<PAGE> 1
As filed with the Securities and Exchange Commission on October 12, 1999
Registration Nos. 333-83877
333-83877-01
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
PRE-EFFECTIVE
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
DORAL FINANCIAL CORPORATION
(Exact name of co-registrant as specified in its charter)
---------------------
<TABLE>
<CAPTION>
COMMONWEALTH OF PUERTO RICO 66-0312162
<S> <C>
(State or other (I.R.S. Employer
jurisdiction of Identification Number)
incorporation or
organization)
</TABLE>
1159 FRANKLIN D. ROOSEVELT AVENUE
SAN JUAN, PUERTO RICO 00920
(787) 749-7100
(Address, including zip code, and telephone number, including area code, of
registrant's principal and executive offices)
---------------------
DORAL PROPERTIES, INC.
(Exact name of co-registrant as specified in its charter)
<TABLE>
<CAPTION>
COMMONWEALTH OF PUERTO RICO 66-0572283
<S> <C>
(State or other (I.R.S. Employer
jurisdiction of Identification Number)
incorporation or
organization)
</TABLE>
1159 FRANKLIN D. ROOSEVELT AVENUE
SAN JUAN, PUERTO RICO 00920
(787) 749-7100
(Address, including zip code, and telephone number, including area code, of
registrant's principal and executive offices)
---------------------
SALOMON LEVIS, CHIEF EXECUTIVE OFFICER
DORAL FINANCIAL CORPORATION
1159 FRANKLIN D. ROOSEVELT AVENUE
SAN JUAN, PUERTO RICO 00920
(787) 749-7100
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------------
COPIES TO:
<TABLE>
<S> <C> <C>
IGNACIO ALVAREZ, ESQ. JULIO L. AGUIRRE, ESQ. JULIO PIETRANTONI, ESQ.
EDUARDO J. ARIAS, ESQ. FIDDLER GONZALEZ & RODRIGUEZ, LLP O'NEILL & BORGES
PIETRANTONI MENDEZ & ALVAREZ LLP EIGHTH FLOOR AMERICAN INTERNATIONAL PLAZA, 8TH FLOOR
SUITE 1901, BANCO POPULAR CENTER 254 MUNOZ RIVERA AVENUE 250 MUNOZ RIVERA AVENUE
209 MUNOZ RIVERA AVENUE SAN JUAN, PUERTO RICO 00918 SAN JUAN, PUERTO RICO 00918
SAN JUAN, PUERTO RICO 00918 (787) 759-3181 (787) 282-5752
(787) 274-1212
</TABLE>
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, other than securities offered only in connection with dividend
or interest reinvestment plans, please check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
- ------------------------
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
- ------------------------
If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act, please check the following box. [ ]
THE CO-REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE CO-REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
THE INFORMATION IN THIS OFFICIAL STATEMENT AND PROSPECTUS IS NOT COMPLETE AND
MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
OFFICIAL STATEMENT AND PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND
IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER
OR SALE IS NOT PERMITTED.
PRELIMINARY OFFICIAL STATEMENT AND PROSPECTUS DATED OCTOBER 12, 1999
SUBJECT TO COMPLETION AND AMENDMENT
$44,425,000*
PUERTO RICO INDUSTRIAL, TOURIST, EDUCATIONAL, MEDICAL
AND ENVIRONMENTAL CONTROL FACILITIES FINANCING AUTHORITY (AFICA)
INDUSTRIAL REVENUE BONDS, 1999 SERIES A
(DORAL FINANCIAL CENTER PROJECT)
The bonds have the following characteristics:
- AFICA will issue the bonds and lend the proceeds to Doral Properties,
Inc., a wholly-owned subsidiary of
(Doral Financial Corporation Logo)
- The bonds do not constitute a debt of the Government of Puerto Rico.
AFICA is required to pay the bonds solely out of loan repayments by
Doral Properties or Doral Financial.
- Doral Financial is unconditionally guaranteeing the loan repayments by
Doral Properties, which include all payments on the bonds.
- Interest on the bonds will accrue from their date of issuance and will
be payable monthly on the first day of each month, commencing on
, 1999.
- The bonds are subject to mandatory and optional redemption as
described in this official statement and prospectus.
- The bonds are secured by a mortgage on the project.
Under most circumstances, interest on the bonds will be exempt from Puerto
Rico and United States taxes to residents of Puerto Rico. See "Taxation"
beginning on page 33 of this official statement and prospectus.
Neither Doral Properties nor AFICA intend to apply for listing of the bonds
on a securities exchange. There will likely be no secondary public market for
the bonds.
INVESTING IN THESE SECURITIES INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING
ON PAGE 5 OF THIS OFFICIAL STATEMENT AND PROSPECTUS.
<TABLE>
<CAPTION>
Proceeds,
Public Offering Underwriting before expenses,
Price Discount to Doral Properties
--------------- ------------ -------------------
<S> <C> <C> <C>
Per bond................................ * % %
Total................................... $ $ $
</TABLE>
- ---------------
* The offering prices of the bonds together with their maturities and interest
rates are shown on the inside cover page hereof.
THESE SECURITIES ARE NOT SAVINGS ACCOUNTS OR DEPOSITS AND ARE NOT INSURED
BY THE FDIC OR ANY OTHER GOVERNMENT AGENCY.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS OFFICIAL STATEMENT AND PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
POPULAR SECURITIES PAINEWEBBER INCORPORATED OF PUERTO RICO
DORAL SECURITIES MERRILL LYNCH & CO.
MORGAN STANLEY DEAN WITTER SALOMON SMITH BARNEY INC.
, 1999
- ---------------
*Preliminary, subject to change.
<PAGE> 3
$44,425,000*
PUERTO RICO INDUSTRIAL, TOURIST, EDUCATIONAL, MEDICAL
AND ENVIRONMENTAL CONTROL FACILITIES FINANCING AUTHORITY
INDUSTRIAL REVENUE BONDS, 1999 SERIES A
(DORAL FINANCIAL CENTER PROJECT)
$5,390,000 SERIAL BONDS
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE PRICE
- --------- -------- ---------------- -----
<S> <C> <C> <C>
$ June 1, 2003
December 1, 2003
June 1, 2004
December 1, 2004
June 1, 2005
December 1, 2005
June 1, 2006
December 1, 2006
June 1, 2007
December 1, 2007
June 1, 2008
December 1, 2008
June 1, 2009
December 1, 2009
</TABLE>
$13,350,000 % Term Bonds due December 1, 2019 -- Price -- %
$25,685,000 % Term Bonds due December 1, 2029 -- Price -- %
- ---------------
* Preliminary, subject to change.
<PAGE> 4
(Doral Financial Corporation Logo)
<PAGE> 5
SUMMARY
This summary highlights information contained elsewhere in this official
statement and prospectus. You should read the entire official statement and
prospectus, including the information incorporated by reference into this
official statement and prospectus, and the "Risk Factors" section beginning on
page 5.
DORAL PROPERTIES AND DORAL FINANCIAL
Doral Properties is a wholly-owned subsidiary of Doral Financial. Doral
Properties was organized to own, develop and operate the Doral Financial Center,
which will be the new headquarters of Doral Financial.
Doral Financial is the leading mortgage banking institution in Puerto Rico
based on the volume of origination of first mortgage loans secured by single
family residences and the size of its mortgage servicing portfolio. Doral
Financial's loan production amounted to $2.3 billion and $1.5 billion for the
year ended December 31, 1998 and the six months ended June 30, 1999,
respectively. Doral Financial had a mortgage servicing portfolio of $7.0 billion
as of June 30, 1999.
Doral Financial is also engaged in the commercial banking and securities
business. As of June 30, 1999, Doral Financial had total banking assets of $1.2
billion and deposits of $760.1 million.
Doral Financial is a bank holding company subject to regulation and
supervision by the Federal Reserve Board. Unlike many bank holding companies,
Doral Financial has significant operations at the holding company level. As of
June 30, 1999, Doral Financial had assets of $1.7 billion at the holding company
level.
Doral Financial's principal executive offices are located at 1159 Franklin
D. Roosevelt Avenue, San Juan, Puerto Rico, and its telephone number is (787)
749-7100.
THE OFFERING
Issuer..................... AFICA, a Puerto Rico government instrumentality.
Bonds are limited
obligations of AFICA....... AFICA is required to pay the bonds solely out of
payments of principal and interest made by Doral
Properties or Doral Financial to AFICA under a loan
and guaranty agreement. AFICA acts as a
pass-through entity so that under most
circumstances, interest on the bonds will be tax
free to Puerto Rico residents. The bonds do not
constitute an indebtedness of the Government of
Puerto Rico or of any of its political
subdivisions.
Use of proceeds............ AFICA will lend the bond proceeds to Doral
Properties, a wholly-owned subsidiary of Doral
Financial. Doral Properties will use the loan
proceeds to finance in part the construction and
equipping of Doral Financial's new headquarters
building and related facilities, to be known as the
Doral Financial Center (the "Center").
Guarantor.................. Doral Financial is unconditionally guaranteeing the
payments by Doral Properties under the loan and
guaranty agreement.
Mortgage on Center......... Payment of the bonds will be secured by a mortgage
on the Center.
Interest on the bonds...... Interest on the bonds will be paid to you monthly
on the first day of each month, commencing on
, 1999. Additionally, interest
will be paid to you at maturity or redemption.
Interest will be computed using a 360-day year of
twelve 30-day months. Interest will accrue from the
date of issuance of the bonds.
1
<PAGE> 6
Book-entry system.......... The bonds will be registered in the name of The
Depository Trust Company's (DTC) nominee under
DTC's book-entry only system. This means that you
will not receive a certificate for any bonds you
purchase.
Mandatory redemption of
bonds...................... A portion of the term bonds will be periodically
redeemed as part of the amortization requirements
of the bonds. For a schedule of term bond
amortizations, see "The Bonds -- Mandatory
Redemption." All of the bonds will be redeemed if
(1) Doral Properties fails to comply with certain
tax covenants and as a result the interest on the
bonds becomes subject to federal taxation for
Puerto Rico residents or (2) if the Center is not
operated in accordance with AFICA's enabling law.
In addition, a portion of the bonds may be redeemed
from unused bond proceeds, if any.
Some or all of the bonds may be required to be
redeemed if all or part of the Center is
expropriated or damaged.
Optional redemption of
bonds...................... Doral Properties has the right to redeem all or a
portion of the bonds on and after
, at the following prices,
expressed as a percentage of the outstanding
principal of the bonds, plus interest to the
redemption date:
<TABLE>
<CAPTION>
REDEMPTION PERIOD PRICE
----------------- -----
<S> <C>
, to , ....................... %
, to , ....................... %
, and thereafter......................... %
</TABLE>
Also, Doral Properties has the right to redeem some
or all of the bonds, without premium, if the Center
is damaged or expropriated by the government or if,
as a result of changes in law, Doral Properties'
operation of the Center or its obligations under
the loan and guaranty agreement are adversely
impacted.
Trustee.................... The bonds will be issued pursuant to a trust
agreement between AFICA and Citibank, N.A., as
trustee.
Ratings.................... Moody's: Baa3
Standard & Poor's: BBB-
Duff & Phelps: BBB
TAX CONSEQUENCES
Provided Doral Properties complies with the source of income covenants in
the loan and guaranty agreement, it is the opinion of Fiddler Gonzalez &
Rodriguez, LLP, bond counsel, that the bonds and the interest on the bonds are
exempt from or not subject to:
(1) Puerto Rico income taxes and municipal property and license taxes,
(2) under certain circumstances, Puerto Rico gift and estate taxes, and
(3) United States income tax when received by:
(a) individuals who are bona fide residents of Puerto Rico during the
entire taxable year in which such interest is received, or
(b) foreign corporations, including Puerto Rico corporations, and the
interest is not effectively connected with the conduct of a trade
or business in the United States by the corporation, the
corporation is not a foreign personal holding company, a
controlled foreign corporation or a passive foreign investment
company under the U.S. internal revenue code, and the corporation
is not treated as a domestic corporation for the purposes of the
U.S. internal revenue code.
2
<PAGE> 7
SUMMARY FINANCIAL AND OPERATING DATA
You should read the summary financial information presented below together
with Doral Financial's consolidated financial statements and notes which are
incorporated by reference into this official statement and prospectus and with
the historical financial information of Doral Financial included under "Selected
Financial Data" beginning on page 12 of this official statement and prospectus.
Net income for 1994 includes the cumulative effect of a change in the
method of accounting for unrealized gains and losses on trading securities. When
Doral Financial adopted this new accounting pronouncement referred to as SFAS
115 in 1994, it classified approximately $132 million of mortgage-backed
securities as trading securities and recognized a net unrealized gain of $1.2
million.
Net income for the year ended December 31, 1997 reflects a non-cash
extraordinary charge to earnings of $12.3 million. The charge resulted from the
issuance by Doral Financial to Popular, Inc., a bank holding company
headquartered in San Juan, Puerto Rico, of shares of convertible preferred stock
in exchange for the cancellation of $8.5 million of Doral Financial's
subordinated convertible debentures owned by Popular, Inc. The charge was equal
to the excess of the fair value of the preferred stock on the date of the
exchange over the net carrying amount of the debentures on Doral Financial's
financial statements. For the year ended December 31, 1997, the return on
average assets ratio computed on income before this extraordinary item would
have been 2.19% and the return on average common equity ratio would have been
19.29%.
The return on average assets ratio is computed by dividing net income by
average total assets for the period. The return on average common equity ratio
is computed by dividing net income by average common stockholders' equity for
the period. Both ratios have been computed using month end averages. These
ratios for the six month periods ended June 30, 1999 and 1998 have been
presented on an annualized basis.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
----------------------- --------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net income.............. $ 32,939 $ 24,101 $ 52,832 $ 20,231 $ 27,041 $ 19,560 $ 17,430
Cash dividends paid..... $ 7,844 $ 4,786 $ 9,975 $ 7,199 $ 6,008 $ 4,374 $ 3,943
BALANCE SHEET DATA:
Total assets............ $3,279,870 $2,497,356 $2,918,113 $1,857,789 $1,106,083 $ 917,922 $ 768,019
Stockholders' equity.... $ 360,562 $ 246,233 $ 269,559 $ 186,955 $ 150,531 $ 129,017 $ 90,496
OPERATING DATA:
Mortgage loans
originated and
purchased............. $1,453,000 $ 931,000 $2,313,000 $1,037,000 $ 817,000 $ 636,000 $ 824,000
Loan servicing
portfolio............. $7,012,000 $5,140,000 $6,186,000 $4,655,000 $3,068,000 $2,668,000 $2,644,000
SELECTED RATIOS:
Return on average
assets................ 2.14% 2.21% 2.17% 1.37% 2.68% 2.32% 2.78%
Return on average common
equity................ 22.10% 22.25% 21.65% 11.99% 19.35% 17.82% 20.82%
</TABLE>
3
<PAGE> 8
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges is a measure of Doral Financial's
ability to generate sufficient earnings to pay the fixed charges or expenses of
its debt. The ratios of earnings to fixed charges were computed by dividing
earnings by fixed charges. For purposes of computing the ratio, earnings consist
of pretax income from continuing operations plus fixed charges and amortization
of capitalized interest, less interest capitalized. Fixed charges consist of
interest expensed and capitalized, amortization of debt issuance costs, and
Doral Financial's estimate of the interest component of rental expense. The
ratio is presented both including and excluding interest on deposits.
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED -------------------------------------
JUNE 30, 1999 1998 1997 1996 1995 1994
------------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges
Including Interest on Deposits................ 1.57x 1.51x 1.61x 1.66x 1.50x 1.78x
Excluding Interest on Deposits................ 1.73x 1.61x 1.72x 1.75x 1.54x 1.82x
</TABLE>
4
<PAGE> 9
RISK FACTORS
You should carefully consider the following factors and other information
in this official statement and prospectus, including the information
incorporated by reference in this official statement and prospectus, before
deciding to invest in the bonds.
HOLDING COMPANY STRUCTURE MAY RESULT IN ADVANTAGE TO CREDITORS OF DORAL
FINANCIAL'S SUBSIDIARIES OVER BONDHOLDERS AND OTHER CREDITORS OF DORAL FINANCIAL
Although Doral Financial has operations and assets at the parent company
level, a significant portion of its assets is in its subsidiaries. The claims of
creditors and preferred stockholders of Doral Financial's subsidiaries will have
a priority over Doral Financial's equity rights in such subsidiaries and the
rights of Doral Financial's creditors. This means that if any of Doral
Financial's subsidiaries were liquidated, the creditors of the subsidiary would
have the right to get paid before any of the creditors of Doral Financial,
including bondholders.
ABSENCE OF SECONDARY MARKET FOR THE BONDS
There is currently no secondary market for the bonds, and there can be no
assurance that a secondary market will be developed, or if it does develop, that
it will provide bondholders with liquidity for their investment or that it will
continue for the life of the bonds.
DORAL FINANCIAL IS NOT RESTRICTED FROM INCURRING ADDITIONAL BORROWINGS OR TAKING
OTHER ACTIONS THAT COULD IMPAIR ITS ABILITY TO PAY THE BONDS
The loan and guaranty agreement between AFICA, Doral Properties and Doral
Financial does not restrict Doral Financial from borrowing additional money,
making capital expenditures, making acquisitions, transferring or creating liens
over its assets, paying dividends or engaging in transactions with affiliates,
among others. Doral Financial could take any of these actions in a way that
could affect its ability to repay the bonds or result in a downgrade of the
rating of the bonds.
REDEMPTION MAY ADVERSELY AFFECT YOUR RETURN ON THE BONDS
Doral Financial may choose to, in the case of optional redemption, or must,
in the case of mandatory redemption, redeem some or all of the bonds at times
when prevailing interest rates may be relatively low. If this happens, you
generally will not be able to reinvest the redemption proceeds in a comparable
security at an effective interest rate as high as that of the bonds.
DORAL FINANCIAL'S CREDIT RATINGS MAY NOT REFLECT ALL RISKS OF AN INVESTMENT IN
THE BONDS
Doral Financial's credit ratings are an assessment of its ability to pay
its obligations. Consequently, real or anticipated changes in Doral Financial's
credit ratings will generally affect the market value of your bonds. Doral
Financial's credit ratings, however, may not reflect the potential impact of all
risks related to market or other factors discussed above on the value of your
bonds.
FLUCTUATIONS IN INTEREST RATES MAY HURT DORAL FINANCIAL'S BUSINESS
Interest rate fluctuations are the primary market risk affecting Doral
Financial. Changes in interest rates affect the following areas of its business:
- the number of mortgage loans originated and purchased;
- the interest income earned on loans and securities;
- gain on sale of loans;
- the value of securities holdings; and
- the value of its servicing asset.
5
<PAGE> 10
Increases in Interest Rates Reduce Demand for Mortgage Loans. Higher
interest rates increase the cost of mortgage loans to consumers and reduce
demand for mortgage loans, which hurts Doral Financial's profits. Reduced demand
for mortgage loans results in reduced loan originations by Doral Financial and
lower mortgage origination income. Demand for refinance loans is particularly
sensitive to increases in interest rates. Doral Financial has for many years
relied on refinance loans for a significant portion of its mortgage loan
production. For the six months ended June 30, 1999, refinance loans represented
approximately 58% of Doral Financial's total dollar volume of loans originated
(excluding loans purchased from third parties).
Increases in Interest Rates Reduce Net Interest Income. Increases in
short-term interest rates reduce net interest income, which is an important part
of Doral Financial's earnings. Net interest income is the difference between the
interest received by Doral Financial on its assets and the interest paid on its
borrowings. Most of Doral Financial's assets, like its mortgage loans and
mortgage-backed securities, are long-term assets with fixed interest rates. In
contrast, most of Doral Financial's borrowings are short-term. When interest
rates rise, Doral Financial must pay more in interest while interest earned on
its assets does not rise as quickly. This causes profits to decrease.
Increases in Interest Rates May Reduce or Eliminate Gain on Sale of
Mortgage Loans. If long-term interest rates increase between the time Doral
Financial commits to or establishes an interest rate on a mortgage loan and the
time it sells the loan, Doral Financial may realize a reduced gain or a loss on
such sale.
Increases in Interest Rates May Reduce the Value of Mortgage Loans and
Securities' Holdings. Increases in interest rates may reduce the value of Doral
Financial's financial assets and have an adverse impact on its earnings and
financial condition. Doral Financial owns a substantial portfolio of mortgage
loans, mortgage-backed securities and other debt securities with fixed interest
rates. The market value of an obligation with a fixed interest rate generally
decreases when prevailing interest rates rise.
Decreases in Interest Rates May Adversely Affect Value of Servicing
Asset. Decreases in interest rates lead to increases in the prepayment of
mortgages by borrowers, which may reduce the value of Doral Financial's
servicing asset. The servicing asset is the estimated present value of the fees
Doral Financial expects to receive on the mortgages it services over their
expected term. Doral Financial assigns this value based on what other persons
have paid for similar servicing rights in recent transactions. If prepayments
increase above expected levels, the value of the servicing asset decreases
because the amount of future fees expected to be received by Doral Financial
decreases. Doral Financial may be required to recognize this decrease in value
by taking a charge against its earnings, which causes its profits to decrease.
DORAL FINANCIAL MAY SUFFER LOSSES FROM MORTGAGE LOANS IT SELLS BUT AS TO WHICH
IT RETAINS THE CREDIT RISK
Doral Financial often retains all or part of the credit risk on sales of
mortgage loans that do not qualify for the guarantee programs of GNMA, FNMA or
FHLMC and may suffer losses on these loans. Doral Financial suffers losses on
these arrangements when foreclosure sale proceeds of the property underlying a
defaulted mortgage loan are less than the outstanding principal balance of these
loans and the cost of holding and disposing of the related property. As of June
30, 1999, Doral Financial's maximum obligation on mortgage loans it had sold but
retained all or part of the credit risk was $640.7 million.
INCREASE IN DORAL FINANCIAL'S ORIGINATIONS OF COMMERCIAL LOANS HAS INCREASED ITS
CREDIT RISKS
Doral Financial's recent increase in originations of mortgage loans secured
by income producing residential buildings and commercial properties has
increased its credit risks. These loans involve greater credit risks than
residential mortgage loans because they are larger in size and more risk is
concentrated in a single borrower. The properties securing these loans are also
harder to dispose of in foreclosure. For the six month period ended June 30,
1999, Doral Financial originated approximately $109.6 million in mortgage loans
secured by income producing residential buildings and commercial properties.
6
<PAGE> 11
DORAL FINANCIAL IS EXPOSED TO GREATER RISK BECAUSE ITS BUSINESS IS CONCENTRATED
IN PUERTO RICO
Because most of Doral Financial's mortgage loans are secured by properties
located in Puerto Rico, Doral Financial is exposed to a greater risk of
delinquency or default on these mortgage loans resulting from adverse economic,
political or business developments and natural hazard risks that affect Puerto
Rico, including hurricanes and earthquakes. If Puerto Rico's real estate market
experiences an overall decline in property values, the rates of delinquency,
foreclosure, bankruptcy and loss on the mortgage loans would probably increase
substantially. This would cause Doral Financial's profitability to decrease.
DORAL FINANCIAL'S BUSINESS WOULD BE DISRUPTED IF ITS COMPUTER SYSTEMS CANNOT
WORK PROPERLY WITH YEAR 2000 DATA
Doral Financial could experience a significant disruption to its business
operations that could have an adverse effect on its profitability if its
computer systems and the computer systems provided by third party vendors on
which it relies are not able to properly perform data calculations in the year
2000. Doral Financial has taken steps that it believes are adequate to make sure
this does not happen. However, Doral Financial cannot assure you that these
efforts will be completely successful. Problems suffered by providers of basic
services, such as telephone, water, sewer and electricity could also have an
adverse impact on Doral Financial's daily operations. Doral Financial has
revised its existing business interruption contingency plans to address any
interruptions of these basic services.
ENFORCEMENT OF REMEDIES UNDER MORTGAGE
If Doral Financial or Doral Properties fail to comply with their
obligations under the loan and guaranty agreement, the trustee may proceed to
enforce any remedies under the trust agreement, the loan and guaranty agreement
and the mortgage. The enforcement of such remedies may be limited or restricted
by laws relating to bankruptcy and rights of creditors generally and by
application of general principles of equity applicable to the availability of
certain remedies and may be substantially delayed and subject to judicial
discretion in the event of litigation or statutory remedy procedures.
Any foreclosure and other proceedings are dependent, in many respects, upon
judicial action which is subject to discretion or delay. Under existing law and
judicial decisions, including specifically the United States Bankruptcy Code,
the remedies specified by the mortgage may not be readily available or may be
limited. In addition, no assurances can be given that the proceeds of any such
sale of the Center would be sufficient to pay the principal of, premium, if any,
and interest on the bonds at such time due.
FORWARD-LOOKING STATEMENTS
This official statement and prospectus, including information incorporated
in this official statement and prospectus by reference, contains certain
"forward-looking statements" concerning Doral Financial's operations,
performance and financial condition, including its future economic performance,
plans and objectives and the likelihood of success in developing and expanding
its business. These statements are based upon a number of assumptions and
estimates which are subject to significant uncertainties, many of which are
beyond the control of Doral Financial. The words "may," "would," "could,"
"will," "expect," "anticipate," "believe," "intend," "plan," "estimate" and
similar expressions are meant to identify these forward-looking statements.
Actual results may differ materially from those expressed or implied by these
forward-looking statements.
RECENT DEVELOPMENTS
On October 7, 1999, Doral Financial released its unaudited earnings for the
quarter and nine months ended September 30, 1999. Doral Financial reported net
income of $17.3 million or $0.38 per diluted share for the third quarter of
1999, compared to net income of $13.9 million or $0.33 per diluted share for the
third quarter of 1998.
7
<PAGE> 12
For the nine months ended September 30, 1999, Doral Financial reported net
income of $50.2 million or $1.11 per diluted share, compared to net income of
$38.0 million or $0.91 per diluted share for the first nine months of 1998.
Doral Financial's mortgage loan origination and purchases were $601 million
for the quarter ended September 30, 1999 and $2.1 billion for the nine months
ended September 30, 1999, compared to $567 million for the quarter ended
September 30, 1998 and $1.5 billion for the nine months ended September 30,
1998. Doral Financial's servicing portfolio totaled $7.3 billion as of September
30, 1999.
DORAL PROPERTIES
Doral Properties is a wholly-owned subsidiary of Doral Financial organized
on July 21, 1999, under the laws of the Commonwealth of Puerto Rico. It has not
had any operations prior to the date of this offering. Doral Properties was
organized for the purpose of owning, developing and operating the Doral
Financial Center.
DORAL FINANCIAL
Doral Financial Corporation is a bank holding company organized under the
laws of the Commonwealth of Puerto Rico. Its main lines of business are
described below.
- Mortgage banking -- Doral Financial is the leading mortgage banking
institution in Puerto Rico based on the volume of origination of first
mortgage loans secured by single family residences and the size of its
mortgage servicing portfolio. Doral Financial conducts this business in
Puerto Rico primarily through a division of Doral Financial, HF Mortgage
Bankers, and its subsidiaries, Doral Mortgage Corporation, Centro
Hipotecario, Inc. and Sana Investment Mortgage Bankers, Inc. Doral
Financial also conducts mortgage banking activities in the mainland
United States through Doral Mortgage and Doral Money, Inc.
- Commercial Banking -- Doral Financial conducts this business in Puerto
Rico through its subsidiary, Doral Bank. Doral Financial is in the
process of opening a new federal savings bank subsidiary in the New York
City metropolitan area under the name Doral Bank, FSB which it expects
will commence operations during October 1999.
- Securities services -- Doral Financial conducts this business in Puerto
Rico through its broker-dealer subsidiary, Doral Securities, Inc.
Because Doral Financial is a holding company, the claims of creditors and
any preferred stockholders of Doral Financial's subsidiaries will have a
priority over Doral Financial's equity rights and the rights of Doral
Financial's creditors, including the holders of the bonds, and preferred
stockholders to participate in the assets of the subsidiary upon the
subsidiary's liquidation.
Doral Financial's subsidiaries that operate in the banking and securities
business can only pay dividends if they are in compliance with the applicable
regulatory requirements of federal and state bank regulatory authorities and
securities regulators. Doral Financial must also maintain the required capital
levels of a bank holding company before it may pay dividends on its stock.
There are various statutory and regulatory limitations on the extent to
which Doral Bank or any other banking subsidiary (including a federal savings
association) can finance or otherwise transfer funds to Doral Financial or its
nonbanking subsidiaries, either in the form of loans, extensions of credit,
investments or asset purchases.
- Such transfers by Doral Bank or any other banking subsidiary to Doral
Financial or any nonbanking subsidiary are limited to 10% of the banking
subsidiary's capital and surplus, and with respect to Doral Financial and
all such nonbanking subsidiaries, to an aggregate of 20% of the banking
subsidiary's capital and surplus.
8
<PAGE> 13
- Furthermore, loans and extensions of credit are required to be secured in
specified amounts and are required to be on terms and conditions
consistent with safe and sound banking practices.
In addition, there are regulatory limitations on the payment of dividends
directly or indirectly to Doral Financial by its subsidiaries. Federal and
Puerto Rico authorities also have the right to further limit Doral Bank's
payment of dividends.
Under the policy of the Board of Governors of the Federal Reserve System, a
bank holding company is required to act as a source of strength to its
subsidiary banks and to commit resources to support such banks. As a result of
that policy, Doral Financial may be required to commit resources to Doral Bank,
Doral Bank, FSB or any other banking subsidiary created in the future in
circumstances in which it might not do so absent such policy. Further, federal
bankruptcy law provides that in the event of the bankruptcy of Doral Financial,
any commitment by Doral Financial to regulators to maintain the capital of a
banking subsidiary will be assumed by the bankruptcy trustee and entitled to
priority of payment. Doral Financial has committed with the FDIC to maintain
Doral Bank FSB's ratio of tier 1 capital to total assets at a level of not less
than 8% throughout its first three years of operations.
USE OF PROCEEDS
The bonds will be issued to finance, in part, (1) the development,
construction and equipping of a new nine-floor, 193,709 square feet commercial
office building with an adjacent five and a half floor parking structure and (2)
the purchase and refurbishing of two existing buildings with approximately
27,305 square feet of space to be used for administrative and support services,
including data storage and processing services for Doral Financial and its
subsidiaries. The office building will be located on an approximately 7,426
square meters site in the Puerto Nuevo ward of the municipality of San Juan,
Puerto Rico, in the commercial sector of Franking D. Roosevelt Avenue. The other
two buildings are located on adjacent parcels of property aggregating
approximately 3,143 square meters. The office building, parking facility and the
other two buildings are collectively referred to as the Center.
Approximately $2.1 million of the proceeds will be used to repay the
balance of a loan used to finance the purchase of the real property on which the
office building is being constructed. This loan bears interest at a fixed rate
per annum of 7.38% and had an original maturity date in December 1997 that has
been extended on several occasions and currently matures on October 20, 1999.
The entire Center will be leased by Doral Properties to Doral Financial.
Doral Financial and its subsidiaries Doral Bank, Doral Mortgage and Doral
Securities intend to relocate their principal offices to the Center and will
initially occupy approximately 85 to 90% of the Center. The remaining space will
be available for rent. At present, the available rent space is expected to be
offered principally to entities who provide legal, consulting and other
professional services to Doral Financial. Construction and equipping of the
Center is expected to be substantially complete by the fourth quarter of 2001.
9
<PAGE> 14
Set forth below are the estimated sources and uses of the proceeds of the
bonds.
<TABLE>
<S> <C>
SOURCES OF FUNDS
Gross AFICA bond proceeds................................... $
Cash contribution by Doral Properties (1)...................
-----------
Total Sources..................................... $
===========
USES OF FUNDS
Repayment of land loan...................................... $
Construction fund...........................................
Capitalized interest fund (2)...............................
Costs of issuance...........................................
Underwriter's discount......................................
AFICA fee...................................................
-----------
Total Uses........................................ $
===========
</TABLE>
- ---------------
(1) Represents costs of issuance in excess of those financed with the bonds.
(2) Represents interest on bonds during the construction of the Center.
10
<PAGE> 15
CAPITALIZATION
The following table shows the unaudited indebtedness and capitalization of
Doral Financial at June 30, 1999, on an actual basis and as adjusted to give
effect to the issuance of the bonds, and the issuance on July 8, 1999 of $200
million of Doral Financial's 8.5% Medium Term Senior Notes due July 8, 2004 and
the issuance of $29 million of Senior Notes due in varying amounts from August
31, 2004 through August 31, 2007, and the application of the proceeds thereof.
In addition to the indebtedness reflected below, Doral Financial had deposits of
$760.1 million as of June 30, 1999. This table should be read together with
Doral Financial's Consolidated Financial Statements and related notes
incorporated by reference into this official statement and prospectus.
<TABLE>
<CAPTION>
ACTUAL AS ADJUSTED
---------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Short-term borrowings
Loans payable............................................. $ 331,537 $ 311,537
Short-term portion of notes payable....................... 77,683 39,683
Short-term portion of securities sold under agreements to
repurchase............................................. 1,150,484 1,150,484
---------- ----------
Total short-term borrowings....................... $1,559,704 $1,501,704
========== ==========
Long-term borrowings
Long-term portion of notes payable........................ $ 54,423 $ 54,423
Long-term portion of securities sold under agreements to
repurchase............................................. 144,557 144,557
Advances from the Federal Home Loan Bank.................. 55,500 55,500
Senior Notes due 2006..................................... 75,000 75,000
Medium Term Senior Notes due 2004......................... -- 200,000
Senior Notes due 2004 through 2007........................ -- 29,000
AFICA bonds............................................... -- 45,425
---------- ----------
Total Long-term Borrowings........................ $ 329,480 $ 603,905
========== ==========
Stockholders' Equity
Serial preferred stock, $1 par value, 10,000,000 shares
authorized; 8,460 shares of 8% Convertible Cumulative
Preferred Stock issued and outstanding and 1,495,000
shares of 7% Noncumulative Monthly Income Preferred
Stock, Series A issued and outstanding................. $ 1,503 $ 1,503
Common Stock, $1.00 par value, 200,000,000 shares
authorized; 40,484,920 shares issued and 40,428,920
outstanding(1)......................................... 40,485 40,485
Paid-in capital........................................... 140,822 140,822
Legal Surplus............................................. 2,499 2,499
Retained earnings......................................... 181,410 181,410
Accumulated other comprehensive income, net of taxes(2)... (6,101) (6,101)
Treasury Stock at par value, 56,000 shares held........... (56) (56)
---------- ----------
Total stockholders' equity........................ $ 360,562 $ 360,562
========== ==========
</TABLE>
- ---------------
(1) Does not include up to 1,933,714 shares of Common Stock issuable upon
conversion of outstanding shares of 8% Convertible Cumulative Preferred
Stock or 435,600 shares of Common Stock subject to stock options.
(2) Consists of unrealized losses on securities available for sale, net of
deferred tax.
11
<PAGE> 16
SELECTED FINANCIAL DATA
The following table shows certain selected consolidated financial and
operating data of Doral Financial on a historical basis as of and for the
six-month periods ended June 30, 1999 and 1998, and for each of the five years
in the period ended December 31, 1998. This information should be read together
with Doral Financial's Consolidated Financial Statements and the related notes
incorporated by reference in this official statement and prospectus. Financial
information for the six-month periods ended June 30, 1999 and 1998 is derived
from unaudited financial statements, which, in the opinion of management,
include all adjustments necessary for a fair presentation of the results for
those periods. These adjustments consist only of normal recurring accruals.
Results for the six-month period ended June 30, 1999, are not necessarily
indicative of results for the full year. Doral Financial has made certain
reclassifications to data for years prior to 1998 to conform to 1998
classifications.
Net income for 1994 includes the cumulative effect of a change in the
method of accounting for unrealized gains and losses on trading securities. When
Doral Financial adopted this new accounting pronouncement referred to as SFAS
115 in 1994, it classified approximately $132 million of mortgage-backed
securities as trading securities and recognized a net unrealized gain of $1.2
million.
Net income for the year ended December 31, 1997, reflects a non-cash
extraordinary charge to earnings of $12.3 million resulting from the issuance to
Popular, Inc., of shares of convertible preferred stock in exchange for the
cancellation of $8.5 million of Doral Financial's subordinated debentures owned
by Popular, Inc. The charge represented the excess of the fair value of the
preferred stock on the date of the exchange over the net carrying amount of the
debentures on Doral Financial's financial statements. The return on average
assets computed on income before this extraordinary item for the year ended
December 31, 1997, would have been 2.19% and the return on average common equity
would have been 19.29%.
The return on average assets ratio is computed by dividing net income by
average assets for the period. The return on average common equity ratio is
computed by dividing net income by average common stockholders' equity for the
period. The average common equity to average assets ratio is computed by
dividing average common stockholders' equity by average assets for the period.
All ratios have been computed using month end averages. The return on average
assets and average common equity ratios for the six-month periods ended June 30,
1999 and 1998, have been presented on an annualized basis. All per share
information shown in the table has been adjusted to reflect two-for-one stock
splits effected on August 28, 1997 and May 20, 1998.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
------------------------- --------------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED INCOME
STATEMENT DATA:
Interest income....... $ 87,631 $ 66,006 $ 148,051 $ 90,131 $ 66,987 $ 61,907 $ 46,508
Interest expense...... 65,788 49,443 114,786 61,438 46,443 43,380 23,252
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net interest income... 21,843 16,563 33,265 28,693 20,544 18,527 23,256
Provision for loan
losses.............. 753 311 883 792 797 352 300
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net interest income
after provision for
loan losses......... 21,090 16,252 32,382 27,901 19,747 18,175 22,956
Non-interest income... 61,286 36,239 88,340 45,286 40,846 29,930 25,535
Non-interest
expense............. 44,446 24,804 60,883 35,390 29,314 26,045 29,746
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income before taxes,
cumulative effect
and extraordinary
item................ 37,930 27,687 59,839 37,797 31,279 22,060 18,745
Income taxes.......... 4,991 3,586 7,007 5,249 4,238 2,500 2,530
----------- ----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
12
<PAGE> 17
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
------------------------- --------------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Income before
cumulative effect
and extraordinary
item................ 32,939 24,101 52,832 32,548 27,041 19,560 16,215
Cumulative effect of
change in accounting
principle........... -- -- -- -- -- -- 1,215
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income before
extraordinary
item................ 32,939 24,101 52,832 32,548 27,041 19,560 17,430
Extraordinary item --
non-cash loss on
extinguishment of
debt................ -- -- -- 12,317 -- -- --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income.... $ 32,939 $ 24,101 $ 52,832 $ 20,231 $ 27,041 $ 19,560 $ 17,430
=========== =========== =========== =========== =========== =========== ===========
Cash dividends
paid........ $ 7,844 $ 4,786 $ 9,975 $ 7,199 $ 6,008 $ 4,374 $ 3,943
=========== =========== =========== =========== =========== =========== ===========
SELECTED BALANCE SHEET
DATA:
Mortgage loans held
for sale............ $ 909,983 $ 620,478 $ 883,048 $ 404,672 $ 260,175 $ 243,678 $ 262,209
Securities held for
trading, net........ 684,673 682,036 606,918 620,288 436,125 418,348 327,960
Securities held to
maturity............ 937,186 155,128 190,778 143,534 107,222 77,945 66,804
Security available for
sale................ 28,862 514,077 408,888 240,876 12,007 14,579 --
Loans receivable,
net................. 192,756 130,672 166,987 133,055 128,766 51,355 34,809
Total assets.......... 3,279,870 2,497,356 2,918,113 1,857,789 1,106,083 917,922 768,019
Loans payable and
securities sold
under agreements to
repurchase.......... 1,626,578 1,542,766 1,624,032 1,076,912 568,840 573,754 538,740
Notes payable......... 207,106 174,361 199,733 164,934 152,126 51,682 17,055
Deposits accounts..... 760,096 376,304 533,113 300,494 158,902 95,740 66,471
Stockholders'
equity.............. 360,562 246,233 269,559 186,955 150,531 129,017 90,496
NET INCOME PER COMMON
SHARE:
Basic:
Income before
cumulative effect
and extraordinary
item.............. $ 0.76 $ 0.60 $ 1.31 $ 0.89 $ 0.75 $ 0.67 $ 0.58
Cumulative effect... -- -- -- -- -- -- 0.04
Extraordinary
item.............. -- -- -- (0.34) -- -- --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income.... $ 0.76 $ 0.60 $ 1.31 $ 0.55 $ 0.75 $ 0.67 $ 0.62
=========== =========== =========== =========== =========== =========== ===========
Diluted:
Income before
cumulative effect
and extraordinary
item.............. $ 0.73 $ 0.58 $ 1.26 $ 0.85 $ 0.71 $ 0.64 $ 0.54
Cumulative effect... -- -- -- -- -- -- 0.04
Extraordinary
item.............. -- -- -- (0.32) -- -- --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income.... $ 0.73 $ 0.58 $ 1.26 $ 0.53 $ 0.71 $ 0.64 $ 0.58
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
13
<PAGE> 18
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
------------------------- --------------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER PER SHARE DATA:
Cash dividends:
Common Stock........ $ 0.14 $ 0.11 $ 0.23 $ 0.195 $ 0.165 $ 0.145 $ 0.13
10 1/2% Preferred
Stock............. -- -- -- -- $ 0.3825 $ 1.05 $ 1.05
8% Convertible
Cumulative
Preferred Stock... $ 40.00 $ 40.00 $ 80.00 $ 15.33 -- -- --
7% Noncumulative
Preferred Stock..... $ 1.24 -- -- -- -- -- --
Weighted average
common shares
outstanding:
Basic............... 40,428,920 39,445,130 39,941,068 36,680,158 36,266,244 29,231,680 27,770,936
Diluted............. 42,435,528 41,400,647 41,928,186 38,728,632 38,725,072 31,040,540 30,307,856
OPERATING DATA:
Mortgage loans
originated and
purchased........... $ 1,453,000 $ 931,000 $ 2,313,000 $ 1,037,000 $ 817,000 $ 636,000 $ 824,000
Loan servicing
portfolio......... $ 7,012,000 $ 5,140,000 $ 6,186,000 $ 4,655,000 $ 3,068,000 $ 2,668,000 $ 2,644,000
SELECTED RATIOS:
Return on average
assets.............. 2.14% 2.21% 2.17% 1.37% 2.68% 2.32% 2.78%
Return on average
common equity....... 22.10% 22.25% 21.65% 11.99% 19.35% 17.82% 20.82%
Average common equity
to average assets... 9.13% 10.03% 10.00% 11.39% 13.81% 13.02% 13.35%
</TABLE>
14
<PAGE> 19
DESCRIPTION OF THE BONDS
GENERAL
The bonds will be issued under a trust agreement between AFICA and
Citibank, N.A., as trustee. The bonds will be dated the date of their issuance
and will bear interest at such rates and will mature, subject to the rights of
redemption described below, in such amounts on and
of such years, as set forth on the inside front cover page
of this official statement and prospectus. Interest on the bonds will be paid to
you on the first day of each month commencing on , 1999 until
maturity or prior redemption. Additionally, interest will be paid to you at
maturity or redemption. Interest will be computed using a 360-day year of twelve
30-day months.
