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Exhibit 10.73
CREDIT AGREEMENT
Dated as of November 5, 1997
Between
DORAL FINANCIAL CORPORATION,
DORAL MORTGAGE CORPORATION,
THE LENDERS PARTY HERETO
And
BANKERS TRUST COMPANY,
as Agent
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TABLE OF CONTENTS
PAGE
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ARTICLE 1
DEFINITIONS.......................................................................................................1
Section 1.1 Defined Terms..........................................................................1
Section 1.2 Terms Generally.......................................................................11
ARTICLE 2
AMOUNTS AND TERMS OF LOANS.......................................................................................12
Section 2.1 Commitments...........................................................................12
Section 2.2 Method of Borrowing and of Conversions/Continuations..................................12
Section 2.3 Conversions/Continuations of Loans....................................................13
Section 2.4 Disbursement of Funds.................................................................13
Section 2.5 Notes.................................................................................14
Section 2.6 Interest..............................................................................15
Section 2.7 Termination or Reduction of Commitments...............................................15
Section 2.8 Mandatory Repayments..................................................................15
Section 2.9 Optional Prepayments..................................................................16
Section 2.10 Fees..................................................................................16
Section 2.11 Payments, Etc,........................................................................16
Section 2.12 Eurodollar Rate Not Determinable; Illegality or Impropriety...........................18
Section 2.13 Reserve Requirements; Change in Circumstances.........................................18
Section 2.14 Indemnity.............................................................................20
Section 2.15 Taxes.................................................................................20
Section 2.16 Sharing of Setoffs....................................................................21
ARTICLE 3
CONDITIONS TO LOANS..............................................................................................22
Section 3.1 Conditions to Loans...................................................................22
ARTICLE 4
REPRESENTATIONS AND WARRANTIES...................................................................................24
Section 4.1 Corporate Existence; Compliance with Law and
Contractual Obligations..............................................24
Section 4.2 Corporate Power; Authorization; Enforceable Obligations...............................25
Section 4.3 No Legal or Contractual Bar...........................................................25
Section 4.4 Financial Information.................................................................25
Section 4.5 No Material Litigation................................................................26
Section 4.6 Taxes.................................................................................26
Section 4.7 Investment Company Act................................................................26
Section 4.8 Subsidiaries..........................................................................26
Section 4.9 Use of Proceeds.......................................................................26
Section 4.10 ERISA.................................................................................27
Section 4.11 Security Interests....................................................................27
Section 4.12 Agency Approvals......................................................................27
Section 4.13 Solvency..............................................................................27
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Section 4.14 Pledged Servicing Portfolio...........................................................27
ARTICLE 5
COVENANTS........................................................................................................28
Section 5.1 Affirmative Covenants.................................................................28
Section 5.2 Negative Covenants of Each Borrower...................................................33
Section 5.3 Additional Negative Covenants.........................................................36
ARTICLE 6
EVENTS OF DEFAULT................................................................................................36
Section 6.1 Events of Default.....................................................................36
ARTICLE 7
THE AGENT........................................................................................................39
Section 7.1 Appointment of Agent..................................................................39
Section 7.2 Nature of Duties of Agent.............................................................39
Section 7.3 Lack of Reliance on Agent.............................................................40
Section 7.4 Certain Rights of Agent...............................................................40
Section 7.5 Reliance by Agent.....................................................................40
Section 7.6 Indemnification of Agent..............................................................41
Section 7.7 Agent in its Individual Capacity......................................................41
Section 7.8 Holders of Notes......................................................................41
Section 7.9 Successor Agent.......................................................................41
ARTICLE 8
MISCELLANEOUS PROVISIONS.........................................................................................42
Section 8.1 Notices...............................................................................42
Section 8.2 Amendments, Etc.......................................................................43
Section 8.3 No Waiver; Remedies Cumulative........................................................43
Section 8.4 Payment of Expenses, Etc..............................................................43
Section 8.5 Right of Setoff.......................................................................44
Section 8.6 Benefit of Agreement..................................................................44
Section 8.7 GOVERNING LAW; SUBMISSION TO JURISDICTION.............................................46
Section 8.8 Counterparts..........................................................................47
Section 8.9 Headings Descriptive..................................................................47
Section 8.10 Survival of Representations and Indemnities...........................................47
Section 8.11 Severability..........................................................................47
Section 8.12 Indemnification of Collateral Agent...................................................48
Section 8.13 Joint and Several Nature of the Obligations...........................................48
Section 8.14 Certain Waivers.......................................................................48
Section 8.15 Subrogation, Etc......................................................................49
Section 8.16 Confidentiality.......................................................................50
Section 8.17 Integration...........................................................................50
Section 8.18 WAIVER OF JURY TRIAL..................................................................50
EXHIBITS
Exhibit A Form of Note
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Exhibit B Security and Collateral Agency Agreement
Exhibit C Form of Opinion of Borrowers' Counsel
Exhibit D-1 Officer's Certificate (DFC)
Exhibit D-2 Officer's Certificate (DMC)
Exhibit E Notice of Borrowing
Exhibit F Notice of Conversion/Continuation
Exhibit G Form of Power of Attorney
Exhibit H Addresses for Notices
Exhibit I Material Litigation
Exhibit J Form of Confidentiality Agreement
Exhibit K Permitted Subordinated Indebtedness
Exhibit L Form of Pledged Servicing Portfolio Report
Exhibit M [Reserved]
Exhibit N Authorized Officers
Exhibit O Form of Assignment and Acceptance
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT is made and dated as of November 5,
1997, by and between the Lenders party hereto from time to time, BANKERS TRUST
COMPANY, a New York banking corporation, as agent for the Lenders, DORAL
FINANCIAL CORPORATION, a corporation organized under the laws of the
Commonwealth of Puerto Rico ("DFC"), and DORAL MORTGAGE CORPORATION, a
corporation organized under the laws of the Commonwealth of Puerto Rico, and a
wholly-owned subsidiary of DFC ("DMC", and together with DFC, each a "BORROWER"
and collectively, the "BORROWERS"). Capitalized terms not otherwise defined
herein are defined in Article I.
ARTICLE 1
DEFINITIONS
SECTION 1.1 DEFINED TERMS.
For purposes of this Agreement, the terms set forth below
shall have the following meanings:
"ACCUMULATED FUNDING DEFICIENCY" shall mean a funding
deficiency described in Section 302 of ERISA.
"ACKNOWLEDGMENT AGREEMENT" shall mean an acknowledgment
agreement in form and substance satisfactory to the Agent pursuant to
which FNMA, FHLMC, GNMA or any other Person which owns Mortgage Loans
or has issued mortgaged-backed securities for which either Borrower
holds direct servicing rights, acknowledges and recognizes the
security interest in such rights granted to the Secured Parties.
"ADJUSTED TANGIBLE NET WORTH" shall mean, as of any date, (a)
the sum of: (i) Book Net Worth as of such date, (ii) one percent
(1.0%) of the outstanding principal balance of Mortgage Loans with
respect to which the Borrowers have direct servicing rights on such
date, and (iii) the aggregate principal amount of Permitted
Subordinated Indebtedness outstanding as of such date, less (b)(i)
thirty-five percent (35%) of the amount of "interest only strip
securities", (ii) all purchased loan administration contracts and
(iii) all other assets that would be classified as intangible assets
under GAAP, including purchased and capitalized value of servicing
rights, goodwill (whether representing the excess cost over book value
of assets acquired or otherwise), patents, trademarks, trade names,
copyrights, franchises, deferred charges (including unamortized debt
discount and expense, organization and acquisition costs and research
and product development costs), and in accordance with FASB 65, as
amended by FASB 122, by the Financial Accounting Standards Board, any
originated mortgage servicing rights.
"AFFILIATE" shall mean, as to any Person, any other Person
directly or indirectly Controlling, Controlled by or under direct or
indirect common Control with, such Person, whether through the
ownership of voting securities, by contract or otherwise. "Control" as
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used herein (and all forms of the word) means the power to direct the
management and policies of a Person.
"AGENCY" shall mean FHA, FHLMC, FNMA, GNMA or VA.
"AGENT" shall mean Bankers Trust Company, in its capacity as
agent for the Lenders hereunder, and any successor agent appointed
pursuant to Section 7.9.
"AGREEMENT" shall mean this Agreement, as amended, modified
or supplemented from time to time.
"AUTHORIZED OFFICERS" shall mean those officers identified on
Exhibit N attached hereto; provided that DFC or DMC, as the case may
be, may, with respect to its Authorized Officers, by notice to the
Agent in accordance with Section 8.1, add or delete any person from
the list of Authorized Officers set forth above.
"BASE EURODOLLAR RATE" shall mean, with respect to any
Eurodollar Loan, a rate per annum equal to the offered rate for U.S.
Dollar deposits, in an amount equal to amount of the Eurodollar Loan
proposed to be subject to such rate and with maturities comparable to
such Eurodollar Interest Period, that appears on Telerate Page 3750 as
of approximately 11:00 a.m., London time, two (2) Eurodollar Business
Days prior to the commencement of such Eurodollar Interest Period;
provided that if such rate does not appear on Telerate Page 3750, the
"Base Eurodollar Rate" applicable to a particular Eurodollar Interest
Period shall mean a rate per annum equal to the rate at which U.S.
Dollar deposits, in an amount equal to the principal amount of the
Eurodollar Loans proposed to be subject to such rate and with
maturities comparable to such Eurodollar Interest Period, are offered
in immediately available funds in the London Interbank Market to the
London office of the Agent by leading banks in the London Interbank
Market as of approximately 11:00 a.m., London time, two (2) Eurodollar
Business Days prior to the commencement of the Eurodollar Interest
Period to which such Base Eurodollar Rate is applicable.
"BOARD" shall mean the Board of Governors of the Federal
Reserve System of the United States and any successor thereto.
"BOOK NET WORTH" shall mean (a) the sum of (i) the net worth,
determined in accordance with GAAP consistently applied, of (A) DFC on
a non-consolidated basis, (B) DMC, (C) Centro Hipotecaro de Puerto
Rico, Inc. and (D) other Subsidiaries of DFC engaged primarily in the
business of mortgage banking (as reasonably determined by the Agent,
but excluding Doral Bank and Doral Securities) and (ii) the amount of
intercompany payables between DFC and DMC, less (b) the sum of (i) the
amount of intercompany receivables between DFC and DMC and (ii)
investments by DFC and/or DMC in any Subsidiaries, which investments
are listed under the account titled "Other Assets" (as such term is
used in the consolidated balance sheet of DFC dated as of December 31,
1996) or which are listed under other accounts. Notwithstanding the
foregoing, if at any time any of the entities listed in clauses (B),
(C) or (D) above become businesses engaged primarily in activities
other than mortgage banking (as reasonably determined by the Agent),
then the net worth of such entity shall not be included in clause (i)
for the purposes of calculating Book Net Worth.
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"BORROWER" and "BORROWERS" shall have the meaning given such
terms in the introductory paragraph of this Agreement.
"BORROWING" shall mean a borrowing pursuant to a Notice of
Borrowing consisting of Loans made concurrently by all of the Lenders.
"BUSINESS DAY" shall mean any day other than (i) a Saturday,
Sunday and any other day on which banks in New York City are required
or authorized to close or (ii) any public or bank holiday in the
Commonwealth of Puerto Rico.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and the rules and regulations issues
thereunder as from time to time in effect.
"COLLATERAL" shall have the meaning given such term in
Section 1 of the Security Agreement.
"COLLATERAL AGENT" shall mean initially Bankers Trust
Company, in its capacity as "Collateral Agent" under the Security
Agreement, and any successor collateral agent thereto acceptable to
the Required Lenders and the Borrowers and designated as the
"Collateral Agent" under the Security Agreement.
"COLLATERAL VALUE OF THE PLEDGED SERVICING PORTFOLIO" shall
mean, at the time of determination thereof, an amount equal to the
lesser of (i) sixty-five percent (65%) of the fair market value of the
servicing rights relating to the Mortgage Loans included in the
Pledged Servicing Portfolio and (ii) one percent (1.0%) of the unpaid
principal balance of the Mortgage Loans included in the Pledged
Servicing Portfolio (in each case as reflected on the most recent
Pledged Servicing Valuation Report delivered to the Agent, provided
that no collateral value shall be attributed to the FNMA servicing
rights or the FHLMC servicing rights relating to the FNMA/FHLMC
Servicing Portfolio until a duly executed Acknowledgment Agreement
from FNMA or FHLMC, respectively, has been received by the Collateral
Agent, and provided further, that if no Pledged Servicing Valuation
Report has been delivered to the Agent in accordance with Section
5.1(a)(ix)(B) or 5.1(a)(ix)(C), then the Collateral Value of the
Pledged Servicing Portfolio shall be an amount determined by the Agent
in its sole discretion).
"COMMITMENT" shall mean, with respect to each Lender, the
commitment of such Lender to make Loans hereunder as set forth in
Section 2.1, as such commitment may be reduced pursuant to Section
8.6(c).
"CONTRACTUAL OBLIGATION" shall mean, as to any Person, any
provision of any security issued by such Person or of any agreement,
instrument or undertaking to which such Person is a party or by which
it or any of its property is bound.
"CONVERSION/CONTINUATION DATE" shall mean (a) any date on
which the Lenders, pursuant to Sections 2.2 and 2.3, convert Loans to
Loans bearing interest at a different interest rate, or continue
outstanding Eurodollar Loans for an additional Eurodollar Interest
Period (which date shall be a Eurodollar Business Day in the case of a
conversion of Prime
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Loans into Eurodollar Loans or the continuation of a Eurodollar Loan)
and (b) the last day of each Eurodollar Interest Period in the case of
a Eurodollar Loan.
"DEFAULT RATE" shall have the meaning given such term in
Section 2.6(c).
"DEFAULTING LENDER" shall have the meaning given such term in
Section 2.4(b).
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as the same may from time to time be supplemented or
amended, and the rules and regulations issued thereunder as from time
to time in effect.
"ERISA AFFILIATE" shall mean each trade or business,
including the Borrowers, whether or not incorporated, that together
with the Borrowers would be treated as a single employer under section
4001 of ERISA.
"EURODOLLAR BUSINESS DAY" shall mean any Business Day on
which commercial banks are open for international business (including
dealings in dollar deposits) in London, England.
"EURODOLLAR INTEREST PERIOD" shall mean, with respect to any
Eurodollar Loan, the period commencing on the Borrowing Date or a
Conversion/Continuation Date for such Eurodollar Loan, as the case may
be, and ending one, two or three months thereafter as the Borrowers
may elect in the applicable Notice of Borrowing or Notice of
Conversion/Continuation; provided that (a) any Eurodollar Interest
Period that would otherwise end on a day that is not a Eurodollar
Business Day shall be extended to the next succeeding Eurodollar
Business Day, unless such Eurodollar Business Day falls in another
calendar month, in which case such Eurodollar Interest Period shall
end on the next preceding Eurodollar Business Day; (b) any Eurodollar
Interest Period that begins on the last Eurodollar Business Day of a
calendar month or any Eurodollar Interest Period that begins on a day
for which there is no numerically corresponding day in the calendar
month at the end of such Eurodollar Interest Period shall end on the
last Eurodollar Business Day of such calendar month at the end of such
Eurodollar Interest Period; and (c) no Eurodollar Interest Period
shall end after the Maturity Date.
"EURODOLLAR LOAN" shall mean any Loan bearing interest at the
rate set forth in Section 2.6(a).
"EURODOLLAR RATE" shall mean, with respect to any Eurodollar
Interest Period, a rate per annum equal to the quotient obtained by
dividing (a) the Base Eurodollar Rate applicable to such Eurodollar
Interest Period by (b) one minus the Reserve Requirement (expressed as
a decimal) applicable to such Eurodollar Interest Period. The
Eurodollar Rate shall be rounded, if necessary, to the next higher
one-sixteenth of one percent (1/16 of 1%).
"EVENT OF DEFAULT" shall have the meaning given such term in
Article VI.
"FEDERAL FUNDS RATE" shall mean, for any period, a
fluctuating interest rate per annum equal for each day during such
period to the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged
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by Federal funds brokers, as published for such day (or, if such day
is not a Business Day, for the preceding Business Day) by the Federal
Reserve Bank of New York or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day
on such transactions received by the Agent from three (3) Federal
funds brokers of recognized standing selected by it.
"FEES" shall mean all fees payable by the Borrowers to the
Agent and/or the Lenders pursuant to Section 2.10 or otherwise.
"FHA" shall mean the Federal Housing Administration and any
successor thereto.
"FHLMC" shall mean the Federal Home Loan Mortgage Corporation
and any successor thereto.
"FNMA" shall mean the Federal National Mortgage Association
and any successor thereto.
"FNMA/FHLMC SERVICING PORTFOLIO" shall mean the portfolio of
outstanding Mortgage Loans (other than Mortgage Loans owned by either
Borrower or its Affiliates that are not covered by a Permitted
Affiliate Servicing Agreement) that are owned by FNMA or FHLMC or
included in pools of Mortgage Loans with respect to which FNMA or
FHLMC has issued a Mortgage-Backed Security and with respect to which
either Borrower holds direct servicing rights, and that are covered by
an effective Acknowledgment Agreement.
"GAAP" shall mean generally accepted accounting principles in
the United States of America in effect from time to time.
"GNMA" shall mean the Government National Mortgage
Association and any successor thereto.
"GNMA SERVICING PORTFOLIO" shall mean the portfolio of
outstanding Mortgage Loans (other than Mortgage Loans owned by either
Borrower or its Affiliates that are not covered by a Permitted
Affiliate Servicing Agreement) that are guaranteed by GNMA or included
in pools of Mortgage Loans with respect to which GNMA has issued a
Mortgage-Backed Security and with respect to which either Borrower
holds direct servicing rights, and that are covered by an effective
Acknowledgment Agreement if requested by the Agent and the Lenders.
"GOVERNMENTAL AUTHORITY" shall mean any nation or government,
any state, commonwealth or other political subdivision thereof, and
any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"HUD" shall mean the Department of Housing and Urban
Development and any successor thereto.
"INDEBTEDNESS" shall mean, with respect to any Person, all
items of indebtedness that, in accordance with GAAP, would be included
in determining liabilities as shown on the liability side of a
statement of financial condition of such Person as of the date as of
which
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indebtedness is to be determined, including all obligations for money
borrowed, the deferred purchase price of property or services and
capitalized lease obligations, and shall also include all indebtedness
and liabilities of others assumed or guaranteed by such Person, or
secured by any Lien upon property owned by such Person, whether or not
such indebtedness is assumed, or in respect of which such Person is
secondarily or contingently liable (other than by endorsement of
instruments in the course of collection), including contingent
reimbursement obligations of such Person under undrawn letters of
credit, whether by reason of any agreement to acquire such
indebtedness or to supply or advance sums or otherwise (but excluding
any obligations (whether recourse or nonrecourse) to advance principal
and interest payments and taxes and insurance payments on Mortgage
Loans in advance of receipt of such payments from the underlying
Obligor under servicing agreements entered into by either Borrower
which agreements exist on the date hereof and any similar agreements
entered into after the date hereof).
"INTERCREDITOR AGREEMENT" shall mean an Intercreditor
Agreement between the Agent, the Lenders, and each of the Warehouse
Secured Parties providing for, among other things, the Warehouse
Lenders' agreement to the granting to the Secured Parties of a first
priority security interest in the Collateral, which agreement shall be
in form and substance acceptable to the Agent and the Lenders in their
sole discretion.
"LENDERS" shall mean the banks and other financial
institutions party hereto from time to time.
"LIEN" shall mean any security interest, mortgage, pledge,
lien, claim on property, charge or encumbrance (including any
conditional sale or other title retention agreement), any lease in the
nature thereof, and the filing of or agreement to give any financing
statement under the Uniform Commercial Code of any jurisdiction.
"LOAN" shall mean a loan made by a Lender pursuant to Section
2.1 for the purposes set forth in Section 4.9.
"LOAN DOCUMENTS" shall mean this Agreement, the Security
Agreement, the Notes, the Acknowledgment Agreements and any other
document, instrument or agreement executed by the Borrowers in
connection herewith or therewith, as any of the same may be amended,
modified or supplemented from time to time.
"MARGIN STOCK" shall have the meaning given such term in
Regulation U of the Board.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse
effect with respect to (a) the business, operations or financial
condition of a Borrower, (b) the ability of any Borrower to pay and
perform its Obligations, (c) the validity or enforceability of this
Agreement, any of the other Loan Documents, or the rights and remedies
of the Secured Parties hereunder or thereunder or (d) the value of the
Collateral.
"MATERIAL AMOUNT" shall mean, at any time, ten percent (10%)
of Book Net Worth, as set forth in the most recent annual or quarterly
financial statement of DFC delivered to the
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Lenders and used in DFC's Securities and Exchange Commission 10-K or
Securities and Exchange Commission 10-Q filing, as applicable, absent
manifest error in such statement.
"MATURITY DATE" shall mean October 30, 1998.
"MORTGAGE LOAN" shall mean a one- to four-family residential
real estate-secured loan.
"MORTGAGE-BACKED SECURITY" shall mean any security (including
a participation certificate) issued by FHLMC, FNMA or any other
Person, or guaranteed by GNMA, that represents an interest in a pool
of Mortgage Loans.
"MULTIEMPLOYER PLAN" shall mean a plan described in section
4001(a)(3) of ERISA to which the Borrowers or any ERISA Affiliate is
required to contribute on behalf of any of its employees.
"NOTE" shall have the meaning given such term in Section 2.5.
"NOTICE OF BORROWING" shall have the meaning given such term
in Section 2.2.
"NOTICE OF CONVERSION/CONTINUATION" shall have the meaning
given such term in Section 2.2.
"OBLIGATIONS" shall mean, collectively, the unpaid principal
of and interest on the Loans and any Notes and all other obligations
and liabilities of each of the Borrowers to the Agent, the Collateral
Agent and the other Secured Parties (including, without limitation,
interest accruing at the then applicable rate provided in the Credit
Agreement after the maturity of the Loans and interest accruing at the
then applicable rate provided in the Credit Agreement after the filing
of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to either Borrower,
whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding), whether direct or indirect, absolute or
contingent, due or to become due, voluntary or involuntary, whether or
not jointly owed with others, liquidated or unliquidated, or now
existing or hereafter incurred, and whether or not from time to time
decreased or extinguished and later increased, created or incurred,
which may arise under, out of, or in connection with, this Agreement,
the Loans, any Notes, the Security Agreement, the other Loan Documents
or any other document made, delivered or given in connection
therewith, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements
of counsel to any of the Agent, the Collateral Agent or any of the
other Secured Parties that are required to be paid by the Borrowers
pursuant to the terms of this Agreement, the Security Agreement or any
other Loan Document).
"PAYMENT OFFICE" shall mean the Agent's office located at Xxx
Xxxxxxx Xxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such other office as
the Agent shall specify by notice to the Borrowers and the Lenders.
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"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA and any
successor thereto.
"PERMITTED AFFILIATE SERVICING AGREEMENT" shall mean an
agreement between either Borrower and an Affiliate thereof pursuant to
which such Borrower has direct servicing rights to service Mortgage
Loans owned by such Affiliate on terms and at rates no less favorable
than would be obtained from a non-Affiliate.
"PERMITTED SUBORDINATED INDEBTEDNESS" shall mean any
Indebtedness incurred by each Borrower (other than the Obligations)
that is subordinated to the Obligations in accordance with the
criteria set forth on Exhibit K attached hereto.
"PERSON" shall mean any corporation, natural person, firm,
joint venture, partnership, trust, unincorporated organization,
government or any political subdivision, department, agency or
instrumentality of any government.
"PLAN" shall mean any plan (other than a Multiemployer Plan)
subject to Title IV of ERISA maintained for employees of the Borrowers
or any ERISA Affiliate (and any such plan no longer maintained by the
Borrowers or any of its ERISA Affiliates to which the Borrowers or any
of its ERISA Affiliates has made or was required to make any
contributions during the five years preceding the date on which such
plan ceased to be maintained).
"PLEDGED SERVICING PORTFOLIO" shall mean the FNMA/FLHMC
Servicing Portfolio and the GNMA Servicing Portfolio, in each case
with respect to which the Secured Parties have a valid and perfected
first priority security interest in the related direct servicing
rights owned by either Borrower.
"PLEDGED SERVICING PORTFOLIO REPORT" shall mean a report
prepared by the Borrowers in the format prescribed by the Mortgage
Bankers' Association of America listing the FNMA/GNMA /FHLMC
statistics and the other information shown on Exhibit L.
