trustee, unless the Authority or the Trustee shall agree in
writing to an extension of such time prior to its expiration; or
(c) the Borrower or the Guarantor shall fail to duly perform,
observe or comply with any covenant, condition or agreement on their part under
this Agreement or the Collateral Documents other than a failure to make any
payment as described in subsections (a) or (b) of this Section 7.01, and such
failure shall continue for a period of ninety (90) days after the date on which
written notice of such failure, requiring the same to be remedied,
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shall have been given to the Borrower and the Guarantor by the Authority or the
Trustee, unless the Authority and the Trustee shall agree in writing to an
extension of such time prior to its expiration; provided, however, that if such
performance, observation or compliance requires work to be done, action to be
taken, or conditions to be remedied, as the case may be, within such ninety
(90) day period, no Event of Default shall be deemed to have occurred or to
exist if, and so long as, the Borrower or the Guarantor shall commence such
performance, observation or compliance within such period and shall diligently
and continuously pursue the same to completion; or
(d) a default under any bond, debenture, note or other
evidence of indebtedness for money borrowed or under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any indebtedness for money borrowed by the Guarantor or any
Significant Subsidiary in excess of $5,000,000, whether such indebtedness now
exists or shall hereafter be created, which default shall have resulted in such
indebtedness becoming or being declared due and payable prior to the date on
which it would otherwise have become due and payable, without such acceleration
having been rescinded or annulled within a period of 30 days after there shall
have been given, by registered or certified mail, to the Guarantor by the
Trustee or to the Guarantor and the Trustee by the Holders of not less than 25%
in principal amount of the Bonds a written notice specifying such default and
requiring the Guarantor or the Significant Subsidiary, as the case may be, to
cause such acceleration to be rescinded or annulled and stating that such
notice is a "Notice of Default" hereunder; provided, however, that if such
default shall be remedied or cured by the Guarantor or the Significant
Subsidiary or waived by the holders of such indebtedness, then the Event of
Default hereunder by reason thereof shall be deemed likewise to have been
thereupon remedied, cured or waived without any action on the part of the
Trustee or any of the Holders; or
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(e) the Borrower or the Guarantor shall commence a voluntary
case under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or shall consent to the entry of an order for relief in an
involuntary case under any such law, or shall consent to the appointment of or
taking possession by a receiver, custodian, liquidator, assignee, trustee or
sequestrator (or other similar official) of itself or of any substantial part
of its property, or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they become due, or the
Borrower or the Guarantor shall take any action in furtherance of any of the
foregoing (except in connection with a consolidation or a merger of the
Borrower with or into another entity or transfer of all or substantially all
the assets of the Borrower not prohibited by Sections 5.01 and 6.01 hereof); or
(f) a court having jurisdiction in the premises shall enter a
decree or order for relief in respect of the Borrower or the Guarantor in an
involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a receiver, custodian,
liquidator, assignee, trustee, sequestrator (or other similar official) of the
Borrower or the Guarantor, respectively, of any substantial part of their
respective properties, or ordering the winding up or liquidation of their
affairs, and the continuance of such decree or order unstayed and in effect for
a period of sixty (60) consecutive days.
The foregoing provisions of subsection (c) of this Section
are subject to the following limitations: if by reason of Force Majeure, the
Borrower or the Guarantor is unable in whole or in part to carry out any of its
agreements herein contained, failure of the Borrower or the Guarantor to carry
out any such agreements other than the obligations on the part of the Borrower
or the Guarantor contained in Sections 4.01, 4.08 and 5.01 hereof, shall not be
deemed an Event of Default during the continuance of
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such inability, including a reasonable time for the removal of the effect
thereof.
The term "Force Majeure" shall mean the following:
(a) acts of God; strikes, lockouts or other industrial
disturbances; acts of public enemies; orders or restraints of any kind of the
government of the United States of America or of the Commonwealth or any of
their departments, agencies, political subdivisions or officials, or any civil
or military authority; war; insurrections; civil disturbances; riots;
epidemics; landslides; lightning; earthquakes; fires; hurricanes; storms;
droughts; floods; washouts; arrests; restraint of government and people;
explosions; breakage, malfunction or accident to facilities, machinery,
transmission pipes or canals; partial or entire failure of utilities; shortages
of labor, materials, supplies or transportation; or
(b) any cause, circumstance or event not reasonably within
the control of the Borrower or the Guarantor.