The bonds will be issued as fully registered bonds without coupons in
denominations of $5,000 or any integral multiple thereof. The bonds will be
registered under the DTC book-entry only system described below. Therefore, you
will not receive a certificate for any bonds you purchase. The principal or
redemption price of and interest on the bonds will be payable as described below
under "Book-Entry Only System."
BOOK-ENTRY ONLY SYSTEM
The following information concerning DTC and DTC's book-entry system has
been obtained from DTC. AFICA, Doral Financial, Doral Properties and the
Underwriters do not take any responsibility for the accuracy thereof.
DTC will act as securities depository for the bonds. The bonds will be
issued as fully registered bonds in the name of Cede & Co., DTC's partnership
nominee. One fully registered bond will be issued for each maturity of the bonds
in the aggregate principal amount of such maturity, and will be deposited with
DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants (the "Direct Participants") deposit with
DTC. DTC also facilitates the settlement of securities transactions among Direct
Participants, such as transfers and pledges, in deposited securities through
electronic book-entry changes in accounts of the Direct Participants, thereby
eliminating the need for physical movement of securities. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations, and certain other organizations. DTC is owned by a number of the
Direct Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others such as banks, brokers, dealers
and trust companies that clear transactions through or maintain a custodial
relationship with a Direct Participant either directly or indirectly (the
"Indirect Participants;" and together with the Direct Participants, the
"Participants"). The rules applicable to DTC and its Participants are on file
with the Commission.
Purchases of bonds under the DTC system must be made by or through Direct
Participants which will receive a credit for the bonds on DTC's records. The
ownership interest of each actual purchaser of each bond ("Beneficial Owner") is
in turn to be recorded on the Direct and Indirect Participants' records.
Beneficial Owners will not receive written confirmation from DTC of their
purchase, but Beneficial Owners are expected to receive written confirmations
providing details of the transaction, as well as periodic statements of their
holdings, from the Direct or Indirect Participant through which the Beneficial
Owner entered into the transaction. Transfers of ownership interests in the
bonds are to be accomplished by entries made on the books of Participants acting
on behalf of Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in the bonds, except in the event that
use of the DTC system for the bonds is discontinued.
15
<PAGE> 20
To facilitate subsequent transfers, all bonds deposited by Participants
with DTC are registered in the name of DTC's partnership nominee, Cede & Co. The
deposit of bonds with DTC and their registration in the name of Cede & Co.
effect no change in beneficial ownership. DTC has no knowledge of the actual
Beneficial Owners of the bonds. DTC's records reflect only the identity of the
Direct Participants to whose accounts such bonds are credited, which may or may
not be the Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
bonds of any maturity are being redeemed, DTC's practice is to determine by lot
the amount of the interest of each Direct Participant in such maturity to be
redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to the bonds.
Under its usual procedures, DTC mails an "Omnibus Proxy" to AFICA as soon as
possible after the record date. The Omnibus Proxy assigns Cede & Co.'s
consenting or voting rights to those Direct Participants to whose accounts the
bonds are credited on the record date, identified in a listing attached to the
Omnibus Proxy.
Principal of and redemption premium, if any, and interest payments on the
bonds will be made to DTC. DTC's practice is to credit Direct Participants'
accounts on each Payment Date in accordance with their respective holdings shown
on DTC's records unless DTC has reason to believe that it will not receive
payment on such date. Payments by Participants to Beneficial Owners will be
governed by standing instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or registered in
"street name," and will be the responsibility of such Participant and not of
DTC, the trustee, Doral Financial, Doral Properties or AFICA, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Payment of principal and interest to DTC is the responsibility of the trustee,
disbursement of such payments to Direct Participants is the responsibility of
DTC, and disbursement of such payments to the Beneficial Owners is the
responsibility of Direct and Indirect Participants.
Each person for which a Participant acquires an interest in the bonds, as
nominee, may desire to make arrangements with such Participant to receive a
credit balance in the records of such Participant, and may desire to make
arrangements with such Participant to have all notices of redemption or other
communications to DTC, which may affect such persons, forwarded in writing by
such Participant and to have notification made of all interest payments.
DTC may discontinue providing its services as securities depository with
respect to the bonds at any time by giving reasonable notice to AFICA or the
trustee. In such event, AFICA will try to find a substitute securities
depository and, if unsuccessful, definitive bonds will be printed and delivered.
In addition, AFICA, in its sole discretion and without the consent of any other
person, may terminate the services of DTC as securities depository with respect
to the bonds if AFICA determines that Beneficial Owners of such bonds shall be
able to obtain definitive bonds. In such event, definitive bonds will be printed
and delivered as provided in the trust agreement and registered in accordance
with the instructions of the Beneficial Owners.
So long as Cede & Co., as nominee of DTC, or any other nominee of DTC, is
the registered owner of the bonds, all references herein to the bondholders or
registered owners of the bonds, other than under the heading "Taxation", shall
mean Cede & Co., or such other nominee, in the capacity of nominee for DTC, and
shall not mean the Beneficial Owners of the bonds.
When reference is made to any action which is required or permitted to be
taken by the Beneficial Owners, such reference shall only relate to those
permitted to act, by statute, regulation or otherwise, on behalf of such
Beneficial Owners for such purposes. When notices are given, they shall be sent
by AFICA or the trustee to DTC only.
16
<PAGE> 21
For every registration of transfer or exchange of the bonds, the Beneficial
Owner may be charged a sum sufficient to cover any tax, fee or other
governmental charge that may be imposed in relation thereto.
AFICA, THE TRUSTEE, DORAL PROPERTIES AND DORAL FINANCIAL SHALL HAVE NO
RESPONSIBILITY OR OBLIGATION TO ANY PARTICIPANT OR ANY BENEFICIAL OWNER WITH
RESPECT TO (1) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DIRECT
PARTICIPANT OR INDIRECT PARTICIPANT, AS DESCRIBED ABOVE; (2) THE PAYMENT OR
TIMELINESS OF PAYMENT BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT
OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL AMOUNT OR
REDEMPTION PRICE OF OR INTEREST ON THE BONDS; (3) THE DELIVERY OR TIMELINESS OF
DELIVERY BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT OF ANY NOTICE
TO ANY BENEFICIAL OWNER WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE
TRUST AGREEMENT TO BE GIVEN TO BONDHOLDERS; (4) THE SELECTION OF THE BENEFICIAL
OWNERS TO RECEIVE PAYMENT IN THE EVENT OF ANY PARTIAL REDEMPTION OF THE BONDS;
OR (5) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC AS BONDHOLDER.
In the event that the book-entry only system is discontinued and the
Beneficial Owners become registered owners of the bonds, the following
provisions will apply: The principal of the bonds and premium, if any, thereon
when due will be payable upon presentation of the bonds at the corporate trust
office of the trustee in San Juan, Puerto Rico, and interest on the bonds will
be paid by check mailed to the persons who were the registered owners as of the
15th day of the month immediately preceding the related interest payment date,
as provided in the trust agreement. Bonds may be exchanged for an equal
aggregate principal amount of bonds in other authorized denominations and of the
same maturity and interest rate, upon surrender thereof at the trustee's
corporate trust office in San Juan, Puerto Rico. The transfer of any bond may be
registered only upon surrender thereof to the trustee along with a duly executed
assignment in form satisfactory to the trustee. Upon any such registration of
transfer, a new bond or bonds of authorized denominations in an equal aggregate
principal amount, of the same maturity, bearing interest at the same rate and
registered in the name of the transferee will be executed by AFICA and
authenticated by the trustee. No charge may be made to the bondholders for any
exchange or registration of transfer of the bonds, but any bondholder requesting
any such exchange shall pay any tax or other governmental charge required to be
paid with respect to such exchange or registration of transfer. The trustee will
not be required to exchange or to register the transfer of any bond during the
period of 15 days preceding the date of giving of notice of redemption or after
any bond or portion thereof has been selected for redemption.
Year 2000 Matters. DTC management is aware that some computer systems for
processing data ("Systems") that are dependent upon calendar dates, including
dates before, on, and after January 1, 2000, may encounter "Year 2000 problems."
DTC has informed its Participants and other members of the financial community
(the "Industry") that it has developed and is implementing a program so that its
Systems, as the same relate to the timely payment of distributions, including
principal and interest payments, to security holders, book-entry deliveries, and
settlement of trades within DTC, continue to function appropriately. This
program includes a technical assessment and a remediation plan, each of which is
complete. Additionally, DTC's program includes a testing phase, which is
expected to be completed within appropriate time frames.
However, DTC's ability to perform properly its services is also dependent
upon other parties, including but not limited to issuers and their agents, as
well as Direct Participants, Indirect Participants and third party vendors from
whom DTC licenses software and hardware, and third party vendors on whom DTC
relies for information or the provision of services, including telecommunication
and electrical utility service providers, among others. DTC has informed the
Industry that it is contacting, and will continue to contact, third party
vendors from whom DTC acquires services to: (1) impress upon them the importance
of such services being Year 2000 compliant; and (2) determine the extent of
their efforts for Year 2000 remediation and, as appropriate, testing, of their
services. In addition, DTC is in the process of developing such contingency
plans as it deems appropriate.
According to DTC, the foregoing information with respect to DTC has been
provided to the Industry for informational purposes only and is not intended to
serve as a representation, warranty, or contract modification of any kind.
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<PAGE> 22
MANDATORY REDEMPTION
Amortization Requirements. Under the trust agreement, Doral Properties is
subject to certain amortization requirements which require it to redeem a
specified principal amount of term bonds each year commencing on
. Pursuant to these amortization requirements, some of the term
bonds will be redeemed semiannually at a price equal to the principal amount
thereof plus accrued interest to the redemption date beginning ,
in the case of the term bonds due December 1, 2019, and , in the
case of the term bonds due December 1, 2029. The principal amount to be redeemed
and the date of redemption is the following:
<TABLE>
<CAPTION>
TERM BONDS DUE 2019 TERM BONDS DUE 2029
- ----------------------------- ---------------------------
DATE AMOUNT DATE AMOUNT
- ---- ------ ---- ------
<S> <C> <C> <C>
</TABLE>
Taking into account the above amortization requirements, the average life
of the term bonds due will be years and the average life of the
term bonds due will be years.
Doral Properties or Doral Financial, at their option, may direct the
trustee to credit against the bonds of any maturity required to be redeemed the
principal amount of bonds of the same maturity purchased by Doral Properties or
Doral Financial and delivered to the trustee for cancellation, or redeemed
pursuant to the optional redemption provisions of the trust agreement.
Event of Taxability. The bonds are further subject to mandatory redemption
in whole at a price equal to the principal amount thereof plus accrued and
unpaid interest to the redemption date (1) upon the failure of Doral Properties
to comply with the covenant described under "Covenant as to Maintenance of
Source of Income" on page 23 of this official statement and prospectus if as a
result of such failure the interest on the bonds becomes subject to federal
taxation for Puerto Rico residents or (2) if Doral Properties or Doral Financial
shall take any other action which shall cause interest on the bonds to become
subject to federal taxation for Puerto Rico residents. No such mandatory
redemption shall be required as a result of a change in the tax laws in force on
the date of issuance of the bonds.
Condemnation, Destruction or Damage of the Center. The bonds will be
subject to mandatory redemption, in whole or in part, at a price equal to the
principal amount thereof plus accrued and unpaid interest up to the redemption
date upon the occurrence of an event of condemnation of, damage to, or
destruction of, the Center or any portion thereof to the extent and as provided
in the pledge agreement described below. Any such redemption will be effected on
the next interest payment date occurring not less than 45 days after receipt by
the trustee of written notice from Doral Properties that the insurance or
condemnation proceeds received by the trustee as a result of any such event will
not be used to restore the Center or any portion thereof, pursuant to the terms
and conditions set forth in the pledge agreement. In such event, the trustee
will use the insurance or condemnation proceeds, as applicable, and other moneys
available to Doral Properties or Doral Financial in the case of redemption in
whole, to redeem the bonds as provided in the trust agreement.
Excess Bond Proceeds. The bonds will also be redeemed, in part, at a price
equal to the principal amount thereof plus accrued interest to the redemption
date, with any bond proceeds that have not been used at the end of construction.
Cessation of Operation of Center as an Industrial Facility. The bonds will
be redeemed, in whole, at a price equal to the principal amount thereof plus
accrued interest to the redemption date, if the Center ceases to operate as an
Industrial Facility for purposes of AFICA's enabling law.
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<PAGE> 23
OPTIONAL REDEMPTION
The bonds may be redeemed by Doral Properties at its option, in whole or in
part, at any time on or after , , on any date selected by
Doral Properties occurring not less than 45 days from the date the notice of
redemption is received by the trustee, and in the order of maturity determined
by Doral Properties, at the redemption prices set forth below (expressed as
percentages of the principal amount of such bonds), plus accrued interest to the
redemption date:
<TABLE>
<CAPTION>
REDEMPTION PERIOD REDEMPTION
(ALL DATES INCLUSIVE) PRICE
- ------------------------------------------------------------ ----------
<S> <C>
, to , ....................... %
, to , ....................... %
, to and thereafter................ %
</TABLE>
EXTRAORDINARY OPTIONAL REDEMPTION
The bonds may be redeemed by Doral Properties at its option, in whole or in
part, and if in part, in such order of maturity as directed by Doral Properties,
on any date selected by Doral Properties occurring not less than 45 days from
the date the notice of redemption is received by the trustee, at a redemption
price equal to the principal amount thereof, without premium, plus accrued
interest to the date fixed for redemption, if any of the following events shall
have occurred:
(1) The Center shall have been damaged or destroyed to such an extent
that in the opinion of Doral Properties it cannot be reasonably restored or
repaired within a period of six months, or Doral Properties is thereby
prevented or will likely be prevented from causing its normal operation for
a period of six months or more, or its restoration and repair would not be
economically feasible; or
(2) Use or control of the Center shall have been taken under the
exercise of the power of eminent domain to such an extent that Doral
Properties is, or in its opinion would likely be, thereby prevented from
causing the normal operation of the Center for a period of six months or
more; or
(3) As a result of any change in the Constitution or laws of the
United States of America or Puerto Rico or of legislative or administrative
action of the United States of America or Puerto Rico or any political
subdivision, or any judicial action or regulatory action or inaction, the
loan and guaranty agreement or the trust agreement, in the opinion of Doral
Properties, shall have become void or unenforceable or impossible of
performance in any material respect, or use or occupancy of all or a
significant part of the Center shall, in the opinion of Doral Properties,
have been legally curtailed for six months or more, or, in the opinion of
Doral Properties, unreasonable burdens or excessive liabilities with
respect to the Center or the bonds shall have been imposed.
NOTICE AND EFFECT OF REDEMPTION; PARTIAL REDEMPTION
At least 30 days before any redemption date, notice thereof will be sent by
the trustee via first-class mail, postage prepaid, to DTC, or if the book-entry
only system is discontinued as described above, by first-class mail, postage
prepaid, to the registered owners of the bonds to be redeemed. If less than all
of the bonds are called for redemption, the particular bonds or portions thereof
to be redeemed will be selected as provided below, except that so long as the
book-entry only system shall remain in effect, in the event of any such partial
redemption, DTC shall reduce the credit balances of the applicable DTC
Participants in respect of the bonds, and such Participants shall in turn select
those beneficial owners whose ownership interests are to be extinguished by such
partial redemption, each by such method as DTC or such Participants, as the case
may be, in their sole discretion deem fair and appropriate.
Each notice of redemption shall set forth:
(1) the redemption date;
(2) the redemption price;
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<PAGE> 24
(3) if fewer than all of the bonds then outstanding shall be called for
redemption, the distinctive numbers and letters, if any, of such bonds to be
redeemed and, in the case of bonds to be redeemed in part only, the portion of
the principal amount thereof to be redeemed;
(4) that on the date fixed for redemption such redemption price will become
due and payable upon each bond or portion thereof called for redemption, and
that interest thereon shall cease to accrue on and after said redemption date;
and
(5) the place where such bonds or portions thereof called for redemption
are to be surrendered for payment of such redemption price.
In case any bond is to be redeemed in part only, the notice of redemption
shall state also that on or after the redemption date, upon surrender of such
bond, a new bond or bonds in principal amount equal to the unredeemed portion of
such bonds will be issued. Failure to mail such notice to any bondholder or any
defect in any notice so mailed shall not affect the validity of the proceedings
for the redemption of the bonds of any other bondholders.
Except with respect to the mandatory redemption of the term bonds in
accordance with the amortization requirements described above, if less than all
of the outstanding bonds shall be called for redemption, Doral Properties shall
determine the principal amount of each maturity of the bonds to be redeemed. If
less than all bonds of one maturity are to be redeemed, the bonds, or portions
thereof, to be redeemed will be selected by the trustee by such method as it
deems fair and appropriate in integral multiples of $5,000.
If notice of redemption is given and if sufficient funds are on deposit
with the trustee to provide for the payment of the principal of and premium, if
any, and interest on the bonds to be redeemed, then the bonds so called for
redemption will, on the redemption date, cease to bear interest and shall no
longer be deemed outstanding or be entitled to any benefit or security under the
trust agreement.
SOURCES OF PAYMENT AND SECURITY FOR THE BONDS
Bonds Limited Obligations of AFICA. The bonds are limited obligations of
AFICA payable solely from monies derived pursuant to the loan and guaranty
agreement. The bonds will not constitute a charge against the general credit of
AFICA and will not constitute an indebtedness of the government of Puerto Rico
or any of its political subdivisions other than AFICA.
The Loan and Guaranty Agreement. Under the loan and guaranty agreement,
Doral Properties will agree to deposit with the trustee in a bond fund
established under the trust agreement amounts sufficient to pay, together with
the amounts then on deposit therein, principal of and premium, if any, and
interest on the bonds. Such deposit must be made on the business day immediately
preceding the day on which the corresponding amounts of principal, premium, if
any, and interest are due and payable. Pursuant to the trust agreement, AFICA
will assign its interest in the loan agreement, except certain rights of AFICA
to indemnification, exemption from liabilities, notices and the payment of costs
and expenses, to the trustee as security for the bonds.
Guaranty of Doral Financial. Under the loan and guaranty agreement, Doral
Financial has agreed to guarantee the payments required to be made by Doral
Properties, which include payment of principal of, premium, if any, and interest
on the bonds, when and as the same become due and payable. The guarantee is
absolute and unconditional, and not subject to any circumstance that might
otherwise constitute a legal or equitable discharge of a guarantor. Subject to
the provisions of the trust agreement, holders of the bonds may proceed directly
against Doral Financial in the event of default under the bonds without first
proceeding against Doral Properties. The guaranty will rank on an equal rank
with other unsecured and unsubordinated obligations of Doral Financial.
Mortgage on Center. The bonds will be secured by a pledge of a mortgage
note in an amount equal to the aggregate principal amount of the bonds and
bearing interest at the rate of 7% per annum. The
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<PAGE> 25
mortgage note will be secured by a first priority mortgage lien on the Center,
subject only to easements and certain other real property rights which do not
materially and adversely affect the operation of the Center.
The mortgage note will be pledged to AFICA pursuant to a pledge agreement
as security for the obligations of Doral Properties and Doral Financial under
the loan and guaranty agreement. AFICA will assign its rights under the pledge
agreement, the mortgage and the mortgage note to the trustee for the benefit of
the bondholders.
A mortgagee title insurance policy insuring the mortgage as a first
priority lien on the Center, subject only to Permitted Liens, will be delivered
on the date of issuance of the bonds in an amount equal to the aggregate
principal amount of the bonds.
SUMMARY OF THE LOAN AND GUARANTY AGREEMENT
The following briefly summarizes the material provisions of the loan and
guaranty agreement among AFICA, Doral Properties and Doral Financial. This
summary is not complete. You should read the more detailed provisions of the
loan and guaranty agreement for provisions that may be important to you. A copy
of the loan and guaranty agreement is filed as an exhibit to the registration
statement of which this official statement and prospectus is a part.
Pursuant to the loan and guaranty agreement, AFICA will loan the proceeds
from the sale of the bonds to Doral Properties to finance a portion of the cost
of construction of the Center. Doral Properties will agree to make payments
directly to the trustee which, together with amounts then held in the bond fund
established under the trust agreement will be sufficient to make the payments of
principal of and premium, if any, and interest on the bonds as the same become
due at maturity, upon redemption or acceleration. Such deposit must be made on
or prior to the date on which the corresponding amounts of principal, premium,
if any, and interest are due and payable. (Section 4.01) Doral Financial has
unconditionally guaranteed Doral Properties' obligations under the loan and
guaranty agreement, including Doral Properties' obligation to make such
payments. (Section 4.08)
ASSIGNMENT BY AFICA
AFICA will assign all of its rights, title and interest in the loan and
guaranty agreement and will pledge and assign to the trustee any payments,
receipts and revenues receivable by it under or pursuant to the loan and
guaranty agreement and the income earned by the investment of funds held under
the trust agreement, as security for payment of the principal of and premium, if
any, and interest on the bonds. Except as provided in the preceding sentence,
AFICA will not sell, assign or otherwise dispose of its interest in the loan and
guaranty agreement. (Section 6.03)
MAINTENANCE AND OPERATION OF THE CENTER
Doral Properties will cause the Center to be operated as an Industrial
Facility, as defined in the Act, and to be maintained, preserved and kept in
good repair, working order and condition and will from time to time cause to be
made all reasonably necessary and proper repairs, replacements and renewals;
provided, however, that Doral Properties will have no obligation to cause to be
maintained, preserved, repaired, replaced or renewed any element or unit of the
Center, the maintenance, repair, replacement or renewal of which becomes
uneconomic to Doral Properties because of damage or destruction or obsolescence,
or change in economic or business conditions or change in government standards
and regulations. Doral Properties shall not permit, commit or suffer any waste
of the whole or any major part of the Center and shall not use or permit the use
of the Center, or any part thereof, for any unlawful purpose or permit any
nuisance to exist thereon. (Section 4.03)
COVENANT AS TO EXISTENCE, CONSOLIDATION, MERGER OR SALE
Doral Properties and Doral Financial will maintain their existence, will
not dispose of all or substantially all of their assets and will not acquire,
consolidate with or merge into another person;
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<PAGE> 26
provided, however, that Doral Properties or Doral Financial may acquire,
consolidate with or merge into another person, or transfer to another person all
or substantially all of their assets and thereafter dissolve, if:
(1) the successor or transferee is solvent and irrevocably and
unconditionally assumes in writing all the obligations of Doral Properties
or Doral Financial, as the case may be, under the loan and guaranty
agreement and the trust agreement; and
(2) immediately after such consolidation, merger or transfer none of
Doral Properties, such successor or transferee, if other than Doral
Properties, or Doral Financial shall be in default in the performance or
observance of any duties, obligations or covenants under the loan and
guaranty agreement, including the Source of Income Requirements discussed
below under "Covenant as to Maintenance of Source of Income." (Section
5.01)
SALE, TRANSFER OR ENCUMBRANCE OF THE CENTER
Doral Properties may sell or otherwise transfer or encumber the Center, in
whole or in part, without the consent of AFICA or the trustee, if it meets the
following requirements:
(1) Doral Properties shall, prior to such sale, transfer or
encumbrance of the Center, notify AFICA and the trustee;
(2) prior to the proposed sale, transfer or encumbrance of the Center,
AFICA and the trustee are provided with proof satisfactory to them by Doral
Properties that the proposed transaction will not adversely affect the
income tax treatment of interest received on the bonds by bondholders; and
(3) the purchaser shall, in a certificate delivered to AFICA and the
trustee, which certificate shall be in a form reasonably satisfactory to
AFICA and the trustee, expressly agree to perform all of the obligations of
Doral Properties under the mortgage and the pledge agreement.
No sale or other transfer or encumbrance of the Center shall relieve Doral
Properties or Doral Financial of their obligations under the loan and guaranty
agreement, including the obligation to make the payments required thereby.
(Section 6.01)
ASSIGNMENT OF LOAN AND GUARANTY AGREEMENT BY DORAL PROPERTIES
Doral Properties may, by operation of law or otherwise, assign its interest
in the loan and guaranty agreement, in whole or in part, without the consent of
AFICA or the trustee, if it meets the following requirements:
(1) Doral Properties shall, prior to such assignment of the loan and
guaranty agreement, notify AFICA and the trustee;
(2) prior to the proposed assignment, the trustee is provided with
proof satisfactory to it by Doral Properties that such assignment or the
terms thereof will not affect adversely affect the income tax treatment of
interest received on the bonds by bondholders;
(3) the assignee shall, in a certificate delivered to AFICA and the
trustee, which certificate shall be in a form reasonably satisfactory to
AFICA and the trustee, expressly agree to pay and to perform all of the
obligations of Doral Properties under the loan and guaranty agreement; and
(4) the assignee shall deliver to AFICA and the trustee a certificate
executed by its chief financial officer (or other executive officer
performing similar functions) stating that none of the obligations,
covenants and performances under the loan and guaranty agreement assumed by
it will conflict with or constitute on the part of such assignee a breach
of, or default under, any indenture, mortgage, agreement or other
instrument to which such assignee is a party or by which it is bound, or
under any existing law, rule, regulation, judgment, order or decree to
which such assignee is subject.
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<PAGE> 27
The provisions of clauses (3) and (4) above shall not apply to any
assignment of the loan and guaranty agreement in which all the parties consist
of Doral Properties, Doral Financial or any of their respective subsidiaries.
Notwithstanding any of the foregoing, no assignment of the loan and
guaranty agreement shall relieve Doral Properties or Doral Financial of their
obligations under the loan and guaranty agreement, including the obligation to
make the payments required thereby. (Section 6.02)
COVENANT AS TO MAINTENANCE OF SOURCE OF INCOME
Doral Properties will covenant under the loan and guaranty agreement that
during each taxable year while the bonds are outstanding it will comply with the
requirements of the Code so that all interest paid or payable on the bonds will
constitute income from sources within Puerto Rico under the general source of
income rules of the Code as in effect on the date of issuance of the bonds (the
"Source of Income Requirements").
Under the loan and guaranty agreement, Doral Properties will be required to
cause its independent accountants to submit, no later than the 120th day after
the close of each of its taxable years, a report stating whether in connection
with their audit of the books and records of Doral Properties, Doral Properties
failed to comply with any of the Source of Income Requirements during the
taxable year just ended or such other applicable period. If the independent
accountants' report should state that in the course of their audit Doral
Properties failed to comply with any of the Source of Income Requirements during
the immediately preceding taxable year or such other applicable period or if
Doral Properties provides the trustee with a certificate that indicates that
Doral Properties failed to comply with the Source of Income Requirements, or
that Doral Properties or Doral Financial has taken any other action which shall
cause interest on the bonds to become subject to federal taxation for Puerto
Rico residents, the trustee shall within five business days from the date of
receipt of such independent accountant's report or certificate of Doral
Properties, send written notice thereof to Doral Properties and each person who
was a bondholder during the preceding taxable year thereof. (Section 5.10)
LIMITATIONS ON LIENS AND DISPOSITION OF STOCK OF PRINCIPAL MORTGAGE BANKING
SUBSIDIARIES
The loan and guaranty agreement provides that Doral Financial will not, and
will not permit any Subsidiary to, incur, issue, assume or guarantee any
indebtedness for money borrowed if such indebtedness is secured by a pledge of,
lien on, or security interest in any shares of Voting Stock of any Principal
Mortgage Banking Subsidiary, without providing that the bonds and, at Doral
Financial's option, any other indebtedness ranking equally with the bonds, shall
be secured equally and ratably with such indebtedness. This limitation shall not
apply to (1) indebtedness secured by a pledge of, lien on or security interest
in any shares of Voting Stock of any corporation at the time it becomes a
Principal Mortgage Banking Subsidiary and (2) liens for taxes or assessments or
governmental charges or levies not then due and delinquent or the validity of
which is being contested in good faith or which are less than $5,000,000 in
amount, liens created by or resulting from any litigation or legal proceeding
which is currently being contested in good faith by appropriate proceedings or
which involve claims of less than $5,000,000, or deposits to secure (or in lieu
of) surety, stay, appeal or customs bonds. (Section 5.15)
The loan and guaranty agreement also provides that Doral Financial will not
sell, assign, transfer or otherwise dispose of any shares of, securities
convertible into or options, warrants or rights to subscribe for or purchase
shares of, Voting Stock (other than directors' qualifying shares) of any
Principal Mortgage Banking Subsidiary and will not permit any Principal Mortgage
Banking Subsidiary to issue (except to Doral Financial) any shares of,
securities convertible into or options, warrants or rights to subscribe for or
purchase shares of, Voting Stock of any Principal Mortgage Banking Subsidiary,
except for sales, assignments, transfers or other dispositions that:
- are for fair market value on the date thereof, as determined by the Board
of Directors of Doral Financial (which determination shall be conclusive)
and, after giving effect to such disposition and to any possible
dilution, Doral Financial will own not less than 80% of the shares of
Voting Stock
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<PAGE> 28
of such Principal Mortgage Banking Subsidiary then issued and outstanding
free and clear of any security interest;
- are made in compliance with an order of a court or regulatory authority
of competent jurisdiction, as a condition imposed by any such court or
authority permitting the acquisition by Doral Financial, directly or
indirectly, of any other mortgage banking institution or entity the
activities of which are legally permissible for a bank holding company or
a subsidiary thereof to engage in, or as an undertaking made to such
authority in connection with such an acquisition;
- are made where such Principal Mortgage Banking Subsidiary, having
obtained any necessary regulatory approvals, unconditionally guarantees
payment when due of the principal of and premium, if any, and interest on
the bonds; or
- are made to Doral Financial or any wholly-owned subsidiary if such
wholly-owned subsidiary agrees to be bound by this covenant and Doral
Financial agrees to maintain such wholly-owned subsidiary as a
wholly-owned subsidiary.
Notwithstanding the foregoing, any Principal Mortgage Banking Subsidiary
may be merged into or consolidated with another mortgage banking institution
organized under the laws of the United States, any state thereof, Puerto Rico or
the District of Columbia if, after giving effect to such merger or
consolidation, Doral Financial or any wholly-owned subsidiary owns at least 80%
of the Voting Stock of such other mortgage banking institution then issued and
outstanding free and clear of any security interest and if, immediately after
giving effect thereto and treating any such resulting institution thereafter as
a Principal Mortgage Banking Subsidiary and as a Subsidiary for purposes of the
loan and guaranty agreement, no event of default, and no event that, after the
giving of notice or lapse of time or both, would become an event of default
under the loan and guaranty agreement, has occurred and is continuing. (Section
5.16)
"Principal Mortgage Banking Subsidiary" means a Subsidiary, including its
Subsidiaries, that is principally engaged in the mortgage banking business and
meets any of the following conditions:
- Doral Financial's and its other Subsidiaries' investments in and advances
to the Subsidiary exceed 30 percent of the total assets of Doral
Financial and its Subsidiaries consolidated as of the end of the most
recently completed fiscal year;
- Doral Financial's and its other Subsidiaries' proportionate share of the
total assets of the Subsidiary after intercompany eliminations exceeds 30
percent of the total assets of Doral Financial and its Subsidiaries
consolidated as of the end of the most recently completed fiscal year; or
- Doral Financial's and its other Subsidiaries' equity in the income from
continuing operations before income taxes, extraordinary items and
cumulative effect of a change in accounting principles of the Subsidiary
exceeds 30 percent of such income of Doral Financial and its Subsidiaries
consolidated for the most recently completed fiscal year.
"Principal Mortgage Banking Subsidiary" does not include, however, any
Subsidiary that is a bank or savings association unless Doral Financial
transfers to such bank or savings association the mortgage banking business
conducted by Doral Mortgage Corporation or Doral Financial's HF Mortgage Bankers
Division as of the date of this official statement and prospectus.
"Subsidiary" means any corporation of which securities entitled to elect at
least a majority of the corporation's directors shall at the time be owned,
directly or indirectly, by Doral Financial, and/or one or more Subsidiaries.
"Voting Stock" means capital stock the holders of which have general voting
power under ordinary circumstances to elect at least a majority of the board of
directors of a corporation, except capital stock that carries only the right to
vote conditioned on the happening of an event regardless of whether such event
shall have happened. (Section 1.01)
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<PAGE> 29
INDEMNITY
Under the loan and guaranty agreement, Doral Properties and Doral Financial
will also agree to indemnify AFICA against any claims or liabilities arising
from the construction and operation of the Center or its participation in the
financing of the Center and certain other liabilities, and will agree to pay the
fees and expenses of AFICA and the trustee. (Section 4.05)
EVENTS OF DEFAULT AND REMEDIES
Each of the following is an event of default under the loan and guaranty
agreement:
(1) failure to pay the principal of, and premium, if any, on the bonds
when the same shall become due and payable or failure to pay interest on
the bonds after the same become due and payable and the continuation of
such failure to pay interest for a period of five days;
(2) failure to make any other payments (excluding payments with
respect to the principal of, premium, if any, and interest on the bonds)
required under the loan and guaranty agreement, the pledge agreement, the
mortgage and the mortgage note if such failure shall continue for a period
of 30 days after written notice thereof, unless a written extension is
granted by the trustee prior to its expiration;
(3) failure by Doral Properties or Doral Financial to observe or
perform certain other covenants, conditions or agreements under the loan
and guaranty agreement, the pledge agreement, the mortgage or the mortgage
note, other than a default described in (1) or (2) above, and continuation
of such failure for 90 days after written notice thereof, unless a written
extension thereof is granted by the trustee prior to its expiration,
provided, however, that if such failure may be cured but cannot be
corrected within such ninety-day period, it will not constitute an event of
default if corrective action is commenced by Doral Properties during such
period and diligently pursued until such failure is corrected;
(4) acceleration of any other indebtedness of Doral Financial or any
Significant Subsidiary (as defined below), in each case exceeding
$5,000,000 in an aggregate principal amount; and
(5) certain events of bankruptcy, liquidation or similar proceedings
involving Doral Properties or Doral Financial. (Section 7.01)
"Significant Subsidiary" means a Subsidiary, including its Subsidiaries,
that meets any of the following conditions:
- Doral Financial's and its other Subsidiaries' investments in and
advances to the Subsidiary exceed 10 percent of the total assets of
Doral Financial and its Subsidiaries consolidated as of the end of the
most recently completed fiscal year;
- Doral Financial's and its other Subsidiaries' proportionate share of
the total assets of the Subsidiary after intercompany eliminations
exceeds 10 percent of the total assets of Doral Financial and its
Subsidiaries consolidated as of the end of the most recently completed
fiscal year; or
- Doral Financial's and its other Subsidiaries' equity in the income
from continuing operations before income taxes, extraordinary items
and cumulative effect of a change in accounting principles of the
Subsidiary exceeds 10 percent of such income of Doral Financial and
its Subsidiaries consolidated for the most recently completed fiscal
year. (Section 1.01)
If by reason of "Force Majeure" (as defined in the loan agreement), Doral
Properties is unable to perform any of its obligations under (3) above, Doral
Properties will not be deemed to be in default during the continuance of such
inability, including a reasonable time for the removal of the effect thereof.
(Section 7.01)
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<PAGE> 30
AFICA has no power to waive any default under the loan and guaranty
agreement or extend the time for the correction of any default which could
become an event of default without the consent of the trustee. (Section 7.05)
Upon the occurrence of an event of default, subject to the provisions of
the trust agreement, the trustee, as assignee of AFICA's rights, may declare all
unpaid amounts payable under the loan and guaranty agreement in respect of the
bonds to be immediately due and payable and may take any action at law or equity
necessary to enforce any obligation of Doral Properties under the loan and
guaranty agreement. (Section 7.02)
SUMMARY OF THE TRUST AGREEMENT
The following briefly summarizes the material provisions of the trust
agreement between AFICA and Citibank, N.A. This summary is not complete. You
should read the more detailed provisions of the trust agreement for the
provisions that may interest you. A copy of the trust agreement is filed as an
exhibit to the registration statement of which this official statement and
prospectus is a part.
Under the trust agreement, AFICA will assign to the trustee for the benefit
of the bondholders all of AFICA's right, title and interest in the loan and
guaranty agreement, the pledge agreement, the mortgage and the mortgage note,
except for certain rights of AFICA under the loan agreement to indemnification,
exemption from liability, notices and the payment of costs and expenses, in
trust to provide for the payment of the principal of and premium, if any, and
interest on the bonds.
CONSTRUCTION FUND
The proceeds from the sale of the bonds, other than amounts to be used to
pay the fee payable to AFICA, the existing land loan and other costs of
issuance, will be deposited with the trustee in the construction fund
established under the trust agreement. (Section 401) Payments of the costs of
the construction of the Center will be made from the construction fund upon
requisitions presented to the trustee signed by Doral Properties and, under
certain circumstances, AFICA. (Section 404) Any amounts remaining in the
construction fund on the earlier of (1) the third anniversary of the date of
issuance of the bonds, subject to extension by AFICA, or (2) the receipt by the
trustee of a certificate issued by Doral Properties and approved by AFICA to the
effect that the moneys in the construction fund will not be used to pay costs of
construction of the Center, will be transferred to the bond fund and used to
redeem bonds. (Section 406)
BOND FUND
Doral Properties shall cause to be deposited to the credit of the bond
fund:
(1) all amounts paid pursuant to the loan and guaranty agreement with
respect to principal of and interest on the bonds, including payments with
respect to optional and mandatory prepayments of the bonds;
(2) any amount in the construction fund to be transferred to the bond
fund in accordance with the provisions of the trust agreement described
above under "Construction Fund"; and
(3) all other moneys received by the trustee pursuant to any of the
provisions of the loan and guaranty agreement or otherwise which are
permitted or required or are accompanied by directions from Doral
Properties or AFICA that such moneys are to be paid into the bond fund.
(Section 502)
INVESTMENT OF FUNDS
Moneys held for the credit of all funds and accounts under the trust
agreement shall be invested in accordance with the instructions of Doral
Properties. Any investment shall mature not later than the respective dates when
the money held for the credit of such funds or accounts will be required for the
purposes intended. (Section 602)
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EVENTS OF DEFAULT
Each of the following events is an event of default under the trust
agreement:
(1) Doral Properties or Doral Financial shall fail to pay the
principal of and interest on the bonds when the same shall become due and
payable and, in the case of failure to pay interest, the continuation of
such failure for a period of five days;
(2) the occurrence of certain events of bankruptcy, liquidation,
insolvency or similar proceedings involving Doral Properties or Doral
Financial; or
(3) any event of default under the loan and guaranty agreement shall
have occurred and such event of default shall not have been remedied or
waived. (Section 802)
ACCELERATION OF MATURITIES
Upon the happening and continuance of an event of default specified above,
the trustee may, and upon the written request of holders of not less than 25% in
aggregate principal amount of bonds then outstanding shall, by notice in writing
to AFICA, Doral Properties and Doral Financial, declare the principal of all the
bonds to be due and payable immediately, and upon such declaration the same
shall become and be immediately due and payable. If this happens, subject to
certain conditions, the trustee, upon the written direction of the holders of
not less than a majority in aggregate principal amount of the bonds then
outstanding, shall by a notice in writing to AFICA, Doral Properties and Doral
Financial, rescind and annul such declaration and its consequences, but no such
rescission or annulment shall extend to or affect any subsequent default or
impair any right consequent thereon. (Section 803)
ENFORCEMENT OF REMEDIES
Upon the happening and continuance of any event of default and the
acceleration of the bonds, then and in every such case the trustee may, and upon
the written direction of the holders of not less than 25% in aggregate principal
amount of the bonds then outstanding under the trust agreement shall, proceed,
subject to the provision of indemnification satisfactory to the trustee, to
protect and enforce its rights and the rights of the bondholders under
applicable laws, under the loan and guaranty agreement and the trust agreement.