"PLEDGED SERVICING VALUATION REPORT" shall mean a report
prepared by a nationally recognized mortgage servicing broker
acceptable to the Agent and the Borrowers and in form and substance
reasonably satisfactory to the Agent, setting forth the fair market
value of the servicing rights relating to the Mortgage Loans included
in the Pledged Servicing Portfolio as of such date (with the
FNMA/FHLMC Servicing Portfolio and the GNMA Servicing Portfolio each
listed and valued separately (and, with respect to the FNMA/FHLMC
Servicing Portfolio, with the portfolio serviced for FNMA listed
separately from the portfolio serviced for FHLMC)), with such value
determined on the basis of the net present value of the expected
stream of annual cash flow generated thereby using assumptions
reasonably acceptable to the Agent.
"POWER OF ATTORNEY" shall mean a power of attorney granted by
the Borrowers, substantially in the form of Exhibit G attached hereto.
"POTENTIAL DEFAULT" shall mean an event that with the lapse
of time or the giving of notice, or both, would, unless cured or
waived, constitute an Event of Default.
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"PRIME LOAN" shall mean any Loan bearing interest at the rate
set forth in Section 2.6(b).
"PRIME RATE" shall mean the rate of interest that is publicly
announced from time to time by Bankers Trust Company in New York City
as its prime lending rate as in effect from time to time, such rate to
change automatically and without notice to the Borrowers when and as
such prime lending rate changes. The Prime Rate is a reference rate
and does not necessarily represent the best or lowest rate actually
charged by Bankers Trust Company to any customer. Bankers Trust
Company may make commercial loans or other loans at rates of interest
at, above or below the Prime Rate.
"PROCESS AGENT" shall have the meaning set forth in Section
8.7.
"PROHIBITED TRANSACTION" shall mean any transaction described
in section 406 of ERISA that is not exempt by reason of section 408 of
ERISA or the transitional rules set forth in section 414(c) of ERISA
and any transaction described in section 4975(c)(1) of the Code that
is not exempt by reason of section 4975(c)(2) or section 4975(d) of
the Code, or the transitional rules of section 2003(c) of ERISA.
"REGULATION D" shall mean Regulation D of the Board as from
time to time in effect, and any other regulation hereafter promulgated
by the Board to replace the prior Regulation D and having
substantially the same function.
"REPORTABLE EVENT" shall mean any of the events set forth in
section 4043(c) of ERISA or the regulations thereunder, a withdrawal
from a Plan described in section 4063 of ERISA, a cessation of
operations described in section 4068(f) of ERISA, an amendment to a
Plan necessitating the posting of security under section 401(a)(29) of
the Code, or a failure to make a payment required by section 412(m) of
the Code and section 302(e) of ERISA when due.
"REQUIRED LENDERS" shall mean, at any time, Lenders holding
at least sixty-six and two-thirds percent (66.66%) of the then
aggregate unpaid principal amount of the Loans or, if no Loans are
then outstanding, Lenders holding at least sixty-six and two-thirds
percent (66.66%) of the Commitments.
"REQUIREMENTS OF LAW" shall mean as to any Person the
Articles or Certificate of Incorporation and Bylaws or other
organizational or governing documents of such Person, and any law,
treaty, rule or regulation, or a final and binding determination of an
arbitrator or a determination of a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
any of its property or to which such Person or any of its property is
subject.
"RESERVE REQUIREMENT" shall mean, with respect to any
Eurodollar Interest Period, the daily average during such Eurodollar
Interest Period of the maximum aggregate reserve requirement
(including all basic, supplemental, marginal and other reserves and
taking into account any transitional adjustments or other scheduled
changes in reserve requirements during such Eurodollar Interest
Period) which is imposed under Regulation D on any
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member bank of the Federal Reserve System, in respect of eurocurrency
or eurodollar funding, lending or liabilities.
"SECURED PARTIES" shall have the meaning given such term in
the Security Agreement.
"SECURITY AGREEMENT" shall mean the Security and Collateral
Agency Agreement substantially in the form of Exhibit B, as amended,
modified or supplemented from time to time and any other documents or
certificates creating or evidencing security interests granted to the
Secured Parties in connection with this Agreement and the other Loan
Documents.
"SERVICING PORTFOLIO" shall mean, at any time, the portfolio
of outstanding Mortgage Loans (other than Mortgage Loans owned by the
Borrowers and its Affiliates which are not covered by Permitted
Affiliate Servicing Agreements) with respect to which the Borrowers
have direct servicing rights.
"SUBSIDIARY" shall mean with respect to any Person, any
corporation, association or other business entity of which more than
fifty percent (50%) of the securities or other ownership interests
having ordinary voting power is, or with respect to which rights to
control management (pursuant to any contract or other agreement or
otherwise) are, at the time as of which any determination is being
made, owned, controlled or held by such Person or one or more
subsidiaries of such Person.
"TAXES" shall have the meaning given such term in Section
2.15.
"TELERATE PAGE 3750" shall mean the display designated as
"Page 3750" on the Associated Press-Dow Xxxxx Telerate Service (or
such other page as may replace Page 3750 on the Associated Press-Dow
Xxxxx Telerate Service or such other service as may be nominated by
the British Bankers' Association as the information vendor for the
purposes of displaying British Bankers' Association interest
settlement rates for U.S. Dollar deposits). Any Base Eurodollar Rate
determined on the basis of the rate displayed on Telerate Page 3750
shall be subject to corrections, if any, made in such rate and
displayed by the Associated Press-Dow Xxxxx Telerate Service within
one (1) hour of the time when such rate is first displayed by such
service.
"TOTAL LIABILITIES" shall mean (i) the aggregate amount of
all liabilities of each Borrower and each of its consolidated
Subsidiaries (other than Doral Bank and Doral Securities) determined
in accordance with GAAP, consistently applied, other than Permitted
Subordinated Indebtedness less (ii) the aggregate amount of
intercompany payables owing from one Borrower to the other.
"VA" shall mean the Veterans Administration and any successor
thereto.
"WAREHOUSE CREDIT AGREEMENT" shall mean the First Amended and
Restated Credit Agreement, dated as of September 25, 1996, between the
Borrowers, Bankers Trust Company, as Agent, and the lenders party
thereto from time to time, as amended, supplemented or otherwise
modified from time to time.
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"WAREHOUSE EVENT OF DEFAULT" shall mean an "Event of Default"
as such term is defined in the Warehouse Credit Agreement.
"WAREHOUSE FACILITY 1 COMMITMENTS" shall mean the "Facility 1
Commitments" as such term is defined in the Warehouse Credit
Agreement.
"WAREHOUSE FACILITY 2 LOANS" shall mean the "Facility 2
Loans" as such term is defined in the Warehouse Credit Agreement.
"WAREHOUSE LENDERS" shall mean the "Lenders" as such term is
defined in the Warehouse Credit Agreement.
"WAREHOUSE SECURED PARTIES" shall mean the "Secured Parties"
as such term is defined in the Warehouse Servicing Security Agreement.
"WAREHOUSE SERVICING SECURITY AGREEMENT" shall mean the
"Servicing Security Agreement" as such term is defined in the
Warehouse Credit Agreement.
SECTION 1.2 TERMS GENERALLY.
The definitions in Section 1.1 shall apply equally to both
the singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include," "includes" and "including" shall be deemed
to be followed by the phrase "without limitation." All references herein to
Articles, Sections, Exhibits and Attachments shall be deemed references to
Articles and Sections of, and Exhibits and Attachments to, this Agreement or to
an Exhibit to this Agreement unless the context shall otherwise require. Except
as otherwise provided herein, all terms of an accounting or financial nature
shall be construed in accordance with GAAP, as in effect from time to time;
provided that, for purposes of determining compliance with any covenant set
forth in Article V, such term shall be construed in accordance with GAAP as in
effect on the date of this Agreement applied on a basis consistent with the
financial statements referred to in Section 4.4(a).
ARTICLE 2
AMOUNTS AND TERMS OF LOANS
SECTION 2.1 COMMITMENTS.
Subject to and upon the terms and conditions herein set
forth, each Lender agrees, severally and not jointly, at any time and from time
to time from the date of this Agreement up to but excluding the date upon which
the Commitments are terminated, to make Loans to the Borrowers in an aggregate
principal amount at any time outstanding not to exceed the Commitment set forth
opposite such Lender's name on the signature pages hereto, as such commitment
may be reduced from time to time pursuant to Section 8.6(c); provided that the
aggregate principal amount of Loans plus the aggregate principal amount of
Warehouse Facility 2 Loans outstanding at any time shall not exceed the then
current Collateral Value of the Pledged Servicing Portfolio. Subject to Section
2.12, each Loan shall be a Eurodollar Loan or a Prime Loan. Each Borrowing
shall be made ratably by
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the Lenders in proportion to their respective Commitments. Within the foregoing
limits and subject to the conditions set forth in Article III, the Borrowers
may borrow and reborrow Loans under Section 2.2 and prepay Loans under Section
2.9.
SECTION 2.2 METHOD OF BORROWING AND OF CONVERSIONS/CONTINUATIONS.
(a) Whenever the Borrowers desire to make a Borrowing hereunder,
to convert any Loan pursuant to Section 2.3 or to continue any Loan for an
additional Eurodollar Interest Period pursuant to Section 2.3, an Authorized
Officer shall deliver to the Agent written notice of such proposed Borrowing,
conversion or continuation (a "NOTICE OF BORROWING" or "NOTICE OF
CONVERSION/CONTINUATION," as the case may be), each such notice to be given (x)
prior to 12:00 noon (New York City time) on the date of such proposed Borrowing
or conversion, in the case of a Borrowing of Prime Loans or a conversion of
Eurodollar Loans into Prime Loans; and (y) prior to 12:00 noon (New York City
time) on the third Eurodollar Business Day before the date of such proposed
Borrowing, conversion or continuation (which date shall be a Eurodollar
Business Day), in the case of a Borrowing of Eurodollar Loans, a conversion of
Prime Loans into Eurodollar Loans or a continuation of Eurodollar Loans for an
additional Eurodollar Interest Period. Each such notice shall be irrevocable
and shall be in the form of Exhibit E or F, as the case may be. Notwithstanding
any other provision hereof to the contrary, (i) no more than three (3)
Eurodollar Interest Periods for Loans may be in effect hereunder at any time;
and (ii) no Borrowing shall be in an aggregate principal amount of less than
$5,000,000.
(b) Without in any way limiting the Borrowers' obligation to
deliver to the Agent a copy of any written Notice of Borrowing or Notice of
Conversion/Continuation, the Agent may act without liability upon the basis of
any telephonic Notice of Borrowing or Notice of Conversion/Continuation
believed by the Agent in good faith to be from an Authorized Officer prior to
receipt of written confirmation. In each such case, the Borrowers hereby waive
the right to dispute the Agent's record of the terms of such telephonic notice.
An Authorized Officer shall promptly confirm in writing any Notice of Borrowing
or Notice of Conversion/Continuation given by telephone.
(c) On the date of receipt of any Notice of Borrowing or Notice
of Conversion/Continuation, the Agent shall promptly give (and in any event by
1:00 p.m. (New York City time)) each Lender telefacsimile notice of each
proposed Borrowing, such Lender's proportionate share thereof, each proposed
conversion or continuation and any other matters covered by the Notice of
Borrowing or Notice of Conversion/Continuation.
(d) Unless otherwise specified in a Notice of Borrowing, each
Loan to be made as part of a Borrowing shall be made as a Prime Loan. If a
timely notice as specified in Section 2.2(a) is not received from the Borrowers
prior to the expiration of any Eurodollar Interest Period for any outstanding
Eurodollar Loan, the Borrowers shall be deemed to have irrevocably elected to
convert such Loan into a Prime Loan. The Agent will endeavor to notify the
Borrowers prior to the expiration of any Eurodollar Interest Period but shall
have no liability for failure to provide such notice.
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(e) By delivering a Notice of Conversion/Continuation to the Agent
hereunder of the continuation of any Eurodollar Loans for an additional
Eurodollar Interest Period or the conversion of any outstanding Loans to
Eurodollar Loans, the Borrowers shall be deemed to have represented and
warranted that no Potential Default or Event of Default has occurred and is
continuing.
SECTION 2.3 CONVERSIONS/CONTINUATIONS OF LOANS.
(a) Subject to the terms and conditions hereof and in accordance
with the procedures for conversions and continuations and the other provisions
set forth in Section 2.2, each Lender agrees to convert outstanding Loans that
are Prime Loans into Eurodollar Loans and Eurodollar Loans into Prime Loans and
to continue Loans that are Eurodollar Loans for an additional Eurodollar
Interest Period, in each case in an aggregate principal amount not to exceed
the principal amount of the Prime Loans or Eurodollar Loans, as the case may
be, being converted or Eurodollar Loans, as the case may be, being continued;
provided that no Lender shall convert any Loan into a Eurodollar Loan or
continue any Eurodollar Loan for an additional Eurodollar Interest Period if a
Potential Default or an Event of Default has occurred and is continuing.
SECTION 2.4 DISBURSEMENT OF FUNDS.
(a) No later than 2:00 p.m. (New York City time) on the date of
each Borrowing, each Lender will make available to the Agent the full amount of
such Lender's pro rata share of such Borrowing, in immediately available funds,
by wire transfer of such funds to the Agent at the Payment Office. Unless the
Agent determines that any applicable condition in Article III has not been
satisfied, the Agent shall make the funds so received from the Lenders
available to the Borrowers by wire transfer of such funds to such account as
the Borrowers through the Agent may direct in writing for such purpose. If a
Borrowing does not occur on the requested date because any condition precedent
herein specified has not been satisfied, the Agent shall so notify the affected
Lenders promptly and shall return the amounts so received to the respective
Lenders.
(b) Unless the Agent has been notified by any Lender before 2:00
p.m. (New York City time) on the date of a proposed Borrowing that such Lender
does not intend to make available to the Agent on such date such Lender's
portion of such Borrowing, the Agent may assume that such Lender will make such
amount available to the Agent on such date and the Agent may (but shall not be
obligated to) make available to the Borrowers a corresponding amount. If such
corresponding amount is not in fact made available to the Agent by such Lender
(a "DEFAULTING LENDER") on such date, the Agent shall be entitled to recover
such corresponding amount on demand from such Defaulting Lender, together with
interest at the overnight Federal Funds Rate for each day until paid. A
Defaulting Lender shall be deemed to have assigned to the Agent the right to
receive any and all payments due to it in respect of the Obligations until the
sum of such payments received by the Agent is equal to the amount owed to the
Agent by such Defaulting Lender pursuant to the preceding sentence. The
foregoing assignment shall be deemed to be a power coupled with an interest and
shall be absolute and irrevocable. Nothing in this subsection shall be deemed
to relieve any Lender from its obligation to fulfill its obligation to make
Loans hereunder or to prejudice any rights that the Borrowers, the Agent or any
Lender may have against any Defaulting Lender hereunder.
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(c) No Lender shall be responsible for any default by any other
Lender in its obligation to make Loans hereunder, and each Lender shall be
obligated to make the Loans on the terms set forth herein, regardless of the
failure of any other Lender to fulfill its obligations hereunder.
SECTION 2.5 NOTES.
(a) Each Borrower's joint and several obligation to pay the
principal of and interest on the Loans made by each Lender shall be evidenced
by a promissory note (each a "NOTE" and collectively the "NOTES") substantially
in the form of Exhibit A, with blanks appropriately completed in conformity
therewith and payable to the order of such Lender. Each Lender shall, and is
hereby authorized by the Borrowers to, endorse on the schedule attached to the
applicable Note delivered to such Lender (or on a continuation of such schedule
attached to such Note and made a part thereof), or otherwise to record in such
Lender's internal records, an appropriate notation evidencing the date and
amount of the Loan from such Lender, each payment and prepayment of principal
of any such Loan, each payment of interest on any such Loan, and applicable
interest rates and Eurodollar Interest Periods and other information with
respect thereto, and any such recordation shall absent manifest error
constitute prima facie evidence of the accuracy of the information so recorded;
provided that the failure of any Lender to make such a notation or any error
therein shall not affect the joint and several Obligations of the Borrowers,
including the joint and several Obligation of the Borrowers to repay the Loans
made by such Lender in accordance with the terms of this Agreement and the
applicable Notes.
SECTION 2.6 INTEREST.
(a) The Borrowers agree to pay interest in respect of the unpaid
principal amount of each Eurodollar Loan for each day during the Eurodollar
Interest Period applicable thereto at a rate per annum equal to one and
one-quarter percent (1.25%) per annum plus the Eurodollar Rate for such
Eurodollar Interest Period.
(b) The Borrowers agree to pay interest in respect of the unpaid
principal amount of each Prime Loan for each day such Prime Loan is outstanding
at a rate per annum equal to one-quarter percent (0.25%) per annum plus the
Prime Rate.
(c) Overdue principal and interest in respect of each Loan and
all other overdue amounts owing hereunder shall bear interest for each day that
such amounts are overdue (after as well as before judgment) at a rate per annum
equal to two and one-quarter percent (2.25%) per annum plus the Prime Rate (the
"DEFAULT RATE").
(d) Interest on each Loan shall accrue from and including the
Borrowing Date thereof to but excluding the date of any repayment thereof and
shall be payable (i) on or before the third (3rd) Business Day after receipt of
the billing statement referred to in clause (e) below, (ii) on any prepayment
in full of all of any Lender's outstanding Loans, (iii) at maturity (whether by
acceleration or otherwise) and (iv) after maturity, on demand.
(e) The Agent shall deliver to the Borrowers one interest billing
statement for each month on or before the third (3rd) Business Day of the next
succeeding month, which interest billing statement shall set forth the interest
accrued on the Loans for such month; provided that any failure
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or delay in delivering such interest billing statement or any inaccuracy
therein shall not affect the Obligations.
SECTION 2.7 TERMINATION OR REDUCTION OF COMMITMENTS.
The Commitments shall automatically terminate on the earliest
of: (i) Maturity Date, and (ii) the date on which the Borrowers terminate or
fail to renew the Warehouse Facility 1 Commitments, in each case subject to
earlier termination pursuant to Section 6.1. The Commitments may not be reduced
in part by the Borrowers, but may be terminated in their entirety at any time
by the Borrowers upon at least fifteen (15) days' prior irrevocable written
notice to the Agent.
SECTION 2.8 MANDATORY REPAYMENTS.
(a) The Borrowers shall repay all outstanding Loans on the
Maturity Date.
(b) On any date upon which the aggregate principal amount of the
outstanding Loans plus the aggregate principal amount of the outstanding
Warehouse Facility 2 Loans exceeds the Collateral Value of the Pledged
Servicing Portfolio, the Borrowers shall repay on such date the aggregate
principal amount of the Loans as shall be necessary so that the aggregate
principal amount of outstanding Loans plus the aggregate principal amount of
the outstanding Warehouse Facility 2 Loans does not exceed the Collateral Value
of the Pledged Servicing Portfolio.
(c) All repayments of the Loans of any Lender under this Section
2.8 shall be applied first to such Lender's Loans that are Prime Loans and
second, to such Lender's Loans that are Eurodollar Loans. All repayments of
Loans under this Section 2.8 shall be without premium or penalty, except that
any repayment of Eurodollar Loans shall be subject to the provisions of Section
2.14. Interest shall be payable in accordance with the provisions of Section
2.6.
SECTION 2.9 OPTIONAL PREPAYMENTS.
The Borrowers shall have the right at any time and from time
to time to prepay outstanding Loans, in whole or in part, upon one (1) Business
Days' prior written notice to the Agent, in the case of Eurodollar Loans, and
without prior notice in the case of Prime Loans; provided that each partial
prepayment of any Loan shall be in an aggregate principal amount of $100,000 or
any multiple of $50,000 in excess thereof. All prepayments of the Loans of any
Lender under this Section 2.9 shall be applied first, to such Lender's Loans
that are Prime Loans, and second, to such Lender's Loans that are Eurodollar
Loans. All prepayments of Loans under this Section 2.9 shall be without premium
or penalty, except that any prepayment of Eurodollar Loans shall be subject to
the provisions of Section 2.14. Interest shall be payable upon such prepayment
in accordance with the provisions of Section 2.6.
SECTION 2.10 FEES.
(a) The Borrowers agree to pay to the Agent a facility fee in the
amount and on the date separately agreed to by the Agent and the Borrowers.
(b) The fees set forth in this Section 2.10, once paid, shall not
be refundable under any circumstances.
00
- 00 -
XXXXXXX 0.00 XXXXXXXX, XXX,
(x) Except as otherwise specifically provided herein, all
payments by the Borrowers under this Agreement shall be made without defense,
set-off or counterclaim to the Agent not later than 1:00 p.m. (New York City
time) on the date when due, it being expressly agreed and understood that if a
payment is received after 1:00 p.m. (New York City time) by the Agent, such
payment will be deemed to have been made on the next succeeding Business Day
and interest thereon shall be payable at the then applicable rate during such
extension; provided that if the Agent receives the federal wire confirmation
number with respect to such payment before 1:00 p.m. (New York City time) on
the date when such payment is due, and the payment is actually received and
credited for value to the appropriate account at Bankers Trust Company before
the close of business on such due date, then the payment will be deemed to be
made on such due date. All payments hereunder shall be made in U.S. Dollars in
immediately available funds at the Payment Office. The Agent will promptly
after receipt of each such payment (and in any event by the close of business
on the day on which such funds are received or deemed to have been received)
distribute funds in the form received relating to the payment of (i) principal
or interest on Loan to the Lenders ratably in accordance with the aggregate
principal amount of the Loans of such Lenders, (ii) Fees ratably to the Lenders
and (iii) any other amount payable to any Lender to such Lender.
(b) Whenever any payment to be made hereunder or under any Note
shall be stated to be due on a day that is not a Business Day, the due date
thereof shall be extended to the next succeeding Business Day and, with respect
to payments of principal, interest thereon shall be payable at the then
applicable rate during such extension.
(c) All computations of interest shall be made on the basis of a
year of three hundred and sixty (360) days for the actual number of days
(including the first day but excluding the last day) occurring in the period
for which such interest is payable. Each determination by the Agent of an
interest rate hereunder shall be conclusive and binding absent manifest error.
(d) Prior to the maturity of the Loans (whether upon
acceleration, upon any date that the Commitments are terminated pursuant to
Section 2.7 or otherwise), or the occurrence and continuance of a Potential
Default or an Event of Default, all amounts received on any day by the Agent
hereunder in respect of principal of the Loans or under the Security Agreement
in respect of the Collateral described therein shall be applied by the Agent as
follows: first, ratably to the Lenders in accordance with the aggregate
principal amounts of their respective outstanding Loans, to repay the aggregate
principal amount of Loans due and payable on such day pursuant to Section 2.8;
second, ratably to the Lenders in accordance with the aggregate principal
amounts of their respective outstanding Loans, to prepay outstanding Loans
being prepaid on such day pursuant to Section 2.9; and third, the balance, if
any, shall be released by the Agent to the Borrowers by transfer to such
account as the Borrowers may direct in writing for such purpose; provided that
if a Potential Default or an Event of Default exists, but the Lenders have not
accelerated the Loans hereunder, then the Agent shall not release any such
amounts to the Borrowers until the earlier of (x) the cure of any Potential
Default or Event of Default or (y) the acceleration of the Loans, and if the
event described in clause (x) occurs first, the amounts shall be released to
the Borrowers as described in this subsection (d), and if the event described
in clause (y) occurs first, then such amounts shall be applied in accordance
with Section 2.11(e).
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(e) Upon the maturity of the Loans and all other Obligations
pursuant to Section 6.1 or otherwise, all amounts received by the Agent on
account of the Obligations shall be disbursed by the Agent as follows: first,
ratably to the Collateral Agent in accordance with the amounts due to it, to
reimburse it for all fees, costs and expenses reasonably incurred by it in
connection with a Potential Default or an Event of Default or otherwise payable
to it in its capacity as Collateral Agent under the Security Agreement; second,
to the Agent, to reimburse the Agent for all fees, costs and expenses
reasonably incurred by it in connection with a Potential Default or an Event of
Default or otherwise payable to it in its capacity as Agent under the Loan
Documents; third, ratably to the Lenders in accordance with the amount of
interest due to each Lender, to pay all accrued and unpaid interest due
hereunder; fourth, ratably to the Lenders in accordance with the aggregate
principal amounts of their respective outstanding Loans, to repay all
outstanding Loans; fifth, ratably to the Lenders in accordance with their
respective unpaid Obligations, to pay all remaining unpaid Obligations; and
sixth, to the Borrowers by transfer to such account as the Borrowers may direct
in writing for such purpose.
SECTION 2.12 EURODOLLAR RATE NOT DETERMINABLE; ILLEGALITY OR IMPROPRIETY.
(a) In the event, and on each occasion, that on or before the day
on which the Eurodollar Rate for a Borrowing that is to include Eurodollar
Loans is to be determined, the Agent has determined in good faith that the
Eurodollar Rate cannot be determined for any reason, the Agent shall, as soon
as practicable thereafter, give written notice of such determination to the
Borrowers and the Lenders. Upon any such determination, any request by the
Borrowers for a Eurodollar Loan pursuant to Section 2.2 shall, until the Agent
has advised the Borrowers and the Lenders that the circumstances giving rise to
such notice no longer exist, be deemed to be a request for a Prime Loan. Each
determination by the Agent hereunder shall be conclusive and binding absent
manifest error.