The Borrower and the Guarantor agree, however, to use their
best efforts to remedy with all reasonable dispatch Force Majeure preventing
them from carrying out their agreements; provided, that the settlement of
strikes, lockouts and other industrial disturbances, shall be entirely within
the discretion of the Borrower and the Guarantor, and the Borrower and the
Guarantor shall not be required to make settlement of strikes, lockouts and
other industrial disturbances by acceding to the demands of the opposing party
or parties when such course is in the judgment of the Borrower or the Guarantor
unfavorable to the Borrower or the Guarantor.
SECTION 7.02. ACCELERATION; REMEDIES. (a) Whenever any Event of
Default hereunder shall have happened and be continuing, any one or more of the
following remedial steps may be taken, provided that
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written notice of the Event of Default has been given to the Borrower and the
Guarantor by the Authority or the Trustee (except that notice need not be given
in the case of an Event of Default specified in Section 7.01(a), (e) and (f)
hereof) and the Event of Default has not theretofore been cured and provided
further that no remedial steps shall be taken by the Authority the effect of
which would be to entitle the Authority to funds necessary for the payment of
principal of and interest on Bonds which have not yet matured or otherwise
become due unless such principal and interest shall have been declared due and
payable in accordance with the Trust Agreement and such declaration shall not
have been rescinded:
(1) The Authority may at its option declare
all unpaid amounts payable under Section 4.01 hereof to be immediately due and
payable, whereupon the same shall become immediately due and payable.
(2) The Authority may take any action at
law or in equity to collect the payments then due and thereafter to become due,
or to enforce performance and observance of any obligation, agreement or
covenant of the Borrower or the Guarantor under this Agreement.
(3) The Authority may exercise its remedies
under the Collateral Documents.
Any amounts collected pursuant to action taken under this
Section shall be applied in accordance with the Trust Agreement.
SECTION 7.03. REMEDIES NOT EXCLUSIVE. No remedy conferred upon or
reserved to the Authority in connection with the Loan to the Borrower pursuant
to this Agreement is intended to be exclusive of any other available remedy or
remedies, but each and every remedy shall be cumulative and shall be in
addition to every other remedy either given under this Agreement or now or
hereafter existing at law or in equity or by statute. No delay or omission
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to exercise any right or power accruing upon any default shall impair any such
right or power or shall be construed to be a waiver thereof, but any such right
and power may be exercised from time to time and as often as it may be deemed
expedient. In order to entitle the Authority to exercise any remedy reserved to
it in this Article, it shall not be necessary to give any notice, other than
such notice as may be herein expressly required.
SECTION 7.04. ATTORNEYS' FEES AND EXPENSES. If an Event of Default
shall occur and the Authority or the Trustee shall employ attorneys or incur
other expenses for the collection of payments due hereunder or for the
enforcement of performance or observance of any obligation or agreement on the
part of the Borrower or the Guarantor contained herein, the Borrower or the
Guarantor will on demand therefor reimburse the reasonable fees of such
attorneys and such other expenses so incurred.
SECTION 7.05. WAIVERS. In view of the assignment of the Authority's
rights under and interest in this Agreement to the Trustee by the provisions of
the Trust Agreement (except for the rights reserved by the Authority
hereunder), the Authority shall have no power to waive any default hereunder by
the Borrower or the Guarantor or extend the time for the correction of any
default which could become an Event of Default by the Borrower or the Guarantor
without the consent of the Trustee to such waiver.
ARTICLE I
PREPAYMENT OF THE LOAN
SECTION 8.01. OPTIONAL PREPAYMENT. (a) The Borrower shall have, and is
hereby granted, the option to prepay all or any portion of the amounts payable
in respect of the Bonds under Section 4.01 by taking the actions required to
effect an optional redemption of the Bonds pursuant to Section 301(b) of the
Trust Agreement.
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(b) To make a prepayment pursuant to subsection (a) of this
Section, the Borrower shall (A)(i) give or cause to be given to the Authority
and the Trustee the written consent of the Guarantor to such prepayment, which
consent shall contain a representation from the Guarantor to the effect that
the Guarantor has sufficient monies available to pay the principal of and
interest on the Bonds through the date of redemption, or (ii) deposit with the
Trustee sufficient monies to pay the redemption price and premium, if any, of
the Bonds, no later than 45 days prior to the date of the intended prepayment
of the Loan, and (B) written notice setting forth (i) the date of redemption,
which date shall be not less than 45 days from the date notice is received by
the Trustee, (ii) the principal amount and maturities of the Bonds to be
redeemed, and (iii) the applicable redemption provision of the Trust Agreement.