(Section 804)
HOLDERS OF MAJORITY IN PRINCIPAL AMOUNT OF BONDS MAY CONTROL PROCEEDINGS
Subject to the provision of indemnification satisfactory to the trustee,
the holders of a majority in aggregate principal amount of the bonds then
outstanding shall have the right to direct the time, method and place of
conducting all remedial proceedings to be taken by the trustee under the trust
agreement or exercising any trust or power conferred upon the trustee, provided
that such direction shall not be otherwise than in accordance with law and the
provisions of the trust agreement. (Section 808)
RESTRICTIONS UPON ACTION BY INDIVIDUAL BONDHOLDER
No bondholder will have any right to institute any suit, action or
proceeding in equity or at law on any bond or for the execution of any trust
under the trust agreement, or for any other remedy under the trust agreement
unless: (1) such holder has previously given to the trustee notice of the event
of default on account of which such suit, action or proceeding is to be
instituted; (2) the holders of not less than 25% of the aggregate principal of
bonds then outstanding have requested of the trustee, after the right to
exercise such powers or right of action, as the case may be, has accrued, and
have afforded the trustee a reasonable opportunity, either to proceed to
exercise such powers or to institute such action, suit or proceeding in its or
their name; (3) the trustee has been offered reasonable security and indemnity
against the costs, expenses and liabilities to be incurred (including, without
limitation, indemnification for environmental liability); and (4) the trustee
has refused or neglected to comply with such request within a reasonable time.
No one or more bondholders will have any right, in any manner, to affect,
disturb or prejudice any rights under the trust agreement, or to enforce any
right thereunder, except in the manner
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<PAGE> 32
therein provided. All suits, actions and proceedings at law or in equity must be
instituted, had and maintained in the manner provided in the trust agreement and
for the benefit of the bondholders. Any individual right of action or other
right given to one or more bondholders by law is restricted by the trust
agreement to the rights and remedies therein provided. (Section 809)
Notwithstanding any other provision of the trust agreement, a bondholder
will have the right to institute suit for the enforcement of the payment of
principal of and premium, if any, and interest on such holder's bonds when due.
(Section 809)
SUPPLEMENTAL TRUST AGREEMENTS
The trust agreement may be amended or supplemented without the consent of
the bondholders:
(1) to cure any ambiguity or to make any other provisions with respect
to matters or questions arising under the trust agreement which shall not
be inconsistent with the provisions of the trust agreement; or
(2) to grant or confer upon the trustee for the benefit of the
bondholders any additional rights, remedies, powers, benefits, authority or
security that may lawfully be so granted or conferred; or
(3) to add to the covenants of AFICA or Doral Properties for the
benefit of the bondholders or to surrender any right or power conferred
upon AFICA or Doral Properties under the trust agreement; or
(4) to permit the qualification of the bonds for sale under the
securities laws of any of the states of the United States, and to add to
the trust agreement or any supplement or amendment thereto such other
terms, conditions and provisions as may be required by the Trust Indenture
Act of 1939 or any similar federal statute. (Section 1101)
The trust agreement may be amended or supplemented with the consent of the
holders of a majority in principal amount of the bonds at the time outstanding.
However, without the consent of each bondholder affected, no amendment to the
trust agreement may:
(1) extend the time for the payment of the principal of and premium,
if any, or the interest on any bond;
(2) reduce the principal of any bond or the redemption premium, if
any, or the rate of interest thereon;
(3) create any lien or security interest with respect to the loan and
guaranty agreement or the payments thereunder, other than the lien created
by the trust agreement;
(4) give a preference or priority to any bond or bonds over any other
bond or bonds; or
(5) reduce the aggregate principal of the bonds required for consent
to such supplement or amendment or any waiver thereunder. (Section 1102)
The trustee is not obligated to execute any proposed supplement or
amendment if its rights, obligations and interests would be affected thereby.
(Section 1104)
Any amendment or supplement to the trust agreement will not become
effective without the consent of Doral Properties and Doral Financial. (Section
1105)
AMENDMENTS AND SUPPLEMENTS TO THE LOAN AND GUARANTY AGREEMENT, THE PLEDGE
AGREEMENT, THE MORTGAGE AND THE MORTGAGE NOTE
The loan and guaranty agreement, the pledge agreement, the mortgage and the
mortgage note may be amended or supplemented without the consent of the
bondholders:
(1) to identify more precisely the project being financed; or
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<PAGE> 33
(2) to cure any ambiguity or formal defect or omission therein or in
any supplement thereto; or
(3) to grant to or confer upon AFICA or the trustee for the benefit of
the bondholders any additional rights, remedies, powers, benefits,
authority or security that may lawfully be granted to or conferred upon
AFICA, the trustee or the bondholders; or
(4) to add to the covenants of Doral Properties or Doral Financial for
the benefit of the bondholders or to surrender any right or power therein
conferred upon Doral Properties or Doral Financial; or
(5) in connection with any other change which, in the judgment of the
trustee, will not restrict, limit or reduce the obligation of Doral
Properties or Doral Financial to make the payments under the loan and
guaranty agreement required to pay the principal of and premium, if any,
and the interest on the bonds or otherwise impair the security of the
bondholders under the trust agreement, the pledge agreement, the mortgage
and the mortgage note, provided such action shall not materially adversely
affect the interests of the bondholders; or
(6) to implement the provisions of the pledge agreement described
under "The Mortgage and the Pledge Agreement." (Section 1201)
Other than for the purposes of the above paragraph, the loan and guaranty
agreement, the pledge agreement, the mortgage and the mortgage note may be
amended or supplemented with the approval of the holders of not less than a
majority of the principal of the bonds at the time outstanding. (Section 1202)
No amendment or supplement to the loan and guaranty agreement, the pledge
agreement, the mortgage or the mortgage note will become effective without the
consent of the trustee. (Section 1203)
DEFEASANCE
Any bond will be deemed paid and no longer entitled to any security under
the trust agreement upon satisfaction of certain conditions and the deposit with
the trustee of sufficient funds, or Defeasance Obligations, the principal of and
the interest on which, when due, without any reinvestment thereof, will provide
moneys which will be sufficient to pay when due the principal of and premium, if
any, and interest due and to become due on such bond. If any bond is not to be
redeemed or does not mature within 60 days after such deposit, Doral Properties
must give irrevocable instructions to the trustee to give notice, in the same
manner as notice of redemption, that such deposit has been made. The bonds shall
have not been deemed paid unless the trustee shall have received an opinion of
counsel experienced in bankruptcy matters to the effect that payment to the
bondholders would not constitute a voidable preference under the provisions of
the United States Bankruptcy Code, and an opinion of counsel experienced in tax
matters under the Code to the effect that, assuming continued compliance by
Doral Properties with the Source of Income Requirements, the deposit of said
obligations or moneys would not adversely affect the interest received by the
bondholders as income from sources within Puerto Rico. (Section 1301)
"Defeasance Obligations" means noncallable Government Obligations as
defined below and, to the extent from time to time permitted by law,
(1) obligations issued or guaranteed by the Federal National Mortgage
Association, Federal Home Loan Mortgage Corporation, Farm Credit System,
Federal Home Loan Banks or Student Loan Marketing Association,
(2) obligations of state, territory or local government issuers which
are rated in the highest rating category by Standard & Poor's or Moody's,
provision for the payment of the principal of and interest on which shall
have been made by deposit with the trustee or escrow agent of noncallable
Government Obligations, the maturing principal of and interest on such
Government Obligations, when due and payable, shall provide sufficient
money to pay the principal of and redemption premium, if any, and interest
on such obligations of state, territory or local government issuers, and
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<PAGE> 34
(3) evidences of ownership of a proportionate interest in obligations
specified in clauses (1) and (2) above held by a bank or trust company
organized and existing under the laws of the United States of America or
any state or territory thereof as custodian.(Section 101)
Government Obligations are defined as:
(1) direct obligations of, or obligations the timely payment of
principal of and interest on which are fully and unconditionally guaranteed
by, the United States of America, and
(2) any certificates or other evidences of ownership interests in
obligations or in specified portions thereof, which may consist of
specified portions of the principal thereof or the interest thereon, of the
character described in clause (1). (Section 101)
THE TRUSTEE
Citibank, N.A., the trustee under the trust agreement, is also a lender
under a loan agreement which provides a warehousing loan facility to Doral
Financial and Doral Mortgage Corporation. The trustee may have other banking
relationships with Doral Financial in the ordinary course of business.
The Trust Indenture Act imposes certain limitations on the right of the
trustee, as a creditor of Doral Financial, to obtain payment of claims in
certain cases, or to realize on certain property received in respect to any such
claim as security or otherwise. (Section 917) The trustee will be permitted to
engage in other transactions with Doral Financial or its affiliates, provided
that if it acquires a conflicting interest within the meaning of Section 310 of
the Trust Indenture Act, it must generally either eliminate such conflict or
resign. (Section 914)
In the case an event of default shall occur and shall not be cured, the
trustee will be required to use the degree of care of a prudent person in the
conduct of its own affairs in the exercise of its powers.
THE MORTGAGE AND THE PLEDGE AGREEMENT
The bonds will be secured by a pledge of the mortgage note. The mortgage
note will be pledged to AFICA pursuant to a pledge agreement as security for the
obligations of Doral Properties and Doral Financial under the loan and guaranty
agreement. Pursuant to the trust agreement, AFICA will assign its rights under
the pledge agreement to the trustee as security for the bonds and will deliver
the mortgage note to the trustee. The mortgage note will be secured by the
mortgage.
The mortgage will be a first mortgage lien on the parcels of real property
with an approximate aggregate area of 10,569 square meters where the Center will
be located and will extend to all the buildings and structures located thereon.
The lien of the mortgage will be subject to rights of way easements and other
easements, and certain other real property rights which do not materially and
adversely affect the operation of the Center.
If Doral Properties sells any of the two parcels that include the two
buildings adjacent to the new office building to be used for support services,
then, at the request of Doral Properties, the trustee is required to release
such parcel from the lien of the mortgage, provided that the property still
subject to the mortgage has an appraised value equal to or greater than the
outstanding principal amount of the bonds.
The mortgage and the pledge agreement contain covenants of Doral Properties
normally required of mortgagors with respect to properties similar to the
Center, including covenants with respect to compliance with environmental laws
and regulations and maintenance of insurance. Doral Properties is required to
maintain insurance on the Center of the types and in the amounts as are
customary for similar commercial properties in Puerto Rico. Failure by Doral
Properties to comply with these covenants is an event of default under the loan
and guaranty agreement. Pursuant to the terms of the pledge agreement, upon the
occurrence of any event of default under the loan and guaranty agreement, the
trust agreement, the mortgage or the pledge agreement, the trustee shall be
entitled to foreclose the pledge of the mortgage
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note and the mortgage and sell the real estate covered by the mortgage and apply
the proceeds of the sale to the payment of the bonds.
A mortgagee title insurance policy insuring the mortgage as a first lien on
the property encumbered by the mortgage, subject only to the encumbrances
described above and certain other permitted encumbrances, will be delivered at
the time of issuance of the bonds in an amount equal to the principal amount of
the bonds.
The pledge agreement requires Doral Properties to restore or replace the
Center or the affected portions thereof in the event of any damage due to
casualty or loss due to partial condemnation, and to apply any insurance or
condemnation proceeds received as a result of such event to such restoration,
except in the case of a casualty or condemnation with an estimated cost of
restoration of $100,000 or less.
AFICA
GENERAL
The Puerto Rico Industrial, Tourist, Educational, Medical and Environmental
Control Facilities Financing Authority ("AFICA") is a body corporate and politic
constituting a public corporation and governmental instrumentality of Puerto
Rico. The Legislature of Puerto Rico determined that the development and
expansion of commerce, industry, and health and educational services within
Puerto Rico is essential to the economic growth of Puerto Rico and to attain
full employment and preserve the health, welfare, safety and prosperity of all
its citizens. The Legislature of Puerto Rico also determined that new methods of
financing capital investments were required to promote industry in Puerto Rico
and to provide modern and efficient medical facilities for the citizens of
Puerto Rico. Accordingly, AFICA was created under Act No. 121 of the Legislature
of Puerto Rico, approved June 27, 1977, as amended (the "Act"), for the purpose
of promoting the economic development, health, welfare and safety of the
citizens of Puerto Rico. AFICA is authorized to borrow money through the
issuance of revenue bonds and to loan the proceeds thereof to finance the
acquisition, development, construction and equipping of industrial, tourist,
educational, medical and environmental pollution control and solid waste
disposal facilities. AFICA has no taxing power. AFICA's offices are located at
Minillas Government Center, De Diego Avenue, Stop 22, San Juan, Puerto Rico
00940. AFICA's telephone number is (787) 782-4060.
GOVERNING BOARD
The Act provides that the Governing Board of AFICA shall consist of seven
members. The President of Government Development Bank for Puerto Rico ("GDB"),
the Executive Director of Puerto Rico Industrial Development Company, the
Executive Director of Puerto Rico Aqueduct and Sewer Authority, the President of
the Puerto Rico Environmental Quality Board and the Executive Director of the
Puerto Rico Tourism Company are each ex officio members of the Governing Board
of AFICA. The remaining two members of the Governing Board of AFICA are
appointed by the Governor of Puerto Rico for terms of four years. As of the date
of this official statement and prospectus, the position of the Executive
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Director of the Aqueduct and Sewer Authority is vacant. The following
individuals are the current members of the Governing Board of AFICA:
<TABLE>
<CAPTION>
NAME POSITION TERM OCCUPATION
- ---- ----------- ---------------- --------------------------------
<S> <C> <C> <C>
Lourdes Chairperson Indefinite President, Government
Rovira-Rizek....... Development Bank for Puerto Rico
Hector Member Indefinite President, Puerto Rico
Russe-Martinez..... Environmental Quality Board
Jose Corujo.......... Member Indefinite Executive Director, Puerto Rico
Tourism Company
Xavier Romeu......... Member Indefinite Executive Director, Puerto Rico
Industrial Development Company
James Thordsen....... Member June 27, 2002 President, James Thordsen, Inc.
Jose Salas-Soler..... Member October 22, 2001 Attorney-at-Law
</TABLE>
The Act provides that the affirmative vote of four members is sufficient
for any action taken by the Governing Board.
The following individuals are currently officers of AFICA:
Carlos Colon de Armas, Executive Director of AFICA, is also Executive Vice
President of GDB. He was appointed to these positions in February of 1999. Mr.
Colon de Armas received a PhD in finance from Purdue University in 1992. Prior
to his appointment, he was Deputy Executive Director of the Puerto Rico Highway
and Transportation Authority.
Velmarie Berlingeri, Assistant Executive Director of AFICA, is also a Vice
President of GDB. Ms. Berlingeri has been associated with GDB since 1993. She
received a Bachelor of Science in Business Administration degree from the
University of Puerto Rico in 1982. Prior to her appointment, she worked in the
investments area of a major private corporation in Puerto Rico.
Delfina Betancourt Capo, Secretary and General Counsel of AFICA, is also
Senior Vice President and General Counsel of GDB. Ms. Betancourt has been
associated with GDB since 1984. She received a law degree from Cornell
University in 1982.
OUTSTANDING REVENUE BONDS AND NOTES OF AFICA
As of June 30, 1999, AFICA had revenue bonds and notes issued and
outstanding in the principal of approximately $2.5 billion. All such bond and
note issues have been authorized and issued pursuant to trust agreements or
resolutions separate from and unrelated to the trust agreement relating to the
bonds and are payable from sources other than the payments under the loan
agreement.
Under the Act, AFICA may issue additional bonds and notes from time to time
to finance industrial, tourist, educational, medical or pollution control
facilities. However, any such bonds and notes would be authorized and issued
pursuant to other trust agreements or resolutions separate from and unrelated to
the trust agreement relating to the bonds and would be payable from sources
other than the payments under the loan agreement.
GOVERNMENT DEVELOPMENT BANK FOR PUERTO RICO
As required by Act No. 272 of the Legislature of Puerto Rico, approved May
15, 1945, as amended, GDB has acted as a financial advisor to AFICA in
connection with the issuance and sale of the bonds.
GDB is a public corporation with varied governmental financial functions.
Its principal functions are to act as financial advisor to and fiscal agent for
Puerto Rico, its municipalities and its public corporations in connection with
the issuance of bonds and notes, to make advances to public corporations and to
make loans to private enterprises that will aid in the economic development of
Puerto Rico. The underwriters have been selected by GDB to act from time to time
as underwriters of its obligations and the obligations
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of Puerto Rico, its instrumentalities and public corporations. The underwriters
or their affiliates also participate in other financial transactions with GDB.
TAXATION
In the opinion of Fiddler Gonzalez & Rodriguez, LLP, bond counsel, under
the provisions of the Acts of Congress and the laws of Puerto Rico now in force:
1. The bonds and the transfer of the bonds, including any gain derived
upon the sale of the bonds, are exempt from Puerto Rico income tax pursuant
to Article 8(b) of Act No. 121 of the Legislature of Puerto Rico.
2. Interest on the bonds is:
(A) excluded from the gross income of the recipient thereof for
Puerto Rico income tax purposes pursuant to Section 1022(b)(4)(B) of the
Puerto Rico Internal Revenue Code of 1994, as amended,
(B) exempt from Puerto Rico income tax and alternative minimum tax
pursuant to Section 1022(b)(4)(B) of the Puerto Rico Internal Revenue
Code, as amended, Article 8(b) of Act No. 121 of the Legislature of
Puerto Rico, and Section 3 of the Puerto Rico Federal Relations Act; and
(C) exempt from Puerto Rico municipal license tax pursuant to
Section 9(25) of the Puerto Rico Municipal License Tax Act of 1974, as
amended, and Section 3 of the Puerto Rico Federal Relations Act.
3. The bonds are exempt from Puerto Rico personal property tax
pursuant Section 3.11 of the Puerto Rico Municipal Property Tax Act of
1991, as amended, and Section 3 of the Puerto Rico Federal Relations Act.
4. The bonds are exempt from Puerto Rico (A) gift tax with respect to
donors who are residents of Puerto Rico at the time the gift is made and
(B) estate tax with respect to estates of decedents who are residents of
Puerto Rico at the time of death, excluding, in each case, United States
citizens who acquired their United States citizenship other than by reason
of birth or residence in Puerto Rico.
5. The bonds will be considered an obligation of an instrumentality of
Puerto Rico for purposes of (i) the non-recognition of gain rules of
Section 1112(f)(2)(A) of the Puerto Rico Internal Revenue Code applicable
to certain involuntary conversions and (ii) the exemption from the surtax
imposed by Section 1102 of the Puerto Rico Internal Revenue Code available
to corporations and partnerships that have a certain percentage of their
net income invested in obligations of instrumentalities of Puerto Rico and
certain other investments.
6. Interest on the bonds constitutes "industrial development income"
under Section 2(j) of the Puerto Rico Industrial Incentives Act of 1963,
the Puerto Rico Industrial Incentives Act of 1978, the Puerto Rico Tax
Incentives Act of 1987, and the Puerto Rico Tax Incentives Act of 1998, as
amended (collectively, the "Acts"), when received by a holder of a grant of
tax exemption issued under any of the Acts that acquired the bonds with
"eligible funds", as such term is defined in the Acts.
In the opinion of Fiddler Gonzalez & Rodriguez, LLP, bond counsel, based
upon the provisions of the Internal Revenue Code now in force and assuming that
Doral Properties complies with the source of income covenants contained in the
loan and guaranty agreement, then:
1. interest received or accrued, or "original issue discount" within
the meaning of the Internal Revenue Code, on the bonds is excludable from
gross income for income tax purposes under the
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<PAGE> 38
Internal Revenue Code if the holder of the bonds is an individual who is a
bona fide resident of Puerto Rico during the entire taxable year in which
such interest is received or accrued,
2. interest received or accrued, or "original issue discount", on the
bonds is not subject to federal income taxation if the holder of the bonds
is a corporation organized under the laws of Puerto Rico or any foreign
country and the interest is not effectively connected with the conduct of a
trade or business in the United States by the corporation, the corporation
is not a foreign personal holding company, a controlled foreign corporation
or a passive foreign investment company under the U.S. internal revenue
code, and the corporation is not treated as a domestic corporation for the
purposes of the U.S. internal revenue code; and
3. interest on the bonds is not excludable from the gross income of
the recipients thereof for federal income tax purposes under Section 103(a)
of the Internal Revenue Code.
United States taxpayers, other than individuals who are bona fide residents
of Puerto Rico during the entire taxable year, will be subject to federal income
tax on any gain realized upon the sale or exchange of the bonds. Pursuant to
Notice 89-40 issued by the United States Internal Revenue Service on March 27,
1989, gain on the sale of the bonds, excluding "original issue discount" accrued
under the Internal Revenue Code as of the date of such sale or exchange, by an
individual who is a bona fide resident of Puerto Rico during the entire taxable
year and that is a resident of Puerto Rico for purposes of Section 865(g)(1) of
the Internal Revenue Code will constitute Puerto Rico source income and,
therefore, qualify for the exclusion provided in Section 933(l) of the Internal
Revenue Code, provided such bonds do not constitute inventory in the hands of
such individual.
The Puerto Rico Internal Revenue Code does not provide rules with respect
to the treatment of the excess of the amount due at maturity of a bond over its
initial offering price ("original issue discount"). Under current administrative
practice followed by the Puerto Rico Treasury Department, original issue
discount is treated as interest.
You should be aware that ownership of the bonds may result in having a
portion of your interest expense allocable to interest on the bonds disallowed
for purposes of computing the regular tax and the alternative minimum tax for
Puerto Pico income tax purposes.
The opinion of Fiddler Gonzalez & Rodriguez, LLP, bond counsel, regarding
the tax consequences under the Internal Revenue Code and the Puerto Rico
Internal Revenue Code arising from ownership or disposition of the bonds is
limited to the above.
RATINGS
The bonds are rated "Baa3" by Moody's Investors Service, Inc., "BBB-" by
Standard & Poor's Ratings Services and "BBB" by Duff & Phelps. There is no
assurance that any rating given to the bonds will remain in effect for any given
period or that it will not be revised downward or withdrawn entirely by Standard
& Poor's, Duff & Phelps or Moody's if, in their sole judgment, circumstances so
warrant. Any such downward revision or withdrawal of a rating may have an
adverse effect on the market prices of the bonds.
The ratings given to the bonds reflect only the views of Standard & Poor's,
Duff & Phelps and Moody's. An explanation of the significance of any rating may
be obtained from Standard & Poor's at 55 Water St., New York, New York 10041;
from Duff & Phelps at 55 East Monroe Street, Chicago, Illinois 60608; and from
Moody's at 99 Church Street, New York, New York 10007. Attached as Appendix B
are the descriptions given by these rating agencies to their investment grade
rating classifications. A rating does not constitute a recommendation to buy,
sell or hold the bonds, and each should be evaluated independently of any other
rating.
Standard & Poor's, Duff & Phelps and Moody's were provided with materials
relating to Doral Properties, Doral Financial, the bonds and other relevant
information, and no application has been made to any other rating agency for
purposes of obtaining a rating on the bonds. In addition, if requested, Doral
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<PAGE> 39
Properties and Doral Financial shall deliver to Standard & Poor's, Duff & Phelps
and Moody's, from time to time, such documents and other relevant information
required for purposes of Standard & Poor's, Duff & Phelps and Moody's restating
or reconfirming the rating of the bonds.
LEGAL INVESTMENT
The bonds will be eligible for deposit by banks in Puerto Rico to secure
public funds and will be approved investments for insurance companies to qualify
them to do business in Puerto Rico as required by law.
PLAN OF DISTRIBUTION
Subject to the terms and conditions of a certain bond purchase agreement to
be entered into among AFICA, Doral Properties, Doral Financial and the
underwriters named on the cover page of this official statement and prospectus
(the "bond purchase agreement"), AFICA has agreed to sell to the underwriters,
and each of the underwriters has severally agreed to purchase from AFICA, the
aggregate principal amount of bonds set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITER OF BONDS
- ----------- ----------------
<S> <C>
Popular Securities, Inc..................................... $
PaineWebber Incorporated of Puerto Rico.....................
Doral Securities, Inc.......................................
Merrill Lynch & Co..........................................
Morgan Stanley & Co. Incorporated...........................
Salomon Smith Barney Inc....................................
--------
Total........................................... $
</TABLE>
Under the terms of the bond purchase agreement, the underwriters are
obligated to purchase all of the bonds shown on the inside front cover page of
this official statement and prospectus, if any bonds are purchased.
The underwriters will purchase the bonds at the public offering price
thereof less the underwriting discount set forth below:
<TABLE>
<CAPTION>
AGGREGATE OFFERING PROCEEDS TO
PRICE OF THE UNDERWRITING DORAL
BONDS DISCOUNT PROPERTIES(1)
------------------ ------------ --------------
<S> <C> <C> <C>
Per bond............................................. % % %
Total...................................... $ $ $
</TABLE>
- ---------------
(1) Before deducting expenses of this offering payable by Doral Properties
estimated at $921,000.
The bonds are a new issue of securities with no established trading market.
The underwriters have advised Doral Properties and Doral Financial that they
presently intend to make a market as permitted by applicable laws and
regulations. The underwriters are not obligated, however, to make a market in
the bonds and any such market making may be discontinued at any time at the sole
discretion of the underwriters. Accordingly, no assurance can be given as to the
liquidity of, or trading markets for, the bonds.
The underwriters propose initially to offer the bonds to the public, when,
as and if issued by AFICA and accepted by the underwriters, at the initial
public offering prices set forth or derived from information shown on the inside
front cover page of this official statement and prospectus. The initial offering
prices may be changed from time to time by the underwriters. The underwriters
may offer and sell the bonds to
35
<PAGE> 40
certain dealers (including dealers depositing bonds into investment trusts) and
others at prices lower than the initial public offering prices stated or derived
from information shown on the inside front cover page hereof.
In connection with this offering, the underwriters may engage in
transactions that stabilize, maintain or otherwise affect the market price of
the bonds, including stabilizing, syndicate short covering and penalty bid
transactions. Such stabilizing, if commenced, may be discontinued at any time.
The underwriters have informed Doral Properties and Doral Financial that,
in accordance with Rule 2720(l) of the NASD, they will not sell bonds to
accounts over which they exercise discretionary authority without the prior
specific written authorization of the customer.
The bond purchase agreement will provide that the obligations of the
underwriters thereunder are subject to approval of certain legal matters by
counsel and to various other conditions. The underwriters are committed to
purchase all of the bonds if any are purchased.
Doral Properties and Doral Financial have agreed to reimburse the
underwriters for their out of pocket expenses (including fees of their counsel)
in connection with the sale of the bonds. Doral Properties and Doral Financial
have also agreed to indemnify the underwriters and AFICA against certain civil
liabilities, including liabilities under the Securities Act of 1933, or to
contribute to payments that the underwriters may be required to make in respect
thereof.
Doral Securities, Inc., is a wholly-owned subsidiary of Doral Financial and
an affiliate of Doral Properties. Accordingly, the offering is being conducted
in accordance with Rule 2720 of the National Association of Securities Dealers,
Inc.
Several of the underwriters have from time to time been customers of,
engaged in transactions with, or performed services for, Doral Financial and its
subsidiaries in the ordinary course of business. The underwriters may continue
to do so in the future. In addition, Popular, Inc., the parent company of
Popular Securities, Inc., one of the underwriters, owns all the outstanding
shares of Doral Financial's 8% Preferred Stock. The shares of common stock
issuable upon conversion of the 8% Preferred Stock together with other shares of
common stock owned by Popular, Inc. equal approximately 4.9% of Doral
Financial's outstanding common stock.
CONTINUING DISCLOSURE COVENANT
Doral Financial will enter into a continuing disclosure agreement with the
trustee wherein Doral Financial will covenant for the benefit of the holders and
the beneficial owners of the bonds to file within 120 days after the end of each
fiscal year with each nationally recognized municipal securities information
repository ("NRMSIR") and with any Puerto Rico state information depository
("SID"), core financial information and operating data for Doral Financial and
its consolidated subsidiaries for such fiscal year, including (1) audited
financial statements for Doral Financial prepared in accordance with generally
accepted accounting principles in effect from time to time, and (2) operating
and financial data generally found or incorporated by reference in this official
statement and prospectus. So long as Doral Financial is subject to the
informational requirements of the Securities Exchange Act of 1934, Doral
Financial expects to provide this core financial information and operating data
by filing with each NRMSIR and with any Puerto Rico SID copies of its Annual
Report on Form 10-K. However, in the event that at any time Doral Financial
ceases to be subject to the informational requirements of the Securities
Exchange Act of 1934, Doral Financial may modify the scope and format of the
operating and financial data filed with each NRMSIR and any Puerto Rico SID,
provided that such data will include at least information of the type generally
found in items 1, 2, 3 and 7 of its Annual Report on Form 10-K.
36
<PAGE> 41
Doral Financial will also covenant to file in a timely manner with each
NRMSIR or with the Municipal Securities Rulemaking Board ("MSRB"), and with any
Puerto Rico SID, notice of any of the following events with respect to the
bonds, to the extent applicable, if material:
(1) principal and interest payment delinquencies;
(2) non-payment related defaults;
(3) unscheduled draws on debt service reserves reflecting financial
difficulties;
(4) unscheduled draws on credit enhancements reflecting financial
difficulties;
(5) substitution of credit or liquidity providers, or their failure to
perform;
(6) adverse tax opinions or events affecting the tax-exempt status of
the bonds;
(7) modifications to rights of bondholders;
(8) bond calls;
(9) defeasances;
(10) release, substitution, or sale of property securing repayment of
the bonds; and
(11) rating changes.
Doral Financial will also covenant to file in a timely manner with each
NRMSIR or with the MSRB, and with any Puerto Rico SID, notice of a failure to
provide the required annual financial information on or before the specified
period.
These covenants have been made in order to assist the Underwriters in
complying with paragraph (b)(5) of Rule 15c2-12 of the SEC.
Doral Financial does not undertake to provide the above-described event
notice of a scheduled redemption, not otherwise contingent upon the occurrence
of an event, if the terms, dates and amounts of redemption are set forth in
detail in this official statement and prospectus under "The Bonds -- Mandatory
Redemption."
As of the date of this official statement and prospectus, there was no
Puerto Rico SID. The nationally recognized municipal securities information
repositories are: Bloomberg Municipal Repository, P.O. Box 840, Princeton, New
Jersey 08542-0840; Kenny Information Systems, Inc., Attn: Kenny Repository
Service, 55 Water Street, New York, New York 10004; Thompson NRMSIR, 395 Hudson
Street, New York, New York 10004, Attn: Municipal Disclosure; and DPC Data Inc.,
One Executive Drive, Fort Lee, New Jersey 07024.
Doral Financial may from time to time choose to provide notice of the
occurrence of certain other events in addition to those listed above if, in its
judgment, such other events are material with respect to the bonds, but Doral
Financial does not undertake to provide any such notice of the occurrence of any
material event except those events listed above.
No bondholder may institute any suit, action or proceeding at law or in
equity ("Proceeding") for the enforcement of the foregoing covenants or for any
remedy for breach thereof, unless such bondholder shall have filed with Doral
Financial written notice of any request to cure such breach, and Doral Financial
shall have refused to comply within a reasonable time. All Proceedings shall be
instituted only as specified in such Continuing Disclosure Agreement in any
federal or Puerto Rico court located in the Municipality of San Juan, and for
the equal benefit of all bondholders of the outstanding bonds benefitted by the
same or a substantially similar covenant, and no remedy shall be sought or
granted other than specific performance by Doral Financial of the covenant at
issue. Notwithstanding the foregoing, no challenge to the adequacy of the
information provided in accordance with the filings mentioned above may be
prosecuted by any bondholder except in compliance with the remedial and
enforcement provisions contained in the trust agreement. See "Summary of the
Trust Agreement -- Enforcement of Remedies."
37
<PAGE> 42
The above covenants may only be amended or waived if:
(1) the amendment or waiver is made in connection with a change in
circumstances that arises from a change in legal requirements, change in
law, or change in the identity, nature or status of Doral Properties or
Doral Financial, the covenants, as amended, or the provision as waived,
would have complied with the requirements of the Rule at the time of award
of the bonds, after taking into account any amendments or change in
circumstance as evidenced by the receipt of an opinion of counsel
experienced in federal securities laws acceptable to the trustee and Doral
Financial; and the amendment or waiver does not materially impair the
interests of the bondholders, as determined by the trustee or by counsel
experienced in federal securities laws acceptable to the trustee and Doral
Financial; and
(2) the annual financial information containing, if applicable, the
amended operating data or financial information will explain, in narrative
form, the reasons for the amendment or waiver and the impact of the change
in the type of operating data or financial information being provided.
WHERE YOU CAN FIND MORE INFORMATION
Doral Financial files annual, quarterly and current reports, proxy
statements and other information with the SEC. Doral Financial has also filed
with the SEC a registration statement on Form S-3, to register the securities
being offered by this official statement and prospectus. This official statement
and prospectus, which forms part of the registration statement, does not contain
all of the information included in the registration statement. For further
information about Doral Financial and the securities offered in this official
statement and prospectus, you should refer to the registration statement and its
exhibits.
You may read and copy any document filed by Doral Financial with the SEC at
the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 for further information on the
operation of the Public Reference Room. Doral Financial files its SEC materials
electronically with the SEC, so you can also review Doral Financial's filings by
accessing the web site maintained by the SEC at http://www.sec.gov. This site
contains reports, proxy and information statements and other information
regarding issuers that file electronically with the SEC.
The SEC allows Doral Financial to "incorporate by reference" the
information it files with them, which means that it can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be a part of this official statement
and prospectus. Information that Doral Financial files later with the SEC will
automatically update and supersede information in this official statement and
prospectus. In all cases, you should rely on the later information over
different information included in this official statement and prospectus. Doral
Financial has previously filed the following documents with the SEC and is
incorporating them by reference into this official statement and prospectus:
- Annual Report on Form 10-K for the year ended December 31, 1998;
- Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999 and
June 30, 1999; and
- Current Reports on Form 8-K, dated January 12, 1999, February 22, 1999,
April 8, 1999, May 14, 1999, July 7, 1999, August 3, 1999, September 1,
1999, and October 7, 1999.
Doral Financial also incorporates by reference, from the date of the
initial filing of the registration statement, all documents filed by it with the
SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of
1934 after the date of this official statement and prospectus and until Doral
Financial sells all of the securities being offered by this official statement
and prospectus.
38
<PAGE> 43
You may request a copy of these filings at no cost, by writing or
telephoning Doral Financial at the following address:
Doral Financial Corporation
Attn.: Mario S. Levis, Executive
Vice President & Treasurer
1159 Franklin D. Roosevelt Avenue
San Juan, Puerto Rico 00920
(787) 749-7108
LEGAL MATTERS
Legal matters incident to the authorization, issuance and sale of the bonds
are subject to the unqualified approving opinion of Fiddler Gonzalez &
Rodriguez, LLP, San Juan, Puerto Rico, Bond Counsel. Certain legal matters will
be passed upon for Doral Properties and Doral Financial by Pietrantoni Mendez &
Alvarez LLP, San Juan, Puerto Rico, and for the underwriters by O'Neill &
Borges, San Juan, Puerto Rico. As of the date of this official statement and
prospectus, attorneys working in Pietrantoni Mendez & Alvarez LLP owned, in the
aggregate, approximately 3,468 shares of common stock of Doral Financial.
EXPERTS
The financial statements of Doral Financial as of December 31, 1998 and
1997 and for each of the three years in the period ended December 31, 1998
incorporated by reference in this official statement and prospectus have been
incorporated herein in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
PUERTO RICO INDUSTRIAL, TOURIST,
EDUCATIONAL, MEDICAL AND
ENVIRONMENTAL CONTROL
FACILITIES FINANCING AUTHORITY
By:
--------------------------------------
Carlos Colon de Armas
Executive Director
APPROVED:
DORAL PROPERTIES, INC.
By:
- ----------------------------------------------------
DORAL FINANCIAL CORPORATION
By:
- ----------------------------------------------------
39
<PAGE> 44
APPENDIX A
PROPOSED FORM OF OPINION OF BOND COUNSEL
, 1999
Puerto Rico Industrial, Tourist, Educational,
Medical and Environmental Control Facilities
Financing Authority
San Juan, Puerto Rico
Gentlemen:
We have examined Act No. 121 of the Legislature of Puerto Rico, approved
June 27, 1977, as amended (the "Act"), creating Puerto Rico Industrial, Medical,
Educational and Environmental Pollution Control Facilities Financing Authority
(the "Authority"), a body corporate and politic constituting a public
corporation and governmental instrumentality of Puerto Rico ("Puerto Rico").
We have also examined certified copies of the resolution of the Board of
Directors of the Authority authorizing the execution and delivery of the Trust
Agreement and the Loan Agreement hereinafter referred to, and certified copies
of the proceedings and other proofs submitted relative to the authorization,
issuance, and sale of the following bonds (the "Bonds"):
$
PUERTO RICO INDUSTRIAL, TOURIST, EDUCATIONAL, MEDICAL
AND ENVIRONMENTAL CONTROL
FACILITIES FINANCING AUTHORITY
INDUSTRIAL REVENUE BONDS, 1999 SERIES A
(DORAL FINANCIAL CENTER PROJECT)
The Bonds are issued under and pursuant to a Deed of Trust Agreement (the
"Trust Agreement"), dated the date hereof, by and between the Authority and
, San Juan, Puerto Rico, Trustee (the "Trustee").
The proceeds of the sale of the Bonds are to be used for the purpose of
financing in part the development, construction, and equipping of a commercial
office building with an adjacent parking structure to be known as the Doral
Financial Center the ("Project") to be located in the Municipality of San Juan,
Puerto Rico.
The Authority has entered into a Loan and Guaranty Agreement, dated the
date hereof (the "Loan Agreement"), with Doral Properties, Inc. (the "Borrower")
and Doral Financial Corporation (the "Guarantor") providing for the loan of the
proceeds of the sale of the Bonds to the Borrower and for repayment by the
Borrower of the loan in amounts sufficient to pay the principal of and interest
on the Bonds as the same will become due and payable. The Loan Agreement
provides that the loan repayments will be paid directly to the Trustee and will
be deposited to the credit of a special fund created by the Trust Agreement and
designated "Industrial Revenue Bonds 1999 Series A (Doral Financial Center
Project) Bond Fund" (the "Bond Fund"), which special fund is charged with the
payment of the principal of, premium, if any, and interest on the Bonds. The
obligations of the Borrower under the Loan Agreement are guaranteed by the
Guarantor. As additional security for the Bonds, the Authority will grant in
trust to the Trustee for the benefit of the Bondholders, substantially all its
rights under a first mortgage lien on the Project granted by the Borrower to the
Authority pursuant to a Pledge and Security Agreement by and between the
Borrower and the Authority (the "Pledge Agreement"). The Loan Agreement, except
for certain rights of the Authority, and the repayments thereunder, has been
assigned to the Trustee.
The Bonds are subject to redemption as provided in the Trust Agreement.
A-1
<PAGE> 45
As to any questions of fact material to our opinion, we have relied upon
representations of the Authority, the Borrower, and the Guarantor contained in
the Trust Agreement and the Loan Agreement, the certified proceedings and other
certifications by officials of the Authority, the Borrower, and the Guarantor
without undertaking to verify the same by independent investigation. For the
purposes of this opinion we assume that the Borrower and the Guarantor will
comply with all provisions of the Loan Agreement, particularly those dealings
with the source of income and that the proceeds of the Bonds will be used in
accordance with the provisions of the Trust Agreement.
We have also examined one of the Bonds as executed and authenticated.
All capitalized words and terms used in this opinion letter and not
otherwise defined herein will have the meanings ascribed to them in the Trust
Agreement.
From such examination, we are of the opinion that:
1. The Act is valid.
2. The proceedings of the Board of Directors of the Authority required
in connection with the authorization, issuance and sale of the Bonds and
the authorization, execution, and delivery of the Loan Agreement, the Trust
Agreement and the Pledge Agreement have been validly and legally taken.
3. The Trust Agreement, the Loan Agreement and the Pledge Agreement
have been duly authorized, executed and delivered by the Authority and
assuming due authorization, execution and delivery by the other parties
thereto, constitute the legal, valid, binding and enforceable obligations
of the Authority in accordance with their terms, except to the extent such
enforceability may be limited by bankruptcy, insolvency or other laws
affecting creditors' rights generally, and subject to general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
4. The Bonds have been duly authorized by the Authority and constitute
legal, valid, and binding obligations of the Authority, payable solely from
the Bond Fund and entitled to the benefit of the Trust Agreement.
5. All right, title and interest of the Authority in and to the Loan
Agreement (except certain rights of the Authority including its rights to
payment of expenses indemnity) have been validly assigned to the Trustee.
6. The Bonds do not constitute an indebtedness of either Puerto Rico
or any of its political subdivisions, other than the Authority, and neither
Puerto Rico nor any of such political subdivisions, other than the
Authority, will be liable thereon.
7. The Bonds, and the transfer of the Bonds, including any gain
derived upon the sale of the Bonds, are exempt from Puerto Rico income tax
pursuant to Article 8(b) of the Act.
8. Interest on the Bonds is (i) excluded from the gross income of the
recipient thereof for Puerto Rico income tax purposes pursuant to Section
1022(b)(4)(B) of the Puerto Rico Internal Revenue Code of 1994, as amended
(the "PR Code"); (ii) exempt from Puerto Rico income tax and alternative
minimum tax pursuant to Section 1022(b)(4)(B) of the PR Code, Article 8(b)
of the Act, and Section 3 of the Puerto Rican Federal Relations Act (the
"PRFRA"); and (iii) exempt from Puerto Rico municipal license tax pursuant
to Section 9(25) of the Puerto Rico Municipal License Tax Act of 1974, as
amended, and Section 3 of the PRFRA.
9. The Bonds are exempt from Puerto Rico personal property tax
pursuant to Section 3.11 of the Puerto Rico Municipal Property Tax Act of
1991, as amended, and Section 3 of the PRFRA.