(b) If any Lender determines at any time that the introduction
of, or any change in, any applicable law, rule, regulation, order or decree or
in the interpretation or the administration thereof by any Governmental
Authority charged with the interpretation or administration thereof, or
compliance by such Lender with any request or directive (whether or not having
the force of law) of any such Governmental Authority, shall make it unlawful or
improper for such Lender to make, maintain or fund any Eurodollar Loan as
contemplated by this Agreement, then such Lender shall immediately give notice
thereof to the Agent and the Borrowers describing such illegality or
impropriety in reasonable detail. Effective thirty (30) days after the giving
of such notice (or effective upon such earlier date as required by such
Governmental Authority), the obligation of such Lender to make Eurodollar Loans
shall be suspended for the duration of such illegality or impropriety and, if
and when such illegality or impropriety ceases to exist, such suspension shall
cease and such Lender shall notify the Agent and the Borrowers thereof. If any
such change makes it unlawful or improper for any Lender to maintain any
Eurodollar Loan such Lender shall, upon the happening of such event, notify the
Agent and the Borrowers thereof, and the Borrowers shall immediately, or if
permitted by applicable law, rule, regulation, order, decree, interpretation,
request or directive, no later than the date permitted thereby, convert each
such Eurodollar Loan into a Prime Loan. If any Lender notifies the Agent and
the Borrowers pursuant to this Section 2.12(b) that it is unlawful or improper
for such Lender to make or maintain Eurodollar Loans, as the case may be, but
no other Lenders give similar notices, then the Borrowers may require such
Lender to sell, pursuant to Section 8.6(c) all of its outstanding Loans to
another Lender (if any other Lender agrees, in its sole and absolute
discretion, to purchase such Loans) or to any other financial institution
reasonably acceptable to the Agent that is willing to make and maintain
Eurodollar Loans. The purchase price
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for such Loans shall be equal to the aggregate outstanding principal amount of
the Loans of such Lender plus such Lender's pro rata share of all other accrued
and unpaid Obligations.
SECTION 2.13 RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES.
(a) Notwithstanding any other provision herein, if after the date
of this Agreement any change in applicable law or regulation or in the
interpretation or administration thereof by any Governmental Authority charged
with the interpretation or administration thereof (whether or not having the
force of law) imposes any tax on or changes the basis of taxation of payments
to any Lender of the principal of or interest on any Eurodollar Loan or any
other amounts payable hereunder (other than taxes imposed on the overall net
income of such Lender by the jurisdiction in which such Lender has its
principal office or by any political subdivision or taxing authority therein),
or imposes, modifies or deems applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of or
credit extended by such Lender (except any such reserve requirement that is
reflected in the Eurodollar Rate) or imposes on such Lender any other condition
affecting this Agreement or Eurodollar Loans, and the result of any of the
foregoing is to increase the cost to such Lender of making or maintaining any
Eurodollar Loan, or to reduce the amount of any sum received or receivable by
such Lender hereunder (whether of principal, interest, fee or otherwise) in
respect thereof by an amount deemed by such Lender to be material, then the
Borrowers shall pay to such Lender such additional amount or amounts as will
compensate such Lender for such additional costs incurred or reduction
suffered. Any amount or amounts payable by the Borrowers to any Lender in
accordance with the provisions of this Section 2.13(a) shall be paid by the
Borrowers to such Lender within ten (10) Business Days of receipt by the
Borrowers from such Lender of a statement setting forth in reasonable detail
the amount or amounts due and the basis for the determination from time to time
of such amount or amounts, which statement shall be conclusive and binding
absent manifest error.
(b) If any Lender has determined that the adoption after the date
hereof of any applicable law, rule or regulation regarding capital adequacy, or
any change therein, or any change in the interpretation or administration
thereof by any Governmental Authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by
such Lender (or any lending office of such Lender, as the case may be) or by
the holding company of such Lender, as the case may be, with any request or
directive regarding capital adequacy (whether or not having the force of law)
of any such authority, central bank or comparable agency, has the effect of
reducing the rate of return on such Lender's capital or on the capital of such
Lender's holding company, as the case may be, as a consequence of such Lender's
obligations under the Loan Documents to a level below that which such Lender or
such Lender's holding company, as the case may be, could have achieved but for
such adoption, change or compliance (taking into consideration such Lender's
policies or such Lender's holding company's policies, as the case may be, with
respect to capital adequacy) by an amount deemed by such Lender to be material,
then from time to time, the Borrowers shall reimburse such Lender or such
Lender's holding company, as the case may be, for such reduction. Any amount or
amounts payable by the Borrowers to any Lender in accordance with the
provisions of this Section 2.13(b) shall be paid by the Borrowers to such
Lender within ten (10) Business Days of receipt by the Borrowers from such
Lender of a statement setting forth in reasonable detail the amount or amounts
due and the basis for the determination from time to time of such amount or
amounts, which statement shall be conclusive and binding absent manifest error.
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(c) Each Lender agrees to use reasonable efforts to change its
lending office to avoid or minimize (i) any amounts that might otherwise be
payable to such Lender pursuant to this Section 2.13 or pursuant to Section
2.15 or (ii) the effect of any event referred to in Section 2.12(b); provided
that such efforts or change shall not cause the imposition on such Lender of
any additional cost or legal, regulatory or administrative burdens deemed by
such Lender, in its sole discretion, to be material.
(d) Failure on the part of any Lender to demand compensation for
any increased costs or reduction in amounts received or receivable or reduction
in return on capital with respect to any period shall not constitute a waiver
of such Lender's right to demand compensation with respect to such period or
any other period. The protection of this Section 2.13(d) shall be available to
any Lender regardless of any possible contention of the invalidity or
inapplicability of the law, rule, regulation, guideline or other change or
condition that shall have occurred or been imposed.
SECTION 2.14 INDEMNITY.
(a) The Borrowers shall indemnify and hold harmless each Lender
against any and all claims, demands, liabilities, damages, losses, costs,
charges and expenses (including reasonable attorney's fees) that such Lender
actually sustains or incurs as a consequence of (i) any failure by the
Borrowers to fulfill on the date of this Agreement the applicable conditions
set forth in Article III, (ii) any failure by the Borrowers to borrow any
Eurodollar Loan hereunder, to convert any Loan into a Eurodollar Loan or to
continue any Eurodollar Loan for an additional Eurodollar Interest Period,
after irrevocable notice of such borrowing, conversion or continuation has been
given pursuant to Section 2.2, (iii) any payment, prepayment or conversion of a
Eurodollar Loan required by any provision of this Agreement or otherwise made
on a date other than the last day of the Eurodollar Interest Period applicable
thereto, (iv) any default in payment or prepayment of the principal amount of
any Eurodollar Loan or any part thereof or interest accrued thereon, as and
when due and payable (at the due date thereof, by irrevocable notice of
prepayment or otherwise) or (v) the occurrence of any Event of Default,
including, in each such case, any loss or reasonable expense sustained or
incurred in liquidating or employing deposits from third parties acquired to
effect or maintain such Eurodollar Loan or any part thereof as a Eurodollar
Loan. Such loss or reasonable expense shall include but not be limited to an
amount equal to the excess, if any, as reasonably determined by such Lender, of
(A) its cost of obtaining the funds for the Eurodollar Loan being paid, prepaid
or converted or not borrowed, converted or continued (based on the Eurodollar
Rate applicable thereto) for the period from the date of such payment,
prepayment, conversion or failure to borrow, convert or continue to the last
day of the Eurodollar Interest Period, as the case may be, for such Loan (or,
in the case of a failure to borrow, convert, or continue the Eurodollar
Interest Period, as the case may be, for such Loan that would have commenced on
the date of such failure to borrow, convert or continue) over (B) the amount of
interest (as reasonably determined by such Lender) that would be realized by
such Lender in re-employing the funds so paid, prepaid or converted or not
borrowed, converted or continued for such period or Eurodollar Interest Period,
as the case may be. A certificate of any Lender setting forth in reasonable
detail any amount or amounts which such Lender is entitled to receive pursuant
to this Section 2.14 shall be delivered to the Borrowers and shall be
conclusive and binding absent manifest error.
(b) Nothing in this Section is intended to limit the
reimbursement obligation of the Borrowers contained elsewhere in this
Agreement. The obligations of the Borrowers under this Section shall survive
the termination of this Agreement.
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SECTION 2.15 TAXES.
All payments made by the Borrowers under this Agreement and
the other Loan Documents shall be made free and clear of, and without deduction
or withholding for or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority, excluding, in the case of the Agent, the
Collateral Agent and each Lender, net income taxes and franchise taxes (imposed
in lieu of net income taxes) imposed on the Agent, the Collateral Agent or such
Lender, as the case may be, as a result of a present or former connection
between the jurisdiction of the government or taxing authority imposing such
tax and the Agent, the Collateral Agent or such Lender (excluding a connection
arising solely from the Agent, the Collateral Agent or such Lender having
executed, delivered, performed its obligations or received a payment under, or
enforced, this Agreement or the other Loan Documents) or any political
subdivision or taxing authority thereof or therein (all such non-excluded
taxes, levies, imposts, duties, charges, fees, deductions and withholdings
being hereinafter called "TAXES"). If any Taxes are required to be withheld
from any amounts payable to the Agent, the Collateral Agent or any Lender
hereunder or under other Loan Documents, the amounts so payable to the Agent,
the Collateral Agent or such Lender shall be increased to the extent necessary
to yield to the Agent, the Collateral Agent or such Lender (after payment of
all Taxes) interest or any such other amounts payable hereunder at the rates or
in the amounts specified in this Agreement and the other Loan Documents.
Whenever any Taxes are payable by the Borrowers, as promptly as possible
thereafter the Borrowers shall send to the Agent for its own account or for the
account of the Collateral Agent or such Lender, as the case may be, a certified
copy of an original official receipt received by the Borrowers showing payment
thereof. If the Borrowers fail to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the Agent the required receipts or other
required documentary evidence, the Borrowers shall indemnify the Agent, the
Collateral Agents and the Lenders for any incremental taxes, interest or
penalties that may become payable by the Agent, the Collateral Agent or any
Lender as a result of any such failure. The agreements in this subsection shall
survive the termination of this Agreement and the payment of the Notes and all
other amounts payable under the Loan Documents.
SECTION 2.16 SHARING OF SETOFFS.
Each Lender agrees that if it shall, through the exercise of
a right of banker's lien, setoff or counterclaim against the Borrowers, or
pursuant to a secured claim under Section 506 of Title 11 of the United States
Code or other security or interest arising from, or in lieu of, such secured
claim, received by such Lender under any applicable bankruptcy, insolvency or
other similar law or otherwise, or by any other means, obtain payment
(voluntary or involuntary) in respect of any Obligation as a result of which
the unpaid portion of its Obligations shall be proportionately less than the
unpaid portion of the Obligations of any other Lender, it shall simultaneously
purchase from such other Lender at face value a participation in the
Obligations of such other Lender, so that the aggregate unpaid amount of the
Obligations and such participations in Obligations held by each Lender shall be
in the same proportion to the aggregate unpaid amount of all Obligations then
outstanding as the amount of its Obligations prior to such exercise of banker's
lien, setoff or counterclaim or other event was to the principal amount of all
Obligations outstanding prior to such exercise of banker's lien, setoff or
counterclaim or other event; provided that, if any such purchase or purchases
or adjustments are made pursuant to this Section 2.16 and the payment giving
rise thereto is thereafter recovered, such purchase or purchases or adjustments
shall be rescinded to the
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extent of such recovery and the purchase price or prices or adjustments
restored without interest. The Borrowers expressly consent to the foregoing
arrangements and agrees that any Lender holding a participation in an
Obligation deemed to have been so purchased may exercise any and all rights of
banker's lien, setoff or counterclaim with respect to any and all moneys owing
by the Borrowers to such Lender by reason thereof as fully as if such Lender
had made a loan directly to the Borrowers in the amount of such participation.
ARTICLE 3
CONDITIONS TO LOANS
SECTION 3.1 CONDITIONS TO LOANS.
(a) As conditions precedent to the initial disbursement of the
Loans hereunder:
(i) Each Borrower shall have delivered or shall have had
delivered to the Agent, in form and substance and in quantities
reasonably satisfactory to the Agent and its counsel, each of the
following:
(A) this Agreement, duly executed by the
parties hereto;
(B) each of the Security Agreements and the
Power of Attorney for each Borrower, duly executed (and
notarized where required) by the parties thereto (which
Powers of Attorney shall be "protocolized" under the laws of
Puerto Rico by counsel to the Borrowers, and filed with the
Registry of Powers of Attorneys and Xxxxx by local counsel to
the Agent promptly after the closing contemplated hereunder);
(C) a duly executed Note for each Lender;
(D) duly executed documents, instruments,
agreements and financing statements, properly executed,
deemed necessary or appropriate by the Agent, in its
reasonable discretion, to create in favor of the Lenders a
valid and perfected, first priority security interest in and
lien upon the Collateral;
(E) a certified copy of resolutions of the
Board of Directors of each of the Borrowers approving the
execution, delivery and performance of all Loan Documents
required to be delivered by such parties hereunder and the
transactions contemplated therein;
(F) a certificate of the Secretary or an
Assistant Secretary of each of the Borrowers certifying the
names and true signatures of the officers of such parties
authorized to sign the Loan Documents required to be executed
and delivered by such parties hereunder, in each case dated
the date of this Agreement;
(G) an opinion of counsel for the Borrowers in
the form of Exhibit C and covering such other matters as the
Agent may reasonably request, in each case dated the date of
this Agreement;
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(H) a copy of the Certificate of Incorporation
or other equivalent document available in the applicable
jurisdiction of the Borrowers certified by the appropriate
officer of the jurisdiction of such party's incorporation as
of a recent date;
(I) a copy of the Bylaws of the Borrowers,
certified by the Secretary or an Assistant Secretary or other
appropriate officer of each such party as of the date of this
Agreement as being accurate and complete;
(J) a certificate of an executive officer of
each of the Borrowers, in the form of Exhibits D-1 and D-2,
respectively, dated the date of this Agreement;
(K) duly executed acknowledgment agreements
from each of FNMA and FHLMC relating to the validity of the
Secured Parties' security interest in the Pledged Servicing
Portfolio;
(L) evidence of (I) the acceptance by the
Process Agent of its appointment pursuant to Section 8.7 and
(II) payment of all fees required by the Process Agent for
serving in such capacity;
(M) a copy of the letter delivered to the
parties to the contracts pledged and assigned to the Secured
Parties pursuant to the Loan Documents (together with
evidence of such delivery) notifying such parties of the
security interests in such contracts and the contract rights
related thereto granted to the Secured Parties pursuant to
the Loan Documents, which letter shall be in substantially
the form of Attachment 2 to the Security Agreement;
(N) a schedule of servicing rights included in
the Pledged Servicing Portfolio, including the owner of such
servicing rights and otherwise in form and substance
acceptable to the Agent;
(O) a duly executed Intercreditor Agreement;
and
(P) a waiver under the Warehouse Credit
Agreement duly executed by each of the Warehouse Lenders..
(ii) All acts and conditions (including the obtaining of
any necessary regulatory approvals and the making of any required
filings, recordings or registrations) required to be done and
performed and to have happened prior to the execution, delivery and
performance of the Loan Documents and to constitute the same legal,
valid and binding obligations, enforceable in accordance with their
respective terms, shall have been done and performed and shall have
happened in due and strict compliance with all applicable laws or if
any of such have not been done, performed or happened, such has been
expressly disclosed to the Agent and waived by all of the Lenders in
writing.
(iii) All documentation, including documentation for
corporate and legal proceedings in connection with the transactions
contemplated by the Loan Documents, shall be reasonably satisfactory
in form and substance to the Agent and its counsel.
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(iv) The Borrowers shall have paid all Fees required to
have been paid under the Loan Documents prior to or on the date of
this Agreement.
(b) As additional conditions precedent to the disbursement of all
Loans (including the initial Loans hereunder), at and as of the date of such
disbursement:
(i) The representations and warranties of the Borrowers
contained in the Loan Documents shall be accurate and complete in all
material respects on and as of the date of such disbursement as if
made on and as of such date.
(ii) No Potential Default or Event of Default shall have
occurred and be continuing.
(iii) Following the funding of the requested Loan, the
aggregate principal amount of Loans outstanding hereunder shall not
exceed the limitations set forth in Sections 2.1 and 2.8.
(iv) Since December 31, 1996, no material adverse change
shall have occurred in the business, financial condition or results of
operations of DFC and its Subsidiaries, taken as a whole.
(v) The Agent shall have received such other documents
or legal opinions as the Agent or any Lender or special counsel to the
Agent may reasonably request, all in form and substance reasonably
satisfactory to the Agent.
By delivering a Notice of Borrowing to the Agent hereunder for any Loan, the
Borrowers shall be deemed to have represented and warranted the accuracy and
completeness of the statements set forth in subsections (i) through (iv) above
as of the date of such Loan.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
As an inducement to the Agent and each Lender to enter into
this Agreement and to make Loans as provided herein, each of the Borrowers
represents and warrants to the Agent and each Lender that:
SECTION 4.1 CORPORATE EXISTENCE; COMPLIANCE WITH LAW AND
CONTRACTUAL OBLIGATIONS.
Each Borrower (a) is duly organized, validly existing and in
good standing as a corporation under the laws of the Commonwealth of Puerto
Rico and in each jurisdiction where its ownership of property or conduct of
business requires such qualification, except where the failure to be so
qualified would not have a Material Adverse Effect; (b) has the corporate power
and authority and the legal right to own and operate its property and to
conduct business in the manner in which it does and proposes so to do; and (c)
is not in violation of any Requirement of Law or any Contractual Obligation if
such violation could have a Material Adverse Effect.
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SECTION 4.2 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS.
Each Borrower has the corporate power and authority to
execute, deliver and perform the Loan Documents to which it is a party and has
taken all necessary corporate action to authorize the execution, delivery and
performance of such Loan Documents. Such Loan Documents have been duly executed
and delivered on behalf of such Borrower and constitute legal, valid and
binding obligations of such Borrower enforceable against it in accordance with
their respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency and other similar laws affecting creditors' rights
generally and by general principles of equity.
SECTION 4.3 NO LEGAL OR CONTRACTUAL BAR.
The execution, delivery and performance of the Loan
Documents, including the creation and perfection of the security interests
contemplated hereunder and thereunder, the borrowings of Loans hereunder and
the use of the proceeds thereof, do not and will not (a) violate any
Requirement of Law or any Contractual Obligation of either Borrower or any of
its Subsidiaries, (b) except as contemplated by this Agreement and the Security
Agreement, require any license, consent, authorization, approval or any other
action by, or any notice to or filing or registration with, any Governmental
Authority or any other Person or (c) result in the creation or imposition of
any Lien on any asset of either Borrower or any of its Subsidiaries except as
contemplated by the Loan Documents.
SECTION 4.4 FINANCIAL INFORMATION.
(a) The consolidated balance sheet of DFC and its consolidated
Subsidiaries as at December 31, 1996 and the related consolidated statements of
income, retained earnings and cash flows for the fiscal year then ended,
including in each case the related schedules and notes, reported on by Price
Waterhouse, true copies of which have been previously delivered to each of the
Lenders, are complete and correct and fairly present the consolidated financial
condition of DFC and its consolidated Subsidiaries as at the date thereof and
the consolidated results of operations and cash flows for such period, in
accordance with GAAP applied on a consistent basis.
(b) The unaudited consolidated and consolidating balance sheet of
each Borrower and its consolidated Subsidiaries as at June 30, 1997, and the
related unaudited combined statements of income, retained earnings and cash
flows for the six months then ended, certified by the chief financial officer
of DFC, true copies of which have been previously delivered to each of the
Lenders, are complete and correct and fairly present the consolidated and
consolidating financial condition of DFC and its consolidated Subsidiaries as
at the date thereof and the consolidated and consolidating results of
operations and cash flows for such period in conformity with GAAP applied on a
basis consistent with the financial statements referred to in subsection (a) of
this Section 4.4, subject to normal year-end audit adjustments.
(c) Except for Indebtedness created by this Agreement, neither
Borrower has any material liability of any kind, whether accrued, contingent,
absolute, determined, determinable or otherwise, and no condition, situation or
set of circumstances exists that could be reasonably expected to result in such
a liability, in each case that is not reflected in the financial statements
referred to in Section 4.4(b) or in the most recent financial statements
delivered to the Agent and the Lenders pursuant to Section 5.1(a)(i) or (ii)
(other than liabilities permitted hereunder and incurred after the
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date of such most recent financial statements and to be reflected in the next
financial statements to be delivered to the Agent and the Lenders pursuant to
Section 5.1 (a)(i) or (ii)).
(d) Since December 31, 1996, no material adverse change has
occurred in the business, financial condition or results of operations of DFC
and its Subsidiaries, taken as a whole.
SECTION 4.5 NO MATERIAL LITIGATION.
Except as set forth on Exhibit I, no litigation,
investigation or proceeding of or before any arbitrator or Governmental
Authority is pending or, to the knowledge of either Borrower, threatened by or
against such Borrower or any of its Subsidiaries, or against any of such
Borrower's or any such Subsidiary's properties or revenues that, if adversely
determined, could alone, or with any other litigation, investigation or
proceeding, affect the business, financial condition or results of operations
of such Borrower and its Subsidiaries, taken as a whole, in excess of a
Material Amount or could have a Material Adverse Effect.
SECTION 4.6 TAXES.
Each Borrower and each of its Subsidiaries have filed or
caused to be filed all tax returns that are required to be filed and have paid
all taxes shown to be due and payable on such returns or on any assessments
made against them or any of their property other than taxes and assessments
that are being contested in good faith by appropriate proceedings and as to
which such Borrower or such Subsidiary has established adequate reserves in
conformance with GAAP.
SECTION 4.7 INVESTMENT COMPANY ACT.
Neither Borrower is an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
SECTION 4.8 SUBSIDIARIES.
DFC has no Subsidiaries as of the date of this Agreement
other than DMC, Doral Bank, Centro Hipotecario de Puerto Rico, Inc., First
Florida Realty Corporation and Doral Securities. DFC owns, directly or through
another Subsidiary, one hundred percent (100%) of the stock of each such
Subsidiary, and all of the stock of each such Subsidiary has been duly issued
and is fully paid and nonassessable. DMC has no Subsidiaries as of the date of
this Agreement.
SECTION 4.9 USE OF PROCEEDS.
The proceeds of all Loans shall be used by the Borrowers
solely for the purpose of financing the Borrowers' servicing portfolios and the
purchase of servicing portfolios and for general working capital purposes.
SECTION 4.10 ERISA.
(a) No Prohibited Transactions, Accumulated Funding Deficiencies,
withdrawals from Multi employer Plans or Reportable Events have occurred with
respect to any Plans or Multiemployer Plans that, in the aggregate, could
subject either Borrower or any of such Borrower's
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Subsidiaries to any material tax, penalty or other liability where such tax,
penalty or liability is not covered in full, for the benefit of such Borrower
or such Subsidiary, by insurance; (b) no notice of intent to terminate a Plan
has been filed, nor has any Plan been terminated under Section 4041 of ERISA,
nor has the PBGC instituted proceedings to terminate, or appoint a trustee to
administer, a Plan and no event has occurred or condition exists that might
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan; (c) the present value of all
benefits liabilities (as defined in Section 4001(a)(16) of ERISA) under all
Plans (based on the actuarial assumptions used to fund the Plans) does not
exceed the assets of the Plans; and (d) the execution, delivery and performance
by Borrowers of the Loan Documents and the borrowing of the Loans hereunder and
the use of the proceeds thereof will not involve any Prohibited Transaction.
SECTION 4.11 SECURITY INTERESTS.
The security interests created in favor of the Secured
Parties under the Security Agreement constitute valid and perfected first
priority security interests in the Collateral, and the Collateral is not and
will not be subject to any other Liens except as permitted by Section 5.2(a).
SECTION 4.12 AGENCY APPROVALS.
Each Borrower is a FHLMC approved Seller/Servicer, a HUD
Direct Endorsement Lender and a VA approved Lender in good standing, and DFC is
also a FNMA approved Seller/Servicer and a GNMA approved Issuer/Servicer.
SECTION 4.13 SOLVENCY.
Each Borrower is able to pay its debts as they mature. The
aggregate estimated fair market value of each Borrower's assets is greater than
such Borrower's liabilities (including contingent, subordinated, unmatured and
unliquidated liabilities and any and all Obligations hereunder). Each Borrower
has capital sufficient to carry on the business and transactions in which it is
engaged and all business and transactions in which it is about to engage.