SECTION 8.02. MANDATORY PREPAYMENT OF LOAN. (ai The Borrower shall be
obligated, and agrees, to prepay a portion of the amount payable under Section
4.01 hereof to the extent and in the manner set forth in Section 301(a) of the
Trust Agreement.
(b) The Borrower shall be obligated, and agrees, to prepay a
portion of the amount payable under Section 4.01 hereof on or prior to each
_________ or ___________ for which there shall be a Amortization Requirement in
an amount equal to such Amortization Requirement.
(c) The Borrower shall be obligated, and agrees, to prepay
all of the amounts payable under Section 4.01 hereof, if the Project ceases to
be operated as an Industrial Facility within the meaning of the Act. A
cessation of operations of the Project shall not be deemed to have occurred
until (i) the Borrower shall have delivered to the Trustee a notice stating
that the operations of the Project have ceased and the Borrower has no present
intention of causing the resumption of operations of the Project or (ii) until
thirty (30) days shall have elapsed after written notice
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has been given to the Borrower by the Authority that operations of the Project
have ceased and the Borrower has not demonstrated to the satisfaction of the
Authority that the Project is being operated as an Industrial Facility. The
Borrower agrees to make the payments required by this paragraph upon the
cessation of operations.
(d) The Borrower shall be obligated, and agrees, to prepay
all of the amounts payable under Section 4.01 hereof, upon the occurrence of an
Event of Taxability. The Borrower shall deliver to the Trustee a notice stating
that it has become obligated to pay all of the amounts payable under Section
4.01 hereof and setting forth the amount required to pay the redemption price
of the Bonds pursuant to Section 301(d) of the Trust Agreement.
(e) The Borrower shall be obligated, and agrees to prepay, in
whole or in part, the amount payable under Section 4.01 upon the occurrence of
an event of Casualty or Taking (as defined in the Pledge Agreement) to the
extent such prepayment is required by, and in accordance with the provisions
of, the Pledge Agreement. The Borrower shall deliver to the Trustee a notice
stating that the Borrower has become obligated to prepay, in whole or in part,
the amount payable under Section 4.01 hereof, setting forth the amount required
to pay the redemption price of the Bonds pursuant to Section 301(c) of the
Trust Agreement. The Borrower agrees to make the payment required by this
paragraph (e) at the time such notice is delivered to the Trustee.
SECTION 8.03. EXTRAORDINARY OPTIONAL PREPAYMENT OF LOAN. The Borrower
shall have the option to prepay the Loan in whole or in part by paying an
amount which, together with amounts held in the funds and accounts under the
Trust Agreement and available for the purpose, will be sufficient to provide
for the redemption of the Bonds together with interest accrued thereon to the
redemption date if any of the following shall have occurred:
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(a) The Project shall have been damaged or destroyed to the
extent that, in the opinion of the Borrower, (i) the required restoration and
repair thereof cannot reasonably be expected to be completed within a period of
6 months, or (ii) the Borrower is prevented or would likely be prevented from
carrying on its normal operation of the Project for a period of 6 months or
more, or (iii) the restoration and repair of the Project is not economically
feasible; or
(b) The use of Project shall be requisitioned, seized or
taken by any governmental authority in the United States of America or the
Commonwealth or any political subdivision thereof or by any foreign
governmental authority, by condemnation or otherwise, or the title to the
Project shall be condemned, seized or confiscated by, or requisitioned or taken
by, or forfeited to, any governmental authority or person acting under color of
governmental authority, in either case to such an extent that the Borrower is
thereby prevented or, in the opinion of the Borrower, would likely be prevented
from using the Project in the Commonwealth for its normal operations for a
period of 6 months or more; or
(c) As a result of any change in the Constitution or laws of
the United States of America or the Commonwealth or of legislative or
administrative action of the United States of America or the Commonwealth or
any political subdivision, or any judicial action or regulatory action or
inaction, this Agreement or the Trust Agreement, in the opinion of the
Borrower, shall have become void or unenforceable or impossible of performance
in any material respect, or use or occupancy of all or a significant part of
the Project shall, in the opinion of the Borrower, have been legally curtailed
for six months or more, or, in the opinion of the Borrower, unreasonable
burdens or excessive liabilities with respect to the Project or the Bonds shall
have been imposed.