10. The Bonds are exempt from Puerto Rico (i) gift tax with respect to
donors who are residents of Puerto Rico at the time the gift is made and
(ii) estate tax with respect to estates of decedents who are residents of
Puerto Rico at the time of death, excluding in each case United States
citizens
A-2
<PAGE> 46
who acquired their United States citizenship other than by reason of birth
or residence in Puerto Rico.
11. The Bonds will be considered an obligation of an instrumentality
of Puerto Rico for purposes of (i) the non-recognition of gain rules of
Section 1112(f)(2)(A) of the PR Code applicable to certain involuntary
conversions and (ii) the exemption from the surtax imposed by Section 1102
of the PR Code available to corporations and partnerships that have a
certain percentage of their net income invested in obligations of
instrumentalities of Puerto Rico and certain other investments.
12. Interest on the Bonds constitutes "industrial development income"
under Section 2(j) of the Puerto Rico Industrial Incentives Act of 1963,
the Puerto Rico Industrial Incentives Act of 1978, the Puerto Rico Tax
Incentives Act of 1987, and the Puerto Rico Tax Incentives Act of 1998, as
amended (collectively, the "Acts"), when received by a holder of a grant of
tax exemption issued under any of the Acts that acquired the Bonds with
"eligible funds", as such term is defined in the Acts.
13. Assuming that the Borrower complies with the source of income
representations, warranties and covenants contained in the Loan Agreement,
then:
(A) Interest received or accrued, or "original issue discount"
(within the meaning of the Code; "OID"), on the Bonds is excludable from
gross income pursuant to Section 933(1) of the Code if the holder of the
Bonds is an individual who is a bona fide resident of Puerto Rico during
the entire taxable year in which the interest is received or accrued.
(B) Interest received or accrued, or OID, on the Bonds is not
subject to United States federal income tax if the holder of the Bonds
is a corporation organized under the laws of Puerto Rico or any foreign
country and such interest is not effectively connected with the conduct
of a trade or business in the United States by such corporation, such
corporation is not a foreign personal holding company, a controlled
foreign corporation or a passive foreign investment company under the
Code, and such corporation is not treated as a domestic corporation for
the purposes of the Code.
14. Interest on the Bonds is not excluded from the gross income of the
recipient thereof for United States federal income tax purposes under
Section 103(a) of the Code.
United States taxpayers, other than individuals who are bona fide residents
of Puerto Rico during the entire taxable year, will be subject to United States
federal income tax on gain realized upon the sale or exchange of the Bonds.
Pursuant to Notice 89-40, 1989-1 CB 681, gain on the sale of the Bonds (not
including original issue discount accruing under the Code as of the date of such
sale or exchange) by an individual who is a bona fide resident of Puerto Rico
for purposes of Section 865(g)(1) of the Code will constitute income from
sources within Puerto Rico and will qualify for the exclusion provided in
Section 933(1) of the Code, provided that the Bonds do not constitute inventory
property in such individual's hands.
The PR Code does not provide rules with respect to the treatment of the
excess of the amount due at maturity of a bond over its initial offering price
("original issue discount"). Under current administrative practice followed by
the Puerto Rico Treasury Department, original issue discount is treated as
interest.
Ownership of the Bonds may result in having a portion of the interest
expense allocable to interest or original issue discount on the Bonds disallowed
for purposes of computing the regular tax and the alternative minimum tax for
Puerto Rico income tax purposes.
This opinion is limited to the above, and we express no other opinion
regarding Puerto Rico or United States tax consequences arising from ownership
or disposition of the Bonds.
This letter is furnished by us solely for the benefit of the Authority and
the holders from time to time of the Bonds and may not be relied upon by any
other person.
A-3
<PAGE> 47
We hereby consent to the inclusion of this opinion as Appendix A to the
official statement and prospectus included in the registration statement. We
further consent to the reference made to us under the captions "Summary -- Tax
Consequences," "Taxation" and "Legal Matters" in the official statement and
prospectus.
Respectfully submitted,
[To be signed
"Fiddler Gonzalez & Rodriguez, L.L.P"]
A-4
<PAGE> 48
APPENDIX B
INVESTMENT GRADE RATINGS OF MUNICIPAL AND CORPORATE BONDS
DESCRIPTION OF MOODY'S LONG TERM RATINGS
The purpose of Moody's ratings is to provide investors with a simple system
of gradation by which the relative investment qualities of bonds may be noted.
There are nine basic rating categories for long-term obligations, ranging from
Aaa (highest quality) to C (lowest quality). Moody's applies numerical modifiers
1, 2 and 3 in each generic rating classification from Aa to Caa. The modifier 1
indicates that the obligation ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates a ranking in the lower end of the generic rating category.
Aaa Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred
to as "gilt edged". Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.
Aa Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities
or fluctuation of protective elements may be of greater amplitude or
there may be other elements present which make the long-term risks
appear somewhat larger than in Aaa securities.
A Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in
the future.
Baa Bonds which are rated Baa are considered as medium-grade obligations
(i.e., they are neither highly protected nor poorly secured). Interest
payments and principal security appear adequate for the present, but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics
as well.
DESCRIPTION OF STANDARD & POOR'S MUNICIPAL AND CORPORATE DEBT RATINGS
A Standard & Poor's issue credit rating is a current opinion of the
creditworthiness of an obligor with respect to a specific financial obligation,
a specific class of financial obligations, or a specific financial program
(including ratings on medium term note programs and commercial paper programs).
It takes into consideration the creditworthiness of guarantors, insurers, or
other forms of credit enhancement on the obligation and takes into account the
currency in which the obligation is denominated.
The issue credit rating is not a recommendation to purchase, sell or hold a
financial obligation, inasmuch as it does not comment as to market price or
suitability for a particular investor.
The ratings are based on current information furnished by the obligors or
obtained by Standard & Poor's from other sources it considers reliable. Standard
& Poor's does not perform an audit in connection with any credit rating and may,
on occasion, rely on unaudited financial information. Credit ratings may be
changed, suspended or withdrawn as a result of changes in, or unavailability of,
such information, or based on other circumstances.
B-1
<PAGE> 49
The ratings are based, in varying degrees, on the following considerations:
1. Likelihood of payment -- capacity and willingness of the obligor to meet
its financial commitment on an obligation in accordance with the terms of the
obligation;
2. Nature of and provisions of the obligation;
3. Protection afforded by, and relative position of, the obligation in the
event of bankruptcy, reorganization or other arrangement under the laws of
bankruptcy and other laws affecting creditors' rights.
Investment grade:
AAA An obligation rated "AAA" has the highest rating assigned by Standard &
Poor's. The obligor's capacity to meet its financial commitment on the
obligation is EXTREMELY STRONG.
AA An obligation rated "AA" differs from the highest-rated obligations only
in small degree. The obligor's capacity to meet its financial commitment
on the obligation is VERY STRONG.
A An obligation rated "A" is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
obligations in higher-rated categories. However, the obligor's capacity
to meet its financial commitment on the obligation is still STRONG.
BBB An obligation rated "BBB" exhibits ADEQUATE protection parameters.
However, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity of the obligor to meet its
financial commitment on the obligation.
DESCRIPTION OF DUFF & PHELPS' LONG-TERM DEBT RATINGS
AAA Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA+ High credit quality. Protection factors are strong. Risk is modest but
may vary slightly from
AA time to time because of economic conditions.
AA-
A+ Protection factors are average but adequate. However, risk factors are
more variable
A in periods of greater economic stress.
A-
BBB+ Below average protection factors but still considered sufficient for
prudent investment.
BBB Considerable variability in risk during economic cycles.
BBB-
B-2
<PAGE> 50
- ------------------------------------------------------
- ------------------------------------------------------
PROSPECTIVE INVESTORS MAY RELY ONLY ON THE INFORMATION INCORPORATED BY
REFERENCE OR CONTAINED IN THIS OFFICIAL STATEMENT AND PROSPECTUS. NONE OF DORAL
PROPERTIES, DORAL FINANCIAL, AFICA OR ANY UNDERWRITER HAS AUTHORIZED ANYONE TO
PROVIDE PROSPECTIVE INVESTORS WITH INFORMATION DIFFERENT FROM THAT INCORPORATED
BY REFERENCE OR CONTAINED IN THIS OFFICIAL STATEMENT AND PROSPECTUS. THIS
OFFICIAL STATEMENT AND PROSPECTUS IS NOT AN OFFER TO SELL NOR IS IT SEEKING AN
OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT
PERMITTED. THE INFORMATION CONTAINED IN THIS OFFICIAL STATEMENT AND PROSPECTUS
IS CORRECT ONLY AS OF THE DATE OF THIS OFFICIAL STATEMENT AND PROSPECTUS,
REGARDLESS OF THE TIME OF THE DELIVERY OF THIS OFFICIAL STATEMENT AND PROSPECTUS
OR ANY SALE OF THESE SECURITIES.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary................................... 1
Risk Factors.............................. 5
Forward-Looking Statements................ 7
Recent Developments....................... 7
Doral Properties.......................... 8
Doral Financial........................... 8
Use of Proceeds........................... 9
Capitalization............................ 11
Selected Financial Data................... 12
Description of the Bonds.................. 15
Summary of the Loan and Guaranty
Agreement............................... 21
Summary of the Trust Agreement............ 26
The Mortgage and the Pledge Agreement..... 30
AFICA..................................... 31
Government Development Bank for Puerto
Rico.................................... 32
Taxation.................................. 33
Ratings................................... 34
Legal Investment.......................... 35
Plan of Distribution...................... 35
Continuing Disclosure Covenant............ 36
Where You Can Find More Information....... 38
Legal Matters............................. 39
Experts................................... 39
Appendix A: Proposed Form of Opinion of
Bond Counsel............................ A-1
Appendix B: Investment Grade Ratings of
Municipal and Corporate Bonds........... B-1
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
$44,425,000*
AFICA
INDUSTRIAL REVENUE BONDS
1999 SERIES A
(DORAL FINANCIAL
CENTER PROJECT)
----------------------------
OFFICIAL STATEMENT
AND PROSPECTUS
----------------------------
POPULAR SECURITIES
PAINEWEBBER INCORPORATED
OF PUERTO RICO
DORAL SECURITIES
MERRILL LYNCH & CO.
MORGAN STANLEY
DEAN WITTER
SALOMON SMITH BARNEY INC.
- ---------------
* Preliminary. Subject to change.
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 51
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses in connection with the offering all of which will be borne by
the Registrant are as follows (all amounts are estimates except for the SEC
Registration fee):
<TABLE>
<S> <C>
SEC registration fee........................................ $ 12,350
NASD fee.................................................... 4,943
AFICA fee................................................... 222,125
Printing expenses........................................... 30,000
Legal fees and expenses..................................... 215,000
Accounting fees and expenses................................ 25,000
Trustee fees and expenses................................... 15,000
Rating Agency fees.......................................... 50,000
Mortgage recordation and title insurance policy............. 300,000
Miscellaneous expenses...................................... 46,460
--------
Total............................................. $920,878
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
(a) Doral Financial Corporation and Doral Properties, Inc. are Puerto Rico
corporations.
(i) Article 1.02(b)(6) of the Puerto Rico General Corporation Act (the
"PR GCA") provides that a corporation may include in its certificate of
incorporation a provision eliminating or limiting the personal liability of
members of its board of directors or governing body for breach of a
director's fiduciary duty of care. However, no such provision may eliminate
or limit the liability of a director for breaching his duty of loyalty,
failing to act in good faith, engaging in intentional misconduct or
knowingly violating a law, paying a dividend or approving a stock
repurchase which was illegal, or obtaining an improper personal benefit. A
provision of this type has no effect on the availability of equitable
remedies, such as injunction or rescission, for breach of fiduciary duty.
Article Seventh of Doral Financial's Restated Certificate of Incorporation
and Doral Properties' Certificate of Incorporation contains such a
provision.
(ii) Article 4.08 of the PR GCA authorizes Puerto Rico corporations to
indemnify their officers and directors against liabilities arising out of
pending or threatened actions, suits or proceedings to which they are or
may be made parties by reason of being directors or officers. Such rights
of indemnification are not exclusive of any other rights to which such
officers or directors may be entitled under any by-law, agreement, vote of
stockholders or otherwise. The Restated Certificate of Incorporation of
Doral Financial and the Certificate of Incorporation of Doral Properties
provide that they shall indemnify their respective directors, officers and
employees to the fullest extent permitted by law. Doral Financial also
maintains directors' and officers' liability insurance on behalf of its
directors and officers.
(b) Section 1 of Article IX of Doral Financial's By-laws (the "By-laws")
provides that Doral Financial shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of Doral Financial) by
reason of the fact that he is or was a director, officer, employee or agent of
Doral Financial or is or was serving at the request of Doral Financial as a
director, officer, employer or agent of another corporation or enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a
II-1
<PAGE> 52
manner he reasonably believed to be in or not opposed to the best interests of
Doral Financial, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
Section 2 of Article IX of the By-laws provides that Doral Financial shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of
Doral Financial to procure a judgment in its favor by reason of the fact that
such person acted in any of the capacities set forth above, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted under similar standards set forth
in the preceding paragraph, except that no indemnification may be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to Doral Financial unless and only to the extent that the
court in which such action or suit was brought shall determine that despite the
adjudication of liability, such person is fairly and reasonably entitled to be
indemnified for such expenses which the court shall deem proper.
Section 3 of Article IX of the By-laws provides that to the extent a
director or officer of Doral Financial has been successful on the merits or
otherwise in the defense of any action, suit or proceeding referred to in
Sections 1 and 2 of Article IX of the By-laws or in the defense of any claim,
issue, or matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.
Section 5 of Article IX of the By-laws provides that Doral Financial shall
pay expenses incurred in defending a civil or criminal action, suit or
proceeding in advance of the final disposition of such action, suit or
proceeding. Doral Financial must make such advanced payments if it receives an
undertaking by or on behalf of any person covered by Section 1 of Article IX of
the By-laws to repay such amounts, if it is ultimately determined that he is not
entitled to be indemnified by Doral Financial as authorized in Article IX of the
By-laws.
Sections 6 and 7 of Article IX of the By-laws provide that indemnification
provided for by Sections 1 and 2 of Article IX of the By-laws shall not be
deemed exclusive of any other rights to which the indemnified party may be
entitled; and that Doral Financial may purchase and maintain insurance on behalf
of a director or officer of Doral Financial against any liability asserted
against him or incurred by him in any such capacity or arising out of his status
as such whether or not Doral Financial would have the power to indemnify him
against such liabilities under such Sections 1 and 2 of Article IX of the By-
laws.
(c) Doral Properties' By-laws contain provisions that are identical in all
respects to those provisions of Doral Financial's By-laws described in (b)
above.
ITEM 16. LIST OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
<C> <C> <S>
1.1** -- Bond Purchase Agreement among Doral Properties, Inc., Doral
Financial Corporation, Popular Securities, Inc., PaineWebber
Incorporated of Puerto Rico, Doral Securities, Inc.,
Santander Securities Corporation of Puerto Rico and Puerto
Rico Industrial, Tourist, Educational, Medical and
Environmental Control Facilities Financing Authority
("AFICA")
4.1** -- Loan and Guaranty Agreement among AFICA, Doral Properties,
Inc. and Doral Financial Corporation.
4.2** -- Trust Agreement between AFICA and Citibank, N.A.
4.3** -- Serial Bond (included in Exhibit 4.2 hereof).
4.4** -- Term Bond (included in Exhibit 4.2 hereof).
4.5** -- Continuing Disclosure Agreement
</TABLE>
II-2
<PAGE> 53
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
<C> <C> <S>
4.6** -- Deed of Constitution of First Mortgage.
4.7** -- Mortgage Note (included in Exhibit 4.6 hereof).
4.8** -- Pledge and Security Agreement.
5** -- Opinion of Pietrantoni Mendez & Alvarez LLP regarding
legality of securities being registered.
8** -- Opinion of Fiddler Gonzalez & Rodriguez, LLP with respect to
certain tax matters.
12** -- Statement of Computation of Ratios of Earnings to Fixed
Charges.
23.1** -- Consent of Pietrantoni Mendez & Alvarez, LLP (included in
Exhibit 5).
23.2** -- Consent of Fiddler Gonzalez & Rodriguez, LLP (included in
Exhibit 8).
23.3** -- Consent of PricewaterhouseCoopers LLP.
24* -- Powers of Attorney
25** -- Statement of Eligibility of Trustee on Form T-1.
</TABLE>
- ---------------
* Previously filed.
** Filed herewith.
ITEM 17. UNDERTAKINGS
The undersigned Co-registrants hereby undertake that for purposes of
determining any liability under the Act, each filing of Doral Financial
Corporation's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Co-registrants pursuant to the foregoing provisions in Item 15, or otherwise,
the Co-registrants have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Co-registrants of expenses incurred or paid by a director, officer or
controlling person of the Co-registrants in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Co-registrants
will, unless in the opinion of their counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by them is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
The undersigned Co-registrants hereby undertake that:
(1) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by any Co-registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering hereof.
II-3
<PAGE> 54
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
Co-registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly cause this
Pre-effective Amendment No. 1 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in San Juan, Puerto Rico,
on the 12th day of October, 1999.
DORAL FINANCIAL CORPORATION
By: /s/ RICHARD F. BONINI
------------------------------------
Richard F. Bonini
Senior Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Chairman of the Board and October 12, 1999
- ----------------------------------------------------- Chief Executive Officer
Salomon Levis
/s/ RICHARD F. BONINI Senior Executive Vice October 12, 1999
- ----------------------------------------------------- President, Chief Financial
Richard F. Bonini Officer and Director
* Vice President and Chief October 12, 1999
- ----------------------------------------------------- Accounting Officer
Ricardo Melendez
* Director October 12, 1999
- -----------------------------------------------------
A. Brean Murray
* Director October 12, 1999
- -----------------------------------------------------
Edgar M. Cullman, Jr.
Director
- -----------------------------------------------------
John L. Ernst
* Director October 12, 1999
- -----------------------------------------------------
Efraim M. Kier
* Director October 12, 1999
- -----------------------------------------------------
Zoila Levis
* Director October 12, 1999
- -----------------------------------------------------
Victor M. Pons, Jr.
* /s/ RICHARD F. BONINI
- -----------------------------------------------------
Richard F. Bonini
as attorney-in-fact for
each of the persons indicated
</TABLE>
II-4
<PAGE> 55
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
Co-registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly cause this
Pre-effective Amendment No. 1 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in San Juan, Puerto Rico,
on the 12th day of October, 1999.
DORAL PROPERTIES, INC.
By: /s/ MARIO S. LEVIS
------------------------------------
Mario S. Levis
Executive Vice President and
Treasurer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Chairman of the Board and October 12, 1999
- ----------------------------------------------------- Chief Executive Officer
Salomon Levis
* President and Director October 12, 1999
- -----------------------------------------------------
Zoila Levis
/s/ MARIO S. LEVIS Executive Vice President, October 12, 1999
- ----------------------------------------------------- Treasurer
Mario S. Levis (Principal Financial
Officer)
and Director
* Vice President and October 12, 1999
- ----------------------------------------------------- Controller
Ricardo Melendez
* /s/ MARIO S. LEVIS
- -----------------------------------------------------
Mario S. Levis
as attorney-in-fact for
each of the persons indicated
</TABLE>
II-5
<PAGE> 56
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENTS
- ------- ------------------------
<C> <C> <S>
1.1** -- Bond Purchase Agreement among Doral Properties, Inc., Doral
Financial Corporation, Popular Securities, Inc., PaineWebber
Incorporated of Puerto Rico, Doral Securities, Inc.,
Santander Securities Corporation of Puerto Rico and Puerto
Rico Industrial, Tourist, Educational, Medical and
Environmental Control Facilities Financing Authority
("AFICA")
4.1** -- Loan and Guaranty Agreement among AFICA, Doral Properties,
Inc. and Doral Financial Corporation.
4.2** -- Trust Agreement between AFICA and Citibank, N.A.
4.3** -- Serial Bond (included in Exhibit 4.2 hereof).
4.4** -- Term Bond (included in Exhibit 4.2 hereof).
4.5** -- Continuing Disclosure Agreement.
4.6** -- Deed of Constitution of First Mortgage.
4.7** -- Mortgage Note (included in Exhibit 4.6 hereof).
4.8** -- Pledge and Security Agreement.
5** -- Opinion of Pietrantoni Mendez & Alvarez LLP regarding
legality of securities being registered.
8** -- Opinion of Fiddler Gonzalez & Rodriguez, LLP with respect to
certain tax matters.
12** -- Statement of Computation of Ratios of Earnings to Fixed
Charges.
23.1** -- Consent of Pietrantoni Mendez & Alvarez, LLP (included in
Exhibit 5).
23.2** -- Consent of Fiddler Gonzalez & Rodriguez, LLP (included in
Exhibit 8).
23.3** -- Consent of PricewaterhouseCoopers LLP.
24* -- Powers of Attorney (included at pages II-4 and II-6).
25** -- Statement of Eligibility of Trustee on Form T-1.
</TABLE>
- ---------------
* Previously filed.
** Filed herewith.
II-6
<PAGE> 1
EXHIBIT 1.1
PUERTO RICO INDUSTRIAL, TOURIST, EDUCATIONAL,
MEDICAL AND ENVIRONMENTAL CONTROL
FACILITIES FINANCING AUTHORITY
INDUSTRIAL REVENUE BONDS
1999 SERIES A
(Doral Financial Center Project)
BOND PURCHASE AGREEMENT
October __, 1999
Puerto Rico Industrial, Tourist,
Educational, Medical and Environmental
Control Facilities Financing Authority
Minillas Government Center
Santurce, Puerto Rico
Attention: Executive Director
Doral Financial Corporation
Doral Properties, Inc.
1159 Franklin D. Roosevelt Avenue
San Juan, Puerto Rico 00920
Attention: President
Ladies and Gentlemen:
The undersigned (hereinafter called the "Underwriters") hereby offer
to enter into this Agreement with Puerto Rico Industrial, Tourist, Educational,
Medical and Environmental Control Facilities Financing Authority (hereinafter
called the "Authority"), a body corporate and politic constituting a public
corporation and governmental instrumentality of the Commonwealth of Puerto Rico
(the "Commonwealth"), created under Act No. 121 of the Legislature of Puerto
Rico, approved June 27, 1977, as amended (the "Act"), and with Doral Financial
Corporation, a corporation organized under the laws of the Commonwealth ("Doral
Financial") and Doral Properties,
<PAGE> 2
Inc., a corporation organized under the laws of the Commonwealth and a
wholly-owned subsidiary of Doral Financial (the "Borrower"), which upon your
acceptance of this offer and of this Agreement will be binding on the
Authority, Doral Financial, the Borrower and the Underwriters. This offer is
made subject to the acceptance of this Agreement by the Authority, Doral
Financial and the Borrower on or before 6:00 P.M., Atlantic Standard time, on
October __, 1999, and if not so accepted will be subject to withdrawal by the
Underwriters upon notice delivered to the Authority, Doral Financial and the
Borrower at any time prior to such acceptance.
1. PURCHASE AND SALE. Upon the terms and conditions and upon the
basis of the representations, warranties and agreements set forth herein, each
Underwriter hereby agrees, severally and not jointly, to purchase from the
Authority, and the Authority hereby agrees to sell and to deliver to each
Underwriter, the principal amount of the Authority's Industrial Revenue Bonds,
1999 Series A (Doral Financial Center Project) (hereinafter called the "Bonds")
set forth opposite such Underwriter=s name in Schedule I hereto, at a purchase
price of __% of the principal amount thereof. The Bonds shall be dated the date
of delivery thereof, shall bear interest at such rates, payable on the first
day of each month in each year, commencing ______________, 1999, until maturity
or prior redemption, all as described in the Official Statement and Prospectus
hereinafter mentioned.
2. THE BONDS AND THE OFFICIAL STATEMENT AND PROSPECTUS.
(a) The Bonds shall be as described in the Official Statement
and Prospectus of the Authority, dated October __, 1999. Such Official
Statement and Prospectus (including the cover page and all appendices included
therein and all information
2
<PAGE> 3
incorporated by reference therein), as amended or supplemented from time to
time, is hereinafter referred to as the "Official Statement and Prospectus."
The Bonds shall be issued and secured under and pursuant to a Trust Agreement,
to be dated as of October __, 1999 (the "Trust Agreement"), between the
Authority and Citibank, N.A., as trustee (the "Bond Trustee"). The Bonds shall
be payable and shall be subject to redemption as provided in the Trust
Agreement.
(b) The proceeds from the sale of the Bonds will be loaned by the
Authority to the Borrower pursuant to a Loan and Guaranty Agreement, to be
dated as of October __, 1999 (the "Loan and Guaranty Agreement"), between the
Authority, the Borrower, and Doral Financial, for the purpose, among other
things, of:
(i) financing, in part, the development,
construction and equipping of the Doral Financial Corporation Center (the
"Project"); and
(ii) paying certain expenses incurred in
connection with the issuance and sale of the Bonds.
(c) The obligations of the Borrower under the Loan and Guaranty
Agreement will be guaranteed by Doral Financial.
(d) Concurrently with its acceptance hereof, the Authority shall
deliver to the Representative (hereinafter referred to):
(i) a certified copy of the resolution or
resolutions of the Authority (collectively, the "Bond Resolution") approved and
adopted by the Board of Directors of the Authority on October __, 1999
authorizing the issuance and sale of the Bonds;
3
<PAGE> 4
and
(ii) a copy of the Official Statement and
Prospectus manually signed on behalf of the Authority by the Executive Director
or the Assistant Executive Director of the Authority, or any person authorized
to act on his behalf pursuant to the by-laws of the Authority, and approved by
the Borrower.
The Authority will provide to the Representative such additional
copies of the Bond Resolution and the Official Statement and Prospectus as the
Representative may reasonably request. As soon as practicable (but not later
than two days) after the date hereof, the Authority shall deliver to the
Underwriters a sufficient number of copies of the Official Statement and
Prospectus as the Underwriters may reasonably request so as to enable the
Underwriters to comply with the provisions of Paragraph (b)(4) of Rule 15c2-12
of the Securities Exchange Act of 1934, as amended (the "Rule"). The Authority
shall be under no obligation to determine what number of copies of the Official
Statement and Prospectus requested by the Underwriters pursuant to the
preceding sentence shall be sufficient to enable the Underwriters to comply
with the requirements of the Rule.
The Authority has previously delivered to the Underwriters a
Preliminary Official Statement and Prospectus of the Authority, dated October
__, 1999, relating to the Bonds (such Preliminary Official Statement and
Prospectus, including all appendices thereto, and all information included or
incorporated by reference therein, being herein called the "Preliminary
Official Statement and Prospectus").
(e) Concurrently with its acceptance hereof, the Borrower
4
<PAGE> 5
shall deliver to the Representative a letter signed and dated the date hereof
and addressed to the Underwriters from Pricewaterhouse Coopers LLP, independent
certified public accountants, to the effect that such accounting firm confirms
that it is an independent certified public accountant with respect to Doral
Financial and the Borrower within the meaning of Rule 101 of the Code of
Professional Conduct of the American Institute of Certified Public Accountant
and stating that on the basis of a reading of the latest available interim
unaudited financial statements made available to them, inquiries of officers of
Doral Financial and the Borrower responsible for financial and accounting
matters and other specified procedures set forth in such letter, nothing came
to their attention that caused them to believe that (A) at the date of the
latest available interim financial statements of Doral Financial and the
Borrower read by such accountants and at a subsequent specified date not more
than five business days prior to the date of such letter, there was, with
respect to Doral Financial and the Borrower, any change in the capital stock,
deposits, securities sold under agreements to repurchase, notes payable, loans
payable or any decrease in stockholders= equity of the Borrower, Doral
Financial and its subsidiaries consolidated with amounts shown as of the dates
of the financial statements of Doral Financial and the Borrower included in the
Official Statement and Prospectus or (B) for the period from December 31, 1998,
to the date of the latest available interim financial statements of Doral
Financial and the Borrower read by such accountants and the period from the
date of such interim financial statements to a specified date not more than
five business days prior to the date of such letter, there was any decrease, as
compared with the corresponding periods of the previous year, in net income,
except in all cases set forth in clauses (A) and (B) above for changes,
increases or decreases which the Official Statement and Prospectus discloses
5
<PAGE> 6
have occurred, and they have compared specified dollar amounts (or percentages
derived from such dollar amounts) and other financial information contained in
the Official Statement and Prospectus (in each case to the extent that such
dollar amounts, percentages and other financial information are derived from
the general accounting records of Doral Financial and the Borrower subject to
the internal controls of the accounting system of Doral Financial and the
Borrower or are derived directly from such records by analysis or computation)
with the results obtained from inquiries, a reading of such general accounting
records and other procedures specified in such letter and have found such
dollar amounts, percentages and other financial information to be in agreement
with such results.
(f) In order to allow the Underwriters to comply with
the Rule, the Borrower will enter into a Continuing Disclosure Agreement (the
"Continuing Disclosure Agreement") with the Trustee no later than the Closing
Date.
3. AUTHORITY OF THE REPRESENTATIVE. The Underwriters represent
that Popular Securities, Inc. (the "Representative") has been duly authorized
by the Underwriters to act hereunder on behalf of the other Underwriters and
shall have full authority to execute this Agreement and to take such actions as
it may deem advisable in respect of all matters pertaining to this Agreement.
Any action taken under this Agreement by the Representative will be binding
upon all the Underwriters.
4. PUBLIC OFFERING. The Underwriters agree to make a bona fide
public offering of the Bonds at the offering prices set forth in the Official
Statement and Prospectus. The Underwriters may offer to sell the Bonds to
certain dealers and others at prices lower than the initial public offering
prices, and such offering prices
6
<PAGE> 7
may be changed, from time to time, by the Underwriters. The Authority, Doral
Financial and the Borrower authorize the Underwriters to use copies of the
Official Statement and Prospectus and any amendments or supplements thereto and
the information contained therein and copies of the Bond Resolution, the Loan
and Guaranty Agreement and the Trust Agreement in connection with the public
offering and sale of the Bonds, and Doral Financial, the Borrower and the
Authority agree not to supplement or amend, or cause to be supplemented or
amended, the Official Statement and Prospectus, the Bond Resolution, the Loan
and Guaranty Agreement or the Trust Agreement at any time prior to the date of
delivery and payment of the Bonds pursuant to Paragraph 8 hereof (such payment
and delivery and the other actions contemplated hereby to take place at the
time of such payment and delivery being hereafter sometimes called the
"Closing") without the prior written consent of the Underwriters.
5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE AUTHORITY.
The Authority hereby represents, warrants and agrees as follows:
(a) the Authority is a body corporate and politic
constituting a public corporation and governmental instrumentality of the
Commonwealth duly constituted and existing under the laws of the Commonwealth
and has, and at the date of the Closing will have, full right, power and
authority (i) to enter into this Agreement, the Trust Agreement, the Loan and
Guaranty Agreement and the Letter of Representations relating to the Bonds (the
"DTC Agreement") from the Authority and the Trustee to The Depository Trust
Company, New York, New York ("DTC"), (ii) to adopt the Bond Resolution, (iii)
to issue and sell the Bonds pursuant to the Trust Agreement and to deliver or
cause to be delivered the Bonds to or for the account of
7
<PAGE> 8
the Underwriters as provided herein, (iv) to perform all of the transactions
contemplated by the Official Statement and Prospectus, the Trust Agreement, the
Loan and Guaranty Agreement, the Bond Resolution, the DTC Agreement and this
Agreement and (v) to approve, execute and deliver the Official Statement and
Prospectus;
(b) the Authority has duly adopted the Bond Resolution, has
duly authorized the execution and delivery of the Bonds, the Official Statement
and Prospectus, the Trust Agreement, the Loan and Guaranty Agreement, the DTC
Agreement and this Agreement and is duly authorized to perform the obligations
to be performed by the Authority under the Bond Resolution, the Bonds, the
Trust Agreement, the Loan and Guaranty Agreement, the Official Statement and
Prospectus, the DTC Agreement and this Agreement;
(c) the Authority is not, and at the time of the Closing will
not be, in breach of or in default under any applicable law (including, without
limitation, any administrative rulemaking law) or administrative regulation of
the Commonwealth, any applicable judgement or decree or any indenture, Loan and
Guaranty Agreement, note, resolution, agreement or other instrument to which
the Authority is a party or otherwise subject, which breach or default would in
any way materially adversely affect the Bond Resolution, this Agreement, the
Trust Agreement, the Loan and Guaranty Agreement, the DTC Agreement, the
Official Statement and Prospectus or the issuance of the Bonds, and no event
has occurred and is continuing which with the passage of time or giving of
notice, or both, would constitute such a breach or default; and the due
authorization, execution and delivery by the Authority of this Agreement, the
Loan and Guaranty Agreement, the Trust Agreement, the DTC Agreement, the
Official Statement and Prospectus and the issuance, sale and delivery of the
Bonds, the adoption of the Bond
8
<PAGE> 9
Resolution by the Authority and compliance with the provisions hereof and
thereof will not conflict with or constitute a breach of or default under any
law (including, without limitation, any administrative rulemaking law),
administrative regulation, judgement, decree or any agreement or other
instrument to which the Authority is a party or otherwise subject; nor will any
such execution, delivery, issuance, sale, adoption or compliance result in the
creation or imposition of any lien, charge, encumbrance or security interest of
any nature whatsoever upon any of the revenues, property or assets of the
Authority except as expressly provided or permitted hereby and by the Trust
Agreement, the Loan and Guaranty Agreement, the Bond Resolution, the DTC
Agreement, the Official Statement and Prospectus and the Bonds;
(d) all authorizations, approvals, licenses, consents and
orders of any governmental authority or agency having jurisdiction of the
matter which would constitute a condition precedent to, or the absence of which
would materially adversely affect, the performance by the Authority of its
obligations hereunder have been or will by the Closing be obtained;
(e) at the Closing Date (hereinafter mentioned), the Bonds,
the Bond Resolution, the Loan and Guaranty Agreement, the Trust Agreement, the
DTC Agreement and this Agreement will constitute the legal, valid and binding
obligations of the Authority enforceable in accordance with their respective
terms, except to the extent enforcement thereof may be limited by bankruptcy,
insolvency, or other similar laws affecting creditors' rights generally or may
be subject to general principles of equity (regardless of whether such
enforceability shall be considered in a proceeding in equity or at law);
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(f) there is no action, suit, proceeding, inquiry or
investigation, at law or in equity, before or by any court, public board or
body, pending or, to the knowledge of the Authority, threatened against the
Authority affecting the existence or powers of the Authority or the titles of
its officers to their respective offices or seeking to prohibit, restrain or
enjoin the issuance, sale or delivery of the Bonds, or in any way contesting or
affecting the validity or enforceability of the Bonds, the Bond Resolution,
this Agreement, the Trust Agreement, the Loan and Guaranty Agreement, the DTC
Agreement or contesting the powers of the Authority with respect to or any
authority for the issuance of the Bonds, the adoption of the Bond Resolution,
the execution, delivery or performance of this Agreement, the Trust Agreement,
the Loan and Guaranty Agreement, or the DTC Agreement, or, to the knowledge of
the Authority, is there any basis therefor, wherein an unfavorable decision,
ruling or finding would materially adversely affect the transactions
contemplated hereby or by the Official Statement and Prospectus or the validity
or enforceability of the Bonds, the Bond Resolution, this Agreement, the Trust
Agreement, the Loan and Guaranty Agreement, or the DTC Agreement;
(g) the Bonds, when sold to the Underwriters as provided
herein and issued and delivered in accordance with the Trust Agreement, will be
validly issued and outstanding obligations of the Authority entitled to the
benefits of the Trust Agreement;
(h) the information in the Official Statement and Prospectus
under the captions "AFICA," "Government Development Bank for Puerto Rico" and
"Legal Investment" does not contain any untrue or misleading statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they are
made, not
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misleading;
(i) the Authority agrees to cooperate with the Underwriters
and their counsel in any endeavor to qualify the Bonds for offering and sale
under the securities or blue sky laws of such jurisdictions of the United
States as the Underwriters may request, provided that the Authority shall not
be required to execute a general consent to service of process or qualify to do
business in connection with any such qualification in any such jurisdiction,
and the Authority consents to the lawful use of the Preliminary Official
Statement and Prospectus and the Official Statement and Prospectus by the
Underwriters in obtaining such qualifications;
(j) if between the date of this Agreement and the date that
is twenty-five days after the end of the "underwriting period" (as defined in
the Rule) the Authority becomes aware of the existence or occurrence of any
event which would or might cause the Official Statement and Prospectus, as then
supplemented or amended, to contain any untrue statement of a material fact or
to omit to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, the Authority shall promptly notify the Underwriters
thereof;
(k) as of its date, the Preliminary Official Statement and
Prospectus was deemed "final" by the Authority for purposes of paragraph (b)(1)
of the Rule and omitted therefrom only such information permitted to be omitted
therefrom by the Rule; and
(l) the Authority will provide, or direct the provision of,
all information that may be required by the Securities and Exchange Commission
pursuant to the Rule and any future amendments
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<PAGE> 12
thereto to the extent such amendments are deemed applicable to the Authority
and/or the Bonds.
6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF DORAL FINANCIAL
AND THE BORROWER. Doral Financial and the Borrower, jointly and severally,
hereby represent and warrant to, and agree with, the Authority and the
Underwriters as follows:
(a) Each of the Borrower and Doral Financial confirms its
representations, warranties and agreements set forth in the Loan and Guaranty
Agreement.
(b) A fully executed counterpart of the Loan and Guaranty
Agreement, duly executed by Doral Financial and the Borrower, shall be
delivered by Doral Financial and the Borrower at the Closing, in the form
theretofore submitted to the Underwriters and the Authority and approved by the
Underwriters and the Authority, with only such changes or modifications thereof
as the Underwriters, the Authority, Doral Financial and the Borrower shall
agree upon.
(c) Doral Financial is a bank holding company registered
under the Bank Holding Company Act of 1956 and duly organized, validly existing
and in good standing under the laws of the Commonwealth, and the Borrower is a
corporation duly organized, validly existing and in good standing under the
laws of the Commonwealth, each with power and authority to conduct their
businesses as described in the Official Statement and Prospectus and to
consummate the transactions contemplated by the Loan and Guaranty Agreement,
the Continuing Disclosure Agreement and this Agreement.
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(d) By official action of the Borrower prior to or
concurrently with the acceptance hereof, the Borrower has ratified the
distribution of the Preliminary Official Statement and Prospectus and approved
the distribution of the Official Statement and Prospectus.
(e) Doral Financial meets the requirements for the use of
Form S-3 under the Securities Act of 1933, as amended (the "Securities Act")
and the rules and regulations (collectively referred to as the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission")
thereunder, and has filed with the Commission a registration statement on such
Form for registration under the Securities Act of the offering and sale of the
Bonds, including the Official Statement and Prospectus, and has filed those
amendments to such registration statement as may have been required to the date
of this Agreement. Such registration statement has been declared effective by
the Commission. The Commission has not issued any order preventing or
suspending the use of the Official Statement and Prospectus or instituted or,
to the knowledge of Doral Financial or the Borrower, threatened any proceeding
for that purpose. Copies of such registration statement and amendments and of
the Official Statement and Prospectus have been delivered to the
Representative. A final Official Statement and Prospectus relating to the Bonds
containing information permitted to be omitted at the time of effectiveness by
Rule 430A will be filed by Doral Financial with the Commission in accordance
with Rule 424(b) of the Rules and Regulations promptly after execution and
delivery of this Agreement. The term "Registration Statement" means the
registration statement as amended at the time it became effective (the
"Effective Date"), including all financial statements and schedules and all
exhibits and documents incorporated therein by reference and all information
contained in
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<PAGE> 14
the Official Statement and Prospectus filed with the Commission pursuant to
Rule 424(b) of the Rules and Regulations and deemed to be included therein as
of the Effective Date by Rule 430A of the Rules and Regulations and including
any registration statement filed pursuant to Rule 462(b) of the Rules and
Regulations (a "Rule 462 Registration Statement") increasing the size of the
offering. References herein to any document or other information incorporated
by reference in the Registration Statement shall include documents or other
information incorporated by reference in the Official Statement and Prospectus.
References herein to the Preliminary Official Statement and Prospectus or the
Official Statement and Prospectus shall be deemed to include all documents and
information incorporated by reference therein and shall be deemed to refer to
and include any documents and information filed after the date of such
Preliminary Official Statement and Prospectus or such Official Statement and
Prospectus, as the case may be, and so incorporated by reference under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
(f) On the date that the Registration Statement containing
the Preliminary Official Statement and Prospectus was filed with the
Commission, on the date that the Official Statement and Prospectus is first
filed with the Commission pursuant to Rule 424(b), at all-times subsequent to
and including the day of the Closing and when any post-effective amendment to
the Registration Statement becomes effective or any amendment or supplement to
the Official Statement and Prospectus is filed with the Commission, the
Registration Statement, the Preliminary Official Statement and Prospectus and
the Official Statement and Prospectus (as amended or as supplemented if Doral
Financial shall have filed with the Commission any amendment or supplement
thereto), including the financial statements included or incorporated by
reference in the
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Official Statement and Prospectus, did or will comply with all applicable
provisions of the Securities Act and the Rules and Regulations and did or will
contain all statements required to be stated therein in accordance with the
Securities Act and the Rules and Regulations. On the Effective Date and when
any post-effective amendment to the Registration Statement becomes effective,
no part of the Registration Statement or any such amendment did or will contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading. At the Effective Date, at the date the Official
Statement and Prospectus or any amendment or supplement to the Official
Statement and Prospectus is filed with the Commission, and at the day of the
Closing, the Official Statement and Prospectus did not or will not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading. The foregoing representations and warranties in
this Section 6(f) do not apply to any statements or omissions made in reliance
on and in conformity with information relating to the Underwriters furnished in
writing to Doral Financial by the Representative specifically for inclusion in
the Preliminary Official Statement and Prospectus or the Official Statement and
Prospectus under the heading "Plan of Distribution". There are no contracts or
other documents required to be filed as exhibits to the Registration Statement
by the Securities Act or the Rules and Regulations that have not been so filed.