SECTION 4.14 PLEDGED SERVICING PORTFOLIO
As of the date of this Agreement, the Mortgage Loans in the
Pledged Servicing Portfolio have an aggregate outstanding principal balance of
not less than $2,500,000,000.
ARTICLE 5
COVENANTS
SECTION 5.1 AFFIRMATIVE COVENANTS.
Each Borrower hereby covenants and agrees that, as long as
any Obligations remain unpaid or any Lender has any Commitment hereunder, the
Borrowers shall:
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(a) Reports to Agent. Furnish or cause to be furnished to the
Agent (with sufficient numbers of copies for each Lender which the Agent shall
forward to each Lender within a reasonable time after receipt thereof):
(i) Annual Financial Statements. As soon as available
and in any event within ninety (90) days after the end of each fiscal
year of DFC, a consolidated balance sheet of DFC and its consolidated
Subsidiaries as at the end of such year and the related consolidated
statements of income, retained earnings and cash flows of DFC and its
consolidated Subsidiaries for such fiscal year, setting forth in each
case in comparative form the figures for the previous fiscal year, all
in reasonable detail and accompanied by a report thereon of Price
Waterhouse or other independent public accountants of comparable
recognized national standing, which report shall be unqualified as to
scope of audit and shall state that such financial statements present
fairly the consolidated financial condition as at the end of such
fiscal year, and the consolidated results of operations and cash flows
for such fiscal year, of DFC and its consolidated Subsidiaries in
accordance with GAAP consistently applied;
(ii) Quarterly Financial Statements. As soon as available
and in any event within forty-five (45) days after the end of each
fiscal quarter of DFC, a consolidated and consolidating balance sheet
of DFC and its consolidated Subsidiaries as at the end of such fiscal
quarter and the related consolidated and consolidating statements of
income, retained earnings and cash flows of DFC and its consolidated
Subsidiaries for such fiscal quarter, setting forth in each case in
comparative form the figures for the previous fiscal quarter, all in
reasonable detail and certified by the chief financial officer of DFC
that they present fairly the consolidated and consolidating financial
condition as at the end of such fiscal quarter, and the consolidated
and consolidating results of operations and cash flows for such fiscal
quarter, of DFC and its consolidated Subsidiaries in accordance with
GAAP consistently applied, subject to normal year-end adjustments;
(iii) Monthly Financial Statements. Upon thirty (30) days'
notice from the Agent (such notice to be given no earlier than the
first day of a month to receive a statement for the previous month), a
consolidated and consolidating balance sheet of DFC and its
consolidated Subsidiaries as at the end of the previous month and the
related consolidated and consolidating statements of income and
retained earnings of DFC and its consolidated Subsidiaries for such
month setting forth in each case in comparative form the figures for
the previous month, all in reasonable detail and certified by the
chief financial officer of DFC that they are complete and correct and
that they present fairly the consolidated and consolidating financial
condition as at the end of such month, and the consolidated and
consolidating results of operations for such month and such portion of
the fiscal year, of DFC and its consolidated Subsidiaries in
accordance with GAAP consistently applied (subject to normal year-end
adjustments);
(iv) No Default/Compliance Certificate. Together with the
financial statements required pursuant to subsections (i) and (ii)
above, a certificate of the chief financial officer of DFC (A) to the
effect that, based upon a review of the activities of DFC and its
Subsidiaries and such financial statements during the period covered
thereby, no Event of Default or Potential Default exists, or if an
Event of Default or a Potential Default exists, specifying the nature
thereof and the Borrowers' proposed response thereto, and
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(B) demonstrating in reasonable detail compliance with Section 5.3 as
at the end of such fiscal year or such fiscal quarter, as applicable;
(v) Audit Reports. Upon request by the Agent, copies of
each HUD Single Family Audit Report and FNMA and FHLMC audit reports
on each Borrower and its operations;
(vi) Notice of Default or Misrepresentation. (a) Promptly
after obtaining knowledge of the occurrence of an Event of Default or
a Potential Default, a certificate of the chief financial officer of
DFC specifying the nature thereof and DFC's or DFC's proposed response
thereto and (b) at any time that any representation, warranty or other
information contained in any statement or certificate required to be
delivered hereunder or any representation or warranty deemed to have
been made hereunder shall prove to be false or misleading in any
material way, promptly after obtaining knowledge thereof give notice
thereof to the Agent describing how such representation, warranty or
information is misleading.
(vii) Litigation. Promptly after the occurrence thereof,
notice of the institution of or any material adverse development in
any action, suit or proceeding or any governmental investigation or
any arbitration, before any court or arbitrator or any governmental or
administrative body, agency or official, against either Borrower or
any material property of any thereof, in each case if such action,
suit, proceeding, investigation or arbitration could result in a
liability to the Borrowers in excess of the Material Amount;
(viii) ERISA. In connection with ERISA:
(A) Promptly and in any event within ten (10)
Business Days after either Borrower knows or has reason to know of the
occurrence of a Reportable Event with respect to a Plan with regard to
which notice must be provided to the PBGC, a copy of such materials
required to be filed with the PBGC with respect to such Reportable
Event and in each such case a statement of the chief financial officer
of such Borrower setting forth details as to such Reportable Event and
the action that such Borrower proposes to take with respect thereto;
(B) Promptly and in any event within ten (10)
Business Days after either Borrower knows or has reason to know of any
condition existing with respect to a Plan that presents a material
risk of termination of such Plan, imposition of an excise tax,
requirement to provide security to such Plan or occurrence of other
liability by the applicable Borrower or any ERISA Affiliate, a
statement of the chief financial officer of the applicable Borrower
describing such condition;
(C) At least ten (10) Business Days prior to
the filing by any plan administrator of a Plan of a notice of intent
to terminate such Plan, a copy of such notice;
(D) Promptly and in no event more than ten (10)
Business Days after the filing thereof with the Secretary of the
Treasury, a copy of any application by either Borrower or an ERISA
Affiliate for a waiver of the minimum funding standard under section
412 of the Code;
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(E) Upon request by the Agent from time to
time, copies of each annual report that is filed on Internal Revenue
Service Form 5500, together with certified financial statements for
any Plan (if any) as of the end of such year and actuarial statements
on Schedule B to such Form 5500;
(F) Promptly and in any event within ten (10)
Business Days after it knows or has reason to know of any event or
condition that might constitute grounds under section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer,
any Plan, a statement of the chief financial officer of the applicable
Borrower describing such event or condition;
(G) Promptly and in no event more than ten (10)
Business Days after receipt thereof by either Borrower or any ERISA
Affiliate, a copy of each notice received by such Borrower or an ERISA
Affiliate concerning the imposition of any withdrawal liability under
section 4202 of ERISA; and
(H) Promptly after receipt thereof a copy of
any notice either Borrower or any ERISA Affiliate may receive from the
PBGC or the Internal Revenue Service with respect to any Plan or
Multiemployer Plan; provided that this subparagraph (H) shall not
apply to notices of general application promulgated by the PBGC or the
Internal Revenue Service;
(ix) Servicing Reports.
(A) As soon as available and in any event no
later than forty-five (45) days after the end of each fiscal quarter,
a Pledged Servicing Portfolio Report dated as of the last day of such
quarter;
(B) As soon as available and in any event no
later than forty-five (45) days after the date of the initial
disbursement of the Loans, a Pledged Servicing Valuation Report, dated
as of a recent date;
(C) As soon as available and in any event no
later than forty-five (45) days after the end of each six-month period
ended June 30 and December 31 of each year, commencing with the
six-month period ending June 30, 1998, a Pledged Servicing Valuation
Report, dated as of the last day of each such six-month period;
provided, that the Agent shall have the right to request additional
Pledged Servicing Valuation Reports at such times as it deems
necessary or desirable, which reports shall be prepared at the expense
of the Lenders; and
(D) Promptly upon the request of the Agent, a
schedule of servicing rights then included in the Pledged Servicing
Portfolio, including the owner of such servicing rights and otherwise
in form and substance acceptable to the Agent; and
(x) Other Information. Promptly, such additional
financial and other information, including financial statements of the
Borrowers or any of its Subsidiaries, and such information regarding
the Collateral as any Lender, through the Agent, may from time to time
reasonably request, including such information as is necessary for any
Lender to grant
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participations of its interests in Loans hereunder or to enable
another financial institution to become a signatory hereto.
(b) Maintenance of Existence and Properties; Compliance with
Laws; Maintenance of Agency Status. (i) Except as provided in Section 5.2(e),
preserve and maintain, and cause each of its Subsidiaries to preserve and
maintain, its corporate existence and all rights, privileges, licenses,
approvals, franchises, properties and assets material to the normal conduct of
its business; comply, and cause each of its Subsidiaries to comply, in all
material respects with all Contractual Obligations and Requirements of Law,
except when the failure to maintain the existence of any such Subsidiary or to
so comply would not have a Material Adverse Effect; and (ii) except as
permitted under Section 5.2(j), preserve and maintain at all times its status
as a FHLMC approved Seller/Servicer, a HUD Direct Endorsement Lender and a VA
approved Lender in good standing and, with respect to DFC, its status as a FNMA
approved Seller/Servicer and as a GNMA approved Issuer/Servicer.
(c) Inspection of Property; Books and Records; Discussions. (i)
Keep, and cause each of its Subsidiaries to keep, proper books of record and
account in which full, true and correct entries in conformity with GAAP and all
Requirements of Law shall be made of all dealings and transactions in relation
to its business and activities, and, (ii) permit representatives of the Agent
and the Lenders (at no cost to such Borrower unless a Potential Default or an
Event of Default has occurred and is continuing) to visit and inspect any of
its properties and examine and make copies from any of its books and records
during normal business hours, upon reasonable advance notice and as often as
may reasonably be desired by the Agent, and to discuss the business,
operations, properties and financial and other condition of such Borrower and
its Subsidiaries with officers of such parties, and, with their independent
certified public accountants (if a representative of DFC or DMC shall have been
given the right upon reasonable notice to be present by phone or in person),
and with the consent of such Borrower, which consent shall not be unreasonably
withheld, with employees of the Borrowers.
(d) Insurance. Maintain or cause to be maintained with
financially sound and reputable insurers, insurance with respect to its
properties and business, and the properties and business of its Subsidiaries,
against loss or damage of the kinds customarily insured against by reputable
companies in the same or similar businesses, such insurance to be of such types
and in such amounts (with such deductible amounts) as is customary for such
companies under similar circumstances, including errors and omissions coverage
and fidelity coverage in form and substance acceptable under Agency guidelines,
and furnish the Agent on request evidence of all such insurance.
(e) Payment of Taxes and Claims, Etc. Pay, and cause each of its
Subsidiaries to pay, (i) all taxes, assessments and governmental charges
imposed upon it or upon its property, and (ii) all genuine claims (including
claims for labour, materials, supplies or services) that might, if unpaid,
become a Lien upon its property, unless, in each case, the validity or amount
thereof is being contested in good faith by appropriate proceedings and such
Borrower or such Subsidiary has maintained adequate reserves in accordance with
GAAP with respect thereto or has posted a bond in respect thereof satisfactory
to the Required Lenders.
(f) GNMA Acknowledgment Agreement. Obtain, execute and deliver an
Acknowledgment Agreement from GNMA relating to the acknowledgment of the
Secured Parties' security interest in the GNMA Servicing Portfolio, if and when
requested by the Administrative Agent in its sole discretion.
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(g) Further Documents. Execute and deliver or to cause to be
executed and delivered to the Agent or the Collateral Agent on behalf of the
Lenders from time to time such confirmatory or supplementary security
agreements, financing statements, reaffirmations and consents and such other
documents, instruments or agreements as the Agent may reasonably request, that
are in the Agent's reasonable judgment necessary or desirable to obtain for the
Agent on behalf of the Lenders the benefit of the Loan Documents and the
Collateral.
(h) Recording. Cause each Power of Attorney to be "protocolized"
under the laws of Puerto Rico and filed in the Registry of Powers of Attorneys
and Xxxxx and pay any and all fees and charges in connection therewith.
(i) Recourse/Purchase Obligations. If (i) DFC sells
Mortgage-Backed Securities or Mortgage Loans and the terms of such sale
obligate DFC to repurchase (whether conditionally or unconditionally) such
Mortgage-Backed Securities or Mortgage Loans or if DFC has retained recourse
obligations with respect thereto and (ii) the then aggregate amount of all such
repurchase and recourse obligations of DFC (in connection with the contemplated
transaction and all previous transactions) exceeds $250,000,000, then DFC shall
give notice thereof to the Agent within five (5) Business Days of such sale. If
DFC shall have assumed recourse obligations with respect to Mortgage-Backed
Securities or Mortgage Loans included in its Servicing Portfolio and the
aggregate amount of such recourse obligations of DFC with respect to
Mortgage-Backed Securities or Mortgage Loans included in its Servicing
Portfolio exceeds $250,000,000, then DFC shall give notice thereof to the Agent
within five (5) Business Days after such assumption. Notwithstanding the
foregoing, DFC shall obtain the prior written consent of the Agent acting at
the direction of the Required Lenders before entering into any of the
transactions described in the preceding two sentences if, in the reasonable
judgment of the management of DFC, such transaction (or the aggregate of such
transaction with all previous transactions for which obligations still exist)
could result in a decrease in DFC's Book Net Worth by a Material Amount.
SECTION 5.2 NEGATIVE COVENANTS OF EACH BORROWER.
Each Borrower hereby covenants and agrees that, as long as
any Obligations remain unpaid or any Lender has any Commitment hereunder, such
Borrower shall not, directly or indirectly:
(a) Liens. Create, incur, assume or suffer to exist, or permit
any Subsidiary to create, incur, assume or suffer to exist, any Lien upon the
Collateral now owned or hereafter acquired, except in favor of the Secured
Parties under the Security Agreement, other than:
(i) Liens or charges for current taxes, assessments or
other governmental charges that are not delinquent or which remain
payable without penalty;
(ii) Liens, deposits or pledges made to secure statutory
obligations, surety or appeal bonds, or bonds for the release of
attachments or for stay of execution, or to secure the performance of
bids and tenders or for purposes of like general nature in the
ordinary course of business of such Borrower or such Subsidiary;
(iii) the interests of FNMA and FHLMC with respect to the
servicing rights relating to the underlying Mortgage Loans in the
Pledged Servicing Portfolio as set forth in
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acknowledgment agreements with such Agencies and the interests of GNMA
as set forth in the GNMA Guide;
(iv) involuntary Liens relating to liabilities not in
excess of $100,000 in the aggregate for each Borrower; provided that
such Borrower or such Subsidiary is making a diligent effort to remove
such Liens as soon as practicable; and
(vi) a second priority Lien in favor of the Warehouse
Secured Parties under the Warehouse Servicing Security Agreement.
(b) Change of Business. Except as permitted under Section 5.2(e),
engage in any type of business that is unrelated to the mortgage banking and
lending business and the servicing of Mortgage Loans or any related financial
service business or permit any of DFC's Subsidiaries to engage in any type of
business other than financial services (including, without limitation, any
activity permitted for banks, savings associations, or savings and loan or bank
holding companies).
(c) Acquisitions. Except as permitted under Section 5.2(e),
purchase or acquire, or permit any of its Subsidiaries to purchase or acquire,
or incur liability for the purchase or acquisition of, or permit any of its
Subsidiaries or to incur liability for the purchase or acquisition of, any or
all of the assets or business of any Person (whether such purchase or
acquisition shall be by means of merger, stock purchase, asset purchase or
otherwise) other than (i) purchases and acquisitions in the ordinary course of
business as currently conducted and (ii) other purchases and acquisitions
relating to the mortgage banking and lending business and the servicing of
Mortgage Loans or other financial services (including, without limitation, any
activity permitted for banks, savings associations, or savings and loan or bank
holding companies).
(d) Transactions with Affiliates. Enter into, or permit any of
its Subsidiaries directly or indirectly to enter into, any transaction
(including the purchase, sale, lease or exchange of any property, the making or
borrowing of any loan or the rendering of any service) with any Affiliate on
terms that are less favorable to such Borrower or such Subsidiary than those
that might be obtained at the time from Persons who are not Affiliates, other
than the existing Master Purchase, Servicing and Collections Agreement dated as
of September 15, 1993 with Doral Bank, the Amended and Restated Master
Production Agreement among DFC, DMC and Doral Bank dated as of October 1, 1995,
as amended by the First Amendment to Master Production Agreement, dated as of
March 1, 1996 and the Master Servicing and Collection Agreement between DFC and
Doral Bank, dated as of October 1, 1995, as amended by the First Amendment to
Master Servicing and Collection Agreement, dated as of March 1, 1996, each as
in effect on such respective date.
(e) Consolidation, Merger, Sale of Assets, Etc. (i) Enter into
any merger, consolidation or amalgamation, including any such transaction with
a regulated banking entity or that results in either Borrower becoming a
Subsidiary of a regulated banking entity (other than of DFC), or (ii)
liquidate, wind-up or dissolve itself (or suffer or permit any of the foregoing
to occur) or (iii) sell, lease, assign, transfer or otherwise dispose of, or
permit any of its Subsidiaries to sell, lease, assign, transfer or otherwise
dispose of, more than twenty-five percent (25%) of its assets based on the book
value of all such assets as set forth in the last audited financial statement
of such Borrower whether now owned or hereafter acquired, except that the
following shall be permitted so long as no Potential Default or an Event of
Default has occurred and is continuing or would result therefrom:
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(A) the Borrowers may merge or consolidate with
another Person where DFC is the surviving entity;
(B) the Borrowers may sell assets in the
ordinary course of business at fair market value (it being expressly
agreed and understood that the sale or other disposition of
Mortgage-Backed Securities and of Mortgage Loans with or without
servicing released is in the ordinary course of business and that,
subject to Section 2.8, the Borrowers may sell all or a portion of its
servicing rights to the extent and in the manner permitted by Sections
5.2(d) and (g) and the Security Agreement). Notwithstanding the
foregoing, DMC may be merged into, become consolidated with or become
a Subsidiary of any Person (other than DFC) that is a regulated
banking entity so long as (x) DFC (I) becomes the sole borrower under
the Loan Documents and affirms the same pursuant to documentation
reasonably satisfactory to Lenders and Agent and (II) satisfies all
the representations, warranties and covenants hereunder, including the
financial covenants, without DMC being included in its consolidated
and consolidating financial statements; (y) no Potential Default or
Event of Default exists at the time of such event and after giving
effect thereto; and (z) such event does not have a Material Adverse
Effect; and
(C) the Borrowers may sell all of the
outstanding stock or assets of Centro Hipotecario de Puerto Rico, Inc.
(f) ERISA. Take, or permit any of its Subsidiaries to take, any
of the following actions:
(i) Terminate or withdraw from any Plan so as to result
in any material liability to the PBGC;
(ii) Engage in or permit any Person to engage in any
Prohibited Transaction involving any Plan that would subject such
Borrower or any of its Subsidiaries to any material tax, penalty or
other liability;
(iii) Incur or suffer to exist any material Accumulated
Funding Deficiency, whether or not waived, involving any Plan;
(iv) Allow or suffer to exist any event or condition that
presents a risk of incurring a material liability to the PBGC;
(v) Amend any Plan so as to require the posting of
security under section 401(a)(29) of the Code; or
(vi) Fail to make payments required under section 412(m)
of the Code and section 302(e) of ERISA that would subject such
Borrower or any of its Subsidiaries to any material tax, penalty or
other liability.
(g) Transfer to Affiliates. Subject to the proviso in subsection
(e) above, sell, assign or otherwise transfer any of its assets to any
Affiliate of a Borrower without the prior written consent of the Required
Lenders, or permit any of its Subsidiaries to sell, assign or otherwise
transfer any of their respective assets, to any Affiliate of a Borrower without
the prior written consent of the Required Lenders other than inter-company
dividends to Borrowers or Borrowers' Subsidiaries;
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provided that (I) any Subsidiary of a Borrower may, subject to subsection (e)
above, sell, assign or otherwise transfer any of their respective assets to
such Borrower, (II) DMC may, subject to subsection (e) above, sell, assign or
otherwise transfer its assets to DFC and (III) DFC may make capital investments
in its Subsidiaries.
(h) Subsidiaries. Form or cause to be formed after the date
hereof any Subsidiaries of the Borrowers without prior notice to the Agent.
(i) Margin Regulations. Use any or all of the proceeds of any
Loan (i) to purchase or carry Margin Stock or extend credit to others for the
purpose of purchasing or carrying Margin Stock or (ii) in any manner that will
violate or be inconsistent with the provisions of Regulation G, T, U or X of
the Board.
(j) Agency Approvals. Fail to maintain the Agency approvals
described in Section 4.12 as a result of a change in business plan of the
Borrower without the prior consent thereto of the Agent and Lenders, which
consent shall not be unreasonably withheld as long as no Material Adverse
Effect would result therefrom.
SECTION 5.3 ADDITIONAL NEGATIVE COVENANTS.
Each Borrower hereby covenants and agrees that, as long as
any Obligations remain unpaid or any Lender has any Commitment hereunder, such
Borrower shall not at any time, directly or indirectly:
(a) Total Liabilities. Permit DFC on a consolidated basis
(excluding any Subsidiaries that are not primarily engaged primarily in the
business of mortgage banking as reasonably determined by the Agent) to incur
Total Liabilities in excess of the sum of (i) one-hundred percent (100%) of
"Cash" or "Cash equivalents"; (ii) ninety-five percent (95%) of the sum of (A)
"Mortgage Loans held for sale", (B) "Mortgage-backed securities held for
trading" (but excluding "interest only securities" included therein), and (C)
"U.S. Treasury & Other AAA Rated Investments that are held to maturity"; (iii)
ninety percent (90%) of "Accrued interest receivable"; (iv) eighty percent
(80%) of the sum of (A) Mortgage- backed securities held to maturity", (B)
"Accounts receivable and mortgage servicing advances", and (C) "Mortgage-backed
securities available for sale"; (v) eighty percent (80%) of "prepaid and other
assets" (excluding investment in Subsidiaries); (vi) fifty percent (50%) of the
sum of (A) "Property, leasehold improvements and equipment" and (B) "Real
estate held for sale"; (vii) sixty-five percent (65%) of "interest only
securities"; and (viii) one percent (1.0%) of the principal amount of Mortgage
Loans owned by Persons not affiliated with DFC or DMC or any of their
Affiliates (unless covered by a Permitted Affiliate Servicing Agreement) for
which DFC or DMC owns the direct servicing rights. All quoted terms used in
the preceding sentence shall have the same meanings, and shall continue to be
calculated and classified in the same manner, as the terms used in the balance
sheet of DFC and its consolidated Subsidiaries referred to in Section 4.4(a).
(b) Adjusted Tangible Net Worth. Permit Adjusted Tangible Net
Worth at any time to be less than $100,000,000.
(c) Book Net Worth. Permit Book Net Worth at any time to be less
than $106,000,000.
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(d) Servicing Portfolio. Permit DFC on a consolidated basis
(excluding any Subsidiaries that are not primarily engaged in the business of
mortgage banking as reasonably determined by the Agent) to maintain a Servicing
Portfolio of Mortgage Loans with an aggregate outstanding principal balance of
less than $2,500,000,000 or such lesser amount as shall be agreed by the
Lenders in their sole discretion.
ARTICLE 6
EVENTS OF DEFAULT
SECTION 6.1 EVENTS OF DEFAULT.