For the purpose of this Section the "opinion of the Borrower" shall be
expressed to the Authority and the Trustee by delivery of
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a certificate of a Borrower Representative to the effect that the
circumstances, situations or conditions described in (a), (b) or (c) exist to
the extent required for the Borrower to exercise the option provided.
SECTION 8.04. RELATIVE POSITION OF LOAN AGREEMENT AND TRUST AGREEMENT.
The rights and the obligations of the Borrower in this Article VIII shall be
and remain prior and superior to the Trust Agreement and may be exercised or
shall be fulfilled, as the case may be, whether or not the Borrower is in
default hereunder, provided that such default will not result in nonfulfillment
of any condition to the exercise of any such right or option.
The obligations of the Borrower in Section 8.02 shall
supersede the rights and options of the Borrower in Section 8.01.
ARTICLE I
MISCELLANEOUS
SECTION 9.01. TERMINATION. This Agreement and all obligations of the
parties thereunder, other than the obligations of the Borrower under Sections
4.05, 5.07 and 5.10 hereof, shall terminate upon (i) Payment of the Bonds, and
(ii) payment or satisfaction of all other obligations incurred by the Authority
or the Borrower under this Agreement, including (without limitation) interest,
premiums and other charges, if any, thereon. Upon such termination any amounts
remaining in the Bond Fund and any other fund or account established under the
Trust Agreement not needed for payment of the aforesaid items shall belong to
and be paid to the Borrower by the Trustee in accordance with the provisions of
the Trust Agreement.
SECTION 9.02. REFERENCE TO BONDS INEFFECTIVE AFTER BONDS PAID. Upon
Payment of the Bonds, including all fees and charges of the Trustee, all
references in this Agreement to the Bonds and the
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Trustee shall be ineffective, and the Trustee, the Authority and the holders of
any of the Bonds shall not thereafter have any right hereunder, excepting those
that shall have theretofore vested.
SECTION 9.03. NO ADDITIONAL WAIVER IMPLIED BY ONE WAIVER. In the event
any agreement contained in this Agreement should be breached by any party and
thereafter waived by any other party, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
hereunder.
SECTION 9.04. AUTHORITY REPRESENTATIVE. Whenever under the provisions
of this Agreement the approval of the Authority is required or the Authority is
required to take some action at the request of the Borrower or the Guarantor,
such approval shall be made or such action shall be taken by the Authority
Representative and such approval or action shall not be unreasonably denied or
delayed; and the Borrower, the Guarantor and the Trustee shall be authorized to
act on any such approval or action.
SECTION 9.05. BORROWER REPRESENTATIVE. Whenever under the provisions
of this Agreement the approval of the Borrower is required or the Borrower is
required to take some action at the request of the Authority, such approval
shall be made or such action shall be taken by the Borrower Representative and
such approval or action shall not be unreasonably denied or delayed; and the
Authority and the Trustee shall be authorized to act on any such approval or
action.
SECTION 9.06. CONFIDENTIAL INFORMATION. The Borrower and the Guarantor
shall not be required to disclose, or to permit the Authority, the Trustee or
others to acquire access to, any trade secrets of the Borrower or the Guarantor
or any other processes, techniques or information deemed by the Borrower or the
Guarantor to be proprietary or confidential.
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SECTION 9.07. NOTICES. All notices, certificates, requests or other
communications among the Authority, the Borrower, the Trustee and the Guarantor
required to be given hereunder or under the Trust Agreement shall be in writing
and shall be (as elected by the person giving the notice) hand-delivered by
courier service or mailed by registered mail, postage prepaid, and each such
notice shall be deemed delivered (i) if by courier service, on the date
delivered receipt is acknowledged or delivery is refused, or (ii) if mailed, on
the third Business Day following the day when mailed. All notices under this
Agreement shall be addressed as follows:
If to the Authority:
Puerto Rico Industrial, Tourist, Educational,
Medical and Environmental Control
Facilities Financing Authority
c/o Government Development Bank for Puerto Rico
▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Executive Director
If to the Borrower:
Doral Properties, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: President
If to the Trustee:
Citibank, N.A.