The documents which are incorporated by reference in any Preliminary Official
Statement and Prospectus or the Official Statement and Prospectus or from which
information is so incorporated by reference, when they became effective or were
filed with the Commission, as the case may be, complied in all material
respects with the requirements of the Securities Act and the Rules
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<PAGE> 16
and Regulations or the Exchange Act and the rules and regulations thereunder,
as applicable, and did not, when such documents were so filed, contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, and any
documents so filed and incorporated by reference subsequent to the effective
date of the Registration Statement shall, when they are filed with the
Commission, conform in all material respects with the requirements of the
Securities Act and the Rules and Regulations and the Exchange Act and the rules
and regulations thereunder, as applicable.
(g) Except as described in the Registration Statement and the
Official Statement and Prospectus, there is no action, suit, proceeding,
inquiry or investigation at law or in equity or before or by any court, public
board or body pending or, to the knowledge of Doral Financial or of the
Borrower, threatened (A) to restrain or enjoin the issuance or delivery of any
of the Bonds, the application of the proceeds thereof, or the execution,
delivery or performance of the Loan and Guaranty Agreement, the Continuing
Disclosure Agreement or this Agreement; (B) in any way contesting the corporate
existence or powers of Doral Financial or the Borrower; (C) in any way
contesting or affecting the payment, collection or application of the revenues
pursuant to the Loan and Guaranty Agreement; or (D) except as described in the
Registration Statement and the Official Statement and Prospectus, against or
affecting Doral Financial or the Borrower, wherein an unfavorable decision,
ruling or finding would materially adversely affect the transactions
contemplated by this Agreement, or the Official Statement and Prospectus, or
which, in any way, would materially adversely affect the validity or
enforceability of the Bonds, the
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Loan and Guaranty Agreement, the Continuing Disclosure Agreement or this
Agreement, or any other agreement or instrument to which Doral Financial or the
Borrower is a party and which is used or contemplated for use in connection
with the transactions contemplated hereby or by the Official Statement and
Prospectus or would have a material adverse effect on the condition, business,
financial or otherwise, of Doral Financial or the Borrower.
(h) The Loan and Guaranty Agreement, the Continuing
Disclosure Agreement and this Agreement, when executed and delivered by Doral
Financial and the Borrower, will be legal, valid and binding obligations of
Doral Financial and the Borrower enforceable in accordance with their terms,
except to the extent enforcement thereof may be limited by bankruptcy,
insolvency, or other similar laws affecting creditors' rights generally or by
general principles of equity (regardless of whether such enforceability shall
be considered in a proceeding in equity or at law).
(i) (i) The execution, delivery and performance by Doral
Financial and the Borrower of this Agreement, the Registration Statement, the
Official Statement and Prospectus, the Loan and Guaranty Agreement, the
Continuing Disclosure Agreement and the borrowings under the Loan and Guaranty
Agreement:
(A) have been duly authorized by all requisite
corporate action;
(B) will not violate (1) any provision of law or any
order of any court or any rule, regulation or order of any other
agency of government, (2) the Certificate of Incorporation or by-laws
of Doral Financial or of the Borrower, or (3) any indenture, agreement
or other instrument
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<PAGE> 18
to which Doral Financial or the Borrower is a party, or by which it or
any of its properties are or may be bound;
(C) will not be in conflict with, result in a breach
of or constitute (alone or with notice or lapse of time or both) a
default under any indenture, agreement or other instrument referred to
in clause (B)(3) above; and
(D) will not result in the creation or imposition of
any lien, charge or encumbrance of any nature whatsoever upon any of
the property or assets of Doral Financial or the Borrower, except as
contemplated by the Registration Statement and the Official Statement
and Prospectus; and
(ii) no registration with or consent or approval of, or other
action by, any Federal, state, Commonwealth or other governmental authority or
regulatory body, foreign or domestic, is required in connection with the
execution, delivery and performance by Doral Financial or the Borrower of this
Agreement, the Loan and Guaranty Agreement or the Continuing Disclosure
Agreement.
(j) The Borrower and Doral Financial agree and consent that
the Bond Trustee shall have, pursuant to the provisions of the Trust Agreement,
a valid assignment of all payments due to, and certain other rights of, the
Authority under the Loan and Guaranty Agreement, subject to no prior rights of
other creditors.
(k) Doral Financial and the Borrower have received and there
remain currently in full force and effect all governmental consents and
approvals necessary at this time which would constitute a condition precedent
to, or the failure to obtain which
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<PAGE> 19
would materially adversely affect, the performance by the Borrower of its
obligations under the Loan and Guaranty Agreement, the Continuing Disclosure
Agreement or this Agreement.
(l) Doral Financial and the Borrower have received and there
remain currently in full force and effect all permits, licenses, accreditations
and certifications necessary to conduct their businesses as presently being
conducted. No consent, approval, authorization or order of, or any filing or
declaration with, any governmental body is required for the consummation of the
transactions contemplated by this Agreement or in connection with the issuance
and sale of the Bonds, except such as have been obtained and such as may be
required under the securities laws of the Commonwealth or the various states of
the United States or the by-laws and rules of the National Association of
Securities Dealers, Inc. (the "NASD") in connection with the purchase and
distribution by the Underwriters of the Bonds.
(m) Neither Doral Financial nor the Borrower is a party to
any contract or agreement or subject to any charter or other restriction not
disclosed in the Official Statement and Prospectus, the performance of or
compliance with which may have a material adverse effect on the condition or
business, financial or otherwise, of Doral Financial or of the Borrower.
(n) Doral Financial and the Borrower have deemed the
Preliminary Official Statement and Prospectus "final" as of its date within the
meaning of paragraph (b)(4) of the Rule and omitted therefrom only information
permitted to be omitted therefrom by the Rule.
(o) Any certificate signed by an authorized
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representative of Doral Financial or of the Borrower delivered to the Authority
or the Underwriters shall be deemed a representation and warranty by Doral
Financial or the Borrower to such parties as to the statements made therein.
7. COVENANTS OF DORAL FINANCIAL AND THE BORROWER. Doral Financial and
the Borrower, jointly and severally, agree to the following:
(a) No amendment or supplement to the Registration Statement
or the Official Statement and Prospectus will be filed, either prior to the
Effective Date or thereafter, during such period as the Official Statement and
Prospectus is required by law to be delivered in connection with the sale of
the Bonds, unless a copy thereof shall first have been submitted to the
Representative within a reasonable period of time prior to the filing thereof
and the Representative shall not have objected thereto in good faith.
(b) Doral Financial will notify the Representative promptly,
and will confirm such advice in writing, (i) when any post-effective amendment
to the Registration Statement becomes effective, (ii) of any request by the
Commission for amendments or supplements to the Registration Statement or the
Official Statement and Prospectus or for additional information, (iii) of the
issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any proceedings for that
purpose or the threat thereof, (iv) of the happening of any event that in the
judgment of the Doral Financial makes any statement of a material fact made in
the Registration Statement or the Official Statement and Prospectus untrue or
that requires the making of any changes in the Registration Statement or the
Official Statement and Prospectus in order to make the statements therein,
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in light of the circumstances in which they are made, not misleading and (v) of
receipt by Doral Financial or the Borrower of any other communication from the
Commission relating to the Borrower, Doral Financial, the Registration
Statement, any Preliminary Official Statement and Prospectus or the Official
Statement and Prospectus. If at any time the Commission shall issue any order
suspending the effectiveness of the Registration Statement, Doral Financial
will make every reasonable effort to obtain the withdrawal of such order at the
earliest possible moment.
Doral Financial and the Borrower will prepare the Official Statement
and Prospectus in a form approved by the Representative and will file such
Official Statement and Prospectus pursuant to Rule 424(b) under the Securities
Act not later than the Commission's close of business on the second business
day following the execution and delivery of this Agreement or, if applicable,
such earlier time as may be required by Rule 430A(a)(3) under the Securities
Act. If Doral Financial has omitted any information from the Registration
Statement pursuant to Rule 430A, Doral Financial will use its best efforts to
comply with the provisions of and make all requisite filings with the
Commission pursuant to said Rule 430A and to notify the Representatives
promptly of all such filings.
(c) If Doral Financial elects to rely upon Rule 462(b) of the
Rules and Regulations, the Company shall file the Rule 462(b) Registration
Statement with the Commission in compliance with Rule 462(b) of the Rules and
Regulations by 10:00 p.m., Washington, D.C. time, on the date of this
Agreement, and Doral Financial shall at the time of filing, either pay to the
Commission the filing fee for the Rule 462(b) Registration Statement or give
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irrevocable instructions for the payment of such fee pursuant to Rule 111 (b)
of the Rules and Regulations.
(d) If, at any time when the Official Statement and
Prospectus relating to the Bonds is required to be delivered under the
Securities Act or the Rule, any event occurs as a result of which, in the
judgment of Doral Financial or the Borrower or in the opinion of counsel for
the Underwriters, the Official Statement and Prospectus, as then amended or
supplemented, would include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or the
Registration Statement, as then amended or supplemented, would include any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein not misleading, or if for any other reason it is
necessary at any time to amend or supplement the Official Statement and
Prospectus or the Registration Statement to comply with the Securities Act or
the Rules and Regulations, Doral Financial will promptly notify the
Representative thereof and, subject to Section 7(a) hereof, will prepare and
file with the Commission, at Doral Financial=s expense, an amendment to the
Registration Statement or an amendment or supplement to the Official Statement
and Prospectus that corrects such statement or omission or effects such
compliance.
(e) Doral Financial and the Borrower will comply with all the
provisions of all undertakings contained in the Registration Statement.
(f) The Borrower will apply the proceeds from the sale of the
Bonds as provided in and subject to all of the terms and
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provisions of the Loan and Guaranty Agreement and the Official Statement and
Prospectus.
(g) Between the date of this Agreement and the date of the
Closing, not, without the prior written consent of the Underwriters, to offer
or issue any industrial revenue bonds exempted to Puerto Rico residents, direct
or contingent, nor to cause any adverse change of a material nature in the
financial position, results of operations or condition, in either case, other
than in the ordinary course of business and except as disclosed in the Official
Statement and Prospectus.
(h) Doral Financial and the Borrower will provide the
Underwriters with sufficient copies of any supplement or amendment to the
Official Statement and Prospectus as the Representative reasonably requests so
as to enable the Underwriters to comply with the provisions of paragraph (b)(4)
of the Rule. The Borrower shall be under no obligation to determine whether the
number of copies requested by the Representative of any amendment or supplement
to the Official Statement and Prospectus pursuant to the preceding sentence
shall be sufficient to enable the Underwriters to comply with the requirements
of the Rule. The Representative shall promptly notify the Borrower of the end
of the underwriting period (as defined in the Rule).
(i) The Borrower and Doral Financial will furnish such
information and execute such instruments as the Underwriters may reasonably
request (i) to (A) qualify the Bonds for offer and sale under the Blue Sky or
other securities laws and regulations of such states and other jurisdictions in
the United States as the Underwriters may designate and (B) determine the
eligibility of the Bonds for investment under the laws of such states and other
23
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jurisdictions and (ii) to continue such qualifications in effect so long as
required for the distribution of the Bonds, provided that Doral Financial or
the Borrower shall not be required to execute a general consent to service of
process or qualify to do business in connection with any such qualification or
determination in any such jurisdiction.
(j) The Borrower and Doral Financial will advise the
Underwriters immediately of receipt by Doral Financial of the Borrower of any
notification with respect to the suspension of the qualification of the Bonds
for sale in any jurisdiction or the initiation or threat of any proceeding for
that purpose.
(k) The Borrower and Doral Financial will use their best
efforts to obtain when needed all consents, approvals, authorizations and
orders of governmental or regulatory authorities that are required for the
performance of their obligations under the Loan and Guaranty Agreement.
(l) As soon as practicable, Doral Financial will make
generally available to its security holders and to the Representative an
earnings statement or statements of Doral Financial and its subsidiaries which
will satisfy the provisions of Section 11(a) of the Act and Rule 158 under the
Act.
(m) The Borrower and Doral Financial will provide, or direct
the provision of, all information that may be required by the Commission
pursuant to the Rule and any future amendments thereto to the extent such
amendments are deemed applicable to the Borrower, Doral Financial and/or the
Bonds.
8. THE CLOSING. At 10:00 a.m., Atlantic standard time, on
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___________, 1999, or at such later time or date as may be mutually agreed upon
by the Authority, the Borrower and the Underwriters (such date being herein
sometimes called the "Closing Date"), the Authority will cause the Bond Trustee
to deliver the Bonds to or for the account of the Underwriters in definitive
form and duly executed and authenticated, and, subject to the terms and
conditions hereof, the Underwriters will accept such delivery and pay the
purchase price for the Bonds in immediately available funds as set forth in
Paragraph 1 hereof to the Bond Trustee. Delivery of the Bonds shall be made to
DTC in such manner as shall be mutually agreed upon by the Authority, the
Borrower and the Representative. Delivery of the other documents provided for
herein to be made at the Closing and payment for the Bonds as aforesaid shall
take place at the office of Pietrantoni, Mendez & Alvarez, San Juan, Puerto
Rico, or at such other place as shall have been mutually agreed upon by the
Authority, the Borrower and the Underwriters.
9. CONDITIONS OF UNDERWRITERS' OBLIGATION TO PURCHASE. The
obligation of the Underwriters to purchase and accept delivery of the Bonds is
subject to the accuracy of the representations and warranties of the Authority,
Doral Financial and the Borrower herein and in the Loan and Guaranty Agreement,
to the accuracy of the statements of officers or representatives of the
Authority, Doral Financial and the Borrower made pursuant to the provisions
hereof, to the performance by the Authority, Doral Financial and the Borrower
of their respective obligations hereunder to be performed at or prior to the
Closing, and to the following additional conditions precedent:
(a) The Official Statement and Prospectus, the Loan and
Guaranty Agreement, this Agreement, the Trust Agreement, the Continuing
Disclosure Agreement, the DTC Agreement and the Bonds
25
<PAGE> 26
shall have been duly authorized, executed and delivered, all in form
satisfactory to the Underwriters and shall constitute valid and binding
agreements of the parties thereto.
(b) The Representative shall have received (i) evidence,
reasonably satisfactory to the Representative, of the due authorization,
execution and delivery of, and executed copies of, the documents mentioned in
clause (a) of this Paragraph 9 by the parties thereto, (ii) an opinion of
counsel for Doral Financial and the Borrower acceptable in form and substance
to the Underwriters, (iii) appropriate certificates reasonably satisfactory to
the Representative covering litigation and compliance with laws and prior
agreements, and with respect to the status of all necessary permits and
requirements, and (iv) evidence that the Registration Statement has become
effective and is effective as of the date of the Closing.
(c) The Representative shall have received a copy, duly
certified by the Secretary or an Assistant Secretary of the Authority, of the
Bond Resolution and shall also have received certified copies of any required
approvals referred to in Paragraph 5(d) hereof.
(d) The Representative shall have received copies, duly
certified by the Secretary or an Assistant Secretary of Doral Financial and the
Borrower of the resolutions or other corporate action referred in Paragraph
6(i) hereof.
(e) The Representative shall have received an opinion of
counsel for the Authority acceptable in form and substance to the Underwriters,
acceptable in form and substance to the Underwriters.
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(f) The Representative shall have received the approving
opinion on the Bonds of Fiddler, Gonzalez & Rodriguez, LLP, Bond Counsel,
substantially in the form attached as Appendix IV to the Official Statement and
Prospectus and a supplemental opinion of Fiddler, Gonzalez & Rodriguez, LLP,
Bond Counsel, acceptable in form and substance to the Underwriters.
(g) The Representative shall have received a manually signed
copy of the letter, addressed to the Underwriters, dated the Closing Date, of
Pricewaterhouse Coopers LLP to the effect that such accounting firm reaffirms
as of such Closing Date and as though made at such date, the statements made in
the letter furnished to the Underwriters by such accountants pursuant to
paragraph 2(e) hereof, except that references to the date referred to in such
letter as the most recent date through which such accountants have performed
their work will be a date not more than five (5) business days prior to the
Closing Date.
(h) The Representative shall have received a certificate,
dated the Closing Date, of the Executive Director or the Assistant Executive
Director of the Authority to the effect that: (i) the Authority has duly
performed and complied with all agreements and conditions and all of its
obligations required to be performed at or prior to the Closing Date, each of
its representations and warranties contained herein and in the Loan and
Guaranty Agreement are true and correct as of the Closing Date and at the time
of Closing no event of default or default shall have occurred and be continuing
with respect to the Bonds; (ii) the Authority has duly adopted the Bond
Resolution and has authorized, by all necessary action, the execution,
delivery, receipt and due performance of this Agreement, the Bonds, the
Official Statement and Prospectus, the Trust Agreement, the Loan and Guaranty
Agreement, the DTC
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Agreement and any and all such other agreements and documents as may be
required to be executed, delivered and received by it in order carry out, give
effect to and consummate the transactions contemplated hereby and thereby;
(iii) no litigation is pending, or to his knowledge threatened, to restrain or
enjoin the issuance or sale of the Bonds or in any way affecting as to the
Authority any authority for or the validity of the Bonds, the Official
Statement and Prospectus, the Trust Agreement, the Loan and Guaranty Agreement,
this Agreement, the Bond Resolution, the DTC Agreement or in any way contesting
the Authority's existence or powers; and (iv) the adoption and performance by
the Authority of the Bond Resolution and the execution, delivery, receipt and
due performance of the Bonds, the Official Statement and Prospectus, the Trust
Agreement, the Loan and Guaranty Agreement, this Agreement, the DTC Agreement
and the other agreements contemplated hereby and the Authority's compliance
with the provisions hereof and thereof will not conflict with or constitute on
the Authority's part a breach of or a default under any existing law, court or
administrative regulation, decree or order or any agreement, indenture,
mortgage, lease or other instrument to which the Authority is subject or by
which it is or may be bound.
(i) The Representative shall have received a certificate,
dated the Closing Date, of an authorized representative of Doral Financial and
of the Borrower to the effect that (i) each of the representations and
warranties of the Borrower contained in this Agreement, the Loan and Guaranty
Agreement and the Continuing Disclosure Agreement is true and correct as of the
Closing Date, (ii) each of the agreements of the Borrower to be complied with
and each of the obligations to be performed by Doral Financial and the Borrower
under this Agreement, the Loan and Guaranty Agreement or the Continuing
Disclosure Agreement on or
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prior to the Closing Date have been complied with and performed, (iii) the
conditions or acts that are disclosed in the Official Statement and Prospectus
as occurring prior to the Closing Date have occurred, (iv) as of the Closing
Date and except as may be disclosed in the Official Statement and Prospectus,
there has been no material adverse change in the financial position of Doral
Financial or the Borrower since the date of the financial statements
incorporated by reference in the Official Statement and Prospectus, (v) no
event of default under this Agreement or the Loan and Guaranty Agreement, or
event which with giving of notice or lapse of time or both would constitute an
event of default under any such document, has occurred and is continuing or
will occur as a result of the transactions to take place at Closing, and (vi)
no event affecting Doral Financial or the Borrower has occurred since the date
of the Official Statement and Prospectus that either makes untrue or incorrect
in any material respect any statement or information concerning Doral Financial
or the Borrower contained in the Official Statement and Prospectus or is not
reflected in the Official Statement and Prospectus but should be reflected
therein or that is necessary to make the statements and information therein
concerning the Borrower not misleading.
(j) The Representative shall have received an opinion of
O'Neill & Borges, counsel to the Underwriters, acceptable in form and substance
to the Underwriters.
(k) The Representative shall have received a copy of the
certificate of incorporation of Doral Financial and of the Borrower, as
amended, certified as of a recent date by the appropriate officer of the
Commonwealth, together with certificates dated as of a recent date from the
Secretary of State of the Commonwealth as to the existence and good standing of
Doral
29
<PAGE> 30
Financial and of the Borrower under the laws of the Commonwealth and copies of
the by-laws of Doral Financial and of the Borrower certified by the Secretary
or an Assistant Secretary of Doral Financial and the Borrower.
(l) The Representative shall have received written evidence
that the Bonds have been issued a rating of "BBB-" by Standard & Poor's Ratings
Services ("S&P"), of "BBB" by Duff & Phelps ("D&P") and of "Baa3" by Moody's
Investors Service ("Moody's").
(m) The Representative shall have received evidence as to the
good standing of Doral Financial and its banking, mortgage banking and
securities subsidiaries from the Commissioner of Financial Institutions of
Puerto Rico.
(n) The Underwriters shall have received such other
documentation, certificates and opinions as may be reasonably required by the
Underwriters.
10. INDEMNIFICATION AND CONTRIBUTION.
(a) Doral Financial and the Borrower agree to indemnify and
hold harmless the Authority, the Underwriters, any member, officer, official,
employee or agent of the Authority or the Underwriters, and each person, if
any, who controls the Authority or Underwriters within the meaning of the
Securities Act or the Exchange Act (collectively, for purposes of this Section
10(a), the "Indemnified Parties"), against any and all losses, claims, damages,
liabilities or expenses, joint or several, to which any of the Indemnified
Parties may become subject, under either of said Acts or otherwise, insofar as
such losses, claims, damages or
30
<PAGE> 31
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue or misleading statement of a material fact contained in Section 6 of
this Agreement, (ii) any untrue statement or alleged untrue statement of any
material fact contained in (A) any Preliminary Official Statement and
Prospectus, the Registration Statement or the Official Statement and
Prospectus, or any amendment or supplement to the Registration Statement or the
Official Statement and Prospectus or (B) any application or other document, or
any amendment or supplement thereto, executed by Doral Financial or the
Borrower or based upon written information furnished by or on behalf of Doral
Financial or the Borrower filed in any jurisdiction in order to qualify the
Bonds under the securities or blue sky laws thereof or filed with the
Commission or any securities association or securities exchange (each, an
"Application"), or (iii) the omission or alleged omission to state in any
Preliminary Official Statement and Prospectus, the Registration Statement or
the Official Statement and Prospectus, or any amendment or supplement to the
Registration Statement or the Official Statement and Prospectus or any
Application a material fact required to be stated therein or necessary in order
to make the statements made therein, in the light of the circumstances under
which they were made, not misleading, including the aggregate amount paid in
settlement of any litigation commenced or threatened arising from a claim based
upon any such untrue statement or omission if such settlement is effected with
the written consent of Doral Financial and the Borrower, and will reimburse
each such Indemnified Party for any legal or other expenses reasonably incurred
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that (1) Doral Financial or the
Borrower will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement
or omission or
31
<PAGE> 32
alleged untrue statement or omission made in any of such documents in reliance
upon and in conformity with written information furnished to Doral Financial or
the Borrower by the Authority or the Underwriters specifically for use therein;
and (2) this indemnity shall not apply to any losses, claims, damages,
liabilities or expenses arising out of or based upon any such untrue statement
or any such omission if such statement or omission was corrected by a
supplement or amendment to the Official Statement and Prospectus delivered to
the Underwriters prior to the sale of the Bonds to the person asserting the
loss. This indemnity agreement will be in addition to any liability which Doral
Financial or the Borrower may otherwise have. Doral Financial or the Borrower
will not, without the prior written consent of each of the Underwriters, settle
or compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not such Underwriter is a
party to such claim, action, suit or proceeding), unless such settlement,
compromise or consent includes an unconditional release of each Underwriter and
each member, officer, official, employee, agent and controlling person of such
Underwriter from all liability arising out of such claim, action, suit or
proceeding.
Doral Financial and the Borrower acknowledge that the
information set forth in the Official Statement and Prospectus under the
caption "Plan of Distribution" related to stabilization and passive market
making legends constitutes the only information furnished in writing by or on
behalf of the Underwriters specifically for use in the Official Statement and
Prospectus. In addition, Doral Financial and the Borrower acknowledge that the
information set forth in the Official Statement and Prospectus under the
captions "AFICA," "GOVERNMENT DEVELOPMENT BANK FOR PUERTO
32
<PAGE> 33
RICO" and "LEGAL INVESTMENT" constitutes the only information furnished in
writing by or on behalf of the Authority specifically for use in the Official
Statement and Prospectus.
(b) The Underwriters agree to indemnify and hold harmless the
Authority, Doral Financial, the Borrower, any member, director, officer,
official, employee or agent of the Authority, Doral Financial or the Borrower,
and each person, if any, who controls the Authority, Doral Financial or the
Borrower within the meaning of the Securities Act or the Exchange Act
(collectively, for purposes of this Section 10(b), the "Indemnified Parties"),
against any and all losses, claims, damages, liabilities or expenses, joint or
several, to which the Indemnified Parties may become subject, under either of
said Acts or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue or
misleading statement of a material fact contained in the Preliminary Official
Statement and Prospectus, the Registration Statement or the Official Statement
and Prospectus, or any omission or alleged omission from the Preliminary
Official Statement and Prospectus, the Registration Statement or the Official
Statement and Prospectus, or any amendment or supplement to the Registration
Statement or the Official Statement and Prospectus of a material fact required
to be stated therein or necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading,
but only so far as any such statement or omission was made in reliance upon and
in conformity with written information, if any, as was furnished in writing by
the Underwriters for use therein.
(c) The Authority agrees to indemnify and hold harmless the
Underwriters, Doral Financial, the Borrower, any member,
33
<PAGE> 34
officer, official, employee or agent of the Underwriters, Doral Financial or
the Borrower, and each person, if any, who controls the Underwriters, Doral
Financial or the Borrower within the meaning of the Securities Act of the
Exchange Act (collectively, for purposes of this Section 10(c), the
"Indemnified Parties"), against any and all losses, claims, damages,
liabilities or expenses, joint or several, to which any such Indemnified Party
may become subject, under either of said Acts or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue or misleading statement of a material fact
contained in any Preliminary Official Statement and Prospectus, the
Registration Statement or the Official Statement and Prospectus, or caused by
any omission or alleged omission from any Preliminary Official Statement and
Prospectus, the Registration Statement or the Official Statement and
Prospectus, or any amendment or supplement to the Registration Statement or the
Official Statement and Prospectus of a material fact required to be stated
therein or necessary in order to make the statements made therein, in the light
of the circumstances under which they were made, not misleading, but only to
the extent that any such statement or omission relates to the information
appearing under the captions "AFICA," "GOVERNMENT DEVELOPMENT BANK FOR PUERTO
RICO" and "LEGAL INVESTMENT".
(d) If the indemnification provided for in the above
subsections (a), (b) and (c) of this Section 10 is for any reason unavailable
(other than for a reason specified in this Section 10) or insufficient to hold
harmless an Indemnified Party under sections (a), (b) or (c) above with respect
to losses covered by such subsection, then each indemnifying party shall
contribute to the damages paid by such Indemnified Party (A) in such proportion
as is appropriate to reflect the relative benefits received by the
34
<PAGE> 35
Borrower and Doral Financial (collectively), the Authority and the Underwriters
from the offering of the Bonds or (B) if the allocation provided by clause (A)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (A) above, but
also the relative liability of the Borrower and Doral Financial (collectively),
the Authority and the Underwriters in connection with the statements or
omissions which resulted in such damages, as well as any other relevant
equitable considerations. The relative benefits received by the Borrower and
Doral Financial (collectively), the Authority and the Underwriters shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by each one bear to each other. The
relative benefits received by the Borrower and Doral Financial shall be deemed
to be equal to the total net proceeds from the offering of the Bonds (after
deducting only the underwriting discount and the Authority's Administrative
Fee). The relative benefits received by the Authority shall be deemed to be
equal to its Administrative Fee and the relative benefits received by the
Underwriters shall be deemed to be equal to their total underwriting discount
or commissions, as set forth in this Bond Purchase Agreement. The relative
liability of each Indemnified Party shall be determined by reference to, among
other things, whether the untrue statement of a material fact or the omission
to state a material fact relates to information supplied by the Borrower or
Doral Financial (collectively), the Authority or the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The Authority, the
Borrower, Doral Financial and the Underwriters agree that it would not be just
and equitable if their respective obligations to contribute pursuant to this
subsection (d) were to be determined by pro rata allocation of
35
<PAGE> 36
the aggregate damages or by any other method of allocation which does not take
into account the equitable considerations referred to above. For purposes of
this subsection (d) the term "damages" shall include any legal or other
expenses reasonably incurred by an Indemnified Party in connection with
investigating or defending against any action or claim which is the subject of
the contribution provisions of this subsection (d). Notwithstanding the
provisions of this subsection (d), the Underwriters shall not be required to
contribute any amount in excess of the total underwriting discount received by
them and the Authority shall not be required to contribute any amounts in
excess of the Administrative Fee payable to the Authority. No person guilty of
fraudulent misrepresentations (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation in connection with the issuance of
the Bonds.
(e) In case any action shall be brought against one or more
of the Indemnified Parties based upon the Official Statement and Prospectus and
in respect of which indemnity may be sought against the indemnifying party, the
Indemnified Parties shall promptly notify the indemnifying party in writing,
and the indemnifying party may assume the defense thereof, including the
employment of counsel, the payment of all expenses and the right to negotiate
and consent to settlement, but the omission so to notify the indemnifying party
will not relieve it from any liability which it may have to an Indemnified
Party otherwise than under this Section 10, unless, and only to the extent
that, such omission results in the forfeiture of substantial rights or defenses
by the indemnifying parties. Any one or more of the Indemnified Parties shall
have the right to employ separate counsel in any such action and to participate
in the defense thereof, but the fees and
36
<PAGE> 37
expenses of such counsel shall be at the expense of such Indemnified Party or
Indemnified Parties unless the employment of such counsel has been specifically
authorized in writing by the indemnifying or contributing party or parties or
the indemnifying or contributing party or parties shall not have employed
counsel to assume the defense of such action promptly after receiving notice
thereof, or such Indemnified Party or Indemnified Parties shall have reasonably
concluded that there may be defenses available to it or them which are
different from or additional to those available to the indemnifying or
contributing party or parties (in which case the indemnifying or contributing
party or parties shall not have the right to direct the defense of such action
on behalf of the Indemnified Party), in any of which events such fees and
expenses of separate counsel for the Indemnified Party shall be borne by the
indemnifying or contributing party or parties. The indemnifying party shall not
be liable for any settlement of any such action effected without its consent by
any of the Indemnified Parties.
11. SURVIVAL OF REPRESENTATIONS AND OBLIGATIONS. The respective
agreements, representations, warranties and other statements of the Authority,
Doral Financial, the Borrower and the Underwriters and their respective
officers set forth in or made pursuant hereto will remain in full force and
effect, regardless of any investigation, or statement as to the results
thereof, made by or on behalf of the Underwriters, the Borrower, Doral
Financial or the Authority, and will survive delivery of and payment for the
Bonds.
12. TERMINATION OF BOND PURCHASE AGREEMENT. The Representative
may terminate this Agreement, in its absolute discretion, without liability
therefor, by notice given to the Authority, Doral
37
<PAGE> 38
Financial and the Borrower prior to the Closing if, at any time prior to the
Closing:
(a) Any fact shall exist or any event shall have occurred
that, in the opinion of the Representative, makes the Registration Statement or
the Official Statement and Prospectus contain an untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
(b) Any extraordinary event shall have occurred or shall
exist affecting current Commonwealth, national or international economic,
financial or other conditions or affecting Doral Financial or the Borrower
which, in the reasonable opinion of the Representative, materially adversely
affects the market for the Bonds or the sale, at the contemplated offering
prices, by the Underwriters of the Bonds;
(c) A war or other similar hostilities directly involving the
United States shall have occurred, which in the reasonable opinion of the
Representative, materially adversely affects the market for the Bonds or the
sale, at the contemplated offering prices, by the Underwriters of the Bonds;
(d) A general banking moratorium shall have been declared by
authorities of the United States or the Commonwealth;
(e) Any rating of the Bonds shall have been downgraded or
withdrawn by S&P, D&P or Moody's;
(f) The New York Stock Exchange or other national securities
exchange, or any governmental authority, shall impose
38
<PAGE> 39
any material restrictions not now in force or being enforced with respect to
the Bonds or obligations of the general character of the Bonds or securities
generally, or shall materially increase restrictions now in force, including
those relating to the extension of credit by, or charges to the net capital
requirements of, underwriters;
(g) Any legislation, ordinance, rule or regulation shall be
introduced in, or be enacted by, any governmental body, department or agency in
the Commonwealth, or decision by any court of competent jurisdiction within the
Commonwealth shall be rendered which, in the reasonable opinion of the
Representative, materially adversely affects the market for the Bonds or the
sale, at the contemplated offering prices, by the Underwriters of the Bonds;
(h) Any amendment to the Official Statement and Prospectus is
proposed by the Borrower or Doral Financial or deemed necessary by Bond Counsel
or counsel to the Underwriters pursuant to Paragraph [ ] hereof which, in the
reasonable opinion of the Representative, materially adversely affects the
market for the Bonds or the sale, at the contemplated offering prices, by the
Underwriters of the Bonds; or
(k) The Authority, Doral Financial or the Borrower shall be
unable to satisfy the conditions to the obligations of the Underwriters to
purchase, to accept delivery of and to pay for the Bonds contained in this
Agreement.
13. EXPENSES OF THE AUTHORITY, DORAL FINANCIAL AND THE BORROWER.
Whether or not the transactions contemplated hereby shall be consummated, the
Underwriters and the Authority shall be under no obligation to pay, and Doral
Financial and the Borrower
39
<PAGE> 40
shall pay, any and all reasonable expenses incident to the performance of the
obligations of the Authority, the Underwriters, Doral Financial or the Borrower
under this Agreement and the fulfillment of the conditions imposed hereunder
including but not limited to: (i) the cost of preparing, printing and
delivering the Bonds, the Preliminary Official Statement and Prospectus, the
Registration Statement and the Official Statement and Prospectus, the Trust
Agreement and the Loan and Guaranty Agreement and any amendments or supplements
thereto; (ii) the fees and disbursements of Bond Counsel; (iii) the fees and
disbursements of any counsel, auditors, engineers, consultants or other
retained by the Authority, Doral Financial or the Borrower in connection with
the transactions contemplated herein; (iv) the fees and disbursements of the
Bond Trustee and its counsel; (v) the charges made by rating agencies for the
rating of the Bonds; (vi) the expenses incurred by the Underwriters in
connection with the purchase of the Bonds and the transactions contemplated
herein, including the fees and disbursements of legal counsel retained by or on
behalf of the Underwriters; and (vii) any and all liability with respect to
amounts payable as a result of (A) any issuance, stamp, documentary, transfer
or similar taxes which may be determined to be payable in connection with the
execution and delivery of the Bonds, this Agreement, the Registration
Statement, the Official Statement and Prospectus, the Trust Agreement, the Loan
and Guaranty Agreement or any other ancillary agreement, or any modification,
amendment or alteration, of the terms or provisions of any of the foregoing,
and (B) any interest or penalties resulting from any delays in paying any of
such expenses, charges, disbursement, liabilities or taxes. The obligations of
the Borrower under this Paragraph 13 shall survive the delivery of and payment
for the Bonds.
40
<PAGE> 41
14. NOTICES. Any notice or other communication to be given to the
Authority, Doral Financial or the Borrower under this Agreement may be given by
delivering the same in writing at the address set forth above, and any notice
or other communication to be given to the Underwriters under this Agreement may
be given by delivering the same in writing to Popular Securities, Inc., Popular
Center Building, Suite 1020, San Juan, Puerto Rico 00918, Attention: President.
15. PARTIES IN INTEREST. This Agreement is made solely for the
benefit of the Authority, Doral Financial, the Borrower and the Underwriters
(including the successors or assigns of the Underwriters) and no other person
shall acquire or have any right hereunder or by virtue hereof.
16. NO ORAL CHANGE. This Agreement may not be changed orally, but
only by an agreement in writing and signed by the party against whom
enforcement of any waiver, change, modification or discharge is sought.
17. EFFECTIVENESS. This Agreement shall become effective upon the
execution hereof by the Authority, Doral Financial and the Borrower and shall
be valid and enforceable as of the time of delivery of such executed copy to
the Underwriters.
18. COUNTERPART EXECUTION. 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 counterparts shall together constitute but one and
the same instrument.
19. GOVERNING LAW. This Agreement is being made in the
41
<PAGE> 42
Commonwealth and for all purposes shall be construed and enforced in accordance
with the laws of the Commonwealth.
20. SEVERABILITY. In the event any provision of this Agreement
shall be held invalid or unenforceable by any court of competent jurisdiction,
such holding shall not invalidate or render unenforceable any other provision
hereof.
Very truly yours,
POPULAR SECURITIES, INC.
PAINEWEBBER INCORPORATED
OF PUERTO RICO
DORAL SECURITIES, INC.
MERRILL LYNCH & CO.
MORGAN STANLEY & CO. INCORPORATED
SALOMON SMITH BARNEY INC.
BY: POPULAR SECURITIES, INC., AS
REPRESENTATIVE
By:
-----------------------------------
Name:
Title:
42
<PAGE> 43
The foregoing Bond Purchase Agreement is hereby accepted as of October __,
1999.
PUERTO RICO INDUSTRIAL, TOURIST,
EDUCATIONAL, MEDICAL AND ENVIRONMENTAL
CONTROL FACILITIES FINANCING AUTHORITY
By:
-----------------------------------
Name:
Title:
DORAL PROPERTIES, INC.
By:
-----------------------------------
Name:
Title:
DORAL FINANCIAL CORPORATION
By:
-----------------------------------
Name:
Title:
43
<PAGE> 44
SCHEDULE I
<TABLE>
<CAPTION>
Principal Amount
of Bonds
Underwriter to be Purchased
- ----------- ---------------
<S> <C>
POPULAR SECURITIES, INC. $
PAINEWEBBER INCORPORATED
OF PUERTO RICO
DORAL SECURITIES, INC.
MERRILL LYNCH & CO.
MORGAN STANLEY & CO. INCORPORATED
SALOMON SMITH BARNEY INC. ------------
TOTAL $
------------
</TABLE>
44
<PAGE> 1
EXHIBIT 4.1
===============================================================================
LOAN AND GUARANTY AGREEMENT
AMONG
PUERTO RICO INDUSTRIAL, TOURIST
EDUCATIONAL, MEDICAL AND ENVIRONMENTAL CONTROL
FACILITIES FINANCING AUTHORITY,
DORAL PROPERTIES, INC.