If one or more of the following events (each an "EVENT OF
DEFAULT") shall have occurred and be continuing:
(a) Payments. (i) The Borrowers shall fail to pay when due
(whether at scheduled maturity, upon mandatory repayment or otherwise) any
principal of any Note; or (ii) the Borrowers shall fail to pay within three (3)
Business Days after the due date thereof any interest on any Note or any other
Obligation;
(b) Covenants Without Notice. The Borrowers shall fail to observe
or perform any covenant or agreement contained in Sections 5.1(b)(i), 5.1(f),
5.2 or 5.3; provided that any violation of Section 5.2(a) that is attributable
to the existence of an involuntary Lien on the Collateral (other than an
involuntary Lien expressly permitted by Section 5.2(a)) shall not constitute an
Event of Default until thirty (30) days after the imposition thereof if at all
times during such thirty (30) day period the Borrowers are making a diligent
effort by appropriate means to remove such Lien and the existence of such Lien
will not have a Material Adverse Effect);
(c) Covenants With Seven Business Day Grace Period. The Borrowers
shall fail to observe or perform any covenant or agreement contained in
Sections 5.1(a), 5.1(b)(ii) or 5.1(c)(ii), and such failure shall remain
unremedied for seven (7) Business Days after oral notice thereof to an
Authorized Officer (which shall be confirmed in writing (which may be by
facsimile) before the end of such seven (7) Business Day period);
(d) Covenants With Thirty Day Grace Period. The Borrowers shall
fail to observe or perform any covenant or agreement contained in any Loan
Document, other than those referred to in Sections 6.1(a), (b) or (c), and, if
capable of being remedied, such failure shall remain unremedied for thirty (30)
days after the earlier of (i) either Borrower's obtaining knowledge thereof or
(ii) notice thereof shall have been given to an Authorized Officer by any
Lender or the Agent before the end of such thirty (30) day period); provided
that if such failure is capable of being remedied but only in a period of more
than thirty (30) days, then such failure shall not constitute an Event of
Default until sixty (60) days after the earlier of the above dates if each
Borrower is making a diligent effort by appropriate means to observe or perform
such covenant and there is otherwise no Material Adverse Effect as a result of
such delay;
(e) Representations. Any representation, warranty or statement made or
deemed to be made by either Borrower or any of their respective officers under
or in connection with any Loan
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Document shall have been inaccurate, incomplete or incorrect in any respect
when made or deemed to be made and such inaccuracy, incompleteness or
incorrectness could have a Material Adverse Effect;
(f) Non-Payment of Other Indebtedness. Either Borrower shall fail
to make any payment of principal of or interest on any of its Indebtedness
(other than the Obligations) exceeding the Material Amount in the aggregate
when due (whether at stated maturity, by acceleration, on demand or otherwise)
after giving effect to any applicable grace period;
(g) Defaults Under Other Agreements. Either Borrower shall fail
to observe or perform any covenant or agreement contained in any agreement or
instrument relating to any of its Indebtedness (other than the Obligations) in
excess of the Material Amount in the aggregate within any applicable grace
period, or any other event shall occur if the effect of such failure or other
event is to accelerate, or to permit the holder of such Indebtedness or any
other Person to accelerate, the maturity of such Indebtedness; or any such
Indebtedness shall be required to be prepaid (other than by a regularly
scheduled required prepayment) in whole or in part prior to its stated
maturity;
(h) Bankruptcy. Either Borrower shall commence a voluntary case
concerning itself under Title 11 of the United States Code entitled
"Bankruptcy" as now or hereafter in effect, or any successor thereto (the
"BANKRUPTCY CODE"); or any involuntary case is commenced against either
Borrower and the petition is not dismissed within sixty (60) days after
commencement of the case; or a custodian (as defined in the Bankruptcy Code) is
appointed for, or takes charge of, all or any substantial part of the property
of either Borrower; or either Borrower commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law or there is commenced
against either Borrower any such proceeding that remains undismissed for a
period of sixty (60) days; or either Borrower is adjudicated insolvent or
bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; or either Borrower shall fail to pay, or shall state
that it is unable to pay, or shall be unable to pay, its debts generally as
they become due; or either Borrower shall call a meeting of its creditors with
a view to arranging a composition or adjustment of its debts; or either
Borrower shall by any act or failure to act indicate its consent to, approval
of or acquiescence in any of the foregoing; or any corporate action is taken by
either Borrower for the purpose of effecting any of the foregoing;
(i) Money Judgment. A judgment or order for the payment of money
in excess of the Material Amount shall be rendered against either Borrower and
such judgment or order shall continue unsatisfied (in the case of a money
judgment) and in effect for a period of thirty (30) days during which execution
shall not be effectively stayed or deferred (whether by action of a court, by
agreement or otherwise);
(j) ERISA. (i) Any Reportable Event or a Prohibited Transaction
shall occur with respect to any Plan; (ii) a notice of intent to terminate a
Plan under section 4041 of ERISA shall be filed; (iii) a notice shall be
received by the plan administrator of a Plan that the PBGC has instituted
proceedings to terminate a Plan or appoint a trustee to administer a Plan; (iv)
any other event or condition shall exist that might, in the opinion of the
Required Lenders, constitute grounds under section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan; (v)
the Borrowers or any ERISA Affiliate shall withdraw from a Multiemployer Plan
under circumstances that the Required Lenders determine could have a material
adverse effect on the
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financial condition of either Borrower; and in case of the occurrence of any
event or condition described in clauses (i) through (v) above, such event or
condition together with all other such events or conditions, if any, could
subject either Borrower to any tax, penalty or other liabilities in the
aggregate material in relation to the business, operations, property or
financial or other condition of either Borrower;
(k) Loan Documents. Any of the Loan Documents shall cease for any
reason to be in full force and effect, a breach by the Borrowers under any of
the Acknowledgement Agreements shall occur, or any action shall be taken by any
Person to terminate, revoke or discontinue, or to assert the invalidity or
unenforceability of, any of the Loan Documents;
(l) Security Interests. The Secured Parties shall cease for any
reason to have a valid, perfected, first priority security interest in the
Collateral, or any Person shall take any action to discontinue or to assert the
invalidity or unenforceability of such security interest; or
(m) Warehouse Event of Default. A Warehouse Event of Default
shall occur;
THEN, the Agent shall notify the Lenders of such Event of Default and may, and
upon the written request of the Required Lenders, shall, by written notice to
the Borrowers, take any or all of the following actions: (A) declare the
Commitments terminated, whereupon the Commitment of each Lender shall terminate
immediately without any other notice of any kind; and (B) declare the principal
of and any accrued interest on the Loans, and all other Obligations to be,
whereupon the same shall become, forthwith due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrowers; provided that, if an Event of Default specified in Section
6.1(h) shall occur, the Commitments shall terminate and all Obligations shall
become immediately due and payable automatically without the giving of any such
notice and without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrowers .
ARTICLE 7
THE AGENT
SECTION 7.1 APPOINTMENT OF AGENT.
Each Lender hereby designates Bankers Trust Company as Agent
to act as herein specified. Each Lender hereby irrevocably authorizes, and each
holder of any Note by the acceptance of a Note shall be deemed irrevocably to
authorize, the Agent to take such action on its behalf under the provisions of
this Agreement and the other Loan Documents and any other instruments and
agreements referred to herein or therein and to exercise such powers and to
perform such duties hereunder or thereunder as are specifically delegated to or
required of the Agent by the terms hereof and thereof and such other powers as
are reasonably incidental thereto. The Agent may perform any of its duties
hereunder or thereunder by or through its agents or employees.
SECTION 7.2 NATURE OF DUTIES OF AGENT.
The Agent shall have no duties or responsibilities except
those expressly set forth in this Agreement and the other Loan Documents.
Neither the Agent nor any of its officers, directors,
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employees or agents shall be liable for any action taken or omitted hereunder
or thereunder or in connection herewith or therewith, unless caused by its or
their gross negligence or willful misconduct. The duties of the Agent shall be
mechanical and administrative in nature; the Agent shall not have by reason of
this Agreement or any other Loan Document a fiduciary relationship in respect
of any Lender; and nothing in this Agreement or any other Loan Document,
express or implied, is intended to or shall be so construed as to impose upon
the Agent any obligations in respect of this Agreement or any other Loan
Document except as expressly set forth herein or therein.
SECTION 7.3 LACK OF RELIANCE ON AGENT.
(a) Independently and without reliance upon the Agent, each
Lender, to the extent it deems appropriate, has made and shall continue to make
(i) its own independent investigation of the financial condition and affairs of
each Borrower and its Affiliates in connection with the taking or not taking of
any action in connection herewith and (ii) its own appraisal of the
creditworthiness of each Borrower and its Affiliates, and, except as expressly
provided in this Agreement, the Agent shall have no duty or responsibility,
either initially or on a continuing basis, to provide any Lender with any
credit or other information with respect thereto, whether coming into its
possession before the making of the Loans or at any time or times thereafter.
(b) The Agent shall not be responsible to any Lender for any
recitals, statements, information, representations or warranties herein or in
any document, certificate or other writing delivered in connection with this
Agreement or any other Loan Document or for the execution, effectiveness,
genuineness, validity, enforceability, collectibility, priority or sufficiency
of this Agreement or any other Loan Document or for the sufficiency of the
Collateral or the validity, perfection or priority of any security interest in
the Collateral or the financial condition of each Borrower or its Affiliates or
be required to make any inquiry concerning either the performance or observance
of any of the terms, provisions or conditions of this Agreement or any other
Loan Document, or the financial condition of each Borrower or its Affiliates,
or the existence or possible existence of any Potential Default or Event of
Default.
SECTION 7.4 CERTAIN RIGHTS OF AGENT.
If the Agent shall request instructions from the Required
Lenders with respect to any act or action (including the failure to act) in
connection with this Agreement or any other Loan Document, the Agent shall be
entitled to refrain from such act or taking such action unless and until the
Agent shall have received instructions from the Required Lenders; and the Agent
shall not incur liability to any Lender by reason of so refraining. Without
limiting the foregoing, no Lender shall have any right of action whatsoever
against the Agent as a result of the Agent acting or refraining from acting
hereunder or under any other Loan Document in accordance with the instructions
of the Required Lenders. The provisions of this Section 7.4 are not intended to
supersede the provisions of Section 8.2 that require all of the Lenders to
approve certain actions under the Loan Documents.
SECTION 7.5 RELIANCE BY AGENT.
The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any notice, believed by it to be genuine and correct
and to have been signed, sent or made by the proper Person. The Agent may
consult with legal counsel (including with the consent of DFC, which
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consent shall not be unreasonably withheld, counsel for DFC or DMC),
independent public accountants (including those retained by DFC or DMC if a
representative of DFC or DMC, as applicable, shall have been given the right
upon reasonable notice to be present by phone or in person during such
consultation) and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
SECTION 7.6 INDEMNIFICATION OF AGENT.
To the extent the Agent is not reimbursed and indemnified by
DFC or DMC, each Lender will reimburse and indemnify the Agent, in proportion
to its respective Commitment (before giving effect to any termination of the
Commitments pursuant to the terms of this Agreement), from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses (including reasonable attorneys' fees and disbursements)
or disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against the Agent in performing its duties hereunder
and under the other Loan Documents, in any way relating to or arising out of
this Agreement or the other Loan Documents; provided that no Lender shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's gross negligence or willful misconduct, as evidenced
by a final judgment of a court of competent jurisdiction.
SECTION 7.7 AGENT IN ITS INDIVIDUAL CAPACITY.
With respect to its obligation to lend under this Agreement,
the Loans made by it and the Notes issued to it, the Agent shall have the same
rights and powers hereunder as any other Lender or holder of a Note and may
exercise the same as though it were not performing the duties specified herein;
and the terms "Lenders," "Required Lenders," "holders of Notes" or any similar
terms shall, unless the context clearly otherwise indicates, include the Agent
in its individual capacity. The Agent may accept deposits from, lend money to,
and generally engage in any kind of banking, trust, financial advisory or other
business with each Borrower or any Affiliate of the Borrowers as if it were not
performing the duties specified herein, and may accept fees and other
consideration from the Borrowers and any Affiliates of the Borrowers for
services in connection with this Agreement and the other Loan Documents and
otherwise without having to account for the same to the Lenders.
SECTION 7.8 HOLDERS OF NOTES.
The Agent may deem and treat the payee of any Note as the
owner thereof for all purposes hereof unless and until a written notice of the
assignment or transfer thereof shall have been filed with the Agent. Any
request, authority or consent of any Person who, at the time of making such
request or giving such authority or consent, is the holder of any Note shall be
conclusive and binding on any subsequent holder, transferee or assignee of such
Note or of any Note or notes issued in exchange therefor.
SECTION 7.9 SUCCESSOR AGENT.
(a) The Agent may resign as Agent hereunder at any time by giving
written notice thereof to the Lenders and the Borrowers if (i) it believes that
its duties hereunder present an actual or
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potential conflict of interest with any other business of the Agent or (ii) it
determines at any time that the introduction of, or any change in, any
applicable law, rule, regulation, order or decree or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by the Agent with any
request or directive (whether or not having the force of law) of any such
Authority, shall make it unlawful or improper for the Agent to continue as Agent
hereunder. Upon any such resignation or any removal of the Agent pursuant to
Section 7.9(b), the Required Lenders shall have the right, upon five (5) days'
notice to the Borrowers, to appoint a successor Agent, which shall be a Lender.
If no successor Agent shall have been so appointed by the Required Lenders, and
shall have accepted such appointment, within thirty (30) days after the retiring
Agent's giving of notice of resignation, then, upon five (5) days' notice to the
Borrowers, the retiring Agent may, on behalf of the Lenders, appoint a successor
Agent, which shall be a bank which maintains an office in the United States, or
a commercial bank organized under the laws of the United States of America or of
any State thereof, or any Affiliate of such bank, having a combined capital and
surplus of at least $250,000,000.
(b) The Agent may be removed by the unanimous vote of all the
Lenders hereunder (not including the vote of the Agent if the Agent is also a
Lender hereunder) if (i) the Agent has engaged in willful misconduct with
respect to its obligations and duties hereunder as evidenced by a final
judgment of a court of competent jurisdiction and (ii) has failed to cure such
willful misconduct after sixty (60) days notice by the Lenders to the Agent of
such willful misconduct.
(c) Any resignation or removal of the Agent hereunder shall be
effective only upon the acceptance of any appointment as Agent hereunder by a
successor Agent. Upon such acceptance, such successor Agent shall succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement and the other Loan Documents. After any
retiring Agent's resignation hereunder as Agent, the provisions of this Article
VII shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Agent under this Agreement.
ARTICLE 8
MISCELLANEOUS PROVISIONS
SECTION 8.1 NOTICES.
(a) Except as otherwise expressly set forth herein, all notices,
requests and other communications to any party hereunder shall be in writing
(including telecopy or similar teletransmission or writing) and shall be given
to such party at its address or telecopy number set forth on Exhibit H hereto
or such other address or telecopy number as such party may hereafter specify by
notice to the Agent and the Borrowers. Each such notice, request or other
communication shall be effective (a) if given by telecopy, when such telecopy
is transmitted to the telecopy number specified herein and the receipt thereof
is confirmed by the recipient or (b) if sent by overnight courier (with all
charges paid) providing for confirmation of delivery, then upon confirmation of
delivery by such courier; provided that notices to the Agent pursuant to
Article II shall not be effective until received.
(b) Any notice required to be given to one or more Borrowers
hereunder or under any other Loan Document shall be effective if delivered to
either Borrower, it being the intent that notice
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to either Borrower is effective notice to the other Borrower. In connection
therewith, each Borrower hereby irrevocably appoints the other Borrower as its
agent to receive any and all notices hereunder or under any other Loan Document
and such appointment is coupled with an interest. In addition to the foregoing,
the Agent and the Lenders shall be entitled to, but shall not be required to,
rely on notice from either Borrower as constituting notice from both Borrowers.
SECTION 8.2 AMENDMENTS, ETC.
No amendment or waiver of any provision of any Loan Document,
nor consent to any departure by the Borrowers therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Borrowers and
the Required Lenders, and then such amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided that (a) notwithstanding anything else contained herein, no
amendment, waiver or consent shall, unless in writing and signed by all the
Lenders, do any of the following: (i) waive or change Section 5.2(e) or any of
the conditions specified in Article III, (ii) increase the Commitments of the
Lenders or subject the Lenders to any additional obligations, (iii) reduce the
principal of, or interest on, the Notes, (iv) postpone any date fixed for any
payment in respect of principal of, or interest on, the Notes, or waive any
Event of Default under Section 6.1(a), (v) change the percentage of the
Commitments, the definitions of "Required Lenders," or "Collateral Value of the
Pledged Servicing Portfolio" (or any definitions contained in such
definitions), or the number or identity of Lenders that is required for any or
all of the Lenders to take any action hereunder, (vi) release the Lien of the
Secured Parties on any of the Collateral, except as provided in the Security
Agreement or (vii) amend this Section 8.2 or Section 8.6; and (b) no amendment,
waiver or consent shall, unless in writing and signed by the Agent, affect the
rights or duties of the Agent under this Agreement or any other Loan Document.
SECTION 8.3 NO WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of the Agent or any Lender in
exercising any right or remedy hereunder or under any other Loan Document and
no course of dealing between the Borrowers, on the one hand, and the Agent or
any Lender, on the other hand, shall operate as a waiver thereof, nor shall any
single or partial exercise of any right or remedy hereunder or under any other
Loan Document preclude any other or further exercise thereof or the exercise of
any other right or remedy hereunder or thereunder. The rights and remedies
expressly provided herein and in the other Loan Documents are cumulative and
not exclusive of any rights or remedies that the Agent or any Lender would
otherwise have. No notice to or demand on the Borrowers not required hereunder
or under the other Loan Documents in any case shall entitle the Borrowers to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Agent or any Lender to any other or
further action in any circumstances without notice or demand.
SECTION 8.4 PAYMENT OF EXPENSES, ETC.
The Borrowers shall:
(a) (i) pay all reasonable out-of-pocket costs and expenses
of the outside legal counsel of the Agent in connection with the preparation,
execution and delivery of, this Agreement and the other Loan Documents, or any
amendment, modification or supplement hereof or thereof, and (ii) pay all
reasonable out-of-pocket costs and expenses of the Agent and each Lender in the
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preservation of rights under, enforcement of, and, after the occurrence of a
Potential Default or an Event of Default, the refinancing, the renegotiating or
the restructuring of, this Agreement and the other Loan Documents and the
documents and instruments referred to herein and therein including in
connection with any bankruptcy, insolvency, liquidation, reorganization or
similar proceeding and any amendment, waiver or consent relating hereto and
thereto (including the reasonable fees and disbursements of counsel (including
allocated costs of internal counsel) for the Agent and, in the case of
enforcement, for each of the Lenders);
(b) pay and hold the Agent and each of the Lenders harmless from
and against any and all present and future stamp and other similar taxes with
respect to the foregoing matters and save the Agent and each Lender harmless
from and against any and all liabilities with respect to or resulting from any
delay or omission to pay such taxes; and
(c) indemnify the Agent and each Lender, and their respective
officers, directors, employees, representatives and agents from, and hold each
of them harmless against, any and all out-of-pocket costs, losses, liabilities,
claims, damages or expenses actually incurred by any of them (whether or not
any of them is designated a party thereto) arising out of or by reason of any
investigation, litigation or other proceeding related to any actual or proposed
use by the Borrowers of the proceeds of any of the Loans or the Borrowers'
entering into and performing of the Loan Documents to which they are a party,
including the reasonable fees and disbursements of counsel (including allocated
costs of internal counsel) incurred in connection with any such investigation,
litigation or other proceeding; provided that neither the Agent nor any Lender
shall have the right to be indemnified hereunder for its own gross negligence
or willful misconduct as evidenced by a final judgment of a court of competent
jurisdiction. If and to the extent that the obligations of the Borrowers under
this Section 8.4 are unenforceable for any reason, the Borrowers hereby agrees
to make the maximum contribution to the payment and satisfaction of such
obligations that is permissible under applicable law.
SECTION 8.5 RIGHT OF SETOFF.
Subject to Section 2.16, in addition to and not in limitation
of all rights of offset that any Lender may have under applicable law, for so
long as any Event of Default has occurred and is continuing and whether or not
any Lender has made any demand or the Obligations have matured, such Lender
shall have the right to appropriate and apply to the payment of the Obligations
all deposits (general or special, time or demand, provisional or final) then or
thereafter held by, and other indebtedness or property then or thereafter owing
to the Borrowers by, such Lender, whether or not related to any Loan Document
or any transaction hereunder.
SECTION 8.6 BENEFIT OF AGREEMENT.
(a) This Agreement shall be binding upon and inure to the benefit
of and be enforceable by the respective successors and assigns of the parties
hereto; provided that neither of the Borrowers may assign or transfer any of
its interest or delegate any of its obligations under the Loan Documents
without the prior written consent of the Lenders and any such assignment or
transfer without the prior written consent of the Lenders shall be null and
void.
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(b) Subject to the provisions of Section 2.13(c), any Lender may
make, carry or transfer Loans at, to or for the account of, any of its branch
offices or the office of an Affiliate of such Lender.
(c) Subject to the limitations set forth below, no Lender may
assign its rights or delegate its obligations under this Agreement and the
other Loan Documents to any other financial institution without the prior
consent of the Agent and the Borrowers (such consent not to be unreasonably
withheld) and provided that (i) no Lender may make an assignment hereunder to a
Person (other than an Affiliate of such Lender or an existing Lender) that is
not a financial institution; and (ii) an assignment fee in the amount of $2,500
for each assignment hereunder shall be payable to the Agent by the applicable
assignee. Any assignment or delegation specifically prohibited by the preceding
sentence shall be null and void. Notwithstanding the foregoing, (i) any Lender
may assign its rights and delegate its obligations under this Agreement and the
other Loan Documents to any Affiliate of such Lender without notice to or
consent by the Borrowers, the Agent, or any other Person, provided the fee set
forth in the proviso to the immediately preceding sentence shall be paid, and
(ii) Bankers Trust Company may assign its rights and delegate its obligations
under this Agreement and the other Loan Documents to any Warehouse Lender with
prior notice to the Borrowers but without consent by the Borrowers or any other
Person. Each assignment by a Lender hereunder shall be made pursuant to an
Assignment and Acceptance in substantially the form of Exhibit O hereto. In the
case of an assignment by a Lender, upon the effective date of such assignment
as set forth in the Assignment and Acceptance executed by such Lender, the
assignee shall have, to the extent of such assignment (unless otherwise
provided thereby), the same rights and benefits as it would have if it were a
Lender under the Loan Documents and the holder of a Note and, if the assignee
has expressly assumed, for the benefit of the Borrowers, the assignor Lender's
obligations hereunder, such assignor Lender shall be relieved of its
obligations hereunder to the extent of such assignment and assumption.
(d) Each Lender may transfer, grant or assign participations in
all or any part of such Lender's interests and obligations hereunder pursuant
to this Section to another financial institution, provided that (i) such Lender
shall remain a "Lender" for all purposes of this Agreement and the transferee
of such participation shall not constitute a Lender hereunder and (ii) no
participant under any such participation shall have rights to approve any
amendment to or waiver of this Agreement or any other Loan Document except to
the extent such amendment or waiver would (x) extend the final scheduled
maturity of any of the Loans or the Commitment in which such participant is
participating, (y) reduce the interest rate (other than as a result of waiving
the applicability of any post-default increases in interest rates) or Fees
applicable to any of the Loans or Commitments or postpone the payment of any
thereof or (z) release any collateral under the Security Agreement. In the case
of any such participation, the participant shall not have any rights under this
Agreement or any of the other Loan Documents (the participant's rights against
the granting Lender in respect of such participation to be those set forth in
the agreement with such Lender creating such participation) and all amounts
payable by the Borrowers hereunder shall be determined as if such Lender had
not sold such participation, provided that such participant shall be entitled
to receive additional amounts under Sections 2.13, 2.14 and 2.15 on the same
basis as if it were a Lender.
(e) Any Lender may furnish any information concerning the
Borrowers and its Affiliates in the possession of such Lender from time to time
to Affiliates, participants and assignees, and prospective participants and
assignees, of such Lender. No Lender or its Affiliates may furnish such
information to any prospective assignee or participant without the prior
written consent of DFC,
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which consent will not be unreasonably withheld. Any prospective assignee or
participant shall be required to execute a confidentiality agreement in the
form of Exhibit J before receiving any such information.
(f) Any Lender may at any time pledge all or any portion of its
rights under the Loan Documents to a Federal Reserve Bank without notice to or
consent of either Borrower, the Agent or any other Lender. No such pledge shall
release the transferor Lender from its obligations hereunder.
SECTION 8.7 GOVERNING LAW; SUBMISSION TO JURISDICTION.
(A) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND UNDER THE NOTES SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK.
(B) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
OR THE OTHER LOAN DOCUMENTS TO WHICH EITHER BORROWER IS A PARTY MAY BE BROUGHT
IN XXX XXXXXX XX XXX XXXXX XX XXX XXXX LOCATED IN NEW YORK COUNTY OR OF THE
UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWERS HEREBY ACCEPTS
FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS. THE PARTIES HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY, AND, TO THE MAXIMUM EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE BORROWERS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED
ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO
THE BRINGING OR MAINTAINING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTIONS.
(C) EACH OF THE BORROWERS IRREVOCABLY AND UNCONDITIONALLY
CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY
SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO EACH SUCH BORROWER AT ITS SAID ADDRESS,
SUCH SERVICE TO BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING. IN
ADDITION, EACH BORROWER HEREBY IRREVOCABLY APPOINTS CT CORPORATION, 0000
XXXXXXXX, XXX XXXX, XXX XXXX 00000 (THE "PROCESS AGENT") TO RECEIVE, FOR IT AND
ON ITS BEHALF, SERVICE OF PROCESS IN ANY PROCEEDINGS OR ACTIONS IN NEW YORK. IF
FOR ANY REASON THE PROCESS AGENT IS UNABLE TO ACT AS SUCH, EACH BORROWER WILL
PROMPTLY NOTIFY THE AGENT AND WITHIN THIRTY (30) DAYS APPOINT A SUBSTITUTE
PROCESS AGENT ACCEPTABLE TO THE AGENT.
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(D) NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT OR ANY
LENDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST EITHER BORROWER IN ANY OTHER
JURISDICTION.