Attention: ________________
If to the Guarantor:
Doral Financial Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: President
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A duplicate copy of each notice, certificate, request or other communication
given hereunder to the Authority, the Borrower, the Trustee or the Guarantor
shall also be given to each of the others. The Borrower, the Authority, the
Trustee or the Guarantor may, by notice given hereunder, designate any further
or different addresses to which subsequent notices, certificates, requests or
other communications shall be sent.
SECTION 9.08. BINDING EFFECT. This Agreement shall inure to the
benefit of and shall be binding upon the Authority, the Borrower, the Guarantor
and their respective successors and assigns, subject, however, to the
provisions contained in Sections 5.01, 6.01, 6.02 and 6.03.
SECTION 9.09. IF PAYMENT OR PERFORMANCE DATE NOT A BUSINESS DAY. If
the date for making payment, or the last date of performance of any act or the
exercising of any right, as provided in this Agreement, shall not be a Business
Day, such payment may be made or act performed or right exercised on the next
succeeding Business Day with the same force and effect as if done on the
nominal date provided in this Agreement, and no interest shall accrue for the
period after such nominal date.
SECTION 9.10. SEVERABILITY. In the event any provision of this
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof.
SECTION 9.11. AMENDMENTS, CHANGES AND MODIFICATIONS. Subsequent to the
issuance of the Bonds under Section 208 of the Trust Agreement and prior to
Payment of the Bonds, this Agreement may not be effectively amended, changed,
modified, altered or terminated except in accordance with the Trust Agreement.
SECTION 9.12. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in several counterparts, each of which shall be an
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original and all of which shall constitute but one and the same instrument.
SECTION 9.13. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth.
SECTION 9.14. NO CHARGE AGAINST AUTHORITY CREDIT. No provision hereof
shall be construed to impose a charge against the general credit of the
Authority or shall impose any personal or pecuniary liability upon any
director, official or employee of the Authority.
SECTION 9.15. AUTHORITY NOT LIABLE. Notwithstanding any other
provision of this Agreement (a) the Authority shall not be liable to the
Borrower, the Trustee, the Guarantor, any holder of any of the Bonds, or any
other person for any failure of the Authority to take action under this
Agreement unless the Authority (i) is requested in writing by an appropriate
person to take such action and (ii) is assured of payment of or reimbursement
for any expenses in such action, and (b) except with respect to any action for
specific performance or any action in the nature of a prohibitory or mandatory
injunction, neither the Authority nor any director of the Authority or any
other official or employee of the Authority shall be liable to the Borrower,
the Trustee, the Guarantor, any holder of any of the Bonds, or any other Person
for any action taken by it or by its officers, servants, agents or employees,
or for any failure to take action under this Agreement or the Trust Agreement.
In acting under this Agreement, or in refraining from acting under this
Agreement, the Authority may conclusively rely on the advice of its legal
counsel.
SECTION 9.16. AGREEMENT SUPERSEDES PRIOR AGREEMENTS. This Agreement
supersedes any other prior agreements or understandings, written or oral,
between the parties with respect to the Project.
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IN WITNESS WHEREOF, the Authority, the Borrower and the Guarantor have
caused this Agreement to be executed in their respective legal names, all as of
the date first above written.
PUERTO RICO INDUSTRIAL, TOURIST,
EDUCATIONAL, MEDICAL AND ENVIRONMENTAL
CONTROL FACILITIES FINANCING AUTHORITY
By:___________________________________
Name:
Title:
DORAL PROPERTIES, INC.,
a Puerto Rico corporation
By:___________________________________
Name:
Title:
DORAL FINANCIAL CORPORATION,
a Puerto Rico corporation
By:___________________________________
Name:
Title:
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EXHIBIT A
DESCRIPTION OF THE PROJECT
The Project will consist of a nine-floor, 193,709 square feet
commercial office building with an adjacent five and a half floor parking
structure and two buildings with approximately 27,305 square feet of space to
be used as a data storage and processing facility for the Guarantor and its
Subsidiaries. The office building will be located on an approximately 7,426
square meters site in the Puerto Nuevo ▇▇▇▇ of the municipality of San ▇▇▇▇, in
the commercial sector of ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Avenue. The other two buildings
are located on adjacent parcels of property aggregating 3,143 square meters.
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EXHIBIT B
LIST OF PENDING CONSTRUCTION PERMITS