AND
DORAL FINANCIAL CORPORATION
-----------
DATED __________, 1999
-----------
===============================================================================
This Loan and Guaranty Agreement has been assigned to Citibank, N.A.,
as Trustee under a Trust Agreement dated __________, 1999, as amended or
supplemented from time to time, from Puerto Rico Industrial, Tourist,
Educational, Medical and Environmental Control Facilities Financing Authority
to such Trustee. A copy of such Trust Agreement may be inspected at the
corporate trust office of the Trustee at __________________ Building in San
Juan, Puerto Rico.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
PAGE
ARTICLE I - Definitions and Rules of Construction.................................................................1
Section 1.01. Definitions...............................................................................1
Section 1.02. Rules of Construction....................................................................10
ARTICLE II - Representations.....................................................................................11
Section 2.01. Representations by the Authority.........................................................11
Section 2.02. Representations, Warranties and Covenants
of the Borrower................................................................................12
Section 2.03. Representations, Warranties and Covenants
of the Guarantor...............................................................................14
ARTICLE III - Construction of the Project........................................................................15
Section 3.01. Construction of Project..................................................................15
Section 3.02. Revision of Plans and Specifications.....................................................15
Section 3.03. Disbursements from Construction Fund.....................................................15
Section 3.04. Borrower Required to Pay Cost of Project.................................................16
Section 3.05. Establishment of Completion Date.........................................................16
Section 3.06. Certificate of Independent Accountants...................................................16
ARTICLE IV - Loan by the Authority to the Borrower;Repayment; Maintenance; Indemnity.............................17
Section 4.01. Issuance of the Bonds to Fund the Loan;
Making of the Loan; Repayment..................................................................17
Section 4.02. No Set-Off...............................................................................19
Section 4.03. Covenant to Maintain the Project.........................................................19
Section 4.04. Expenses.................................................................................20
Section 4.05. Indemnification..........................................................................21
Section 4.06. Past Due Payments........................................................................24
Section 4.07. Payment of Costs upon Default............................................................24
Section 4.08. Guarantee................................................................................25
ARTICLE V - Further Agreements...................................................................................27
Section 5.01. Covenant to Maintain Existence;
Consolidation, Merger and Sale.................................................................27
Section 5.02. No Warranty by Authority.................................................................27
Section 5.03. Maintenance and Examination of Books
and Records of Borrower; Right of Inspection...................................................27
Section 5.04. Officers of Authority Not Liable.........................................................28
Section 5.05. Compliance with Applicable Law...........................................................28
Section 5.06. Authority's Performance of the
Borrower's Obligations.........................................................................29
Section 5.07. Indemnification with Respect to
Government Obligations.........................................................................29
Section 5.08. Annual Reports...........................................................................29
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
Section 5.09. Covenant by Borrower as to Compliance
with Trust Agreement...........................................................................30
Section 5.10. Covenant as to Source of Income..........................................................30
Section 5.11. No Purchase of Bonds by Borrower or
Guarantor......................................................................................32
Section 5.12. No Interest of Authority in Project......................................................32
Section 5.13. Consent to Jurisdiction..................................................................32
Section 5.14. Limitation Upon Creation of Liens on
Voting Stock of Principal Mortgage Banking
Subsidiaries...................................................................................33
Section 5.15. Limitation upon Disposition of Voting
Stock of Principal Mortgage Banking Subsidiaries...............................................34
Section 5.16. Liens....................................................................................35
ARTICLE VI - Sale of the Project; Assignments....................................................................36
Section 6.01. Sale, Transfer or Encumbrance of
the Project....................................................................................36
Section 6.02. Assignment by Borrower...................................................................37
Section 6.03. Assignment by Authority..................................................................38
ARTICLE VII - Events of Default and Remedies.....................................................................39
Section 7.01. Events of Default........................................................................39
Section 7.02. Acceleration; Remedies...................................................................42
Section 7.03. Remedies Not Exclusive...................................................................43
Section 7.04. Attorneys' Fees and Expenses.............................................................44
Section 7.05. Waivers..................................................................................44
ARTICLE VIII - Prepayment of the Loan............................................................................44
Section 8.01. Optional Prepayment......................................................................44
Section 8.02. Mandatory Prepayment of Loan.............................................................45
Section 8.03. Extraordinary Optional Prepayment
of Loan........................................................................................46
Section 8.04. Relative Position of Loan Agreement
and Trust Agreement............................................................................48
ARTICLE IX - Miscellaneous.......................................................................................48
Section 9.01. Termination..............................................................................48
Section 9.02. Reference to Bonds Ineffective After
Bonds Paid.....................................................................................48
Section 9.03. No Additional Waiver Implied by
One Waiver.....................................................................................49
Section 9.04. Authority Representative.................................................................49
Section 9.05. Borrower Representative..................................................................49
Section 9.06. Confidential Information.................................................................49
Section 9.07. Notices..................................................................................50
Section 9.08. Binding Effect...........................................................................51
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C> <C>
Section 9.09. If Payment or Performance Date Not
a Business Day.................................................................................51
Section 9.10. Severability.............................................................................51
Section 9.11. Amendments, Changes and Modifications....................................................51
Section 9.12. Execution in Counterparts................................................................51
Section 9.13. Applicable Law...........................................................................52
Section 9.14. No Charge Against Authority Credit.......................................................52
Section 9.15. Authority Not Liable.....................................................................52
Section 9.16. Agreement Supersedes Prior Agreements....................................................52
</TABLE>
-iii-
<PAGE> 5
THIS LOAN AND GUARANTY AGREEMENT, dated __________, 1999, by and among
PUERTO RICO INDUSTRIAL, TOURIST, EDUCATIONAL, MEDICAL AND ENVIRONMENTAL CONTROL
FACILITIES FINANCING AUTHORITY, a public corporation and governmental
instrumentality of the Commonwealth of Puerto Rico (the "Authority"), DORAL
PROPERTIES, INC., a corporation organized and existing under the laws of the
Commonwealth of Puerto Rico (the "Borrower"), and DORAL FINANCIAL CORPORATION,
a corporation organized and existing under the laws of the Commonwealth of
Puerto Rico (the "Guarantor"), and its successors and assigns,
WITNESSETH:
In consideration of the respective representations and agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
SECTION 1.01. DEFINITIONS. Unless otherwise defined herein, all terms
used herein shall have the meanings assigned to such terms in Section 101 of
the Trust Agreement, dated ___________, 1999, between the Authority and
Citibank, N.A., San Juan, Puerto Rico, as Trustee, either as originally
executed or as amended or supplemented from time to time:
"ACT" means Act No. 121 of the Legislature of Puerto Rico,
approved June 27, 1977, as amended, and all future acts supplemental thereto or
amendatory thereof.
"ACT OF BANKRUPTCY" means the filing of a petition commencing
a case under the United States Bankruptcy Code by or against the Borrower or
the Guarantor.
<PAGE> 6
"ADMINISTRATIVE FEE" means the one time fee to the Authority
in the amount of one half of one percent (2 of 1%) of the principal amount of
the Bonds.
"AFFILIATE" means a corporation, partnership, joint venture,
association, business trust or similar entity organized under the laws of the
Commonwealth, the United States of America or any state or territory thereof
which (i) is directly or indirectly controlled by the Borrower or by any Person
which directly or indirectly controls the Borrower, or (ii) controls, directly
or indirectly, the Borrower. For purposes of this definition, control means the
power to direct the management and policies of a Person through the ownership
of not less than a majority of its voting securities or the right to designate
or elect not less than a majority of the members of its board of directors or
other governing board or body by contract or otherwise.
"AGREEMENT" or "THIS AGREEMENT" means this Loan and Guaranty
Agreement, including any amendments or supplements hereto as permitted by the
Trust Agreement.
"AMORTIZATION REQUIREMENT" shall have the meaning given to
that term in the Trust Agreement.
"APPLICABLE INTEREST PERIOD" means a taxable year of the
Borrower.
"AUTHORITY" means Puerto Rico Industrial, Tourist,
Educational, Medical and Environmental Control Facilities Financing Authority,
a body corporate and politic constituting a public corporation and governmental
instrumentality of the Commonwealth, and any successor thereto.
"AUTHORITY REPRESENTATIVE" means each of the persons at the
time designated to act on behalf of the Authority in a written certificate
furnished to the Borrower, the Trustee and the
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Guarantor containing the specimen signature of such person and signed by an
authorized officer of the Authority.
"BOARD" means the board of directors of the Authority as
constituted from time to time and defined by the Act, or if said board shall be
abolished, then the board, body or officer succeeding to the principal
functions thereof or to whom the powers of the Authority shall be given by law.
"BOND FUND" means the fund created and so designated by
Section 501 of the Trust Agreement.
"BONDS" means the bonds issued under Section 208 of the Trust
Agreement.
"BORROWER" means Doral Properties, Inc., a corporation
organized and existing under the laws of the Commonwealth of Puerto Rico and
its successors and permitted assigns and any surviving, resulting or transferee
entity.
"BORROWER REPRESENTATIVE" means each of the persons at the
time designated to act on behalf of the Borrower in a written certificate
furnished to the Authority and the Trustee containing the specimen signature of
such person and signed by an authorized officer of the Borrower.
"BUSINESS DAY" means any day of the year other than a
Saturday, Sunday or other day in which commercial banks in the Commonwealth are
generally closed for business to the public.
"CLOSING" means the date on which this Agreement becomes
legally effective, the same being the date on which the Bonds are initially
issued and delivered against payment therefor.
"CODE" means the United States Internal Revenue Code of 1986,
as amended, and the rules and regulations thereunder.
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"COMMONWEALTH" means the Commonwealth of Puerto Rico.
"COMPLETION DATE" means the date of completion of the Project
as that date shall be certified as provided in Section 3.05 of this Agreement.
"CONSTRUCTION FUND" means the fund created and so designated
pursuant to Section 401 of the Trust Agreement.
"CORPORATION" AND "CORPORATION" includes corporations,
associations, companies (including joint stock companies and limited liability
companies) and business trusts.
"COST", as applied to the Project, without intending thereby
to limit or restrict any proper definition of such word under the Act, has the
meaning set forth in Section 403 of the Trust Agreement.
"EMINENT DOMAIN" or "TAKING" means the taking pursuant to
eminent domain or condemnation proceedings, or by any settlement or compromise
of such proceedings, or any voluntary conveyance of the Project or any part
thereof during the pendency of, or as a result of a threat of, such
proceedings.
"ENVIRONMENTAL CLAIM" means any claim, demand, notice of
violation, suit, applicable and binding administrative or judicial proceeding,
regulatory action, or order involving any Hazardous Substance, Environmental
Law, noise or odor pollution or any injury or threat of injury to human health
or the environment.
"ENVIRONMENTAL LAW" means any applicable federal, state,
Commonwealth, local law, regulation, applicable and binding order, decree,
opinion or agency requirement relating to: (i) the handling, use, disposal or
release of any Hazardous Substance, or (ii) the protection of the environment
or human health.
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"EVENT OF DEFAULT" means, with respect to this Agreement,
each of the events set forth in Section 7.01 of this Agreement.
"EVENT OF TAXABILITY" means (i) the failure by the Borrower
to comply during its immediately preceding taxable year with the covenants
provided in Section 5.10(a) or (b), or (ii) the failure by the Borrower to
comply with the representations made in Section 2.02(g). An Event of Taxability
shall be deemed to have occurred if any of the certificates or reports required
to be furnished under Section 5.10(c) indicate that the Borrower has failed to
comply with any of the covenants of Section 5.10(a) or (b) or the
representations made in Section 2.02(g).
"FEDERAL TAXES" means any income taxes imposed under the Code.
"GOVERNMENT OBLIGATIONS" means (i) direct obligations of, or
obligations the timely payment of the principal of and the interest on which
are unconditionally guaranteed by, the United States of America, and (ii) any
certificates or other evidences of ownership interest in obligations or in
specified portions thereof (which may consist of specified portions of the
principal thereof or the interest thereon) of the character described in clause
(i).
"GUARANTOR" means Doral Financial Corporation.
"HAZARDOUS SUBSTANCE" means any substance that is: (i)
listed, classified or regulated pursuant to any Environmental Law, or (ii) any
petroleum product or by-product, asbestos containing material, polichlorinated
byphenyls, radioactive materials or radon.
"INDEBTEDNESS" means (1) any obligation of a Person for (a)
the repayment of borrowed money, whether or not evidenced by bonds, debentures,
notes or other written instruments or for the payment of the deferred purchase
price of property or assets (other
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than Trade Payables), or (b) the payment of money relating to a lease that is
required to be classified as a capitalized lease obligation in accordance with
generally accepted accounting principles; (2) any liability of others described
in the preceding clause (1) that the Person has guaranteed, that is recourse to
such Person or that is otherwise its legal liability; and (3) any amendment,
supplement, modification, deferral, renewal, extension or refunding of any
liability of the types referred to in clauses (1) and (2) above.
"INDEPENDENT ACCOUNTANTS" means a firm of certified public
accountants experienced in federal tax matters that is recognized in the
Commonwealth, which may also be the firm which audits the books of the Borrower
and the Guarantor, which is in fact independent with respect to the Borrower
and the Guarantor within the meaning of the Code of Professional Ethics of the
American Institute of Certified Public Accountants and is employed by the
Borrower with the approval of the Authority (which approval shall not be
unreasonably delayed or withheld).
"INDUSTRIAL FACILITIES" shall have the meaning given to such
term by the Act.
"INTEREST PAYMENT DATE" means the first day of each calendar
month, commencing on ___________, 1999.
"LOAN" means the loan of the proceeds of the Bonds made by
the Authority to the Borrower pursuant to Section 4.01 of this Agreement.
"OFFICERS' CERTIFICATE" means a certificate signed by the
Chairman, the President, the Chief Financial Officer or an Executive Vice
President, and by the Treasurer, the Chief Accounting Officer, the Controller
or the Secretary of the Guarantor and delivered to the Trustee.
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"OPINION OF COUNSEL" means a written opinion of counsel, who
may be counsel to the Borrower or the Guarantor (including an employee of the
Borrower or the Guarantor) and who shall be satisfactory to the Authority,
which is delivered to the Authority.
"PAYMENT OF THE BONDS" means payment of the entire principal
of and premium, if any, and interest on all or a portion of the Bonds in
accordance with their terms, whether through payment at maturity, upon
acceleration, redemption or provision for such payment in such a manner that
such Bonds or such portion shall be deemed to have been paid under Article XIII
of the Trust Agreement.
"PERMITTED LIENS" has the meaning set forth in Section 5.16.
"PERSON" includes an individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or a government or an agency or a political subdivision thereof,
or any other entity.
"PLANS AND SPECIFICATIONS" means, collectively, the plans and
specifications prepared by the Borrower for the Project as the same may be
implemented and detailed from time to time and as the same may be revised from
time to time by the Borrower prior to the Completion Date.
"PRINCIPAL MORTGAGE BANKING SUBSIDIARY" means any Subsidiary,
including its Subsidiaries, which (1) is principally engaged in the mortgage
banking business, and (2) meets any of the following conditions: (i) the
Guarantor's and its other Subsidiaries' investments in and advances to the
Subsidiary exceed 30 percent of the total assets of the Guarantor and its
Subsidiaries consolidated as of the end of the most recently completed fiscal
year; (ii) the Guarantor's and its other Subsidiaries' proportionate share of
the total assets (after
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intercompany eliminations) of the Subsidiary exceeds 30 percent of the total
assets of the Guarantor and its Subsidiaries consolidated as of the end of the
most recently completed fiscal year; or (iii) the Guarantor's and its other
Subsidiaries' equity in the income from continuing operations before income
taxes, extraordinary items and cumulative effect of a change in accounting
principles of the Subsidiary exceeds 30 percent of such income of the Guarantor
and its Subsidiaries consolidated for the most recently completed fiscal year;
provided, however, that any Subsidiary chartered as a banking corporation or as
a savings association under the laws of the United States, any State or the
Commonwealth shall not be considered a Principal Mortgage Banking Subsidiary
unless the Guarantor shall, after the date of this Agreement, transfer the
mortgage banking business currently conducted by Doral Mortgage Corporation or
the Guarantor's HF Mortgage Bankers Division to such banking corporation or
savings association.
"PROJECT" means the industrial facilities financed in part
with the proceeds from the sale of the Bonds and more fully described in
Exhibit A hereto.
"QUALIFYING BONDHOLDER" means (i) an individual who during
the entire taxable year in which an Event of Taxability occurred was a bona
fide resident of the Commonwealth or (ii) a Commonwealth or other foreign
corporation (for purposes of the Code) that is not engaged in any trade or
business in the United States.
"SIGNIFICANT SUBSIDIARY" means a Subsidiary, including its
Subsidiaries, which meets any of the following conditions: (i) the Guarantor's
and its other Subsidiaries' investments in and advances to the Subsidiary
exceed 10 percent of the total assets of the Guarantor and its Subsidiaries
consolidated as of the end of the most recently completed fiscal year; (ii) the
Guarantor's and its other Subsidiaries' proportionate share of the total assets
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(after intercompany eliminations) of the Subsidiary exceeds 10 percent of the
total assets of the Guarantor and its Subsidiaries consolidated as of the end
of the most recently completed fiscal year; or (iii) the Guarantor's and its
other Subsidiaries' equity in the income from continuing operations before
income taxes, extraordinary items and cumulative effect of a change in
accounting principles of the Subsidiary exceeds 10 percent of such income of
the Guarantor and its Subsidiaries consolidated for the most recently completed
fiscal year.
"SUBSIDIARY" means any Corporation of which at least a
majority of the outstanding stock having by the terms thereof ordinary voting
power to elect a majority of the directors of such Corporation, irrespective of
whether or not, at the time, stock of any other class or classes of such
Corporation shall have or might have voting power by reason of the happening of
any contingency, is at the time, directly or indirectly, owned or controlled by
the Guarantor or by one or more Subsidiaries thereof, or by the Guarantor and
one or more Subsidiaries thereof.
"TITLE POLICY" means the mortgagee title insurance policy
issued to the Authority and the Trustee on the date of issuance of the Bonds.
"TRADE PAYABLES" means accounts payable or any other
indebtedness or monetary obligations to trade creditors created or assumed in
the ordinary course of business in connection with the obtaining of materials
or services.
"TRUST AGREEMENT" means the Deed of Trust Agreement, dated
_____________, 1999, by and between the Authority and the Trustee, as the same
may be amended or supplemented in accordance with the terms thereof.
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"TRUSTEE" means the Trustee at the time serving as such under
the Trust Agreement, whether the original or successor trustee.
"VOTING STOCK" means capital stock the holders of which have
general voting power under ordinary circumstances to elect at least a majority
of the board of directors of a corporation, provided that, for the purposes of
such definition, capital stock which carries only the right to vote conditioned
on the happening of an event shall not be considered voting stock whether or
not such event shall have happened.
"WHOLLY-OWNED SUBSIDIARY" means a Subsidiary of which all of
the outstanding voting stock (other than directors' qualifying shares) is at
the time, directly or indirectly, owned by the Guarantor, or by one or more
Wholly-Owned Subsidiaries of the Guarantor, or by the Guarantor and one or more
Wholly-Owned Subsidiaries of the Guarantor.
SECTION 1.02. RULES OF CONSTRUCTION. (a) Words of the masculine gender
shall be deemed and construed to include correlative words of the feminine and
neuter genders.
(b) Unless the context shall otherwise indicate, the words
"Bond," "Bondholder," "owner," "Holder" and "Person" shall include the plural
as well as the singular number, and "Holder" and "Bondholder" when used herein
with respect to the Bonds shall mean the holder or registered owner, as the
case may be, of the Bonds at the time issued and outstanding.
(c) Words importing the redemption or calling for redemption
of the Bonds shall not be deemed to refer to or connote the payment of the
Bonds at their stated maturity.
(d) The captions or headings in this Agreement are for
convenience of reference only and in no way define, limit or
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describe the scope or intent of any provisions or sections of this Agreement.
(e) All references herein to particular articles, sections or
exhibits are references to articles, sections or exhibits of this Agreement
unless some other reference is established.
(f) Except as provided in Section 8.04, any inconsistency
between the provisions of this Agreement and the provisions of the Trust
Agreement shall be resolved in favor of the provisions of the Trust Agreement.
ARTICLE II
REPRESENTATIONS
SECTION 2.01. REPRESENTATIONS BY THE AUTHORITY. The Authority
represents that:
(a) The Authority was duly created and is validly existing
under the laws of the Commonwealth as a body corporate and politic constituting
a public corporation and governmental instrumentality of the Commonwealth.
(b) Under the provisions of the Act, the Authority is duly
authorized to enter into and to execute and deliver this Agreement, the Pledge
Agreement and the Trust Agreement, to undertake the transactions contemplated
by this Agreement and the Trust Agreement and to carry out its obligations
hereunder and thereunder.
(c) By duly adopted resolution, the Authority has duly
authorized the execution and delivery of this Agreement, the Trust Agreement
and the Pledge Agreement and the issuance, sale, execution and delivery of the
Bonds.
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(d) Under existing law all payments received by the Authority
pursuant to this Agreement are exempt from Commonwealth income taxation.
SECTION 2.02. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
BORROWER. The Borrower represents, warrants and covenants that:
(a) It is a duly constituted and validly existing corporation
under the laws of the Commonwealth, has elected to be treated as a special
partnership in accordance with the provisions of the Puerto Rico Internal
Revenue Code of 1994, as amended, and Act No. 3 of the Legislature of Puerto
Rico, approved September 27, 1985, and its proposed operations qualify under
the above provisions for treatment as a special partnership.
(b) It has the power and authority to enter into and perform
its obligations under this Agreement and the Collateral Documents.
(c) It has the necessary power and authority to develop,
construct and operate the Project, and to conduct its operations as presently
conducted or proposed to be conducted.
(d) It has duly authorized by proper corporate action the
execution, delivery and performance of this Agreement and the Collateral
Documents.
(e) The execution and delivery of this Agreement and the
Collateral Documents by the Borrower, and the consummation of the transactions
contemplated hereby and thereby and the fulfillment of or compliance with the
terms and conditions hereof and thereof do not and will not conflict with the
provisions of the certificate of incorporation or by-laws of the Borrower and
do not and will not conflict with, or constitute on the part of the Borrower a
breach of or default under any indenture, deed of trust, mortgage,
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agreement or other instrument to which the Borrower is a party or by which the
Borrower or any of its property is bound or conflict with, violate or result in
a breach of any existing law, public administrative rule or regulation,
judgment, court order or consent decree to which the Borrower or any of its
property is now a party or by which it is bound, or result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
of the property or assets of the Borrower under the terms of any instrument or
agreement other than this Agreement or the Trust Agreement.
(f) It will cause the Project to be operated as Industrial
Facilities within the meaning of the Act.
(g) At all times during each of the last three taxable years
(or for such part of such period as may be applicable) and up to and including
the date of execution and delivery of this Agreement, (i) the Borrower has not
been engaged in any trade or business in or outside the Commonwealth; and (ii)
the Borrower has not derived any gross income from sources within or without
the Commonwealth, as determined under the general source of income rules of the
Code.
(h) Except as set forth in Exhibit B hereto, all consents,
approvals, licenses and permits of any governmental authority having
jurisdiction, or of any other Person, that are required for the construction of
the Project are, and shall remain, in full force and effect.
(i) All consents, approvals, licenses and permits of any
governmental authority having jurisdiction, or of any other Person, that are
required for the development and construction of the Project and which are not
in effect on the date hereof or for the proposed operation of the Project shall
be obtained and, once obtained, shall remain in full force and effect.
(j) To the best of Borrower's knowledge: (i) the Project is
not in violation of any applicable Environmental Law and
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(ii) the Project has not received any Environmental Claims or threatened
Environmental Claims.
SECTION 2.03. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
GUARANTOR. The Guarantor represents, warrants and covenants that:
(a) It is a duly constituted and validly existing corporation
under the laws of the Commonwealth.
(b) It has the power and authority to enter into and perform
its obligations under this Agreement.
(c) It has duly authorized by proper corporate action the
execution, delivery and performance of this Agreement.
(d) The execution and delivery of this Agreement by the
Guarantor, and the consummation of the transactions contemplated hereby and the
fulfillment of or compliance with the terms and conditions hereof do not and
will not conflict with the provisions of the certificate of incorporation or
by-laws of the Guarantor and do not and will not conflict with, or constitute
on the part of the Guarantor a breach of or default under any indenture, deed
of trust, mortgage, agreement or other instrument to which the Guarantor is a
party or by which the Guarantor or any of its property is bound or conflict
with, violate or result in a breach of any existing law, public administrative
rule or regulation, judgment, court order or consent decree to which the
Guarantor or any of its property is now a party or by which it is bound, or
result in the creation or imposition of any lien, charge or encumbrance of any
nature whatsoever upon any of the property or assets of the Guarantor under the
terms of any instrument or agreement other than this Agreement or the Trust
Agreement.
(e) The Company is registered as a bank holding company under
the Bank Holding Company Act of 1956 and is subject to the supervision and
regulation of the Board of Governors of the Federal Reserve System.
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ARTICLE III
CONSTRUCTION OF THE PROJECT
SECTION 3.01. CONSTRUCTION OF PROJECT. The Borrower will cause the
Project to be constructed and equipped substantially in accordance with the
Plans and Specifications and in accordance with Exhibit A hereto with all
reasonable dispatch; but if for any reason such construction and equipping
shall be delayed or shall not be completed, there shall be no resulting
diminution in or postponement of the payments required under this Agreement to
be paid by the Borrower.
SECTION 3.02. REVISION OF PLANS AND SPECIFICATIONS. The Borrower may
cause the description of the Plans and Specifications and the description of
the Project in Exhibit A hereto to be revised from time to time; provided,
however, no such revision shall be inconsistent with the representation made in
subsection (f) of Section 2.02 hereof, and in the case of any change that would
render materially inaccurate the description of the Project in Exhibit A, there
shall be delivered to the Trustee and the Authority (i) a revised description
of the Project as altered by the change in the Plans and Specifications, the
accuracy of which shall have been certified by a Borrower Representative and
(ii) the approvals and consents, if any, required by the Act and the Trust
Agreement.
SECTION 3.03. DISBURSEMENTS FROM CONSTRUCTION FUND. The Authority and
the Borrower hereby agree that the monies in the Construction Fund shall be
applied to the payment of the Cost of the Project and otherwise as provided in
accordance with Article IV of the Trust Agreement and substantially to the
extent of the estimates of Cost of the Project set forth in the application
filed with the Authority or otherwise approved by the Authority, and such
monies shall be invested and reinvested in accordance with Article VI of the
Trust Agreement.
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SECTION 3.04. BORROWER REQUIRED TO PAY COST OF PROJECT. If the monies
in the Construction Fund available for the payment of the Cost of the Project
should not be sufficient to pay or cause to be paid the Cost of the Project,
the Borrower agrees to cause the Project to be completed and to pay all that
portion of the Cost of the Project as may be in excess of the monies available
therefor in the Construction Fund. The Authority does not make any warranty,
either express or implied, that the monies which will be paid into the
Construction Fund, together with any other available monies of the Borrower,
will be sufficient to pay the Cost of the Project. The Borrower agrees that if,
after exhaustion of the monies in the Construction Fund, the Borrower should
pay or cause to be paid any portion of the Cost of the Project, it shall not be
entitled to any reimbursement therefor from the Authority or from the Trustee,
and that it shall not be entitled to any abatement, diminution or postponement
of the payments to be made pursuant to Article IV of this Agreement.
SECTION 3.05. ESTABLISHMENT OF COMPLETION DATE. The Completion Date
for the construction of the Project shall be evidenced to the Trustee by a
certificate delivered, after the review and approval of the Guarantor, to the
Trustee and signed by a Borrower Representative setting forth the Cost of the
Project and stating that, except for amounts not then due and payable or the
liability for the payment of which is being contested or disputed by the
Borrower, the construction of the Project has been completed in accordance with
the description thereof and the Plans and Specifications therefor and the Cost
of the Project has been paid. Such certificate shall state that it is given
without prejudice to any rights against third parties which exist at the date
of such certificate or which may subsequently come into being.
SECTION 3.06. CERTIFICATE OF INDEPENDENT ACCOUNTANTS. The Borrower
shall furnish to the Authority and the Trustee, within ninety (90) days after
the end of the Borrower's fiscal year during which the Completion Date occurs,
a written statement prepared by
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a firm of Independent Accountants, based upon a review of the Borrower's
financial records verifying the Cost of the Project and that all Bond proceeds
were used by the Borrower to pay the Cost of the Project.
ARTICLE IV
LOAN BY THE AUTHORITY TO THE BORROWER;
REPAYMENT; MAINTENANCE; INDEMNITY
SECTION 4.01. ISSUANCE OF THE BONDS TO FUND THE LOAN; MAKING OF THE
LOAN; REPAYMENT. Simultaneously with the delivery of this Agreement, the
Authority shall issue and deliver the Bonds to provide it with funds to be
loaned to the Borrower pursuant to this Agreement. The Bonds shall be issued in
accordance with the Trust Agreement. The approval of the terms of the Bonds and
the Trust Agreement by the Borrower shall be conclusively established by its
execution of this Agreement. Upon the terms and conditions of this Agreement,
the Authority shall loan the Borrower the proceeds of the Bonds. The Loan shall
be deemed to have been made when the proceeds of the sale of the Bonds are
delivered to the Trustee. The proceeds for the Loan shall be used by the
Borrower, together with other available funds, to (i) pay the Cost of the
Project, (ii) pay interest on the Bonds during the construction of the Project,
and (iii) pay certain expenses incurred in connection with the authorization
and issuance of the Bonds. The principal amount of the Loan shall be equal to
the aggregate principal amount of the Bonds.
The Borrower agrees to repay the Loan in accordance with the
provisions of this Agreement. The Borrower acknowledges that the proceeds of
the Loan will be delivered to the Trustee and applied on behalf of the Borrower
in accordance with this Agreement and the Trust Agreement.
With respect to each date on which the principal amount of,
redemption premium, if any, or the interest on the Bonds is
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payable (whether at maturity, upon acceleration, redemption or otherwise), the
Borrower will pay such additional amounts which, together with all other monies
available therefor in the Bond Fund, will be sufficient to pay:
(a) all interest which will become due and payable on the
Bonds on such date;
(b) the principal amount of the Bonds and redemption premium,
if any, which will become due and payable on such date; and
(c) amounts, if any, required to effect redemption or
purchase of the Bonds on the dates specified pursuant to Section 301 of the
Trust Agreement.
The Borrower will pay the amounts it is required to pay under
clauses (a), (b) and (c) above directly to the Trustee in immediately available
funds for deposit in the Bond Fund. The Borrower shall deposit or cause to be
deposited such amounts with the Trustee no later than the date on which the
corresponding amounts are due on the Bonds or are required to be deposited
under the Trust Agreement, if earlier, except as provided in Section 8.01, 8.02
and 8.03 hereof.
All payments required to be made by the Borrower under the
terms of this Loan Agreement shall be made in lawful money of the United States
of America.
For purposes of this Section 4.01 all payments made by the
Guarantor pursuant to Section 4.08 to the extent made and applied to the
payment of the principal amount of and interest on the Bonds will be deemed to
satisfy the corresponding obligation of the Borrower under this Section 4.01.
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Except as provided in Section 906 of the Trust Agreement, the
Trustee shall not use any of the amounts deposited in the Bond Fund pursuant to
this Section for any purpose other than the payment of the principal amount of
and redemption premium, if any, and interest on the Bonds.
SECTION 4.02. NO SET-OFF. The obligation of the Borrower to make the
payments required by Section 4.01 and all other payments required under this
Agreement and to perform and observe the other agreements contained in this
Agreement shall be absolute and unconditional. The Borrower shall pay without
abatement, diminution or deduction (whether for taxes or otherwise) all such
amounts regardless of any cause or circumstance whatsoever including, without
limitation, any defense, set-off, recoupment or counterclaim which the Borrower
may have or assert against the Authority, the Trustee, any holder of a Bond or
any other Person.
SECTION 4.03. COVENANT TO MAINTAIN THE PROJECT. The Borrower will at
all times, at its sole cost and expense, maintain, preserve and keep the
Project in good repair, working order and condition and cause to be made all
needed and proper repairs, replacements and renewals; provided, however, that
the Borrower will have no obligation to cause to be maintained, preserved,
repaired, replaced or renewed any element or unit of the Project, the
maintenance, repair, replacement or renewal of which becomes uneconomic to the
Borrower because of damage or destruction or obsolescence or change in economic
or business conditions, or change in government standards or regulations. The
Borrower covenants that it will not permit, commit or suffer any waste of the
whole or any major part of the Project and shall not use or permit the use of
the Project, or any part thereof, for any unlawful purpose or permit any
nuisance to exist thereon.
The Borrower covenants that it will promptly notify the
Trustee and the Authority if the Project ceases to be operated as
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an Industrial Facility within the meaning of the Act as in effect on the date
hereof.
SECTION 4.04. EXPENSES. The Borrower shall pay, when due and payable,
certain costs and expenses (without duplication), exclusive of costs and
expenses payable from the proceeds of the Bonds, as follows:
(a) the fees and other costs payable to the Trustee,
including the reasonable compensation and the reasonable expenses and
disbursements of Trustee's counsel and the reasonable costs and expenses of
indemnifying the Trustee for, and holding the Trustee harmless against, any
loss, liability or expense (including the reasonable costs and Trustee expenses
of defending against any claim of liability) incurred without negligence or
willful misconduct by the Trustee and arising out of or in connection with its
acting as Trustee under the Trust Agreement;
(b) all costs incurred by the Authority or the Trustee in
connection with the purchase or redemption of Bonds to the extent money is not
otherwise available therefor;
(c) the fees and other costs incurred for services of such
attorneys, management consultants and accountants as are employed by the
Authority or the Trustee to make examinations, provide services, render
opinions or prepare reports required under this Agreement or the Trust
Agreement;
(d) reasonable fees and other costs that the Borrower is
obligated to pay, not otherwise paid under this Agreement or the Trust
Agreement, incurred by the Authority in connection with its administration and
enforcement of, and compliance with, this Agreement or the Trust Agreement,
including, but not limited to, the Administrative Fee; and
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(e) fees and other costs incurred at the request or with the
consent of the Borrower in connection with the issuance of the Bonds to the
extent such fees and other costs are not paid from the proceeds of the Bonds;
provided, however, that in no event shall the total amount of such fees and
other costs paid from the proceeds of the Bonds exceed two percent (2%) of the
proceeds of the Bonds, less amounts paid to the underwriters of the Bonds as
underwriters' discount.
SECTION 4.05. INDEMNIFICATION.
(a) The Borrower and the Guarantor shall at all times
indemnify and hold harmless the Authority against any and all losses, costs,
damages, expenses and liabilities (individually, a "Loss" or collectively
referred to hereinafter as "Losses") of whatsoever nature (including but not
limited to reasonable attorneys' fees, litigation and court costs, amounts paid
in settlement consented to in writing by the Borrower or the Guarantor, and
amounts paid to discharge judgments) directly or indirectly resulting from,
arising out of, or related to one or more Claims, as hereinafter defined. The
word "Claims" as used herein shall mean all claims, lawsuits, causes of action
and other legal actions and proceedings of whatsoever nature, including bodily
or personal injury or death of any person or damage to any property (including
but not limited to persons employed by the Authority, the Borrower or any other
Person) brought against the Authority or to which the Authority is a party,
that directly or indirectly result from, arise out of, or relate to (i) the
design, construction, transfer, sale, operation, use, occupancy, maintenance or
ownership of the Project or any part thereof, (ii) the execution, delivery or
performance of this Agreement, the Trust Agreement, the Collateral Documents,
or any related instruments or documents or (iii) any untrue statement or
alleged untrue statement of a material fact contained in the official statement
relating to the Bonds, or any amendment or supplement thereto, or any
preliminary official statement relating to the Bonds, or arise out of or
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are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
in light of the circumstances under which they were made not misleading;
provided, however, that the Borrower and the Guarantor will not be liable in
any such case to the extent that any such Loss or Claim arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any of such documents in reliance upon and in
conformity with written information furnished to the Borrower or the Guarantor
by the Authority specifically for use therein (it being understood that the
information in said official statement under the captions "AFICA" and
"Government Development Bank for Puerto Rico" has been so furnished to the
Borrower and the Guarantor by the Authority specifically for use therein). The
obligations of the Borrower and the Guarantor under this Section 4.05 shall
apply to all Losses or Claims, or both, that result from, arise out of, or are
related to any event, occurrence, condition or relationship existing prior to
termination of this Agreement, whether such Losses or Claims, or both, are
asserted prior to termination of this Agreement or thereafter. The Authority
shall reimburse the Borrower or the Guarantor, as applicable, for payments made
by the Borrower or the Guarantor pursuant to this Section 4.05 to the extent of
any proceeds, net of all expenses of collection, actually received by the
Authority from any insurance covering such Claims with respect to the Losses
sustained. The Authority shall have the duty to claim any such insurance
proceeds and the Authority shall assign its rights to such proceeds, to the
extent of such required reimbursement, to the Borrower. In case any action
shall be brought against the Authority in respect of which indemnity may be
sought against the Borrower and the Guarantor, the Authority shall promptly
notify the Borrower and the Guarantor in writing and the Borrower and the
Guarantor shall have the right to assume the investigation and defense thereof
including the employment of counsel and the payment of all expenses. The
Authority shall have the right to employ separate counsel in any such action
and participate in the
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investigation and defense thereof, but the fees and expenses of such counsel
shall be paid by the Authority unless the employment of such counsel has been
authorized by the Borrower or the Guarantor. The Borrower and the Guarantor
shall not be liable for any settlement of any such action without the written
consent of the Borrower or the Guarantor but, if any such action is settled
with the written consent of the Borrower or the Guarantor or if there be a
final unappealable judgment for the plaintiff in any such action, the Borrower
and the Guarantor agree to indemnify and hold harmless the Authority from and
against any such Losses or Claims by reason of such settlement or judgment.
Nothing herein shall be construed as requiring the Authority to acquire or
maintain insurance of any form or nature with respect to the Project or any
portion thereof or with respect to any phrase, term, provision, condition or
obligation of this Agreement or any other matter in connection herewith so long
as this Agreement is in effect.
(b) The Borrower and the Guarantor do hereby agree to
indemnify and hold harmless the Authority and the Trustee from and against all
reasonable losses, costs, damages, Environmental Claims expenses (including
reasonable attorneys and consultants fees), liabilities, fines, enforcement
actions, remedial costs, and third party cost recovery actions that the Trustee
may sustain by reason of the Trustee becoming liable as an operator (and/or as
an owner if, in its function as a lender, the Trustee or the Authority is
deemed to be an owner) under CERCLA or other applicable Environmental Law or
related to the presence in, under or at the Project of any Hazardous Substance
or related to the Borrower's failure to comply with any applicable
Environmental Law.
The above notwithstanding, the Trustee and the Authority shall not be
entitled to the foregoing indemnity if any such losses, costs, damages,
expenses (including reasonable attorneys fees), liabilities, fines, enforcement
actions, remedial costs, and third party cost recovery actions are a result of,
or in any way related
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to, the negligent or reckless acts or omissions of Trustee, the Authority,
their agents, representatives, employees, officers or directors. Furthermore,
in the event the Borrower or the Guarantor has indemnified the Trustee or the
Authority pursuant to the above indemnity provisions, and the Trustee or the
Authority have received any monies from insurance or other similar source for
the above indemnifiable situations, then the Trustee and the Authority shall
reimburse the Borrower or the Guarantor, as applicable, any amounts received by
any of them from the Borrower or the Guarantor pursuant to the above indemnity
which has otherwise been covered by insurance or a similar source.
(c) The provisions of this Section 4.05 shall survive the
expiration or termination of this Agreement.
SECTION 4.06. PAST DUE PAYMENTS. In the event the Borrower shall fail
to pay any amounts required to be paid under Section 4.01 or any other amounts
payable under this Agreement, any such amounts shall continue to bear interest
until their payment (to the extent permitted by law) from the maturity date,
redemption date or interest payment date to which such defaulted amounts relate
at the then current rate of interest on such Bonds.
SECTION 4.07. PAYMENT OF COSTS UPON DEFAULT. The Borrower shall pay,
and shall indemnify the Authority against, all costs and charges, including
reasonable counsel fees, lawfully and reasonably incurred in enforcing any
covenant or agreement of the Borrower contained in this Agreement. The Borrower
shall reimburse the Trustee for any funds advanced by the Trustee for the
performance of any of its duties hereunder or under the Trust Agreement, or in
the exercise of any of its rights or powers and shall pay interest on any funds
so advanced at rates customarily charged by the Trustee, which rates shall
never be more than two percent over the prime rate of Citibank, N.A. or the
maximum rate permitted by law, whichever is lower.
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SECTION 4.08. GUARANTEE. The Guarantor hereby unconditionally and
irrevocably guarantees, jointly and severally with the Borrower, to each holder
of a Bond authenticated and delivered by the Trustee, and to the Authority, (1)
the due and punctual payment of the principal of (including any amount in
respect of original issue discount), and any premium and interest on, such Bond
and the due and punctual payment of the Amortization Requirements, if any, and
analogous obligations, if any, provided for pursuant to the terms of such Bond,
when and as the same shall become due and payable, whether at stated maturity
or upon redemption or upon declaration of acceleration or otherwise according
to the terms of such Bond and of the Trust Agreement, (2) the full payment to
each holder of a Bond of any amount required to be returned by the holders as a
result of an order by a court having lawful jurisdiction that any payment by
the Borrower to any holder is a preferential transfer as defined in Section
547(b) of the United States Bankruptcy Code, and (3) the payment of all other
amounts payable by the Borrower and the performance of all other obligations of
the Borrower under this Agreement and the Collateral Documents. In case of
default by the Borrower in the payment of any principal (including any amount
in respect of original issue discount), interest, Amortization Requirements, or
analogous obligation, or in the payment of any other amounts payable by the
Borrower or the performance of any other obligations of the Borrower under this
Agreement, the Guarantor agrees duly and punctually to pay or perform the same.
The Guarantor hereby agrees that its obligations hereunder shall rank pari
passu with all other unsecured and unsubordinated obligations of the Guarantor,
whether now existing or hereafter incurred, shall be as principal and not
merely as surety, and shall be absolute and unconditional irrespective of any
extension of the time for payment of any such Bond or other obligation, any
modification of any such Bond, this Agreement or the Trust Agreement, any
invalidity, irregularity or unenforceability of any such Bond, this Agreement
or the Trust Agreement, any failure to enforce the same or any waiver,
modification, consent or indulgence granted to the Borrower with
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respect thereto by the Holder of such Bond or the Trustee, or any other
circumstances which may otherwise constitute a legal or equitable discharge of
a surety or guarantor. The Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of merger or
bankruptcy of the Borrower, any right to require a demand or proceeding first
against the Borrower, protest or notice with respect to any such Bond or the
indebtedness evidenced thereby and all demands whatsoever, and covenants that
this guarantee will not be discharged except by payment in full of the
principal of (including any amount payable in respect of original issue
discount), and any premium and interest on all Bonds and of all other amounts
payable by the Borrower and performance of all other obligations of the
Borrower under this Agreement. The Guarantor agrees that any and all rights
under this guarantee may be enforced by any Bondholder, by the Authority and by
the Trustee in accordance with the terms of the Trust Agreement and this
Agreement.
Until such time as the Bonds are paid in full, the Guarantor
irrevocably waives any and all rights to which it may be entitled, by operation
of law or otherwise, upon making any payment hereunder (i) to be subrogated to
the rights of a Holder against the Borrower with respect to such payment or
otherwise to be reimbursed, indemnified or exonerated by the Borrower in
respect thereof or (ii) to receive any payment, in the nature of contribution
or for any other reason, from any other obligor with respect to such payment.
The guarantee set forth in this Section shall not be valid or become
obligatory for any purpose with respect to a Bond until the certificate of
authentication on such Bond shall have been signed by the Trustee.
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ARTICLE V
FURTHER AGREEMENTS
SECTION 5.01. COVENANT TO MAINTAIN EXISTENCE; CONSOLIDATION, MERGER
AND SALE. The Borrower and the Guarantor covenant that so long as any Bonds are
outstanding they will maintain their existence, will not dispose of all or
substantially all of their assets and will not acquire, consolidate with or
merge into another Person; provided, however, that the Borrower or the
Guarantor may acquire, consolidate with or merge into another Person, or
transfer to another Person all or substantially all their assets and thereafter
dissolve, if (i) the successor or transferee is solvent and irrevocably and
unconditionally assumes in writing all the obligations of the Borrower or the
Guarantor, as the case may be, herein and under the Trust Agreement and the
Collateral Documents; (ii) such consolidation, merger or transfer shall not
cause the Borrower to fail to comply with any of the covenants of Section
5.10(a) or (b) or the representations made in Section 2.02(g) of this
Agreement; and (iii) immediately after such consolidation, merger or transfer
none of the Borrower, such successor or transferee (if other than the Borrower)
or Doral Financial shall be in default in the performance or observance of any
duties, obligations or covenants under this Agreement or the Collateral
Documents.