(E) EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER
IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO IN THIS SECTION 8.7, ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES. THIS WAIVER IS MADE KNOWINGLY AND
VOLUNTARILY.
SECTION 8.8 COUNTERPARTS.
This Agreement may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, each of which
when so executed and delivered shall be an original, but all of which shall
together constitute one and the same instrument.
SECTION 8.9 HEADINGS DESCRIPTIVE.
The headings of the several sections and subsections of this
Agreement, and the Table of Contents, are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of
this Agreement.
SECTION 8.10 SURVIVAL OF REPRESENTATIONS AND INDEMNITIES.
All covenants, agreements, representations and warranties
made herein and in any certificate delivered pursuant hereto shall survive the
making by the Lenders of the Loans and the execution and delivery to the Agent
for the account of the Lenders of the Notes regardless of any investigation
made by the Agent or the Lenders and of the Agent's and the Lender's access to
any information and shall continue in full force and effect so long as any
Obligation is outstanding and unpaid. The Borrowers' obligations under Sections
2.13, 2.14, 2.15 and 8.4 and under any other indemnification provisions of the
Loan Documents and each Lender's obligations under Sections 7.6 and 8.12 and
under any other indemnification provisions of the Loan Documents shall survive
the termination of this Agreement for any reason whatsoever and payment of the
Notes.
SECTION 8.11 SEVERABILITY.
In case any one or more of the provisions contained in this
Agreement or the Notes should be invalid, illegal or unenforceable in any
respect in any jurisdiction, the validity, legality and enforceability of such
provisions shall not be affected or impaired in any other jurisdiction, nor
shall the remaining provisions contained herein and therein in any way be
affected or impaired thereby.
SECTION 8.12 INDEMNIFICATION OF COLLATERAL AGENT.
To the extent that the Collateral Agent is not reimbursed and
indemnified by the Borrowers pursuant to the Security Agreement, each Lender
will reimburse and indemnify the Collateral Agent, in proportion to its
respective Loans, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including
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reasonable attorneys' fees and disbursements) or disbursements of any kind or
nature whatsoever that may be imposed on, incurred by or asserted against the
Collateral Agent in performing its duties under the Loan Documents, in any way
relating to or arising out of the Loan Documents; provided that no Lender shall
be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Collateral Agent's gross negligence or willful misconduct as
evidenced by a final judgment of a court of competent jurisdiction. The
Collateral Agent shall be entitled to rely on the provisions of this Section
8.12 as if they were a party to this Agreement.
SECTION 8.13 JOINT AND SEVERAL NATURE OF THE OBLIGATIONS.
The Borrowers agree that any and all of the Obligations of
the Borrowers hereunder and under each other Loan Document shall be the joint
and several obligation of each of them notwithstanding any absence herein or
therein of a reference such as "jointly and severally" with respect to any such
obligation.
SECTION 8.14 CERTAIN WAIVERS.
Each of the Borrowers agrees that its joint and several
liability under this Agreement and each of the other Loan Documents shall be
absolute, unconditional and irrevocable irrespective of:
(a) any lack of validity, legality or enforceability of the
Obligations of the other Borrower or any other Person under this Agreement or
any other Loan Document;
(b) the failure of any Lender:
(i) to assert any claim or demand or to enforce any
right or remedy against the other Borrower or any other Person
(including any guarantor) under the provisions of this Agreement or
any other Loan Document or otherwise, or
(ii) to exercise any right or remedy against any
guarantor of, or Collateral securing, any Obligations;
(c) any change in the time, manner or place or payment of, or in
any other term of, all or any of the Obligations, or any other extension,
compromise or renewal of any Obligation with respect to the other Borrower or
any other Person;
(d) any reduction, limitation, impairment or termination of any
of the Obligations of the other Borrower or any other Person for any reason,
including any claim of waiver, release, surrender, alteration or compromise,
and the liability of each of the Borrowers shall not be subject to (and each of
them hereby waives any right to or claim of) any defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the invalidity,
illegality, non-genuineness, irregularity, compromise, unenforceability of, or
any other event or occurrence affecting, any of the Obligations of the other
Borrower or any other Person;
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(e) any rescission, waiver, amendment or other modification of,
or any consent to departure from, any of the Obligations of the other Borrower
or any other Person under the terms of this Agreement or any other Loan
Document;
(f) any exchange, release or non-perfection of any Collateral, or
any release, amendment or waiver of, or consent to departure from, any guaranty
or other agreement from the other Borrower or any other Person, securing any of
the Obligations; or
(g) any other circumstances which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the other Borrower
or any surety or any guarantor. Each of the Borrowers waives any right to
require that any resort be made by any Lender to any of the Collateral.
SECTION 8.15 SUBROGATION, ETC.
At any time that a payment is made by either Borrower with
respect to the Obligations, such Borrower shall have a right of contribution
against the other Borrower in the maximum amount permitted by applicable law,
which right of contribution shall be subject to adjustment at the time of any
subsequent payment with respect to the Obligations; provided, that the maximum
aggregate liability of either Borrower with respect to such contribution rights
of the other Borrower shall not exceed the maximum amount of liability that
such first Borrower can incur without rendering such contribution rights void
or voidable under applicable law relating to fraudulent conveyance or
fraudulent transfers, and not for any greater amount, and provided further,
that neither Borrower will exercise any such contribution rights or any other
rights which it may acquire by reason of any payment made hereunder, whether by
way of rights of subrogation, reimbursement or otherwise, until the prior
payment, in full and in cash, of all Obligations and the termination of all
Commitments. Any amount paid to either Borrower on account of any payment made
hereunder prior to the payment in full of all Obligations other than
intercompany payments or reimbursements made in the ordinary course of the
businesses of each Borrower shall be held in trust for the benefit of the Agent
and the Lenders and shall immediately be paid to the Agent and credited and
applied against the Obligations, whether matured or unmatured, in accordance
with the terms of this Agreement and the other Loan Documents. In furtherance
of the foregoing, for so long as any Obligation or any Commitment remains
outstanding, each Borrower shall refrain from taking any action or commencing
any proceeding against the other Borrower (or its successors or assigns,
whether in connection with a bankruptcy proceeding or otherwise) to recover any
amounts in respect of payments made under this Agreement to the Agent and the
Lenders.
SECTION 8.16 CONFIDENTIALITY.
Each Lender agrees not to disclose, without the prior written
consent of the Borrowers, any of the financial information or other information
of the Borrowers or any Affiliate of any of the Borrowers, designated in
writing by either Borrower as "confidential" and obtained under or in
connection with this Agreement or any of the other Loan Documents.
Notwithstanding the foregoing, each Lender may disclose such information: (a)
as is permitted under Section 8.6; (b) as is required by law or by subpoena or
similar court order, or by any governmental, regulatory or supervisory
authority or official or as otherwise required to be provided by the Lender in
the ordinary course of its business; (c) to counsel to such Lender in
connection with the transactions contemplated by this Agreement and the other
Loan Documents; (d) to independent auditors and
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other advisers retained by such Lender; and (e) to the Agent or the Collateral
Agent as contemplated by this Agreement and the other Loan Documents. In
addition, unless specifically prohibited by applicable law or court order, each
Lender shall, to the extent practical, notify the Borrowers of any subpoena or
similar court order or of any request by any governmental, regulatory or
supervising authority or official (other than any such request in connection
with an examination of the financial condition of such Lender by such
authority) for disclosure of any such information prior to disclosure of such
information so that the Borrowers may seek an appropriate protective order.
Notwithstanding the foregoing, the Lenders shall have no obligation to keep any
such information confidential if such information (i) becomes generally
available to the public other than as a result of the disclosure by any Lender
in violation of this Section 8.16, (ii) is available to any Lender on a
non-confidential basis prior to its disclosure to such Lender by the Borrower
or, if applicable, by the Lender from whom such Lender has purchased its
participation or assignment, or (iii) becomes available to any Lender on a
non-confidential basis from a source other than the Borrower or, if applicable,
the Lender from whom such Lender has purchased its participation or assignment;
and any Lender may disclose any such information in connection with any
litigation to which such Lender is party relating to this Agreement or any of
the other Loan Documents.
SECTION 8.17 INTEGRATION
This Agreement and the other Loan Documents represent the
entire agreement of the Borrowers, the Agent and the Lenders with respect to
the subject matter hereof and thereof, and there are no promises, undertakings,
representations or warranties by the Agent or any Lender relative to the
subject matter hereof or thereof not expressly set forth or referred to herein
or in the other Loan Documents.
SECTION 8.18 WAIVER OF JURY TRIAL.
THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THE SUBJECT
MATTER OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above written.
DORAL FINANCIAL CORPORATION,
as a Borrower
By: /S/ Xxxxx X. Xxxxx
----------------------------------------
Xxxxx X. Xxxxx
Executive Vice President and Treasurer
DORAL MORTGAGE CORPORATION,
as a Borrower
By: /S/ Xxxxx X. Xxxxx
----------------------------------------
Xxxxx X. Xxxxx
Vice President
Commitment: $25,000,000 BANKERS TRUST COMPANY,
as Agent and as a Lender
By: /S/ Xxxxx X. XxXxxx
----------------------------------------
Xxxxx X. XxXxxx
Vice President
54
EXHIBIT A
PROMISSORY NOTE
New York, New York
November __, 1997
FOR VALUE RECEIVED, DORAL FINANCIAL CORPORATION, a corporation
organized under the laws of the Commonwealth of Puerto Rico, and DORAL MORTGAGE
CORPORATION, a corporation organized under the laws of the Commonwealth of
Puerto Rico (each a "Borrower" and jointly and severally, the "Borrowers"),
hereby jointly and severally and unconditionally promise to pay to the order of
___________________ (the "Lender") the unpaid principal amount of each Loan made
by the Lender to the Borrowers pursuant to the Credit Agreement referred to
below on the Maturity Date. Each Borrower further jointly and severally and
unconditionally promises to pay interest on the unpaid principal amount of each
Loan on the dates and at the rate or rates provided for in the Credit Agreement.
All such payments of principal and interest shall be made in lawful money of the
United States in immediately available funds at the office of BANKERS TRUST
COMPANY (the "Agent"), located at One Bankers Trust Plaza, New York, New York,
or at such other office as the Agent may designate in writing from time to time.
The Lender is hereby authorized to record the date and amount
of each Loan, each payment and prepayment of principal of any such Loan, each
payment of interest on such Loan, whether such Loan is a Prime Loan or a
Eurodollar Loan and other information with respect thereto on the schedule
annexed to and constituting a part of this Note (or on a continuation of such
schedule attached hereto and made a part hereof), or otherwise to record such
information in the Lender's internal records, and any such recordation shall
absent manifest error constitute prima facie evidence of the accuracy of the
information so recorded; provided that the failure to make a notation or the
inaccuracy of any notation shall not limit or otherwise affect the Obligations.
This Note is one of the Notes referred to in, and is entitled
to all the benefits of the Notes referred to in, the Credit Agreement dated as
of November 5, 1997 between the Borrowers, the lenders party thereto, and the
Agent (as amended, modified or supplemented from time to time, the "Credit
Agreement"). Reference is hereby made to the Credit Agreement for rights and
obligations of payment and prepayment, collateral security, Events of Default
and the rights of acceleration of the maturity hereof. Any capitalized terms not
otherwise defined herein are used with the meanings given such terms in the
Credit Agreement.
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THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE LAWS OF THE STATE OF NEW YORK.
DORAL FINANCIAL CORPORATION
By:
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Xxxxx X. Xxxxx
Executive Vice President and Treasurer
DORAL MORTGAGE CORPORATION
By:
----------------------------------------
Xxxxx X. Xxxxx
Vice President
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Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
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Name Prime Loan Amount Amount of Notations
of or of Principal Made
Date Borrower Eurodollar Loan Loan Repaid By
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EXHIBIT B
SECURITY AND COLLATERAL AGENCY AGREEMENT
THIS SECURITY AND COLLATERAL AGENCY AGREEMENT (as amended,
modified or supplemented from time to time, this "AGREEMENT") is made and dated
as of November 5, 1997 by and between DORAL FINANCIAL CORPORATION, a corporation
duly organized under the laws of the Commonwealth of Puerto Rico, and DORAL
MORTGAGE CORPORATION, a corporation duly organized under the laws of the
Commonwealth of Puerto Rico, jointly and severally as debtor (each a "GRANTOR"
and jointly, severally and collectively, the "GRANTORS"), BANKERS TRUST COMPANY,
a New York banking corporation, as Agent for the Lenders under the Credit
Agreement dated as of November 5, 1997 between the Grantors, the Agent and the
Lenders (as amended, modified or supplemented from time to time, the "CREDIT
AGREEMENT"), and BANKERS TRUST COMPANY, as collateral agent under this Agreement
(the "COLLATERAL AGENT"). Any capitalized terms not otherwise defined herein are
used with the same meaning given such terms in the Credit Agreement.
To induce the Lenders to enter into the Credit Agreement and
to make Loans thereunder and as a condition precedent to the making of such
Loans, the Grantors have agreed to enter into this Agreement, pursuant to which
the Grantors shall grant to the Collateral Agent, on behalf of and for the
benefit of each and all of the Lenders, the Agent, and the Collateral Agent
(collectively, the "SECURED PARTIES"), a security interest in and lien upon
certain property of the Grantors described more particularly herein.
Accordingly, the parties hereto hereby agree as follows:
1. Defined Terms. Terms defined in the UCC (as
hereinafter defined) are used herein as therein defined. As used in this
Agreement, capitalized terms defined in the Credit Agreement and not otherwise
defined herein have the meanings given such terms in the Credit Agreement, and
the following terms have the meanings specified below (such meanings being
equally applicable to both the singular and plural forms of the terms defined):
"COLLATERAL" shall have the meaning set forth in Section 2 of this
Agreement.
"PROCEEDS" shall mean "proceeds," as such term is defined in Section
9-306(1) of the UCC, and, in any event, includes, without limitation, (a) any
and all proceeds of any insurance, indemnity, warranty or guaranty payable to
either Grantor from time to time with respect to any of the Collateral, (b) any
and all payments (in any form whatsoever) made or due and payable to either
Grantor from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by any
Governmental Authority (or any Person acting under color of Governmental
Authority), and (c) any and all other amounts from time to time paid or payable
under or in connection with any of the Collateral.
"SERVICING CONTRACT" shall mean each of the contracts or other
agreements to which either Grantor is a party pursuant to which such Grantor
holds Servicing Rights, in each case as amended, supplemented or otherwise
modified from time to time, including, without limitation, (a) all rights of
such Grantor to receive moneys due and to become due to it thereunder or in
connection therewith (other than any portion of principal and interest payable
under the related Mortgage Loans to the
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extent not attributable to servicing fees payable to such Grantor under such
Servicing Contracts), whether on account of the performance of services, upon
the termination of such servicing rights or otherwise (including, without
limitation, payments due from mortgagors and proceeds of FHA mortgage insurance
and VA guarantee claims or other proceeds of foreclosure or other realization or
recoveries on defaulted Mortgage Loans as reimbursement for any advances made by
the Grantors with respect to the payment of principal and interest to investors,
the payment of taxes and insurance and other advances made by the Grantors in
connection with the servicing of such Mortgage Loans), (b) all rights of such
Grantor to damages arising out of, or for, breach or default in respect thereof,
and (c) all rights of such Grantor to perform and to exercise all remedies
thereunder.
"SERVICING RIGHTS" shall mean the rights of either Grantor to (a)
service or administer Mortgage Loans, including, without limitation, the
Mortgage Loans described on Attachments 1-A and 1-B hereto, for or on behalf of
the owner or holder of such Mortgage Loans (including investors in
Mortgage-Backed Securities) pursuant to a direct agreement between such Grantor
and FHLMC, FNMA or GNMA, together with the legal titles, mortgagor files,
escrows and records relating to such Mortgage Loans and the right to receive
servicing fee income and any other income arising from or in connection with
such Mortgage Loans, including late charges, termination fees and charges and
all other incidental fees and charges, and (b) subservice or administer Mortgage
Loans for or on behalf of the legal title holder of the direct servicing rights
in respect of, or the owner or holder of, such Mortgage Loans, pursuant to a
subservicing agreement in form and substance satisfactory to the Agent between
the Grantor and the legal title holder of the related direct servicing rights,
together with the legal titles, mortgagor files, escrows and records relating to
such Mortgage Loans and the right to receive servicing or subservicing fee
income and any other income arising from or in connection with such Mortgage
Loans, including late charges, termination fees and charges and all other
incidental fees and charges.
"UCC" shall mean the Uniform Commercial Code as the same may, from time
to time, be in effect in the State of New York; provided, however, in the event
that, by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of the Collateral Agent's and the other Secured Parties'
security interest in any Collateral is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than the State of New York, the term "UCC"
shall mean the Uniform Commercial Code as in effect in such other jurisdiction
for purposes of the provisions hereof relating to such attachment, perfection or
priority and for purposes of definitions related to such provisions.
2. Grant of Security Interest. As collateral security
for the full and prompt payment when due (whether as stated maturity, by
acceleration or otherwise) of, and the performance of, all the Obligations and
to induce the Lenders to make the Loans pursuant to the Credit Agreement, each
of the Grantors hereby assigns, conveys, mortgages, pledges, hypothecates and
transfers to the Collateral Agent, on behalf and for the ratable benefit of the
Secured Parties, and hereby grants to the Collateral Agent, on behalf and for
the ratable benefit of the Secured Parties, a security interest in, all of such
Grantor's right, title and interest in, to and under the following, whether now
owned or hereafter acquired, whether now in existence or hereafter arising (all
of which being herein collectively called the "COLLATERAL"):
(a) all (i) Servicing Rights, (ii) Servicing Contracts and (iii) rights
to receive payments in connection with Servicing Contracts and Servicing Rights,
whether on account of the performance of services, upon the termination of
Servicing Rights, Servicing Contracts or otherwise (including, without
limitation, all deeds, contracts, agreements, instruments of title and other
documents
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received or receivable in respect thereof), and (iv) rights with respect to the
placement of escrow deposits associated with such Servicing Rights and Servicing
Contracts and all rights to the payment of money or provision of concessions or
services with respect thereto;
(b) all files, documents, agreements, instruments, deeds, chattel
paper, inventory consisting of Servicing Rights, insurance policies, personal
property, contract rights, accounts, general intangibles, records, surveys,
certificates, correspondence, appraisals, computer records, tapes, discs, cards,
accounting records and other books, records, information and data of such
Grantor relating to the Collateral (including all such items necessary or
helpful in the administration or servicing of the Collateral) of whatever kind
or nature whatsoever relating to the Servicing Rights or any other Collateral,
and all other documents or instruments delivered to the Collateral Agent in
respect of the Collateral, including, without limitation, the right to receive
all insurance proceeds and condemnation awards which may be payable in respect
of any of the Collateral;
(c) All right to control the custodial accounts of the Grantors
held by the Collateral Agent and all other rights of the Grantors therein, any
and all funds at any time held in any of the above accounts, and any and all
rights of the Grantors to insurance payments made in respect of such accounts;
and
(d) to the extent not otherwise included, all Proceeds of each of the
foregoing and all accessions to, substitutions and replacements for, and rents,
profits and products of, each of the foregoing.
Simultaneously with the execution and delivery of this Agreement, the Grantors
shall execute and send notices in the form attached hereto as Attachment 2 to
each party to any contract (other than the Grantors) which is assigned to the
Secured Parties pursuant to this Agreement as part of the Collateral and deliver
copies of such notices together with evidence of delivery thereof to the Agent.
3. Appointment of Collateral Agent. The Agent hereby appoints the
Collateral Agent to act as agent and secured party for the exclusive benefit of
the Secured Parties with respect to the Collateral. The Collateral Agent hereby
accepts such appointment and agrees to maintain and hold all Collateral at any
time delivered to it as agent and secured party for the exclusive benefit of the
Secured Parties. The Collateral Agent acknowledges and agrees that it is acting
and will act with respect to the Collateral for the exclusive benefit of the
Secured Parties and is not, and shall not at any time in the future be, subject,
with respect to the Collateral, in any manner or to any extent, to the direction
or control of the Grantors except as expressly permitted hereunder and under the
Credit Agreement. The Collateral Agent agrees to act in accordance with this
Agreement and in accordance with any written instructions from the Required
Lenders. Under no circumstances shall the Collateral Agent release any
Collateral from the Lien created hereby, except in accordance with the express
terms of this Agreement or otherwise upon the written instruction of the Agent
acting at the direction of all of the Lenders.
4. Release of Servicing Rights.
(a) From time to time upon the request of either
Borrower, the Collateral Agent (at the direction of the Agent) may release the
Lien of the Secured Parties on servicing rights being sold by such Borrower, and
the Agent shall consent to such release if, after giving effect to such release,
(i) the Borrowers shall be in compliance with Sections 2.1 and 2.8 of the Credit
Agreement, and (ii) no Potential Default or Event of Default of any other type
has occurred and is continuing. The Borrowers agree that the Agent may, prior to
directing the Collateral Agent to
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release the Lien of the Secured Parties on any of the Servicing Rights, require
the Borrowers to arrange for the delivery to the Agent of a Pledged Servicing
Valuation Report that gives effect to such release and to all recent or
simultaneous additions of Servicing Rights to and deletions of Servicing Rights
from the Pledged Servicing Portfolio. In addition, such Pledged Servicing
Valuation Report shall show the changes to any valuations of Servicing Rights
set forth in most recent Pledged Servicing Valuation Report delivered to the
Agent.
(b) Upon the request of the Borrowers, if the
Commitments have been terminated by the Borrowers and all Loans and other
Obligations shall have been paid and performed, the Collateral Agent (at the
direction of the Agent) shall release the Lien of the Secured Parties on the
Collateral. The Agent shall direct the Collateral Agent to provide such release
if the Commitments have been terminated and all Loans and other Obligations have
been paid and performed.
5. Standard of Care of Collateral Agent; Duties;
Indemnification.
The Collateral Agent shall exercise reasonable care in the
performance of its duties hereunder. Notwithstanding anything to the contrary
contained herein:
(a) The provisions of this Agreement set forth
the exclusive duties of the Collateral Agent and no implied duties or
obligations shall be read into this Agreement against the Collateral Agent. The
Collateral Agent shall not be bound in any way by any agreement or contract
other than this Agreement and any other agreement to which it is a party. The
Collateral Agent shall not be required to ascertain or inquire as to the
performance or observance of any of the conditions or agreements to be performed
or observed by any other party, except as specifically provided in this
Agreement. The Collateral Agent disclaims any responsibility for the validity or
accuracy of the recitals to this Agreement and any representations and
warranties contained herein, unless specifically identified as recitals,
representations or warranties of the Collateral Agent.
(b) Throughout the term of this Agreement, the
Collateral Agent shall have no responsibility for ascertaining the value,
collectability, insurability, enforceability, effectiveness or suitability of
any Collateral, the title of any party therein, the validity or adequacy of the
security afforded thereby, or the validity of this Agreement (except as to
Collateral Agent's authority to enter into this Agreement and to perform its
obligations hereunder).
(c) The Collateral Agent shall not be under any
duty to examine or pass upon the genuineness, validity or legal sufficiency of
any of the documents constituting part of any Collateral, and shall be entitled
to assume that all documents constituting part of such Collateral are genuine
and valid and that they are what they purport to be, and that any endorsements
or assignments thereof are genuine and valid. The Collateral Agent may rely upon
and shall be protected in acting in good faith upon any notice, resolution,
request, consent, order, certificate, report, statement or other paper or
document appearing on its face to be genuine and to have been signed or
presented by the proper party or parties or by a person or persons authorized to
act on behalf of the proper party or parties. The Collateral Agent shall not be
liable for any action or omission to act except for its own gross negligence or
willful misconduct.
(d) No provision of this Agreement shall require
the Collateral Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder or in the
exercise of any of its rights or powers, if, in its judgment, it shall
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believe that repayment of such funds or adequate indemnity against such risk or
liability is not assured to it.
(e) The Collateral Agent is not responsible for
preparing or filing any reports or returns relating to federal, state or local
income taxes with respect to this Agreement, other than for the Collateral
Agent's compensation or for reimbursement of expenses.
(f) The Grantors agree to reimburse and hold
harmless the Collateral Agent, its directors, officers, employees and agents
from and against any and all liability, loss and expense, including reasonable
counsel fees, arising from or connected with the Collateral Agent's execution
and performance of this Agreement including but not limited to the claims of any
third parties, including any assignee, and including any liabilities of the
Collateral Agent under acknowledgment agreements executed in connection with the
Servicing Contracts, except in the case of loss, liability or expense resulting
from gross negligence or willful misconduct on the part of the Collateral Agent.
Notwithstanding anything to the contrary contained herein, this provision shall
survive the termination of this Agreement.
6. Fees and Expenses of Collateral Agent. The Collateral
Agent shall notify the Grantors of all expenses and charges of the Collateral
Agent incurred in connection with the enforcement of any of the rights of the
Secured Parties hereunder, including realization upon the Collateral or any
breach by their Grantors of their obligations under this Agreement, and such
expenses and charges shall be paid promptly by the Grantors or, if already paid
by the Collateral Agent, the Grantors promptly shall reimburse the Collateral
Agent therefor. The Collateral Agent may employ, at the Grantors' expense, such
legal counsel and other experts as it reasonably deems necessary in connection
with such enforcement or breach described in the preceding sentence under this
Agreement.
7. Resignation of Collateral Agent. The Collateral Agent
may, at any time, effective upon ninety (90) days' prior written notice to the
Grantors and the Lenders, terminate its agreement to act as the Collateral Agent
hereunder. Upon the effective date of any such termination, the Collateral Agent
shall promptly deliver the Collateral then held by it and any and all books and
records (or copies thereof) relating thereto, to the Agent or to such other
person or entity as the Agent may direct in writing.
8. Availability of Documents. Each of the Lenders and
its agents, accountants, attorneys and auditors will be permitted during normal
business hours at any time and from time to time upon reasonable notice to the
Collateral Agent to examine (to the extent permitted by applicable law) the
files, documents, records and other papers in the possession or under the
control of the Collateral Agent relating to any or all of the Collateral and to
make copies thereof. As long as no Event of Default has occurred and is
continuing, any such activity will be at no cost or expense to the Grantors; if
an Event of Default has occurred and is continuing, all costs and expenses
associated with the exercise by any Lender of its rights under this Section 8
shall be paid by the Grantors within fifteen (15) days of receipt by the
Grantors from such Lender of a statement setting forth in reasonable detail the
amount thereof.
9. Representations and Warranties of Grantors. Each
Grantor, with respects to itself, hereby represents and warrants that: (a) the
Grantors are the sole owner of the Collateral (or, in the case of after-acquired
Collateral, at the time the Grantors acquire rights in the Collateral, will be
the sole owner thereof); (b) except for the security interest granted hereunder
to the Secured Parties and other Liens permitted by Section 5.2(a) of the Credit
Agreement, no Person has (or, in
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the case of after-acquired Collateral, at the time such Grantor acquires rights
therein, will have) any right, title, claim or interest (by way of security
interest or other lien or charge or otherwise) in, against or to the Collateral;
(c) all information heretofore, herein or hereafter supplied to the Collateral
Agent, the Agent or the Lenders by or on behalf of such Grantor with respect to
the Collateral is or will be accurate and complete in all material respects; (d)
all of the servicing rights in which a security interest is granted hereby
constitute direct servicing rights; (e) each Servicing Contract is in full force
and effect, each Servicing Contract is legal, valid and enforceable in
accordance with its terms and, to the best knowledge of such Grantor after due
inquiry, no default by any party thereto has occurred and is continuing
thereunder; (f) each right to the payment of money under the Servicing Contracts
is genuine and enforceable in accordance with its terms against the parties
obligated to pay the same (each an "OBLIGOR"), which terms have not been
modified or waived in any respect or to any extent; (g) to the best of such
Grantor's knowledge, the amount represented by such Grantor to the Collateral
Agent as owing by an Obligor under each Servicing Contract and the Mortgage Loan
related thereto is the correct amount actually owing by such Obligor; (h) to the
best of such Grantor's knowledge, no Obligor has any defence, set off, claim or
counterclaim against such Grantor that can be asserted against any Secured
Party, whether in any proceeding to enforce the Secured Parties' rights in the
related Servicing Contract or the Mortgage Loan related thereto or otherwise;
(i) such Grantor has not sold, assigned or otherwise transferred any rights
associated with any Servicing Contract or the Mortgage Loan related thereto
including, without limitation, any rights to place escrow deposits with respect
thereto; (j) except for the acknowledgment agreements referred to in clause (k)
below, no consent of any Obligor or any other Person is required for the grant
of the security interest provided herein by such Grantor in any of the
Collateral including, without limitation, the Servicing Contracts, other than
consents that have been obtained, nor will any such consent need to be obtained
upon the occurrence of an Event of Default for the Secured Parties to exercise
their rights with respect to any of the Collateral except as set forth in such
acknowledgment agreements; and (k) the representations and warranties of the
Grantors contained in any Acknowledgment Agreement delivered to the Agent are
true and correct as of the date hereof (or as of the date delivered to the Agent
if subsequent to the date hereof).
10. Covenants of Grantors. The Grantors hereby agree: (a)
to procure, execute and deliver from time to time any and all endorsements,
assignments, financing statements and continuation statements under the UCC, and
other writings deemed necessary or appropriate by the Collateral Agent or the
Agent to perfect, maintain and protect its security interest hereunder and the
priority thereof and to deliver promptly to the Collateral Agent all originals
of Collateral or Proceeds consisting of chattel paper or instruments, and hereby
authorize the Collateral Agent to file any financing statement or continuation
statement without the signature of either Grantor to the extent permitted by
applicable law; (b) except as permitted under Section 4 of this Agreement, not
to surrender or lose possession of (other than to the Collateral Agent), sell,
encumber, or otherwise dispose of or transfer, any Collateral or right or
interest therein; (c) at all times upon the request of the Collateral Agent, to
account fully for and promptly to deliver to the Collateral Agent, in the form
received, all Collateral or Proceeds received, endorsed to the Collateral Agent
as appropriate and accompanied by such assignments and powers, duly executed, as
the Collateral Agent shall request, and until so delivered all Collateral and
Proceeds shall be held in trust for the Collateral Agent, separate from all
other property of the Grantors and identified as being subject to the interest
of the Collateral Agent; (d) at any reasonable time, upon twenty-four (24) hours
notice by the Collateral Agent, to exhibit and to allow inspection by the
Collateral Agent (or Persons designated by the Collateral Agent including,
subject to the Credit Agreement, the Lenders) of the Collateral and the records
concerning the Collateral (at no cost to the Grantors unless an Event of Default
has occurred and is continuing); (e) to keep the Collateral insured against
loss, damage, theft and other risks customarily covered by insurance; (f) to do
all acts that a prudent investor would deem necessary
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or desirable to maintain, preserve and protect the Collateral; (g) not knowingly
to use or permit any Collateral to be used unlawfully or in violation of any
provision of this Agreement or any applicable statute, regulation or ordinance
or any policy of insurance covering the Collateral; (h) to pay (or require to be
paid) prior to their becoming delinquent all taxes, assessments, insurance
premiums, charges, encumbrances and liens now or hereafter imposed upon or
affecting any Collateral; (i) to notify the Collateral Agent before any such
change shall occur of any change in any Grantor's name, identity or structure
through merger, consolidation or otherwise; (j) to appear in and defend, at the
Grantors' cost and expense (unless such action or proceeding arises solely from
an act or failure to act by a Secured Party which act or failure to act is
determined to be gross negligence or willful misconduct), any action or
proceeding that may affect its title to or the Secured Parties' interest in the
Collateral; (k) to keep accurate and complete records of the Collateral and to
provide the Collateral Agent with such records and such reports and information
relating to the Collateral as the Collateral Agent may reasonably request from
time to time; (l) to comply with all laws, regulations and ordinances relating
to the possession, maintenance and control of the Collateral; and (m) to do all
acts that may be necessary to keep the Servicing Contracts in full force and
effect.
11. Collection of Collateral Payments.
(a) Each of the Grantors shall, at its sole cost
and expense, endeavor to obtain payment, when due and payable, of all sums due
or to become due with respect to any Collateral ("COLLATERAL PAYMENTS" or a
"COLLATERAL PAYMENT"), including, without limitation, the taking of such action
with respect thereto as the Collateral Agent may reasonably request, or, in the
absence of such request, as such Grantor may reasonably deem advisable; provided
that neither Grantor shall, without the prior written consent of the Agent,
grant or agree to any rebate, refund, compromise or extension with respect to
any Collateral Payment. Upon the request of the Required Lenders following the
occurrence of an Event of Default, each of the Grantors shall notify and direct
any party who is or might become obligated to make any Collateral Payment with
respect to the Collateral, to make payment thereof to the Collateral Agent at
such address as the Collateral Agent may designate. The Grantors will reimburse
the Collateral Agent promptly upon demand for all out-of-pocket costs and
expenses, including reasonable attorneys' fees and litigation expenses, actually
incurred by the Collateral Agent in seeking to collect any Collateral Payment.
(b) If an Event of Default has occurred and is
continuing, upon the request of the Required Lenders, the Grantors shall,
immediately upon receipt, transmit and deliver to the Collateral Agent, in the
form received, all cash, checks, drafts and other instruments for the payment of
money (properly endorsed if required so that such items may be collected by the
Collateral Agent) that may be received by the Grantors at any time as payment on
account of any Collateral Payment with respect to the Collateral and if such
request is made, until delivery to the Collateral Agent, such items shall be
held in trust for the Collateral Agent and shall not be commingled by the
Grantors with any of its other funds or property. Thereafter, the Collateral
Agent is hereby authorized and empowered to endorse the name of the Grantors on
any check, draft or other instrument for the payment of money received by the
Collateral Agent on account of any Collateral Payment if the Collateral Agent
believes such endorsement is necessary or desirable for purposes of collection.
(c) The Grantors shall indemnify and save
harmless the Collateral Agent from and against all liabilities and reasonable
expenses on account of any adverse claim asserted against the Collateral Agent
relating to any moneys received by the Collateral Agent on account of any
Collateral Payment except to the extent caused by the gross negligence or
willful misconduct of the Collateral Agent and such obligation of the Grantors
shall survive the termination of this Agreement and the release of the security
interest granted in Section 2 above.
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12. Authorized Action by Collateral Agent. Each Grantor
hereby irrevocably appoints the Collateral Agent as its attorney-in-fact,
coupled with an interest, to do (but the Collateral Agent shall not be obligated
to and shall incur no liability to the Grantors or any third party for failure
so to do), at the request and direction of the Required Lenders at any time
while an Event of Default has occurred and is continuing, any act that any
Grantor is obligated by this Agreement to do, and to exercise such rights and
powers as the Grantors might exercise with respect to the Collateral, including,
without limitation, the right to (a) collect by legal proceedings or otherwise
and endorse, receive and receipt for all interest, payments, proceeds and other
sums and property now or hereafter payable on or on account of the Collateral;
(b) enter into any extension, reorganization, deposit, or other agreement
pertaining to, or deposit, surrender, accept, hold or apply other property in
exchange for, the Collateral; (c) insure, process and preserve the Collateral;
(d) transfer the Collateral to the Collateral Agent's own name or its nominee's
name; (e) sell or otherwise dispose of the Collateral, as provided in Section 13
hereof; (f) take all actions necessary to effect the sale, transfer, or other
disposition of the Collateral, including without limitation to submit to FNMA,
FHLMC or GNMA a request to effect the sale, transfer, or other disposition of
the Collateral, and to execute with FNMA, FHLMC or GNMA a transfer or other
agreement or to take any other action contemplated under acknowledgment
agreements with FNMA, FHLMC or GNMA; (g) submit to FNMA, FHLMC or GNMA a request
to obtain any proceeds and fees otherwise payable to the Grantors upon the
termination of any Servicing Contracts; and (h) make any compromise or
settlement, and take any other action it deems advisable with respect to the
Collateral. Notwithstanding anything contained herein, in no event shall the
Collateral Agent be required to make any presentment, demand or protest, or give
any notice, and the Collateral Agent need not take any action to preserve any
rights against any prior party or any other Person in connection with the
Obligations or with respect to the Collateral.
13. Default and Remedies. Upon the occurrence of an Event
of Default and following the acceleration of the Obligations as provided in
Article VI of the Credit Agreement, the Collateral Agent shall at the request
and direction of the Required Lenders without notice to or demand upon the
Grantors (to the extent permitted by applicable law): (a) foreclose or otherwise
enforce the Secured Parties' security interest in the Collateral, in any manner
permitted by law or provided for hereunder; (b) sell or otherwise dispose of the
Collateral, or any part thereof at one or more public or private sales, whether
or not such Collateral is present at the place of sale, for cash or credit or
future delivery (without the assumption of any credit risk), on such terms and
in such manner as the Collateral Agent may determine (taking into account the
circumstances under which the Collateral is being sold); (c) require the
Grantors to assemble the Collateral, and/or books and records relating thereto
and all equipment, files, documents, instruments, surveys, certificates,
correspondence, appraisals, computer programs, tapes, discs, cards, accounting
records and other books, records, information and data of Grantors relating to
the Collateral and make such available to the Collateral Agent at a place to be
designated by the Collateral Agent; (d) enter onto property where any
Collateral, or books and records relating thereto and other collateral described
in the preceding clause (c) are located and take possession thereof with or
without judicial process; and (e) prior to the disposition of the Collateral,
prepare it for disposition in any manner and to the extent the Collateral Agent
deems appropriate. Upon any sale or other disposition pursuant to this
Agreement, the Collateral Agent shall have the right to deliver, assign and
transfer to the purchaser thereof the Collateral or portion thereof so sold or
disposed of and all proceeds thereof shall be promptly transmitted to the Agent
as provided in the Credit Agreement. Each purchaser at any such sale or other
disposition shall hold the Collateral free from any claim or right of whatever
kind, including any equity or right of redemption of the Grantors, and the
Grantors specifically waives (to the extent permitted by law) all rights of
redemption, stay or appraisal that it has or may have under any rule of law or
statute now existing or hereafter adopted. In furtherance and not in limitation
of
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the rights of the Collateral Agent set forth in this Section 13, upon the
occurrence of any Event of Default and following the acceleration of the
Obligations as provided in Article VI of the Credit Agreement, the Collateral
Agent may, in addition to any other rights it may have, do one or more of the
following, subject to the terms of the relevant Servicing Contract and the
Acknowledgment Agreements (it being understood that if there is any conflict
between this Agreement and any Acknowledgment Agreement or the GNMA Guide, the
applicable Acknowledgment Agreement or GNMA Guide shall prevail): (i) succeed
the Grantors as servicer of the Mortgage Loans under any or all of the Servicing
Contracts as absolute assignee thereof and not merely as security, (ii) appoint
a third party as successor servicer of the Mortgage Loans under any or all of
the Servicing Contracts, (iii) sell to a third party or itself or otherwise
transfer any of the Grantors' right, title, interest, or obligations with
respect to the Mortgage Loans under any or all of the Servicing Contracts,
including without limitation the right to hold the escrow deposits associated
therewith or (iv) require the Grantors, notwithstanding any action taken by the
Collateral Agent under clause (iii), to remain as servicer of the Mortgage Loans
under any such Servicing Contract. The Collateral Agent's rights under clauses
(i), (ii) and (iii) shall respectively include, without limitation, the right to
succeed the Grantors as servicer, appoint a successor servicer or transfer any
or all of its rights with respect to the Mortgage Loans if the Grantors, or any
successor to the Grantors in bankruptcy or similar proceedings, rejects any
Servicing Contracts. As successor servicer under clause (i), the Collateral
Agent shall notify all interested Persons thereof and take such further action
as it shall deem necessary or appropriate. Upon the Collateral Agent's (x)
succeeding the Grantors as servicer under clause (i), (y) appointing a third
party as a successor servicer of the Mortgage Loans under any Servicing Contract
under clause (ii), or (z) transferring any of the Grantors' rights, title,
interest and obligations under clause (iii), the Grantors shall have no further
rights under or with respect to the Mortgage Loans (or to such rights, title,
interest or obligations in the case of a transfer under clause (iii)), to any
other documents pertaining thereto or to the related escrow deposits. Upon the
exercise by the Collateral Agent of any option hereunder, the Grantors shall (A)
upon request of the Collateral Agent, deliver to the Collateral Agent all
computer software, tapes, records, documents, escrow deposits and other deposits
in its possession or under its control relating to the Collateral, and (B)
cooperate with the Collateral Agent in every respect in effecting such
succession. If the Collateral Agent or any appointee of the Collateral Agent
succeeds the Grantors as successor servicer of the Mortgage Loans under any
Servicing Contract, the Collateral Agent or the appointee, as the case may be,
shall only assume those obligations which a successor servicer of the Mortgage
Loans under such Servicing Contract is obligated to assume; provided that
neither the Collateral Agent nor its appointee shall be liable for any failure
of the Grantors to perform its obligations under any Servicing Contract or for
any other breach thereof. Nothing herein contained shall be construed as an
assumption by the Collateral Agent or its appointee of any liability of the
Grantors with respect to any of the Collateral, and the Grantors shall be and
remain responsible for all such liabilities.
14. Cumulative Rights. The rights, powers and remedies of
the Collateral Agent and the Secured Parties under this Agreement shall be in
addition to all rights, powers and remedies given to the Collateral Agent and
the Secured Parties by virtue of any statute or rule of law, the Credit
Agreement or any other agreement, all of which rights, powers and remedies shall
be cumulative and may be exercised successively or concurrently without
impairing the Secured Parties' security interest in the Collateral.
15. Acknowledgment Agreements.
(a) Notwithstanding anything contained herein or
in any of the other Loan Documents, the Agent and the Collateral Agent, by
executing this Agreement, and each of the Lenders, by executing the Credit
Agreement, acknowledge that (i) each Grantor is entitled to
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66
servicing income with respect to any GNMA pool of Mortgage Loans only so long as
such Grantor is a GNMA Issuer/Servicer in good standing; (ii) upon such
Grantor's loss of such good standing status, the Secured Parties' rights to any
such servicing income also terminate; and (iii) the pledge of rights to
servicing income with respect to any GNMA pool of Mortgage Loans hereunder
conveys no rights (such as the right to become a substitute servicer) that are
not otherwise specifically provided for in the applicable GNMA Guide.
(b) The security interest referred to in this
Agreement is subject and subordinate in each and every respect (a) to all
rights, powers and prerogatives of one or more of FNMA, FHLMC and GNMA (the
"Investors"); and (b) to all claims of any such a arising out of any and all
defaults and outstanding obligations of the Grantor to the Investor. Such
rights, powers and prerogatives of the Investors may include, without
limitation, one or more of the following: the right of an Investor to disqualify
the debtor from participating in a mortgage selling or servicing program or a
securities guaranty program with the Investor; the right to terminate contract
rights of the Grantor relating to such a mortgage selling or servicing program
or securities guaranty program; and the right to transfer and sell all or any
portion of such contract rights following the termination of those rights.
16. Waiver. Any waiver, forbearance, failure or delay by
the Collateral Agent or the Secured Parties in exercising, or the exercise or
beginning of exercise by the Collateral Agent or the Secured Parties of, any
right, power or remedy, simultaneous or later, shall not preclude the further,
simultaneous or later exercise thereof, and every right, power or remedy of the
Collateral Agent or the Secured Parties shall continue in full force and effect.
17. Binding Upon Successors. All rights of the Collateral
Agent and the Secured Parties under this Agreement shall inure to the benefit of
the Collateral Agent and the Secured Parties and their successors and assigns,
and all obligations of the Grantors shall bind its successors and assigns.
18. Entire Agreement; Severability. This Agreement
contains the entire security agreement and agency agreement, with respect to the
Collateral, between the Collateral Agent, the Agent and the Grantors. All
waivers by the Grantors provided for in this Agreement have been specifically
negotiated by the parties with full cognizance and understanding of their
rights. If any of the provisions of this Agreement shall be held invalid or
unenforceable, this Agreement shall be construed as if not containing such
provisions, and the rights and obligations of the parties hereto shall be
construed and enforced accordingly.
19. Choice of Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of New York except with
respect to the perfection and enforcement of the security interests created
hereby which perfection and enforcement shall be construed in accordance with
and governed by the laws of the Commonwealth of Puerto Rico (other than with
respect to perfection and enforcement of accounts which are to be located in New
York which will be governed by New York law).
20. Amendments, Etc. No amendment or waiver of any
provision of this Agreement, nor consent to any departure by the Grantors or the
Collateral Agent herefrom, shall be effective unless the same shall have been
effected in accordance with Section 8.2 of the Credit Agreement.
X-00
00
00. Place of Business; Records. Each Grantor represents
and warrants that its chief executive office is at the address set forth on
Exhibit H to the Credit Agreement, and that its books and records concerning the
Collateral are kept at such location. Each Grantor agrees not to move its chief
executive office or such books and records unless it has given the Agent and the
Collateral Agent at least thirty (30) days' prior written notice thereof.
22. Notice. Any written notice, consent or other
communication provided for in this Agreement shall be delivered or sent as
provided in Section 8.1 of the Credit Agreement.
23. Execution in Counterparts. This Agreement may be
executed in counterparts, each of which when so executed shall be deemed to be
an original and all of which when taken together shall constitute one and the
same agreement.
24. Joint and Several Nature of the Obligations. The
Grantors agree that any and all of the Obligations of the Grantors hereunder and
under each other Loan Document shall be the joint and several obligation of each
of them notwithstanding any absence herein or therein of a reference such as
"jointly and severally" with respect to any such obligation.
25. SUBMISSION TO JURISDICTION; WAIVER OF DAMAGES. (a)
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS TO WHICH EITHER GRANTOR IS A PARTY MAY BE BROUGHT IN XXX XXXXXX XX XXX
XXXXX XX XXX XXXX LOCATED IN NEW YORK COUNTY OR OF THE UNITED STATES OF AMERICA
FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH OF THE GRANTORS HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS. THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY
JURY, AND, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE
GRANTORS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION, INCLUDING
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OR MAINTAINING OF
ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.
(b) EACH OF THE GRANTORS IRREVOCABLY AND UNCONDITIONALLY
CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY
SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO EACH SUCH GRANTOR AT ITS SAID ADDRESS, SUCH
SERVICE TO BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING. IN ADDITION,
EACH GRANTOR HEREBY IRREVOCABLY APPOINTS CT CORPORATION, 0000 XXXXXXXX, XXX
XXXX, XXX XXXX 00000 (THE "PROCESS AGENT") TO RECEIVE, FOR IT AND ON ITS BEHALF,
SERVICE OF PROCESS IN ANY PROCEEDINGS OR ACTIONS IN NEW YORK. IF FOR ANY REASON
THE PROCESS AGENT IS UNABLE TO ACT AS SUCH, EACH GRANTOR WILL PROMPTLY NOTIFY
THE AGENT AND WITHIN THIRTY (30) DAYS APPOINT A SUBSTITUTE PROCESS AGENT
ACCEPTABLE TO THE AGENT.
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(c) NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT OR
ANY LENDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST EITHER GRANTOR IN ANY OTHER
JURISDICTION.
(d) EACH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO
THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR
RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO IN THIS SECTION 25, ANY
SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES. THIS WAIVER IS MADE
KNOWINGLY AND VOLUNTARILY.
26. Limitation on Liability of Secured Parties. It is
expressly agreed by the Grantors that, anything herein to the contrary
notwithstanding, the Grantors shall remain liable to observe and perform all the
conditions, duties and obligations to be observed and performed by them relating
to the Collateral, and the Grantors shall perform all of their duties and
obligations thereunder, all in accordance with and pursuant to the terms and
provisions relating thereto. Neither the Collateral Agent nor any other Secured
Party shall have any obligation or liability under any instrument, agreement,
contract or other document by reason of or arising out of this Agreement or the
granting of a security interest in any instrument, agreement, contract or other
document to the Collateral Agent on behalf and for the ratable benefit of the
Secured Parties or the receipt by the Collateral Agent or any other Secured
Party of any payment relating to any of the foregoing pursuant hereto, nor shall
the Collateral Agent or any other Secured Party be required or obligated in any
manner to perform or fulfill any of the obligations of the Grantors thereunder,
or to make any payment, or to make any inquiry as to the nature or the
sufficiency of any payment received by it or the sufficiency of any performance
by any party thereunder, or to present or file any claim, or to take any action
to collect or enforce any performance or the payment of any amounts which may
have been assigned to it or to which it may be entitled at any time or times.
27. Survival of Representations. All covenants,
agreements, representations and warranties made herein shall survive the making
by the Lenders of the Loans and the execution and delivery to the Agent for the
account of the Lenders of the Notes regardless of any investigation made by the
Collateral Agent or any of the other Secured Parties and of the Collateral
Agent's and the other Secured Parties' access to any information and shall
continue in full force and effect so long as any Obligation is unpaid or
unperformed.
28. WAIVER OF JURY TRIAL. THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING
WITH RESPECT TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
EXECUTED the day and year first above written.
Grantors:
---------
DORAL FINANCIAL CORPORATION
By:
------------------------------
X-00
00
Xxxxx X. Xxxxx
Executive Vice President and Treasurer
DORAL MORTGAGE CORPORATION
By:
------------------------------
Xxxxx X. Xxxxx
Vice President
Agent:
------
BANKERS TRUST COMPANY
By:
------------------------------
Xxxxx X. XxXxxx
Vice President
Collateral Agent:
-----------------
BANKERS TRUST COMPANY
By:
------------------------------
Xxxxx X. XxXxxx
Vice President
AFFIDAVIT
---------
Affidavit No. ______________
Subscribed and acknowledged before me by ______________, of legal age,
(single/married), property owner and resident of ___________, ___________, in
his/her capacity as (title) __________ of Doral Financial Corporation, and
____________, of legal age, (single/married), property owner and resident of
____________, ____________, in his/her capacity as (title) __________ of (name
of corporation), both personally known to me, in _______________, Puerto Rico,
on this ____ day of ________, 199_.