SECTION 5.02. NO WARRANTY BY AUTHORITY. The Authority makes no
warranty, either express or implied, as to the condition of the Project or its
suitability for the Borrower's purposes or needs or that the proceeds of the
Bonds will be sufficient for the purposes set forth above.
SECTION 5.03. MAINTENANCE AND EXAMINATION OF BOOKS AND RECORDS OF
BORROWER; RIGHT OF INSPECTION. The Borrower covenants that it will keep
accurate records, books and accounts of all items of cost and of all
expenditures relating to the Project, whether or not financed under the
provisions of this Agreement. The Authority
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and the Trustee and their duly authorized agents shall have the right at all
reasonable times during business hours to enter upon and examine and inspect
the Project, to determine whether the Project continues to constitute
Industrial Facilities. The Authority and the Trustee shall also be permitted,
at all reasonable times during business hours, to (i) examine the Plans and
Specifications and the other books and records (other than confidential
personnel records) of the Borrower, including any accountants' work papers,
with respect to the Project in connection with the transactions contemplated by
this Agreement and the Trust Agreement, and (ii) to make copies of those
portions of such books and records as the Authority and the Trustee or such
agents shall reasonably request. Any proprietary or confidential information
obtained by the Authority or the Trustee pursuant to this Section 5.03 shall
not be disclosed to third parties unless such disclosure is required in order
to comply with its obligations hereunder or under the Trust Agreement or the
Collateral Documents.
SECTION 5.04. OFFICERS OF AUTHORITY NOT LIABLE. All covenants,
stipulations, promises, agreements and obligations of the Authority contained
herein shall be deemed to be covenants, stipulations, promises, agreements and
obligations of the Authority and not of any member of the Board of the
Authority or any officer, agent, servant or employee of the Authority in his
individual capacity, and no recourse shall be had for the payment of the
principal amount of or redemption premium or interest on the Bonds or for any
claim based thereon or hereunder against any member of the Board of the
Authority or any officer, agent, servant or employee of the Authority or any
natural person executing the Bonds. Neither any member of the Board of the
Authority nor any person executing the Bonds shall be liable personally on the
Bonds or be subject to any personal liability or accountability by reason of
the issuance of the Bonds.
SECTION 5.05. COMPLIANCE WITH APPLICABLE LAW. The Borrower covenants
that the Plans and Specifications shall comply with all
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provisions of applicable laws, ordinances, orders, rules, regulations and
requirements of all federal, Commonwealth and municipal governments, and
appropriate departments, commissions, boards and officers thereof, whether now
or hereafter in force.
SECTION 5.06. AUTHORITY'S PERFORMANCE OF THE BORROWER'S OBLIGATIONS.
In the event the Borrower at any time neglects, refuses or fails to perform any
of its obligations under this Agreement, the Authority or the Trustee, at their
respective options and following at least thirty (30) days' written notice to
the Borrower and the Guarantor (except where a shorter period of notice is
necessary to avoid a default in the Bonds or to avoid endangering the interest
of the Authority or the Trustee in the Project, or any part thereof, or to
prevent any loss or forfeiture thereof), may perform or cause to be performed
such obligations, and all reasonable expenditures incurred by the Authority or
the Trustee thereby shall be promptly paid or reimbursed by the Borrower to the
Authority or the Trustee, as the case may be.
SECTION 5.07. INDEMNIFICATION WITH RESPECT TO GOVERNMENT OBLIGATIONS.
If the Borrower shall elect to cause Government Obligations to be deposited
with the Trustee pursuant to Section 1301 of the Trust Agreement, the Borrower
shall pay and shall indemnify and hold harmless the Trustee, the Authority and
each holder of the Bonds against any tax, fee or other charge imposed upon or
assessed against such Government Obligations or the principal thereof, or
premium, if any, and interest received thereon.
SECTION 5.08. ANNUAL REPORTS. Within 90 days following the completion
of each of their fiscal years, the Borrower and the Guarantor shall furnish a
copy of their year-end audited financial statements to the Trustee and the
Authority, together with a certificate signed by the chief financial officer
(or other executive officer performing similar functions) of the Borrower and
the Guarantor certifying that no default has occurred under this
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Agreement, and that no fact or circumstance exists which, with the lapse of
time or the giving of notice or both, would result in an Event of Default
hereunder.
SECTION 5.09. COVENANT BY BORROWER AS TO COMPLIANCE WITH TRUST
AGREEMENT. The Borrower and the Guarantor approve all the terms of the Trust
Agreement and consent to the assignment made by the Authority to the Trustee
therein, covenant and agree that they will comply with the provisions of the
Trust Agreement with respect to the Borrower and the Guarantor and recognize
that the Trustee shall have the power and authority provided in the Trust
Agreement. The Borrower and the Guarantor further agree to cooperate with the
Authority and the Trustee in providing any information or documentation that is
necessary or convenient for the rendering of any legal opinion that may be
required under the Trust Agreement.
SECTION 5.10. COVENANT AS TO SOURCE OF INCOME.
(a) The Borrower covenants that: (i) during the three taxable
years (or for such part of such period as may be applicable) immediately
preceding the taxable year during which interest is paid on the Bonds, more
than 20% of its total gross income will be attributable to its trade or
business in the Commonwealth, as determined under Section 861(c)(1)(B) of the
Code as in effect on the Closing and will be derived from sources within the
Commonwealth under the general source of income rules of the Code, as in effect
on the Closing; and (ii) no part of the interest paid on the Bonds will be
treated under the Code, as paid by a trade or business of the Borrower
conducted outside the Commonwealth, such determination to be made in accordance
with Section 884(f)(1)(A) of the Code and Treas. Regs. Section
1.884-4(b)(1)(i)(A) or (B) issued thereunder, as in effect on the Closing.
(b) The Borrower covenants that all interest paid or accrued
on the Bonds will constitute income from sources within the
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Commonwealth under the general sourcing rules of the Code as in effect on the
Closing.
(c) The Borrower covenants that for each taxable year, up to
and including the taxable year when all interest on and principal of the Bonds
are paid in full, not later than the 120th day following the close of each such
taxable year, beginning with the first taxable year ending after the Closing,
it will (1) deliver to the Trustee, the Independent Accountant and the
Authority, a certificate (the "Borrower's Certificate") addressed to the
Trustee, the Independent Accountant and the Authority: (i) stating for the
three immediately preceding taxable years of the Borrower (or for such part of
such period as may be applicable), the percentage of the Borrower's gross
income that was derived from sources within the Commonwealth under the general
sourcing rules of the Code as in effect on the Closing; (ii) stating the
percentage of the Borrower's gross income that was attributable to, the active
conduct of (A) its trade or business in the Commonwealth and (B) any trade or
business outside the Commonwealth, in each case as determined under Section
861(c)(1)(B) of the Code as in effect on the Closing; (iii) making an assertion
as to whether or not the Borrower has complied with each of the covenants of
Section 5.10(a) and the representation of Section 2.02(g) and, accordingly,
whether or not an Event of Taxability has occurred; and (iv) making an
assertion as to whether the Borrower or the Guarantor has taken any other
action which shall cause interest on the Bonds to become subject to federal
taxation for Puerto Rico residents; and, (2) cause an Independent Accountant to
deliver to the Trustee, the Guarantor and the Authority, an Independent
Accountant's Report stating (i) that they have examined (such examination being
made in accordance with standards established by the American Institute of
Certified Public Accountants) management's assertion included in the Borrower's
Certificate as to the Borrower's compliance with the covenants of Section
5.10(a) and the representation of Section 2.02(g) and (ii) whether in their
opinion the Borrower's assertion as to compliance with each of such covenants
and representation is
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correct. If the Borrower's Certificate or the Independent Accountant's Report
indicates that the Borrower has failed to comply with any of the covenants of
Section 5.10(a) or the representations made in Section 2.02(g), or that the
Borrower or the Guarantor has taken any other action which shall cause interest
on the Bonds to become subject to federal taxation for Puerto Rico residents,
an Event of Taxability shall have occurred and the Trustee shall cause a copy
of such report to be mailed to each Bondholder together with a notice to each
Bondholder that an Event of Taxability has occurred, within five (5) Business
Days of the receipt of such report. Upon the occurrence of an Event of
Taxability, the Borrower shall cause the Independent Accountants or tax counsel
acceptable to the Trustee and the Authority, to provide an opinion as to what
would be the Applicable Interest Period in which a Qualifying Bondholder would
be subject to Federal Taxes with respect to the interest paid or accrued on the
Bonds.
SECTION 5.11. NO PURCHASE OF BONDS BY BORROWER OR GUARANTOR. Except as
permitted by the Trust Agreement with respect to the purchase of Bonds for
cancellation in connection with the Amortization Requirement, the Borrower and
the Guarantor covenant that none of the Bonds will be purchased by the Borrower
or the Guarantor, or their respective Affiliates, other than Doral Securities
in the ordinary course of their broker-dealer business.
SECTION 5.12. NO INTEREST OF AUTHORITY IN PROJECT. The Authority shall
not have any rights to or interest in the Project, which shall be the sole and
exclusive property of the Borrower.
SECTION 5.13. CONSENT TO JURISDICTION. The Borrower and the Guarantor
consent to the jurisdiction of the courts of the Commonwealth for causes of
action arising under or related to the terms of this Agreement, the Trust
Agreement, or any related documents.
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SECTION 5.14. LIMITATION UPON CREATION OF LIENS ON VOTING STOCK OF
PRINCIPAL MORTGAGE BANKING SUBSIDIARIES. The Guarantor will not, and it will
not permit any Subsidiary at any time directly or indirectly to, incur, issue,
assume or guarantee any Indebtedness for borrowed money secured by a pledge of,
lien on or security interest in any shares of Voting Stock of any Principal
Mortgage Banking Subsidiary without making effective provision whereby the
Bonds (and, if the Guarantor so elects, any other Indebtedness of the Guarantor
ranking on a parity with the Bonds) shall be secured equally and ratably with
such secured Indebtedness; provided, however, that the foregoing covenant shall
not apply to any Indebtedness secured by a pledge of, lien on or security
interest in any shares of Voting Stock of any corporation at the time it
becomes a Principal Mortgage Banking Subsidiary; and provided further, however,
that the foregoing covenant shall not be applicable to liens for taxes or
assessments or governmental charges or levies not then due and delinquent or
the validity of which is being contested in good faith or which are less than
$5,000,000 in amount, liens created by or resulting from any litigation or
legal proceeding which is currently being contested in good faith by
appropriate proceedings or which involve claims of less than $5,000,000, or
deposits to secure (or in lieu of) surety, stay, appeal or customs bonds.
If the Guarantor shall hereafter be required to secure the
Bonds equally and ratably with any other Indebtedness of the Guarantor pursuant
to this Section, (i) the Guarantor will promptly deliver to the Trustee an
Officers' Certificate stating that the foregoing covenant has been complied
with, and an Opinion of Counsel stating that in the opinion of such counsel the
foregoing covenant has been complied with and that any instruments executed by
the Guarantor or any Subsidiary in the performance of the foregoing covenant
comply with the requirements of the foregoing covenant and (ii) the Authority
is hereby authorized to enter into an agreement supplemental hereto and to take
such action, if any,
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as it may deem advisable to enable the Trustee to enforce the rights of the
holders of the Bonds so secured.
SECTION 5.15. LIMITATION UPON DISPOSITION OF VOTING STOCK OF PRINCIPAL
MORTGAGE BANKING SUBSIDIARIES. Subject to Section 5.01, the Guarantor will not
sell, assign, transfer or otherwise dispose of any shares of, securities
convertible into or options, warrants or rights to subscribe for or purchase
shares of, Voting Stock (other than directors' qualifying shares) of any
Principal Mortgage Banking Subsidiary and will not permit any Principal
Mortgage Banking Subsidiary to issue (except to the Guarantor ) any shares of,
securities convertible into or options, warrants or rights to subscribe for or
purchase shares of, Voting Stock of any Principal Mortgage Banking Subsidiary,
except for sales, assignments, transfers or other dispositions that:
(1) are for fair market value on the date thereof, as determined by
the Board of Directors of the Guarantor (which determination shall be
conclusive) and, after giving effect to such disposition and to any possible
dilution, the Guarantor will own not less than 80% of the shares of Voting
Stock of such Principal Mortgage Banking Subsidiary then issued and outstanding
free and clear of any security interest;
(2) are made in compliance with an order of a court or regulatory
authority of competent jurisdiction, as a condition imposed by any such court
or authority permitting the acquisition by the Guarantor, directly or
indirectly, of any other mortgage banking institution or entity the activities
of which are legally permissible for a bank holding company or a subsidiary
thereof to engage in, or as an undertaking made to such authority in connection
with such an acquisition;
(3) are made where such Principal Mortgage Banking Subsidiary, having
obtained any necessary regulatory approvals, unconditionally
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guarantees payment when due of the principal of and premium, if any, and
interest on the Bonds; or
(4) are made to the Guarantor or any Wholly-Owned Subsidiary if such
Wholly-Owned Subsidiary agrees to be bound by this covenant and the Guarantor
agrees to maintain such Wholly-Owned Subsidiary as a Wholly-Owned Subsidiary.
Notwithstanding the foregoing, any Principal Mortgage Banking
Subsidiary may be merged into or consolidated with another mortgage banking
institution organized under the laws of the United States, any State thereof,
the Commonwealth or the District of Columbia if, after giving effect to such
merger or consolidation, the Guarantor or any Wholly-Owned Subsidiary owns at
least 80% of the Voting Stock of such other mortgage banking institution then
issued and outstanding free and clear of any security interest and if,
immediately after giving effect thereto and treating any such resulting
institution thereafter as a Principal Mortgage Banking Subsidiary and as a
Subsidiary for purposes of this Agreement, no Event of Default, and no event
that, after the giving of notice or lapse of time or both, would become an
Event of Default, has occurred and is continuing.
SECTION 5.16. LIENS. The Borrower shall not create, incur, assume or
permit to exist any lien on the Property, other than (i) the lien under the
Mortgage, the Mortgage Note and the Pledge Agreement, (ii) liens, charges,
encumbrances and rights identified as subsisting liens on the Mortgage or
listed as exceptions in the Title Policy, (iii) liens for real estate taxes or
assessments not yet due and payable or which are being contested in good faith
by appropriate proceedings and for which adequate reserves are maintained by
the Borrower, (iv) zoning restrictions, easements, rights of way, licenses,
exceptions, reservations, restrictions on use, minor defects and irregularities
in title, and other similar encumbrances incurred in the ordinary course of
business which, in the aggregate, are not substantial in amount and do not
materially
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detract from the value of the Property or interfere with the ordinary conduct
of the business of the Borrower; (v) carriers', warehousemen's, mechanic's,
materialmen's, repairmen's or other like liens arising in the ordinary course
of business and securing obligations that are not due or which are being
contested in good faith; (vi) pledges and deposits made in the ordinary course
of business in compliance with workmen's compensation, unemployment insurance
and other social security laws or regulations; and (vii) deposits to secure the
performance of bids, trade contracts, leases (other than capital lease
obligations), statutory obligations, surety and appeal bonds, performance bonds
and other obligations of a like nature incurred in the ordinary course of
business (the Liens listed in clauses (i) through (vii) being referred to as
"Permitted Liens").
ARTICLE VI
SALE OF THE PROJECT; ASSIGNMENTS
SECTION 6.01. SALE, TRANSFER OR ENCUMBRANCE OF THE PROJECT. Without
the necessity of obtaining the consent of the Authority or the Trustee, the
Project may be sold, leased or otherwise transferred or encumbered as a whole
or in part and any proceeds thereof retained by the Borrower, subject, however,
to the following conditions:
(a) the Borrower shall, prior to such sale, lease, transfer
or encumbrance of the Project, notify the Authority and the Trustee thereof;
(b) prior to the proposed sale, lease or other transfer of
the Project as a whole or substantially as a whole, the Trustee and the
Authority are provided with proof satisfactory to them by the Borrower (which
may include an opinion from counsel approved by the Trustee) that as a result
of such transfer or the terms thereof, interest payable on the Bonds will
continue to constitute
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Commonwealth source income under the Code as in effect on the Closing;
(c) the Person to whom the Project is sold, leased or
transferred, or in favor of whom the Project is encumbered, shall, in a
certificate delivered to the Authority and the Trustee, which certificate shall
be in a form reasonably satisfactory to the Authority and the Trustee,
expressly agree to perform all of the obligations of the Borrower under the
Collateral Documents; and
(d) no sale, lease or other transfer or encumbrance of the
Project shall relieve the Borrower or the Guarantor of its obligations
hereunder, including the obligation to make the payments required by Sections
4.01 and 4.08 hereof.
SECTION 6.02. ASSIGNMENT BY BORROWER. Without the necessity of
obtaining the consent of the Authority or the Trustee, the Borrower may assign
its interest in this Agreement or the Collateral Documents, in whole or in
part, subject, however, to the following conditions:
(a) the Borrower shall, prior to such assignment of this
Agreement, notify the Authority and the Trustee thereof;
(b) prior to the proposed assignment the Trustee is provided
with proof satisfactory to it by the Borrower (which may include an opinion
from counsel approved by the Trustee) that as a result of such assignment or
the terms thereof, interest payable on the Bonds will continue to constitute
Commonwealth source income under the Code as in effect on the Closing;
(c) no assignment of this Agreement shall relieve the
Borrower or the Guarantor of its obligations hereunder, including the
obligation to make the payments required by Sections 4.01 and 4.08 hereof;
37
<PAGE> 42
(d) the assignee shall, in a certificate delivered to the
Authority and the Trustee, which certificate shall be in a form reasonably
satisfactory to the Authority and the Trustee, expressly assume, and agree to
pay and to perform, all of the obligations of the Borrower under this Agreement
and the Collateral Documents which shall have been assigned to it; and
(e) the assignee shall deliver to the Authority and the
Trustee a certificate executed by its chief financial officer (or other
executive officer performing similar functions) stating that none of the
obligations, covenants and performances under this Agreement and the Collateral
Documents assumed by it will conflict with or constitute on the part of such
assignee a breach of, or default under, any indenture, mortgage, agreement or
other instrument to which such assignee is a party or by which it is bound, or
under any existing law, rule, regulation, judgment, order or decree to which
such assignee is subject.
The provisions of subsections (d) and (e) of this Section
6.02 shall not apply to any assignment of this Agreement in which all the
parties consist of the Borrower or the Guarantor, or any of their respective
Subsidiaries.
SECTION 6.03. ASSIGNMENT BY AUTHORITY. By the provisions of the Trust
Agreement, the Authority will assign its rights under and interest in this
Agreement (except its rights to receive notices, reports and other statements
given both to the Authority and the Trustee, its rights under Sections 4.04,
4.05, 5.07, 7.02 and 7.04 hereof to payment of certain costs and expenses and
to indemnification, and its right to individual and corporate exemption from
liability under Sections 5.04, 9.14 and 9.15 hereof) and will pledge and assign
any payments, receipts and revenues receivable by it (except as aforesaid)
under or pursuant to this Agreement and income earned by the investment of
funds held under the Trust Agreement, to the Trustee as security for the
payment of the principal of and premium, if any, and interest on the Bonds.
38
<PAGE> 43
Except as provided in this Section 6.03, the Authority will not sell, assign,
transfer, convey or otherwise dispose of its interest in this Agreement or the
payments, receipts and revenues of the Authority derived hereunder.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
SECTION 7.01. EVENTS OF DEFAULT. The term "Events of Default" shall
mean, whenever used with reference to this Agreement, any one or more of the
following occurrences:
(a) failure to pay the amounts required to be paid with
respect to principal of or redemption premium, if any, or interest on the Bonds
when the same shall become due and payable, at maturity, upon acceleration,
redemption or otherwise, and, in the case of failure to pay interest, the
continuation of such failure for a period of five (5) days; or
(b) failure by the Borrower to pay when due any payment
required to be made under this Agreement (other than payments under subsection
(a) of this Section 7.01) or the Collateral Documents, which failure shall
continue for a period of thirty (30) days after written notice, specifying such
failure and requesting that it be remedied, is given to the Borrower by the
Authority or the Trustee, unless the Authority or the Trustee shall agree in
writing to an extension of such time prior to its expiration; or
(c) the Borrower or the Guarantor shall fail to duly perform,
observe or comply with any covenant, condition or agreement on their part under
this Agreement or the Collateral Documents other than a failure to make any
payment as described in subsections (a) or (b) of this Section 7.01, and such
failure shall continue for a period of ninety (90) days after the date on which
written notice of such failure, requiring the same to be remedied,
39
<PAGE> 44
shall have been given to the Borrower and the Guarantor by the Authority or the
Trustee, unless the Authority and the Trustee shall agree in writing to an
extension of such time prior to its expiration; provided, however, that if such
performance, observation or compliance requires work to be done, action to be
taken, or conditions to be remedied, as the case may be, within such ninety
(90) day period, no Event of Default shall be deemed to have occurred or to
exist if, and so long as, the Borrower or the Guarantor shall commence such
performance, observation or compliance within such period and shall diligently
and continuously pursue the same to completion; or
(d) a default under any bond, debenture, note or other
evidence of indebtedness for money borrowed or under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any indebtedness for money borrowed by the Guarantor or any
Significant Subsidiary in excess of $5,000,000, whether such indebtedness now
exists or shall hereafter be created, which default shall have resulted in such
indebtedness becoming or being declared due and payable prior to the date on
which it would otherwise have become due and payable, without such acceleration
having been rescinded or annulled within a period of 30 days after there shall
have been given, by registered or certified mail, to the Guarantor by the
Trustee or to the Guarantor and the Trustee by the Holders of not less than 25%
in principal amount of the Bonds a written notice specifying such default and
requiring the Guarantor or the Significant Subsidiary, as the case may be, to
cause such acceleration to be rescinded or annulled and stating that such
notice is a "Notice of Default" hereunder; provided, however, that if such
default shall be remedied or cured by the Guarantor or the Significant
Subsidiary or waived by the holders of such indebtedness, then the Event of
Default hereunder by reason thereof shall be deemed likewise to have been
thereupon remedied, cured or waived without any action on the part of the
Trustee or any of the Holders; or
40
<PAGE> 45
(e) the Borrower or the Guarantor shall commence a voluntary
case under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or shall consent to the entry of an order for relief in an
involuntary case under any such law, or shall consent to the appointment of or
taking possession by a receiver, custodian, liquidator, assignee, trustee or
sequestrator (or other similar official) of itself or of any substantial part
of its property, or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they become due, or the
Borrower or the Guarantor shall take any action in furtherance of any of the
foregoing (except in connection with a consolidation or a merger of the
Borrower with or into another entity or transfer of all or substantially all
the assets of the Borrower not prohibited by Sections 5.01 and 6.01 hereof); or
(f) a court having jurisdiction in the premises shall enter a
decree or order for relief in respect of the Borrower or the Guarantor in an
involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a receiver, custodian,
liquidator, assignee, trustee, sequestrator (or other similar official) of the
Borrower or the Guarantor, respectively, of any substantial part of their
respective properties, or ordering the winding up or liquidation of their
affairs, and the continuance of such decree or order unstayed and in effect for
a period of sixty (60) consecutive days.
The foregoing provisions of subsection (c) of this Section
are subject to the following limitations: if by reason of Force Majeure, the
Borrower or the Guarantor is unable in whole or in part to carry out any of its
agreements herein contained, failure of the Borrower or the Guarantor to carry
out any such agreements other than the obligations on the part of the Borrower
or the Guarantor contained in Sections 4.01, 4.08 and 5.01 hereof, shall not be
deemed an Event of Default during the continuance of
41
<PAGE> 46
such inability, including a reasonable time for the removal of the effect
thereof.
The term "Force Majeure" shall mean the following:
(a) acts of God; strikes, lockouts or other industrial
disturbances; acts of public enemies; orders or restraints of any kind of the
government of the United States of America or of the Commonwealth or any of
their departments, agencies, political subdivisions or officials, or any civil
or military authority; war; insurrections; civil disturbances; riots;
epidemics; landslides; lightning; earthquakes; fires; hurricanes; storms;
droughts; floods; washouts; arrests; restraint of government and people;
explosions; breakage, malfunction or accident to facilities, machinery,
transmission pipes or canals; partial or entire failure of utilities; shortages
of labor, materials, supplies or transportation; or
(b) any cause, circumstance or event not reasonably within
the control of the Borrower or the Guarantor.
The Borrower and the Guarantor agree, however, to use their
best efforts to remedy with all reasonable dispatch Force Majeure preventing
them from carrying out their agreements; provided, that the settlement of
strikes, lockouts and other industrial disturbances, shall be entirely within
the discretion of the Borrower and the Guarantor, and the Borrower and the
Guarantor shall not be required to make settlement of strikes, lockouts and
other industrial disturbances by acceding to the demands of the opposing party
or parties when such course is in the judgment of the Borrower or the Guarantor
unfavorable to the Borrower or the Guarantor.
SECTION 7.02. ACCELERATION; REMEDIES. (a) Whenever any Event of
Default hereunder shall have happened and be continuing, any one or more of the
following remedial steps may be taken, provided that
42
<PAGE> 47
written notice of the Event of Default has been given to the Borrower and the
Guarantor by the Authority or the Trustee (except that notice need not be given
in the case of an Event of Default specified in Section 7.01(a), (e) and (f)
hereof) and the Event of Default has not theretofore been cured and provided
further that no remedial steps shall be taken by the Authority the effect of
which would be to entitle the Authority to funds necessary for the payment of
principal of and interest on Bonds which have not yet matured or otherwise
become due unless such principal and interest shall have been declared due and
payable in accordance with the Trust Agreement and such declaration shall not
have been rescinded:
(1) The Authority may at its option declare
all unpaid amounts payable under Section 4.01 hereof to be immediately due and
payable, whereupon the same shall become immediately due and payable.
(2) The Authority may take any action at
law or in equity to collect the payments then due and thereafter to become due,
or to enforce performance and observance of any obligation, agreement or
covenant of the Borrower or the Guarantor under this Agreement.
(3) The Authority may exercise its remedies
under the Collateral Documents.
Any amounts collected pursuant to action taken under this
Section shall be applied in accordance with the Trust Agreement.
SECTION 7.03. REMEDIES NOT EXCLUSIVE. No remedy conferred upon or
reserved to the Authority in connection with the Loan to the Borrower pursuant
to this Agreement is intended to be exclusive of any other available remedy or
remedies, but each and every remedy shall be cumulative and shall be in
addition to every other remedy either given under this Agreement or now or
hereafter existing at law or in equity or by statute. No delay or omission
43
<PAGE> 48
to exercise any right or power accruing upon any default shall impair any such
right or power or shall be construed to be a waiver thereof, but any such right
and power may be exercised from time to time and as often as it may be deemed
expedient. In order to entitle the Authority to exercise any remedy reserved to
it in this Article, it shall not be necessary to give any notice, other than
such notice as may be herein expressly required.
SECTION 7.04. ATTORNEYS' FEES AND EXPENSES. If an Event of Default
shall occur and the Authority or the Trustee shall employ attorneys or incur
other expenses for the collection of payments due hereunder or for the
enforcement of performance or observance of any obligation or agreement on the
part of the Borrower or the Guarantor contained herein, the Borrower or the
Guarantor will on demand therefor reimburse the reasonable fees of such
attorneys and such other expenses so incurred.
SECTION 7.05. WAIVERS. In view of the assignment of the Authority's
rights under and interest in this Agreement to the Trustee by the provisions of
the Trust Agreement (except for the rights reserved by the Authority
hereunder), the Authority shall have no power to waive any default hereunder by
the Borrower or the Guarantor or extend the time for the correction of any
default which could become an Event of Default by the Borrower or the Guarantor
without the consent of the Trustee to such waiver.
ARTICLE I
PREPAYMENT OF THE LOAN
SECTION 8.01. OPTIONAL PREPAYMENT. (a) The Borrower shall have, and is
hereby granted, the option to prepay all or any portion of the amounts payable
in respect of the Bonds under Section 4.01 by taking the actions required to
effect an optional redemption of the Bonds pursuant to Section 301(b) of the
Trust Agreement.
44
<PAGE> 49
(b) To make a prepayment pursuant to subsection (a) of this
Section, the Borrower shall (A)(i) give or cause to be given to the Authority
and the Trustee the written consent of the Guarantor to such prepayment, which
consent shall contain a representation from the Guarantor to the effect that
the Guarantor has sufficient monies available to pay the principal of and
interest on the Bonds through the date of redemption, or (ii) deposit with the
Trustee sufficient monies to pay the redemption price and premium, if any, of
the Bonds, no later than 45 days prior to the date of the intended prepayment
of the Loan, and (B) written notice setting forth (i) the date of redemption,
which date shall be not less than 45 days from the date notice is received by
the Trustee, (ii) the principal amount and maturities of the Bonds to be
redeemed, and (iii) the applicable redemption provision of the Trust Agreement.
SECTION 8.02. MANDATORY PREPAYMENT OF LOAN. (ai The Borrower shall be
obligated, and agrees, to prepay a portion of the amount payable under Section
4.01 hereof to the extent and in the manner set forth in Section 301(a) of the
Trust Agreement.
(b) The Borrower shall be obligated, and agrees, to prepay a
portion of the amount payable under Section 4.01 hereof on or prior to each
_________ or ___________ for which there shall be a Amortization Requirement in
an amount equal to such Amortization Requirement.
(c) The Borrower shall be obligated, and agrees, to prepay
all of the amounts payable under Section 4.01 hereof, if the Project ceases to
be operated as an Industrial Facility within the meaning of the Act. A
cessation of operations of the Project shall not be deemed to have occurred
until (i) the Borrower shall have delivered to the Trustee a notice stating
that the operations of the Project have ceased and the Borrower has no present
intention of causing the resumption of operations of the Project or (ii) until
thirty (30) days shall have elapsed after written notice
45
<PAGE> 50
has been given to the Borrower by the Authority that operations of the Project
have ceased and the Borrower has not demonstrated to the satisfaction of the
Authority that the Project is being operated as an Industrial Facility. The
Borrower agrees to make the payments required by this paragraph upon the
cessation of operations.
(d) The Borrower shall be obligated, and agrees, to prepay
all of the amounts payable under Section 4.01 hereof, upon the occurrence of an
Event of Taxability. The Borrower shall deliver to the Trustee a notice stating
that it has become obligated to pay all of the amounts payable under Section
4.01 hereof and setting forth the amount required to pay the redemption price
of the Bonds pursuant to Section 301(d) of the Trust Agreement.
(e) The Borrower shall be obligated, and agrees to prepay, in
whole or in part, the amount payable under Section 4.01 upon the occurrence of
an event of Casualty or Taking (as defined in the Pledge Agreement) to the
extent such prepayment is required by, and in accordance with the provisions
of, the Pledge Agreement. The Borrower shall deliver to the Trustee a notice
stating that the Borrower has become obligated to prepay, in whole or in part,
the amount payable under Section 4.01 hereof, setting forth the amount required
to pay the redemption price of the Bonds pursuant to Section 301(c) of the
Trust Agreement. The Borrower agrees to make the payment required by this
paragraph (e) at the time such notice is delivered to the Trustee.
SECTION 8.03. EXTRAORDINARY OPTIONAL PREPAYMENT OF LOAN. The Borrower
shall have the option to prepay the Loan in whole or in part by paying an
amount which, together with amounts held in the funds and accounts under the
Trust Agreement and available for the purpose, will be sufficient to provide
for the redemption of the Bonds together with interest accrued thereon to the
redemption date if any of the following shall have occurred:
46
<PAGE> 51
(a) The Project shall have been damaged or destroyed to the
extent that, in the opinion of the Borrower, (i) the required restoration and
repair thereof cannot reasonably be expected to be completed within a period of
6 months, or (ii) the Borrower is prevented or would likely be prevented from
carrying on its normal operation of the Project for a period of 6 months or
more, or (iii) the restoration and repair of the Project is not economically
feasible; or
(b) The use of Project shall be requisitioned, seized or
taken by any governmental authority in the United States of America or the
Commonwealth or any political subdivision thereof or by any foreign
governmental authority, by condemnation or otherwise, or the title to the
Project shall be condemned, seized or confiscated by, or requisitioned or taken
by, or forfeited to, any governmental authority or person acting under color of
governmental authority, in either case to such an extent that the Borrower is
thereby prevented or, in the opinion of the Borrower, would likely be prevented
from using the Project in the Commonwealth for its normal operations for a
period of 6 months or more; or
(c) As a result of any change in the Constitution or laws of
the United States of America or the Commonwealth or of legislative or
administrative action of the United States of America or the Commonwealth or
any political subdivision, or any judicial action or regulatory action or
inaction, this Agreement or the Trust Agreement, in the opinion of the
Borrower, shall have become void or unenforceable or impossible of performance
in any material respect, or use or occupancy of all or a significant part of
the Project shall, in the opinion of the Borrower, have been legally curtailed
for six months or more, or, in the opinion of the Borrower, unreasonable
burdens or excessive liabilities with respect to the Project or the Bonds shall
have been imposed.
For the purpose of this Section the "opinion of the Borrower" shall be
expressed to the Authority and the Trustee by delivery of
47
<PAGE> 52
a certificate of a Borrower Representative to the effect that the
circumstances, situations or conditions described in (a), (b) or (c) exist to
the extent required for the Borrower to exercise the option provided.
SECTION 8.04. RELATIVE POSITION OF LOAN AGREEMENT AND TRUST AGREEMENT.
The rights and the obligations of the Borrower in this Article VIII shall be
and remain prior and superior to the Trust Agreement and may be exercised or
shall be fulfilled, as the case may be, whether or not the Borrower is in
default hereunder, provided that such default will not result in nonfulfillment
of any condition to the exercise of any such right or option.
The obligations of the Borrower in Section 8.02 shall
supersede the rights and options of the Borrower in Section 8.01.
ARTICLE I
MISCELLANEOUS
SECTION 9.01. TERMINATION. This Agreement and all obligations of the
parties thereunder, other than the obligations of the Borrower under Sections
4.05, 5.07 and 5.10 hereof, shall terminate upon (i) Payment of the Bonds, and
(ii) payment or satisfaction of all other obligations incurred by the Authority
or the Borrower under this Agreement, including (without limitation) interest,
premiums and other charges, if any, thereon. Upon such termination any amounts
remaining in the Bond Fund and any other fund or account established under the
Trust Agreement not needed for payment of the aforesaid items shall belong to
and be paid to the Borrower by the Trustee in accordance with the provisions of
the Trust Agreement.
SECTION 9.02. REFERENCE TO BONDS INEFFECTIVE AFTER BONDS PAID. Upon
Payment of the Bonds, including all fees and charges of the Trustee, all
references in this Agreement to the Bonds and the
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<PAGE> 53
Trustee shall be ineffective, and the Trustee, the Authority and the holders of
any of the Bonds shall not thereafter have any right hereunder, excepting those
that shall have theretofore vested.
SECTION 9.03. NO ADDITIONAL WAIVER IMPLIED BY ONE WAIVER. In the event
any agreement contained in this Agreement should be breached by any party and
thereafter waived by any other party, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
hereunder.
SECTION 9.04. AUTHORITY REPRESENTATIVE. Whenever under the provisions
of this Agreement the approval of the Authority is required or the Authority is
required to take some action at the request of the Borrower or the Guarantor,
such approval shall be made or such action shall be taken by the Authority
Representative and such approval or action shall not be unreasonably denied or
delayed; and the Borrower, the Guarantor and the Trustee shall be authorized to
act on any such approval or action.
SECTION 9.05. BORROWER REPRESENTATIVE. Whenever under the provisions
of this Agreement the approval of the Borrower is required or the Borrower is
required to take some action at the request of the Authority, such approval
shall be made or such action shall be taken by the Borrower Representative and
such approval or action shall not be unreasonably denied or delayed; and the
Authority and the Trustee shall be authorized to act on any such approval or
action.
SECTION 9.06. CONFIDENTIAL INFORMATION. The Borrower and the Guarantor
shall not be required to disclose, or to permit the Authority, the Trustee or
others to acquire access to, any trade secrets of the Borrower or the Guarantor
or any other processes, techniques or information deemed by the Borrower or the
Guarantor to be proprietary or confidential.
49
<PAGE> 54
SECTION 9.07. NOTICES. All notices, certificates, requests or other
communications among the Authority, the Borrower, the Trustee and the Guarantor
required to be given hereunder or under the Trust Agreement shall be in writing
and shall be (as elected by the person giving the notice) hand-delivered by
courier service or mailed by registered mail, postage prepaid, and each such
notice shall be deemed delivered (i) if by courier service, on the date
delivered receipt is acknowledged or delivery is refused, or (ii) if mailed, on
the third Business Day following the day when mailed. All notices under this
Agreement shall be addressed as follows:
If to the Authority:
Puerto Rico Industrial, Tourist, Educational,
Medical and Environmental Control
Facilities Financing Authority
c/o Government Development Bank for Puerto Rico
PO Box 42001
San Juan, Puerto Rico 00940
Attention: Executive Director
If to the Borrower:
Doral Properties, Inc.
1159 Franklin D. Roosevelt Avenue
San Juan, Puerto Rico 00920
Attention: President
If to the Trustee:
Citibank, N.A.
Attention: ________________
If to the Guarantor:
Doral Financial Corporation
1159 Franklin D. Roosevelt Ave.
San Juan, Puerto Rico 00920
Attention: President
50
<PAGE> 55
A duplicate copy of each notice, certificate, request or other communication
given hereunder to the Authority, the Borrower, the Trustee or the Guarantor
shall also be given to each of the others. The Borrower, the Authority, the
Trustee or the Guarantor may, by notice given hereunder, designate any further
or different addresses to which subsequent notices, certificates, requests or
other communications shall be sent.
SECTION 9.08. BINDING EFFECT. This Agreement shall inure to the
benefit of and shall be binding upon the Authority, the Borrower, the Guarantor
and their respective successors and assigns, subject, however, to the
provisions contained in Sections 5.01, 6.01, 6.02 and 6.03.
SECTION 9.09. IF PAYMENT OR PERFORMANCE DATE NOT A BUSINESS DAY. If
the date for making payment, or the last date of performance of any act or the
exercising of any right, as provided in this Agreement, shall not be a Business
Day, such payment may be made or act performed or right exercised on the next
succeeding Business Day with the same force and effect as if done on the
nominal date provided in this Agreement, and no interest shall accrue for the
period after such nominal date.
SECTION 9.10. SEVERABILITY. In the event any provision of this
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof.
SECTION 9.11. AMENDMENTS, CHANGES AND MODIFICATIONS. Subsequent to the
issuance of the Bonds under Section 208 of the Trust Agreement and prior to
Payment of the Bonds, this Agreement may not be effectively amended, changed,
modified, altered or terminated except in accordance with the Trust Agreement.
SECTION 9.12. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in several counterparts, each of which shall be an
51
<PAGE> 56
original and all of which shall constitute but one and the same instrument.
SECTION 9.13. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth.
SECTION 9.14. NO CHARGE AGAINST AUTHORITY CREDIT. No provision hereof
shall be construed to impose a charge against the general credit of the
Authority or shall impose any personal or pecuniary liability upon any
director, official or employee of the Authority.
SECTION 9.15. AUTHORITY NOT LIABLE. Notwithstanding any other
provision of this Agreement (a) the Authority shall not be liable to the
Borrower, the Trustee, the Guarantor, any holder of any of the Bonds, or any
other person for any failure of the Authority to take action under this
Agreement unless the Authority (i) is requested in writing by an appropriate
person to take such action and (ii) is assured of payment of or reimbursement
for any expenses in such action, and (b) except with respect to any action for
specific performance or any action in the nature of a prohibitory or mandatory
injunction, neither the Authority nor any director of the Authority or any
other official or employee of the Authority shall be liable to the Borrower,
the Trustee, the Guarantor, any holder of any of the Bonds, or any other Person
for any action taken by it or by its officers, servants, agents or employees,
or for any failure to take action under this Agreement or the Trust Agreement.
In acting under this Agreement, or in refraining from acting under this
Agreement, the Authority may conclusively rely on the advice of its legal
counsel.
SECTION 9.16. AGREEMENT SUPERSEDES PRIOR AGREEMENTS. This Agreement
supersedes any other prior agreements or understandings, written or oral,
between the parties with respect to the Project.
52
<PAGE> 57
IN WITNESS WHEREOF, the Authority, the Borrower and the Guarantor have
caused this Agreement to be executed in their respective legal names, all as of
the date first above written.
PUERTO RICO INDUSTRIAL, TOURIST,
EDUCATIONAL, MEDICAL AND ENVIRONMENTAL
CONTROL FACILITIES FINANCING AUTHORITY
By:___________________________________
Name:
Title:
DORAL PROPERTIES, INC.,
a Puerto Rico corporation
By:___________________________________
Name:
Title:
DORAL FINANCIAL CORPORATION,
a Puerto Rico corporation
By:___________________________________
Name:
Title:
53
<PAGE> 58
EXHIBIT A
DESCRIPTION OF THE PROJECT
The Project will consist of a nine-floor, 193,709 square feet
commercial office building with an adjacent five and a half floor parking
structure and two buildings with approximately 27,305 square feet of space to
be used as a data storage and processing facility for the Guarantor and its
Subsidiaries. The office building will be located on an approximately 7,426
square meters site in the Puerto Nuevo ward of the municipality of San Juan, in
the commercial sector of Franklin D. Roosevelt Avenue. The other two buildings
are located on adjacent parcels of property aggregating 3,143 square meters.