----------------------------
NOTARY PUBLIC
AFFIDAVIT
Affidavit No. ______________
Subscribed and acknowledged before me by ______________, of legal age,
(single/married), property owner and resident of ___________, ___________, in
his/her capacity as (title) __________ of Doral Mortgage Corporation, and
____________, of legal age, (single/married),
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property owner and resident of ____________, ____________, in his/her capacity
as (title) __________ of (name of corporation), both personally known to me, in
_______________, Puerto Rico, on this ____ day of ________, 199_.
----------------------------
NOTARY PUBLIC
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71
ATTACHMENT 1-A
TO SECURITY AGREEMENT
SERVICED MORTGAGE LOANS
FNMA/FHLMC
All Mortgage Loans in the FNMA/FHLMC Servicing Portfolio
(whether or not included in Mortgage Loan pools) now existing or hereafter
originated or acquired with respect to which either of the Grantors have
servicing rights, including, without limitation, Mortgage Loans serviced by
either of the Grantors pursuant to:
(i) the Mortgage Selling and Servicing Contract
and all applicable Pool Purchase Contracts between FNMA and the
Grantors and the FNMA Selling Guide and Servicing Guide, as amended
from time to time; and
(ii) the Unitary, Indivisible Master Servicing
Contract between the Grantors and FHLMC, as described in the FHLMC
Sellers' and Servicers' Guide, as amended from time to time.
X-00
00
XXXXXXXXXX 1-B
TO SECURITY AGREEMENT
SERVICED MORTGAGE LOANS
GNMA
All Mortgage Loans in the GNMA Servicing Portfolio (whether or
not included in Mortgage Loan pools) now existing or hereafter originated or
acquired with respect to which either of the Grantors have servicing rights,
including, without limitation, Mortgage Loans serviced by either of the Grantors
pursuant to servicing contracts between such Grantor and any issuer of
GNMA-guaranteed Mortgage-Backed Securities.
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73
ATTACHMENT 2
TO SECURITY AGREEMENT
[LETTERHEAD OF APPLICABLE GRANTOR]
[Reference title of Contract]
[DATE]
Certified Mail
Return Receipt Requested
TO: ___________________
___________________
___________________
We hereby notify you that we have assigned our interest in [describe
contract] (the "Contract") to ________________, as [collateral/security] agent
for the Secured Parties pursuant to that certain Credit Agreement dated as of
November 5, 1997 among Doral Financial Corporation, Doral Mortgage Corporation,
Bankers Trust Company, as agent, and the Lenders party thereto (as amended,
modified or supplemented from time to time, the "Credit Agreement") and loan
documents related thereto, as security for the obligations described therein.
This notice shall be evidence of the above-described assignment, which
shall remain in full force and effect until terminated in accordance with the
Credit Agreement and the other loan documents.
[DORAL FINANCIAL CORPORATION]
By:__________________________________________
Name:________________________________________
Title:_______________________________________
or
[DORAL MORTGAGE CORPORATION]
By:__________________________________________
Name:________________________________________
Title:_______________________________________
Acknowledged By:
----------------------
Contract Party
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74
EXHIBIT C
FORM OF OPINION OF BORROWERS' COUNSEL
75
EXHIBIT D-1
OFFICER'S CERTIFICATE
(Doral Financial Corporation)
I, Xxxxx X. Xxxxx, on behalf of Doral Financial Corporation
("DFC"), DO HEREBY CERTIFY as follows:
1. The representations and warranties set forth in the
Credit Agreement, dated as of November 5, 1997, between DFC, Doral Mortgage
Corporation ("DMC"), Bankers Trust Company, as Agent, and the lenders named
therein (the "AGREEMENT"), and in the Security Agreement referred to therein,
are accurate and complete in all material respects on and as of the date hereof
both before and after giving effect to the making of any Loans to occur on such
date.
2. DFC and DMC are each in compliance with all the terms
and provisions set forth in the Agreement on its part to be observed and
performed, and no Event of Default or Potential Default (as those terms are
defined in the Agreement) has occurred and is continuing.
3. The aggregate principal amount of Loans to be
borrowed on the date hereof will not exceed the limitations set forth in
Sections 2.1 and 2.8 of the Agreement.
IN WITNESS WHEREOF, the undersigned has hereunto signed his
name this __ day of November, 1997.
By:
----------------------------
Xxxxx X. Xxxxx
Executive Vice President and Treasurer
76
EXHIBIT D-2
OFFICER'S CERTIFICATE
(Doral Mortgage Corporation)
I, Xxxxx X. Xxxxx, on behalf of Doral Mortgage Corporation
("DMC"), DO HEREBY CERTIFY as follows:
1. The representations and warranties set forth in the
Credit Agreement, dated as of November 5, 1997, between DMC and Doral Financial
Corporation ("DFC"), Bankers Trust Company, as Agent, and the lenders named
therein (the "AGREEMENT"), and in the Security Agreement referred to therein,
are accurate and complete in all material respects on and as of the date hereof
both before and after giving effect to any Loans to be made on such date.
2. DMC and DFC are each in compliance with all the terms
and provisions set forth in the Agreement on its part to be observed and
performed, and no Event of Default or Potential Default (as those terms are
defined in the Agreement) has occurred and is continuing.
3. The aggregate principal amount of Loans to be
borrowed on the date hereof will not exceed the limitations set forth in
Sections 2.1 and 2.8 of the Agreement.
IN WITNESS WHEREOF, the undersigned has hereunto signed his
name this __ day of November, 1997.
By:
---------------------------
Xxxxx X. Xxxxx
Vice President
77
EXHIBIT E
NOTICE OF BORROWING
1. We refer to the Credit Agreement (as amended,
modified or supplemented from time to time, the "CREDIT AGREEMENT") dated as of
November 5, 1997 by and between Doral Financial Corporation and Doral Mortgage
Corporation, the Lenders party thereto and Bankers Trust Company, as Agent.
Capitalized terms used herein without definitions shall have the respective
meanings set forth in the Credit Agreement.
2. The undersigned, [Doral Financial Corporation] [Doral
Mortgage Corporation], a corporation duly organized under the laws of the
Commonwealth of Puerto Rico ("BORROWER"), hereby requests a Borrowing in the
aggregate principal amount of $__________(1) to be made on ________________,
199_.(2) [Such Borrowing shall consist of [Prime] [Eurodollar] Loans.] [After
giving effect to the Borrowing requested hereby, no more than 3 Eurodollar
Interest Periods will be in effect.] [The Eurodollar Interest Period for the
Eurodollar Loan requested hereunder shall be [30] [60] [90] days.]
3. The aggregate principal amount of the Loans
outstanding after giving effect to the Borrowing requested hereby will not
exceed the maximum amounts permitted under Sections 2.1 and 2.8 of the Credit
Agreement.
4. The representations and warranties of the Borrowers
contained in the Loan Documents are accurate and complete in all material
respects on and as of the date hereof and will be accurate and complete in all
material respects on and as of the date of the Borrowing requested hereunder
both before and after giving effect to the Borrowing requested hereunder.
5. No Potential Default or Event of Default has occurred
and is continuing on the date hereof and none will occur after giving effect to
the Borrowing to be made in accordance with the terms hereof.
6. Since December 31, 1996, no material adverse change
has occurred in the business, financial condition or results of operations of
DFC and its Subsidiaries, taken as a whole.
Date: _________ __, 199_.
[DORAL FINANCIAL CORPORATION
By:
-----------------------------------
Name:
-----------------------------------
Title: ]
-----------------------------------
or
[DORAL MORTGAGE CORPORATION
By:
-----------------------------------
Name:
-----------------------------------
Title: ]
-----------------------------------
------------------------
(1) Minimum amount of $5,000,000 for each Borrowing.
(2) Must be a Eurodollar Business Day for a Borrowing of Eurodollar Loans
and a Business Day for a Borrowing of Prime Loans.
78
EXHIBIT F
NOTICE OF CONVERSION/CONTINUATION
1. We refer to the Credit Agreement (as amended,
modified or supplemented from time to time, the "CREDIT AGREEMENT") dated as of
November 5, 1997, by and between Doral Financial Corporation and Doral Mortgage
Corporation, the lenders party thereto and Bankers Trust Company, as Agent.
Capitalized terms used herein without definitions shall have the meaning set
forth in the Credit Agreement.
2. The undersigned, [Doral Financial Corporation] [Doral
Mortgage Corporation], a corporation duly organized under the laws of the
Commonwealth of Puerto Rico ("BORROWER"), hereby requests to [convert an
aggregate principal amount of Loans that constitute [Prime] [Eurodollar] Loans
equal to $__________(3) to [Prime] [Eurodollar] Loans] [continue an aggregate
principal amount of Loans that constitute Eurodollar Loans equal to
$_____________] on ________________, 199_.(4) [The Eurodollar Interest Period
for such Eurodollar Loans following the requested [conversion] [continuation]
shall be [30] [60] [90] days.] [After giving effect to the conversion or
continuation requested hereby, no more than 3 Eurodollar Interest Periods will
be in effect.]]
3. The aggregate principal amount of the Loans
outstanding after giving effect to the [conversion] [continuation] hereunder
will not exceed the maximum amounts permitted under Section 2.1 and 2.8 of the
Credit Agreement.
------------------------
(3) Minimum amount of $5,000,000 for a conversion of Prime Loans into
Eurodollar Loans.
(4) Must be a Eurodollar Business Day for a conversion into or continuation
of Eurodollar Loans and a Business Day for conversions into or
continuations of Prime Loans.
79
4. No Potential Default or Event of Default has occurred
and is continuing on the date hereof and none will occur after giving effect to
the [conversion] [continuation] to be made pursuant to the terms hereof.(5)
Date: _________ __, 199_.
[DORAL FINANCIAL CORPORATION
By:
-----------------------------------
Name:
-----------------------------------
Title: ]
-----------------------------------
or
[DORAL MORTGAGE CORPORATION
By:
-----------------------------------
Name:
-----------------------------------
Title: ]
-----------------------------------
------------------------
(5) Only required for a conversion into or a continuation of a Eurodollar
Loan.
80
EXHIBIT G
FORM OF POWER OF ATTORNEY
THIS POWER OF ATTORNEY is entered into as of this __ day of November,
1997 by [DORAL FINANCIAL CORPORATION] [DORAL MORTGAGE CORPORATION], a
corporation organized under the laws of the Commonwealth of Puerto Rico
(["DFC"]["DMC"]), for the benefit of Bankers Trust Company, as Agent, and the
other Secured Parties as defined in the Credit Agreement dated as of the date
hereof among [DFC and Doral Mortgage Corporation] [DMC and Doral Financial
Corporation] (collectively, the "BORROWERS"), the Agent and the Lenders (the
"CREDIT AGREEMENT"). Capitalized terms used herein and not otherwise defined
shall have the meanings set forth in the Credit Agreement which is attached
hereto as Schedule A.
[DFC][DMC] hereby irrevocably appoints the Collateral Agent as its
attorney-in-fact, coupled with an interest, to do (but the Collateral Agent
shall not be obligated to and shall incur no liability to the Borrowers or any
third party for failure so to do) at the request and direction of the Required
Lenders, at any time while an Event of Default has occurred and is continuing,
any act that either Borrower is obligated by the Security Agreement to do, and
to exercise such rights and powers as the Borrowers might exercise with respect
to the Collateral, including, without limitation, the right to (a) collect by
legal proceedings or otherwise and endorse, receive and receipt for all
interest, payments, proceeds and other sums and property now or hereafter
payable on or on account of the Collateral; (b) enter into any extension,
reorganization, deposit or other agreement pertaining to, or deposit, surrender,
accept, hold or apply other property in exchange for, the Collateral; (c)
insure, process and preserve the Collateral; (d) transfer the Collateral to the
Collateral Agent's own name or to its nominee's name; (e) sell or otherwise
dispose of the Collateral, as provided in the Security Agreement; (f) take all
actions necessary to effect the sale, transfer, or other disposition of the
Collateral, including without limitation to submit to FNMA, FHLMC or GNMA a
request to effect the sale, transfer, or other disposition of the Collateral, if
applicable, and to execute with FNMA, FHLMC or GNMA a transfer or other
agreement or to take any other action contemplated under acknowledgement
agreements with FNMA, FHLMC or GNMA, if applicable; (g) submit to FNMA, FHLMC or
GNMA a request to obtain any proceeds and fees otherwise payable to either or
both of the Borrowers upon the termination of any Servicing Contracts, if
applicable; and (h) make any compromise or settlement, and take any other action
it deems advisable with respect to the Collateral. Notwithstanding anything
contained herein, in no event shall the Collateral Agent be required to make any
presentment, demand or protest, or give any notice, and the Collateral Agent
need not take any action to preserve any rights against any prior party or any
other Person in connection with the Obligations or with respect to the
Collateral.
81
Executed as of the day and year first above written.
DORAL FINANCIAL CORPORATION
By:
---------------------------------------
Xxxxx X. Xxxxx
Executive Vice President and Treasurer
DORAL MORTGAGE CORPORATION
By:
---------------------------------------
Xxxxx X. Xxxxx
Vice President
82
EXHIBIT H
ADDRESSES FOR NOTICES
Borrowers: Doral Financial Corporation
0000 X.X. Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxxxxx Xxxx 00000
Attn: Xxxxx X. Xxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
Doral Mortgage Corporation
000 Xxxxx Xxxxxx Xxxxxx
Xxx Xxxx, Xxxxxx Xxxx 00000
Attn: Xxxxxx Xxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
Agent and
Collateral Agent: Bankers Trust Company
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Mail Stop 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
Lenders: Bankers Trust Company
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Mail Stop 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. XxXxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
83
EXHIBIT I
MATERIAL LITIGATION
XXXXXXX XXXXXXXX XXXXXX
V.
DORAL MORTGAGE CORPORATION AND XXXXXX XXXXXX
Civil No. KDP94-0216
Superior Court of Puerto Rico, San Xxxx Part
This a tort action filed on or about February 25,
1994. Plaintiff alleges that Xxxxxx Xxxxxx Colon, Vice President of Doral
Mortgage, sexually harassed her. Plaintiff initially claimed a total of
$7,020,000 excluding attorneys' fees, interest and costs. Plaintiff has amended
the complaint to add an additional cause of action which increased her total
claims by $1,000,000.
The case is still pending at the discovery stage. In
the opinion of counsel handling this case the liability, if any, of Doral has
been grossly exaggerated. The Plaintiff has made an offer to settle the case for
$900,000 which has been turned down by Doral. Counsel believes that Doral has
meritorious defenses to such action.
Doral has filed a complaint against its insurance
carrier for insurance coverage.
84
EXHIBIT J
FORM OF CONFIDENTIALITY AGREEMENT
[Letterhead of Participant or Assignee]
[DATE]
Doral Financial Corporation
0000 X.X. Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxxxxx Xxxx 00000
Attention: Xxxxx X. Xxxxx
Doral Mortgage Corporation
000 Xxxxx Xxxxxx Xxxxxx
Xxx Xxxx, Xxxxxx Xxxx 00000
Attention: Xxxxxx Xxxxxxx
Dear Sirs:
In connection with our proposed purchase of a participation in
or assignment of outstanding loans and commitments under the Credit Agreement
(as amended, modified or supplemented from time to time, the "Credit Agreement")
dated as of November 5, 1997 between Doral Financial Corporation, a corporation
organized under the laws of Puerto Rico, and Doral Mortgage Corporation, a
corporation organized under the laws of Puerto Rico (jointly and severally, the
"Borrowers"), the lenders party thereto and Bankers Trust Company, as Agent, we
may acquire from time to time certain information concerning the business of the
Borrowers and their Affiliates which, pursuant to Section 8.16 of the Credit
Agreement, the Borrowers or any Affiliate thereof has marked "confidential"
(collectively, the "Confidential Information"). Capitalized terms used in this
letter without definitions shall have the meanings set forth in the Credit
Agreement.
We hereby agree that we will not disclose Confidential
Information to any Person other than (a) our Affiliates or as otherwise
permitted under Section 8.6 of the Credit Agreement, (b) as is required by law
or by subpoena or similar court order, or by any governmental, regulatory or
supervisory authority or official or as otherwise required to be provided by the
undersigned in the ordinary course of its business; (c) our counsel in
connection with the transactions contemplated by this Agreement and the other
Loan Documents; (d) independent auditors and other advisers retained by the
undersigned; and (e) the Agent or the Collateral Agents as contemplated by this
Agreement and the other Loan Documents. In addition, unless specifically
prohibited by applicable law or court order, the undersigned shall, to the
extent practicable, notify the Borrowers of any subpoena or similar court order
or of any request by any governmental, regulatory or supervising authority or
official (other than any such request in connection with an examination of the
financial condition of the undersigned by such authority) for disclosure of any
such information prior to disclosure of such information so that the Borrowers
may seek an appropriate protective order. Notwithstanding
85
the foregoing, the undersigned shall have no obligation to keep any such
information confidential if such information (i) becomes generally available to
the public other than as a result of the disclosure by the undersigned in
violation of this Agreement, (ii) is available to the undersigned on a
non-confidential basis prior to its disclosure to the undersigned by the
Borrower or, the Lender who [assigned its interest] [sold a participation] to
the undersigned, or (iii) becomes available to the undersigned on a
non-confidential basis from a source other than the Borrower or, the Lender who
[assigned its interest] [sold a participation] to the undersigned; and any
Lender and the undersigned may disclose any such information in connection with
any litigation to which such Lender or the undersigned is party relating to this
Agreement or any of the other Loan Documents.
Very truly yours,
86
EXHIBIT K
PERMITTED SUBORDINATED INDEBTEDNESS
Subordinated indebtedness shall be permitted if:
(a) the subordinated indebtedness and all obligations thereunder
are fully subordinated to the Indebtedness and all Obligations
under the Credit Agreement;
(b) the documents evidencing the subordinated indebtedness (the
"SUBORDINATE DEBT DOCUMENTS") shall include the following
terms and conditions:
(i) No prepayment or amortization of the subordinate debt
(the "SUBORDINATE DEBT") shall be permitted;
(ii) Prior to an Event of Default regularly scheduled
interest payments on the Subordinate Debt shall be
permitted provided such payments would not otherwise
cause an Event of Default under the Loan Documents;
(iii) The Subordinate Debt shall be unsecured;
(iv) The maturity date of the Subordinate Debt (whether
upon the scheduled maturity date or upon acceleration
or otherwise) may not occur earlier than the Maturity
Date; and
(v) The holder of the Subordinate Debt shall be required
to "standstill" when and if the Agent, the Collateral
Agent or the Lenders are enforcing their rights under
the Loan Documents; and
(c) copies of such Subordinate Debt Documents and all amendments,
modifications and supplements thereto shall have been
delivered to the Agent prior to the incurrence of such
Subordinate Debt together with a certification from an
Authorized Officer of each Borrower stating that the attached
documents are true, correct and complete copies of the
Subordinate Debt Documents.
87
EXHIBIT L
FORM OF PLEDGED SERVICING PORTFOLIO REPORT
88
EXHIBIT M
[Reserved]
89
EXHIBIT N
AUTHORIZED OFFICERS
DORAL FINANCIAL CORPORATION
Xxxxxxx Xxxxx
Xxxxx X. Xxxxx
Xxxxx Xxxxx
Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxxxx
DORAL MORTGAGE CORPORATION
Xxxxxxx Xxxxx
Xxxxx Xxxxxxxx
Xxxxxxx Xxxxxx
Xxxxxx Xxxxx
90
EXHIBIT O
FORM OF
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement dated as of November
5, 1997 (as amended, supplemented or otherwise modified from time to time, the
"CREDIT AGREEMENT"), between (i) DORAL FINANCIAL CORPORATION, a Puerto Rico
corporation, and DORAL MORTGAGE CORPORATION, a Puerto Rico corporation, as
Borrowers (collectively, the "BORROWERS"), (ii) the Lenders party thereto from
time to time, and (iii) BANKERS TRUST COMPANY, as Agent (in such capacity, the
"AGENT"). Unless otherwise defined herein, terms defined in the Credit Agreement
and used herein shall have the meanings given to them in the Credit Agreement.
The Assignor identified on Schedule 1 hereto (the "ASSIGNOR")
and the Assignee identified on Schedule 1 hereto (the "ASSIGNEE") agree as
follows:
1. The Assignor hereby irrevocably sells and assigns to the
Assignee without recourse to the Assignor, and the Assignee hereby irrevocably
purchases and assumes from the Assignor without recourse to the Assignor, as of
the Effective Date (as defined below), the interest described in Schedule 1
hereto (the "ASSIGNED INTEREST") in and to the Assignor's rights and obligations
under the Credit Agreement in a principal amount for the Assigned Interest as
set forth on Schedule 1 hereto.
2. The Assignor (a) makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or with
respect to the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Credit Agreement, any other Loan Document or any
other instrument or document furnished pursuant thereto, other than that the
Assignor has not created any adverse claim upon the interest being assigned by
it hereunder and that such interest is free and clear of any such adverse claim;
(b) makes no representation or warranty and assumes no responsibility with
respect to the financial condition of either Borrower, any of their Subsidiaries
or any other obligor or the performance or observance by either Borrower, any of
their Subsidiaries or any other obligor of any of their respective obligations
under the Credit Agreement or any other Loan Document or any other instrument or
document furnished pursuant hereto to thereto; and (c) attaches any Notes held
by it evidencing the Assigned Interest and (i) requests that the Agent, upon
request by the Assignee, exchange the attached Notes for a new Note or Notes
payable to the Assignee and (ii) if the Assignor has retained any interest in
the Assigned Interest requests that the Agent exchange the attached Notes for a
new Note or Notes payable to the Assignor, in each case in amounts which reflect
the assignments being made hereby (and after giving effect to any other
assignments which have become effective on the Effective Date).
3. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (b) confirms that it
has received a copy of the Credit Agreement, together with copies of the
financial statements delivered pursuant to Section 4.4 thereof and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance; (c) agrees
that it will, independently and without reliance upon the Assignor, the Agent or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in
91
taking or not taking action under the Credit Agreement, the other Loan Documents
or any other instrument or document furnished pursuant hereto or thereto; (d)
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers and discretion under the Credit Agreement, the other
Loan Documents or any other instrument or document furnished pursuant hereto or
thereto as are delegated to the Agent by the terms thereof, together with such
powers as are incidental thereto; and (e) agrees that it will be bound by the
provisions of the Credit Agreement and will perform in accordance with its terms
all the obligations which by the terms of the Credit Agreement are required to
be performed by it as a Lender.
4. The effective date of this Assignment and Acceptance shall be
the Effective Date of Assignment described in Schedule 1 hereto ( the "Effective
Date "). Following the execution of this Assignment and Acceptance, it will be
delivered to the Agent for acceptance by it and recording by the Agent effective
as of the Effective Date (which shall not, unless otherwise agreed to by the
Agent, be earlier than five Business Days after the date of such acceptance and
recording by the Agent).
5. Upon such acceptance and recording, from and after the
Effective Date, the Agent shall make all payments in respect of the Assigned
Interest (including payments of principal, interest, fees and other amounts) to
the Assignor for amounts which have accrued to the Effective Date and to the
Assignee for amounts which have accrued subsequent to the Effective Date. The
Assignor and the Assignee shall make all appropriate adjustments in payments by
the Agent for periods prior to the Effective Date or with respect to the making
of this assignment directly between themselves.
6. From and after the Effective Date, (a) the Assignee shall be a
party to the Credit Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Lender thereunder and under the
other Loan Documents and shall be bound by the provisions thereof and (b) the
Assignor shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Credit
Agreement.
7. This Assignment and Acceptance shall be governed by and
construed in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Acceptance to be executed as of the date first above written by
their respective duly authorized officers on Schedule 1 hereto.
92
Schedule 1
----------
to Assignment and Acceptance
----------------------------
Name of Assignor: ____________________________
Name of Assignee: ____________________________
Effective Date of Assignment: ___________________
Principal
Amount Assigned Commitment Percentage Assigned
--------------- ------------------------------
$ _________ ____%
[Name of Assignee] [Name of Assignor]
By:_______________________ By:_______________________
Name:_____________________ Name:_____________________
Title:____________________ Title:____________________
Accepted: Consented To:
BANKERS TRUST COMPANY, as DORAL FINANCIAL CORPORATION [1]
Agent
By:_______________________ By:_______________________
Name:_____________________ Name:_____________________
Title:____________________ Title:____________________
DORAL MORTGAGE CORPORATION
By:_______________________
Name:_____________________
Title:____________________