<PAGE> 59
EXHIBIT B
LIST OF PENDING CONSTRUCTION PERMITS
<PAGE> 1
EXHIBIT 4.2
===============================================================================
TRUST AGREEMENT
BETWEEN
PUERTO RICO INDUSTRIAL, TOURIST, EDUCATIONAL,
MEDICAL AND ENVIRONMENTAL CONTROL
FACILITIES FINANCING AUTHORITY
and
CITIBANK, N.A.
AS TRUSTEE
-------------------
DATED ______________, 1999
-------------------
SECURING
$-------------
INDUSTRIAL REVENUE BONDS,
1999 SERIES A
(DORAL FINANCIAL CENTER PROJECT)
===============================================================================
<PAGE> 2
RECONCILIATION AND TIE BETWEEN
TRUST INDENTURE ACT OF 1939 AND
TRUST AGREEMENT DATED AS OF __________, 1999
<TABLE>
<CAPTION>
TRUST INDENTURE INDENTURE SECTION
ACT SECTION
<S> <C>
ss. 310 (a)(1) .......................... 913
(a)(2) .......................... 913
(a)(3) .......................... Not Applicable
(a)(4) .......................... Not Applicable
(b) .......................... 914
915
ss. 311(a) .......................... 917
(b) .......................... 917
ss. 312(a) .......................... Not Applicable
(b) .......................... 918(a)
(c) .......................... 918(b)
ss. 313(a) .......................... 919(a)
(b) .......................... 919(a)
(c) .......................... 919(a)
(d) .......................... 919(b)
ss. 314(a) .......................... 920(a)
(a)(4) .......................... 101
920(b)
(b) .......................... 920(c)
(c)(1) .......................... 103
(c)(2) .......................... 103
(c)(3) .......................... Not Applicable
(d) .......................... 920(d)
(e) .......................... 103
ss. 315(a) .......................... 905(a)
(b) .......................... 815
(c) .......................... 905(b)
(d) .......................... 905(c)
(e) .......................... 816
ss. 316(a)(1)(A) .......................... 808
(a)(1)(B) .......................... 814
(a)(2) .......................... Not Applicable
(b) .......................... 809
ss. 317(a)(1) .......................... 804
(a)(2) .......................... 805
(b) .......................... 505
ss. 318(a) .......................... 104
</TABLE>
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Trust Agreement.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I - Definitions; Rules of Construction;
Conflict with Trust Indenture Act.................................................8
Section 101. Meaning of Words and Terms..........................................8
Section 102. Rules of Construction..............................................19
Section 103. Compliance Certificates and
Opinions. ..............................................................20
Section 104. Conflict with Trust Indenture
Act.....................................................................21
ARTICLE II - Form, Execution, Authentication,
Delivery and Exchange of Bonds...................................................21
Section 201. Limitation on Issuance of
Bonds...................................................................21
Section 202. Form of Bonds.......................................................21
Section 203. Details of Bonds...................................................22
Section 204. Authentication of Bonds............................................26
Section 205. Exchange of Bonds..................................................26
Section 206. Negotiability, Registration of
Transfer of Bonds.......................................................27
Section 207. Ownership of Bonds; Transfer
of Title................................................................28
Section 208. Authorization of Bonds..............................................29
Section 209. Temporary Bonds.....................................................34
Section 210. Mutilated, Destroyed, Stolen
or Lost Bonds...........................................................35
Section 211. Book-Entry Bonds...................................................37
ARTICLE III - Redemption of Bonds.........................................................43
Section 301. Redemption of Bonds................................................43
Section 302. Redemption Notice..................................................47
Section 303. Effect of Calling for
Redemption..............................................................48
Section 304. Redemption of Portion of Bond......................................49
Section 305. Cancellation.......................................................50
ARTICLE IV - Construction Fund............................................................50
Section 401. Construction Fund..................................................50
Section 402. Payments from the Construction
Fund....................................................................50
Section 403. Items of Cost......................................................51
Section 404. Requisites for Payments from
Construction Fund.......................................................52
Section 405. Reliance on Requisitions............................................53
Section 406. Balance in Construction Fund.......................................54
ARTICLE V - Bond Fund.....................................................................55
Section 501. Creation of Bond Fund..............................................55
Section 502. Payments into Bond Fund............................................55
Section 503. Use of Moneys in Bond Fund.........................................56
Section 504. Application and Pledge of Moneys
in the Bond Fund........................................................57
Section 505. Money Withdrawn from Bond Fund
Held in Trust...........................................................58
Section 506. Cancellation of Bonds Upon
Payment.................................................................58
</TABLE>
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<TABLE>
<S> <C>
ARTICLE VI - Depositaries of Moneys, Security for
Deposits and Investment of Funds.................................................59
Section 601. Security for Deposits..............................................59
Section 602. Investment of Moneys...............................................60
Section 603. Valuation..........................................................61
ARTICLE VII - Particular Covenants and
Provisions.......................................................................62
Section 701. Covenant to Pay Bonds;
Bonds Limited Obligations of Authority..................................62
Section 702. Covenant to Perform and
Authority of the Authority..............................................64
Section 703. Covenant as to the Loan
Agreement...............................................................65
Section 704. Covenant to Perform Further
Acts....................................................................65
Section 705. Trustee May Enforce
Authority's Rights under Loan
Agreement...............................................................66
ARTICLE VIII - Default and Remedies.......................................................66
Section 801. Extension of Interest..............................................66
Section 802. Defaults...........................................................67
Section 803. Acceleration of Maturities.........................................68
Section 804. Enforcement of Remedies............................................70
Section 805. Trustee May File Claim in
Bankruptcy..............................................................71
Section 806. Pro Rata Application of Funds......................................72
Section 807. Effect of Discontinuance
of Proceedings..........................................................76
Section 808. Holders of a Majority in Principal
Amount of Bonds May Control Proceedings.................................76
Section 809. Restrictions Upon Actions
by Individual Bondholder................................................77
Section 810. Receiver...........................................................78
Section 811. Actions by Trustee.................................................79
Section 812. No Remedy Exclusive................................................79
Section 813. No Delay or Omission Construed
to Be a Waiver..........................................................79
Section 814. Waiver of Past Defaults............................................80
Section 815. Notice of Default..................................................80
Section 816. Undertaking for Costs..............................................80
ARTICLE IX - Concerning the Trustee.......................................................81
Section 901. Acceptance of Trusts...............................................81
Section 902. Trustee Entitled to Indemnity......................................82
Section 903. Trustee Not Responsible for
Insurance, Taxes or Execution of
this Agreement by the Authority.........................................83
Section 904. Trustee Not Responsible for
Acts of the Authority or Application
of Monies Applied in Accordance with
this Agreement..........................................................84
Section 905. Certain Duties and
Responsibilities of the Trustee.........................................84
Section 906. Compensation.......................................................88
Section 907. Semi-Annual Statement of Funds
on Deposit..............................................................89
Section 908. Notice of Default..................................................89
Section 909. Trustee May Be a Bondholder........................................90
Section 910. Trustee Not Responsible for
Recitals................................................................90
</TABLE>
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<TABLE>
<S> <C>
Section 911. Trustee Not Responsible for
Recording...............................................................91
Section 912. Trustee May Rely on
Certificates............................................................91
Section 913. Qualification of the Trustee........................................92
Section 914. Disqualification; Conflicting
Interests...............................................................92
Section 915. Resignation and Removal of
Trustee.................................................................93
Section 916. Successor Trustee..................................................95
Section 917. Preferential Collection of
Claims against Borrower or Guarantor....................................96
Section 918. Communication to Bondholders........................................97
Section 919. Reports by Trustee..................................................99
Section 920. Reports of Borrower and
Guarantor...............................................................99
Section 921. Money Held in Trust...............................................101
Section 922. Continuing Disclosure.............................................101
ARTICLE X - Execution of Instruments by Bondholders
and Proof of Ownership of Bonds.................................................101
Section 1001. Execution of Instruments by
Bondholders and Proof of Ownership of
Bonds..................................................................101
ARTICLE XI - Supplements and Amendments to
Agreement.......................................................................103
Section 1101. Supplements and Amendments Not
Requiring Bondholder Consent...........................................103
Section 1102. Supplements and Amendments
Requiring Consent of Holders of a
Majority in Principal Amount of Bonds..................................104
Section 1103. Supplements and Amendments
Deemed Part of Agreement...............................................107
Section 1104. Discretion of Trustee in
Entering into Supplements and
Amendments.............................................................107
Section 1105. Consent of Borrower and
the Guarantor Required.................................................108
ARTICLE XII - Supplements and Amendments to the
Loan Agreement and the Collateral
Documents.......................................................................108
Section 1201. Supplements and Amendments Not
Requiring Consent......................................................108
Section 1202. Supplements and Amendments
Requiring Consent of Holders of a
Majority in Principal Amount of Bonds..................................110
Section 1203. Consent of Trustee Required.......................................110
ARTICLE XIII - Defeasance................................................................110
Section 1301. Defeasance........................................................110
ARTICLE XIV - Miscellaneous Provisions...................................................114
Section 1401. Covenants of Authority Bind
Its Successors.........................................................114
Section 1402. Notices...........................................................114
Section 1403. Substitute Mailing...............................................115
Section 1404. Rights under Agreement...........................................116
Section 1405. Severability.....................................................116
Section 1406. Covenants of Authority Not
Covenants of Officials Individually....................................117
Section 1407. Commonwealth Law Governs..........................................117
</TABLE>
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<TABLE>
<S> <C>
Section 1408. Payments Due on Saturdays,
Sundays and Holidays...................................................117
Section 1409. Headings Not Part of
Agreement..............................................................118
</TABLE>
iv
<PAGE> 7
NUMBER ____ (_)
TRUST AGREEMENT
In the City of San Juan, Commonwealth of Puerto Rico, on this
_____________ (____) day of _________, nineteen hundred ninety-nine (1999).
BEFORE ME
________________________, Attorney-at-Law and Notary Public in and for
the Commonwealth of Puerto Rico with residence in __________, Puerto Rico and
offices on the _______________ (____) Floor, _________ Building in San Juan,
Puerto Rico.
APPEAR
AS THE PARTY OF THE FIRST PART: PUERTO RICO INDUSTRIAL, TOURIST,
EDUCATIONAL, MEDICAL AND ENVIRONMENTAL CONTROL FACILITIES FINANCING AUTHORITY
(the "Authority"), a public corporation and governmental instrumentality of the
Commonwealth of Puerto Rico (the "Commonwealth"), Employer Identification
Number 66-0426994, represented herein by its Executive Director, Carlos Colon
de Armas, of legal age, married, executive and a resident of ________, Puerto
Rico, who has been duly authorized to appear herein on behalf of the Authority
and who agrees to produce evidence of such authority whenever and
wherever required.
AS PARTY OF THE SECOND PART: CITIBANK, N.A., a national banking
association having a corporate trust office in San Juan, Puerto Rico, which is
authorized to exercise corporate trust powers (said bank and any other bank or
trust company becoming successor trustee under this Agreement being hereinafter
sometimes called the "Trustee"), Employer Identification Number ___________,
and represented herein by its
1
<PAGE> 8
_______________________________________, of legal age, [married,] banker and a
resident of ___________, Puerto Rico, who has been duly authorized to appear
herein on behalf of the Trustee and who agrees to produce evidence of such
authority whenever and wherever required.
I, the Notary, DO HEREBY CERTIFY that I am personally acquainted with
the appearing parties herein and by their statements as to their respective
ages, civil status, professions and residences. They assure me that they have,
and in my judgment they do have, the necessary legal capacity and knowledge of
the English language to execute this public instrument. Wherefore, they freely
and voluntarily
STATE
FIRST: That by Act Number One Hundred Twenty-One (121) of the
Legislature of Puerto Rico, approved June twenty-seven (27), nineteen hundred
seventy-seven (1977), as amended (the "Act"), the Authority was created a body
corporate and politic constituting a public corporation and governmental
instrumentality of the Commonwealth.
SECOND: That the Authority is authorized under the Act to borrow money
and issue revenue bonds for the purpose of providing funds to pay all or any
part of the cost of any industrial, tourist, educational, medical and
environmental control facility, the principal of and the premium, if any, and
the interest on which bonds shall be payable solely from the funds provided by
the obligor under a loan agreement in respect of such project.
THIRD: That the Authority has determined to issue
2
<PAGE> 9
its Industrial Revenue Bonds, 1999 Series A (Doral Financial Center Project) in
the aggregate principal amount of ________________________________
____________________ ($_____________) (the "Bonds") and to lend the proceeds
thereof to Doral Properties, Inc. (the "Borrower") for the purpose of providing
funds, together with other available funds, to (i) pay the cost of acquisition,
development, construction and equipping of a new building and related
facilities to be known as the Doral Financial Center, (ii) pay the interest due
on the Bonds during the construction of the Project (as herein defined) and
(iii) pay certain expenses incurred in connection with the authorization and
issuance of the Bonds by the
Authority
FOURTH: That simultaneously with the issuance of the Bonds, the
Borrower and the Authority will enter into a loan and guaranty agreement, dated
as of the Date of Issuance (as herein defined) (which loan and guaranty
agreement, together with any and all amendments and supplements thereto as
herein permitted, is herein called the "Loan Agreement"), pursuant to which the
Authority will lend the proceeds of the Bonds to the Borrower.
FIFTH: That the Authority is entering into this Agreement for the
purpose of issuing the Bonds, and securing the payment thereof by assigning
certain of its rights and interests under the Loan Agreement, including its
rights to a portion of the payments thereunder.
SIXTH: That in order to assure the full and timely payment of the
Bonds to be issued hereunder, Doral Financial Corporation has, under the Loan
Agreement, guaranteed the timely payment of principal of and
3
<PAGE> 10
interest on the Bonds when due.
SEVENTH: That in order to further secure its obligations under the
Loan Agreement, the Borrower has entered into a Pledge and Security Agreement
with the Authority, dated the date hereof, pledging in favor of the Authority a
mortgage note secured by a mortgage on the real property where the Project will
be located and the buildings and fixtures forming part thereof. To further
secure the payment of the Bonds, the Authority proposes to assign its rights
under said Pledge Agreement to the Trustee for the benefit of the
bondholders.
EIGHTH: That the Authority has determined that the Bonds and the
certificate of authentication to be endorsed thereon by the Trustee shall be
substantially in the form attached hereto as Exhibit A with such variations,
omissions and insertions as are required or permitted by this Agreement.
WHEREAS, the execution and delivery of this Agreement and the Loan
Agreement have been duly authorized by resolution of the Authority;
WHEREAS, all acts, conditions and things required by the Puerto Rican
Federal Relations Act, the Constitution and laws of the Commonwealth, including
the Act, and the rules and regulations of the Authority to happen, exist and be
performed precedent to and in the execution and delivery of this Agreement have
happened, exist and have been performed as so required in order to make this
Agreement a legal, valid and binding trust agreement securing the Bonds in
accordance with its terms and in order to make the Loan Agreement a legal,
valid and binding agreement in accordance with its terms; and
4
<PAGE> 11
WHEREAS, the Trustee has accepted the trusts created by this Agreement
and in evidence thereof has joined in the execution hereof;
NOW, THEREFORE, THIS AGREEMENT WITNESSETH, that in consideration of
the foregoing, of the acceptance by the Trustee of the trusts hereby created,
and of the purchase and acceptance of the Bonds by the Holders (as hereinafter
defined) thereof, and for the purpose of fixing and declaring the terms and
conditions upon which the Bonds are to be issued, executed, authenticated,
delivered, secured and accepted by all persons who shall from time to time be
or become Holders thereof, and to secure the payment of all Bonds at any time
issued and outstanding (as hereinafter defined) under this Agreement and the
interest and the redemption premium, if any, thereon according to their tenor,
purport and effect, and to secure the performance and observance of all the
covenants, agreements and conditions, expressed or implied, therein and herein
contained, the Authority has executed and delivered this Agreement, and by this
Agreement does hereby pledge, assign and transfer unto the Trustee, and its
successor or successors, in trust:
I. All right, title and interest of the Authority in
and to the Loan Agreement (except for those certain rights that are
set forth in the next sentence of this clause) and the Collateral
Documents, it being the intent and purpose hereof that the pledge,
assignment and transfer to the Trustee of the payments and other sums
due and to become due under the Loan Agreement shall be effective and
operative immediately and the Trustee shall have the right to
5
<PAGE> 12
collect and receive said payments and other sums for application in
accordance with the provisions hereof at all times during the period
from and after the date of this Agreement until the indebtedness hereby
secured shall have been fully paid and discharged. The Authority
specifically reserves from this assignment its rights under the Loan
Agreement to receive notices, reports and other statements given both
to the Authority and the Trustee, its rights under Sections 4.04, 4.05,
4.07, 5.06, 5.07 and 7.04 of the Loan Agreement to payment of certain
costs and expenses and to indemnification, and to individual and
corporate rights to exemption from liability under Sections 5.04, 9.14
and 9.15 of the Loan Agreement; provided that the reservation of the
aforementioned rights shall not prevent the Trustee from enforcing the
same on behalf of the Authority and the Holders. The Authority is to
remain liable to observe and perform all the conditions and covenants
in the Loan Agreement provided to be observed and performed by it;
II. All money and securities held by the Trustee in all
of the funds or accounts established under this Agreement; and
III. All proceeds derived from the exercise of any
remedies hereunder;
as security for the payment of the principal of and the premium, if
any, on the Bonds and the interest thereon, and as security for the
satisfaction of any other obligation assumed by it in connection with
such Bonds, and it is so mutually agreed and covenanted by and between
the parties hereto, for the equal and proportionate benefit and
security of all and each
6
<PAGE> 13
present and future Holders of the Bonds issued under this Agreement,
without preference, priority or distinction as to lien or otherwise,
except as otherwise hereinafter provided, of any one Bond over any
other Bond, by reason of priority in the issue, sale or negotiation
thereof or otherwise.
TO HAVE AND TO HOLD all the same forever, with all privileges and
appurtenances hereby pledged, assigned and transferred or agreed or intended so
to be, in trust to the Trustee and its successor or successors and to them and
their assigns forever, subject, however, to the rights of the Borrower under
the Loan Agreement and to the exceptions, reservations and matters therein and
herein recited; but IN TRUST, nevertheless, for the equal and proportionate
benefit and security of the Holders, from time to time, of the Bonds
authenticated and delivered hereunder and outstanding without preference,
priority or distinction as to lien or otherwise, except as may other wise be
provided herein, of any one Bond over any other Bond, by reason of priority in
the issue, sale or negotiation thereof or otherwise;
PROVIDED, HOWEVER, that if the Authority, its successors or assigns,
shall well and truly pay, or cause to be paid, or provide for the payment,
pursuant to the provisions of this Agreement, of the principal of all the Bonds
and the interest and any redemption premium due or to become due thereon, at
the times and in the manner mentioned in the Bonds and this Agreement,
according to the true intent and meaning thereof and hereof, and shall cause
the payments to be made into the Bond Fund as required under this Agreement,
and shall pay or cause to be paid to the
7
<PAGE> 14
Trustee all sums of money due or to become due to it in accordance with the
terms and provisions hereof, then upon such performance and payments this
Agreement and the rights hereby granted shall cease and terminate as provided
in Article XIII hereof, and thereupon the Trustee shall cancel and discharge
this Agreement and execute and deliver to the Authority and the Borrower such
instruments as shall be required to evidence the discharge hereof; otherwise
this Agreement is to be and remain in full force and effect.
THIS AGREEMENT FURTHER WITNESSETH, and it is expressly declared, that
all Bonds issued and secured hereunder are to be issued, authenticated,
delivered, and dealt with, and the payments under the Loan Agreement and other
revenues and funds hereby pledged, assigned and transferred are to be dealt
with and disposed of under, upon and subject to the terms, conditions,
stipulations, covenants, agreements, trusts, uses and purposes as hereinafter
expressed, and the Authority has agreed and covenanted, and does hereby agree
and covenant, with the Trustee and with the respective Holders, from time to
time, of Bonds, or any part thereof, as follows, that is to say:
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION;
CONFLICT WITH TRUST INDENTURE ACT
Section 101. MEANING OF WORDS AND TERMS. In addition to words and
terms elsewhere defined in this Agreement, the following words and terms as
used in this Agreement shall have the following meanings:
"Act" means Act Number One Hundred Twenty-One (121)
8
<PAGE> 15
of the Legislature of Puerto Rico, approved June twenty-seven (27), nineteen
hundred seventy-seven (1977), as amended, and all future acts supplemental
thereto or amendatory thereof.
"Act of Bankruptcy" means the filing of a petition commencing a case
under the United States Bankruptcy Code by or against the Borrower or the
Guarantor.
"Administrative Fee" means the one time fee to the Authority in the
amount of one half of one percent (1/2 of 1%) of the principal amount of the
Bonds.
"Affiliate" shall have the meaning given to that term in Section 1.01
of the Loan Agreement.
"Agreement" means this Trust Agreement, together with all agreements
supplemental hereto or amendatory hereof as herein permitted.
"Amortization Requirements" means, with respect to the Term Bonds, the
principal amounts fixed initially in Exhibit B to this Agreement for the
retirement of Term Bonds by purchase or redemption on each ______ ______ (__)
and ________ ______ (__) of each Bond Year pursuant to Section 301(e) hereto,
commencing on ______ ______ (__), _______________ (____), or payment at
maturity in the case of the final Amortization Requirement for each Term Bond.
On or before the forty-fifth (45th) day next preceding any Interest
Payment Date on which Term Bonds are to be retired pursuant to the Amortization
Requirement therefor, the Authority or the Borrower may purchase and deliver to
the Trustee for cancellation Term Bonds required to be redeemed on such
Interest Payment Date in any aggregate principal amount desired and receive a
credit against the required Amortization Requirement on account of such
9
<PAGE> 16
Term Bonds in the amount of one hundred percent (100%) of the principal amount
of any such Term Bonds so purchased and delivered.
If on the forty-fifth (45th) day next preceding any Interest Payment
Date on which Term Bonds are to be retired pursuant to the applicable
Amortization Requirement, the Trustee determines that the total principal
amount of Term Bonds of the same maturity date as the Term Bonds to be retired
which have already been retired by purchase or redemption (or called for
redemption under the provisions of Article III of this Agreement) prior to such
date, is greater than the aggregate amount of Amortization Requirements for
each preceding Interest Payment Date, then the Amortization Requirement for
subsequent Interest Payment Dates shall be reduced by the amount of such excess
as shall be specified in an Officer's Certificate of the Borrower delivered to,
and accepted by, the Trustee.
Prior to the Bond Year commencing ____________ ____________ (____),
___________________________ (____), there shall be no Amortization Requirement.
The aggregate amount of the Amortization Requirements for the Term Bonds,
together with the amount due upon the final maturity of such Term Bonds, shall
be equal to the aggregate principal amount of the Term Bonds.
"Authority" means Puerto Rico Industrial, Tourist, Educational,
Medical and Environmental Control Facilities Financing Authority, a body
corporate and politic constituting a public corporation and governmental
instrumentality of the Commonwealth and any successor thereto.
"Authority Representative" means the Authority
10
<PAGE> 17
Representative as defined in Section 1.01 of the Loan Agreement.
"Beneficial Owner" means, whenever used with respect to a Bond, the
person in whose name such Bond is recorded as the beneficial owner of such Bond
by a Participant on the records of such Participant.
"Bond Fund" means the "Industrial Revenue Bonds, 1999 Series A (Doral
Financial Center Project) Bond Fund," a fund created and designated by the
provisions of Section 501 of this Agreement.
"Bondholder", "Holder", or "owner" of a Bond, means a person in whose
name a Bond is registered in the registration books provided for in Section 206
of this Agreement.
"Bonds" means the Bonds issued under the provisions of Section 208 of
this Agreement.
"Bond Year" means the period commencing on _________ ___________
(____) of any year and ending on _________ __________ (____) of the following
year, except that the first Bond Year shall commence on the date of Closing and
end on _________ ________ (__), ____________________________ (____).
"Borrower" means Doral Properties, Inc., a corporation organized
and existing under the laws of the Commonwealth, which has elected to be
treated as a special partnership under Subchapter K of Chapter 3 of Subtitle A
of the Puerto Rico Internal Revenue Code of 1994, as amended, and its
successors and permitted assigns and any surviving, resulting or transferee
entity.
"Borrower Representative" has the meaning given to that term in
Section 1.01 of the Loan Agreement.
"Business Day" means any day of the year other than
11
<PAGE> 18
a Saturday, Sunday or other day on which commercial banks in the Commonwealth
are generally closed for business to the public.
"Closing" has the meaning given to that term in Section 1.01 of the
Loan Agreement.
"Code" means the United States Internal Revenue Code of 1986, as
amended, and the rules and regulations thereunder.
"Collateral Documents" means the Mortgage, the Mortgage Note and the
Pledge Agreement, as amended from time to time.
"Commission" means the Securities and Exchange Commission.
"Commonwealth" means the Commonwealth of Puerto Rico.
"Construction Fund" means the "Industrial Revenue Bonds, 1999 Series A
(Doral Financial Center Project) Construction Fund," a fund created and
designated by the provisions of Section 401 of this Agreement.
"Construction Fund Transfer Date" has the meaning specified in Section
406 of this Agreement.
"Cost" has the meaning specified in Section 403 of this Agreement.
"Costs of Issuance" means all items of expense relating to the
authorization, sale and issuance of the Bonds, the initial or acceptance fee of
the Trustee, legal, accounting and financial advisory fees and expenses,
underwriting fees and expenses, filing and rating agencies' fees and printing
and engraving costs incurred in connection with the authorization, sale and
issuance of the Bonds, the execution of this Agreement, the Loan Agreement, the
Collateral Documents and all other documents in connection
12
<PAGE> 19
therewith, and payment of all fees, costs and expenses for the preparation of
the Loan Agreement, this Agreement, the Collateral Documents, the Bonds, and
any other fees and expenses necessary or incident to the issuance and sale of
the Bonds, and the documents contemplated by any of the foregoing.
"Date of Issuance" means _________ ______ (__), nineteen hundred
ninety-nine (1999), the date of the initial delivery and sale of the Bonds.
"Defaulted Interest" has the meaning specified in Section 203 of this
Agreement.
"Defeasance Obligations" means (i) noncallable Government Obligations
and, to the extent from time to time permitted by law, (ii) obligations issued
or guaranteed by the Federal National Mortgage Association, Federal Home Loan
Mortgage Corporation, Farm Credit System, Federal Home Loan Banks or Student
Loan Marketing Association, (iii) Defeased Municipal Obligations and (iv)
evidences of ownership of a proportionate interest in the obligations specified
in clause (ii) and in specified Defeased Municipal Obligations, which
obligations described in clause (ii) and Defeased Municipal Obligations are
held by a bank or trust company organized and existing under the laws of the
United States of America or any state or territory thereof as custodian.
"Defeased Municipal Obligations" means obligations of state, territory
or local government issuers which are rated in the highest rating category by a
Rating Agency, provision for the payment of the principal of and interest on
which shall have been made by deposit with a trustee or escrow agent of
noncallable Government Obligations, the maturing principal of and
13
<PAGE> 20
interest on such Government Obligations, when due and payable, shall provide
sufficient money to pay the principal of and redemption premium, if any, and
interest on such obligations of state, territory or local government issuers.
"DTC" means The Depository Trust Company, a limited purpose trust
company organized under the laws of the State of New York, and its successors
and assigns.
"D&P" means Duff & Phelps, its successors and assigns.
"Event of Default" means, with respect to this Agreement, each of
those events set forth in Section 802 hereof.
"Event of Taxability" has the meaning given to that term in Section
1.01 of the Loan Agreement.
"Executive Director" shall mean the Executive Director or the
Assistant Executive Director of the Authority for the time being, or if there
is no Executive Director or Assistant Executive Director, then any person
designated by the Board of Directors of the Authority or authorized by the
by-laws of the Authority to perform the functions of the Executive Director.
"Government Obligations" means (i) direct obligations of, or
obligations the timely payment of principal of and the interest on which are
unconditionally guaranteed by, the United States of America and (ii) any
certificates or other evidences of ownership interest in obligations or in
specified portions thereof (which may consist of specified portions of the
principal thereof or the interest thereon) of the character described in clause
(i).
"Guarantor" means Doral Financial Corporation.
14
<PAGE> 21
"Independent Accountants" shall have the meaning given to that term in
Section 1.01 of the Loan Agreement.
"Interest Payment Date" means the first (1st) day of each calendar
month, commencing on __________ one (1), nineteen hundred ninety-nine (1999).
"Loan" shall have the meaning given to that term in Section 1.01 of
the Loan Agreement.
"Loan Agreement" means the Loan Agreement, as that term is defined in
paragraph FOURTH of the preamble to this Agreement.
"Moody's" means Moody's Investors Service, Inc., its successors and
assigns.
"Mortgage" means the first mortgage on the Project constituted by Deed
Number _____________ (___) of Constitution of First Mortgage executed before
Notary Public ______________________, on ___________ (___), nineteen hundred
ninety-nine (1999).
"Mortgage Note" means the mortgage note of the Borrower, in a
principal amount of not less than the aggregate principal amount of the Bonds,
to be secured by the Mortgage.
"Officer's Certificate" means a certificate signed by the president,
chief executive officer, chief financial officer, or any vice president of the
Borrower or the Guarantor, as the context requires. One of the officers signing
an Officer's Certificate given pursuant to Section 920(b) shall be the
principal executive, financial or accounting officer of the Borrower or the
Guarantor, as the case may be.
"Opinion of Counsel" means an opinion in writing signed by an attorney
or firm of attorneys acceptable to the Trustee who may be counsel for the
Authority or
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the Borrower or other counsel.
"Outstanding" or "outstanding" when used with reference to Bonds,
means, as of a particular date, all Bonds theretofore issued and authenticated
under this Agreement, except:
(a) Bonds theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(b) Bonds for the payment of which moneys or Defeasance
Obligations the principal of and the interest on which Defeasance
Obligations, when due, without reinvestment, will be sufficient to
pay, on the date when such Bonds are to be paid or redeemed, the
principal amount and premium, if any, and the interest accruing to
such date on the Bonds to be paid or redeemed, have been deposited
with the Trustee in trust for the Holders of such Bonds;
(c) Bonds deemed to have been paid in accordance with
Section 1301 of this Agreement; or
(d) Bonds in exchange for or in lieu of which other
Bonds have been authenticated and delivered pursuant to this
Agreement;
provided, however, that in determining whether the Holders of
the requisite principal amount of Bonds Outstanding have given
any request, demand, authorization, direction, notice, consent
or waiver hereunder, Bonds owned or held by or for the account
of the Borrower or any Affiliate thereof shall be disregarded
and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice,
consent or waiver, only Bonds which the Trustee knows to be so
owned shall be so disregarded.
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"Participant" means each broker-dealer, bank or other financial
institution for which DTC or any other Securities Depository holds securities
as a Securities Depository.
"Payment of the Bonds" means payment of the principal of and premium,
if any, and interest on all or a portion of the Bonds in accordance with their
terms, whether through payment at maturity or purchase or redemption or
provision for such payment in such a manner that such Bonds or such portion
shall be deemed to have been paid under the second paragraph of Section 1301 of
this Trust Agreement.
"person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or government or any agency or political subdivision thereof.
"Pledge Agreement" means the Pledge and Security Agreement, dated as
of ____________ (___), nineteen hundred ninety-nine (1999) by and between the
Borrower and the Authority, pursuant to which the Borrower delivers the
Mortgage Note to the Authority in pledge as security for the Borrower's
obligations under the Loan Agreement.
"Predecessor Bonds" of any particular Bond means every previous Bond
evidencing all or a portion of the same debt as that evidenced by such
particular Bond, and, for purposes of this definition, any Bond authenticated
and delivered under Section 210 hereof in lieu of a lost, destroyed, mutilated
or stolen Bond shall be deemed to evidence the same debt as the lost,
destroyed, mutilated or stolen Bond.
"principal" means, with respect to a Bond, the
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amount of such Bond stated to be payable at its maturity.
"Project" has the meaning given to that term in Section 1.01 of the
Loan Agreement.
"Property" means the property identified in and encumbered by the
Mortgage.
"Rating Agency" means, initially, S&P, Moody's and D&P or, if S&P,
Moody's or D&P shall elect to discontinue the rating on the Bonds, any
nationally recognized securities rating organization designated by the
Authority and the Borrower then rating the Bonds.
"Regular Record Date" means the fifteenth (15th) day of the month
immediately preceding an Interest Payment Date.
"Representation Letter" means the Representation Letter from the
Authority, the Borrower and the Trustee to DTC with respect to the Bonds,
which, so long as DTC shall be the Securities Depository for the Bonds, shall
be deemed to be part of this Agreement and shall be a binding obligation of the
Authority and the Trustee.
"Secretary" means the Secretary or any Assistant Secretary of the
Authority, or if there is no secretary or assistant secretary, then any person
designated by the Board of Directors of the Authority or authorized by the
by-laws of the Authority to perform the functions of the Secretary.
"Securities Depository" means DTC, or any other securities depository
(or any of its designees to the Trustee) appointed for the Bonds.
"Serial Bonds" means the Bonds which are stated to mature on ______
______ (__) and ________ ______ (__)
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of each year commencing with the Bonds maturing in the month of ______
contained in year _______________ (____) and ending in the month of __________
contained in year ____________________ (____).
"Special Record Date" means a date fixed by the Trustee for the
payment of any Defaulted Interest on Bonds pursuant to Section 203 hereof.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., a corporation organized and existing under the
laws of the State of New York, its successors and assigns.
"Term Bonds" means the Bonds that are stated to mature on ________
______ (__) of the years _________________ (____), _________________ (____) and
_________________ (____).
"Trust Indenture Act" means the Trust Indenture Act of Nineteen
Hundred Thirty-Nine (1939) as in force at the date as of which this Agreement
was executed; provided, however, that in the event the Trust Indenture Act of
Nineteen Hundred Thirty-Nine (1939) is amended after such date, "Trust
Indenture Act" means, to the extent required by such amendment, the Trust
Indenture Act of Nineteen Hundred Thirty-Nine (1939), as so amended.
"Trustee" means the Trustee acting as such under this Agreement,
whether the original or any successor trustee.
"Underwriters" means the initial purchasers of the Bonds pursuant to
the terms of that certain Bond Purchase Agreement dated _________ __________
(__), nineteen hundred ninety-nine (1999).
SECTION 102. RULES OF CONSTRUCTION. Words of the
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masculine gender shall be deemed and construed to include correlative words
of the feminine and neuter genders. Unless the context shall otherwise indicate,
"Bond," "Bondholder," "owner,' "Holder" and "person" shall include the plural as
well as the singular number.
SECTION 103. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application
or request by the Authority, the Borrower or the Guarantor to the Trustee to
take any action under any provision of this Agreement, the requesting party
shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Agreement relating to the
proposed action have been complied with and an Opinion of Counsel, who may be
counsel for the Authority, the Borrower or the Guarantor and shall be appointed
by order of the Borrower or the Guarantor, stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Agreement
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Agreement shall include:
(1) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(2) a brief statement as to the nature and scope
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of the examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual,
he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 104. CONFLICT WITH TRUST INDENTURE ACT. If any provision hereof
limits, qualifies or conflicts with a provision of the Trust Indenture Act that
is required under such Act to be a part of and govern this Agreement, the latter
provision shall control. If any provision of this Agreement modifies or excludes
any provision of the Trust Indenture Act that may be so modified or excluded,
the latter provision shall be deemed to apply to this Agreement as so modified
or shall be deemed to be excluded, as the case may be.
ARTICLE II
FORM, EXECUTION, AUTHENTICATION, DELIVERY
AND EXCHANGE OF BONDS
SECTION 201. LIMITATION ON ISSUANCE OF BONDS. No Bonds may be issued
under this Agreement except in accordance with the provisions of this Article.
SECTION 202. FORM OF BONDS. The definitive Bonds are issuable as fully
registered Bonds without coupons, in denominations of not less than FIVE
THOUSAND DOLLARS ($5,000) and any integral multiple
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thereof. The definitive form of Bonds shall be substantially in the form
attached hereto as Exhibit A with such appropriate variations, omissions and
insertions as may be necessary or appropriate to conform to the provisions of
this Agreement. All Bonds may have endorsed thereon such legends or text as may
be necessary or appropriate to conform to any applicable rules and regulations
of any governmental authority or of any securities exchange on which the Bonds
may be listed or traded or any usage or requirement of law with respect thereto
or as may be authorized by the Authority and approved by the Trustee.
SECTION 203. DETAILS OF BONDS. The Bonds shall be dated their Date of
Issuance, shall bear interest until their payment, such interest to the maturity
or prior redemption thereof being payable monthly on the first (1st) day of each
month, and shall be stated to mature (subject to the right of prior redemption),
all as hereinafter provided.
Each Bond shall bear interest from the Interest Payment Date next
preceding the date on which it is authenticated, unless it is (a) authenticated
on an Interest Payment Date, in which case it shall bear interest from such
Interest Payment Date, or (b) authenticated prior to the first Interest Payment
Date, in which case it shall bear interest from its date; provided, however,
that if at the time of authentication of any Bond interest is in default, such
Bonds shall bear interest from the date to which interest shall have been paid
or duly provided for.
Interest on the Bonds shall be computed on the
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basis of a three hundred and sixty (360) day year of twelve (12) months of
thirty (30) days each.
The Bonds shall be signed by, or bear the facsimile signatures of, the
Executive Director of the Authority and of the Secretary or any Assistant
Secretary of the Authority. A facsimile of the official seal of the Authority
shall be printed on the Bonds.
In case any officer whose signature or a facsimile of whose signature
shall appear on any Bonds shall cease to be such officer before the delivery of
such Bonds, such signature or such facsimile shall nevertheless be valid and
sufficient for all purposes as if he had remained in office until such delivery,
and also any Bond may bear the facsimile signatures of or may be signed by such
persons as at the actual time of the execution of such Bond shall be the proper
officers to sign such Bond although at the date of issue of such Bond such
persons may not have been such officers.
The principal of and premium, if any, and the interest on the Bonds
shall be payable in any coin or currency of the United States of America which
on the respective dates of payment thereof is legal tender for the payment of
public and private debts. The principal of and premium, if any, on all Bonds
shall be payable only to the registered owner or his legal representative at the
corporate trust office of the Trustee upon the presentation and surrender of
such Bonds as the same shall become due and payable. Interest on each Bond which
is payable, and is punctually paid or duly provided for on any Interest Payment
Date shall be paid to the person in whose name such Bond (or one or more
Predecessor Bonds) is
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registered at the close of business on the Regular Record Date by check mailed
to each such registered owner at its address as it appears on the registration
books kept by the Trustee pursuant to Section 206 hereof.
Interest on any Bond which is payable, but is not punctually paid or
duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the Holder on the relevant
Regular Record Date solely by virtue of such Holder having been such Holder; and
such Defaulted Interest may be paid by the Authority, at its election in each
case, as provided in clause one or two below:
one. The Authority may elect to make payment of any Defaulted
Interest to the persons in whose names the Bonds (or their respective
Predecessor Bonds) are registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest, which shall be
fixed in the following manner. The Authority shall notify the Trustee
in writing of the amount of Defaulted Interest proposed to be paid on
each Bond and the date of the proposed payment (which date shall be
such as will enable the Trustee to comply with the next sentence
hereof), and at the same time the Authority shall deposit or shall
cause to be deposited with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for
such deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the persons entitled
to such Defaulted
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Interest as in this clause provided. Thereupon the Trustee shall fix
the Special Record Date for the payment of such Defaulted Interest
which shall be not more than fifteen (15) days and not fewer than ten
(10) days prior to the date of the proposed payment and not fewer than
ten (10) days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Authority and
the Borrower of such Special Record Date and, in the name and at the
expense of the Borrower, shall cause notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor to be
mailed, first-class postage prepaid, to each Holder of such Bonds at
his address as it appears in the registration books maintained by the
Trustee under Section 206 hereof not fewer than ten (10) days prior to
such Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having been
mailed as aforesaid, such Defaulted Interest shall be paid to the
persons in whose names such Bonds (or their respective Predecessor
Bonds) are registered at the close of business on such Special Record
Date and shall no longer be payable pursuant to the following clause
two.
two. The Authority may make payment of any Defaulted Interest
in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Bonds affected may be listed, and
upon such notice as may be required by such exchange, if, after notice
given by the Authority to the Trustee of the proposed payment pursuant
to this clause, such payment shall be deemed practicable by
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the Trustee.
Subject to the foregoing provisions of this Section, each Bond
delivered under this Agreement upon registration of transfer of or in exchange
for or in lieu of any other Bond shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Bond.
SECTION 204. AUTHENTICATION OF BONDS. Only such of the Bonds as shall
have endorsed thereon a certificate of authentication substantially in the form
set forth in Exhibit A hereof, duly executed by the Trustee, shall be entitled
to any benefit or security under this Agreement. No Bond shall be valid or
become obligatory for any purpose unless and until such certificate of
authentication shall have been duly executed by the Trustee, and such
certificate of the Trustee upon any such Bond shall be conclusive evidence that
such Bond has been duly authenticated and delivered under this Agreement. The
Trustee's certificate of authentication on any Bond shall be deemed to have been
duly executed if signed by an authorized officer of the Trustee, but it shall
not be necessary that the same officer sign the certificate of authentication on
all of the Bonds that may be issued hereunder at any one time.
SECTION 205. EXCHANGE OF BONDS. Bonds may be exchanged at the option of
the registered owner thereof, upon surrender thereof at the corporate trust
office of the Trustee, together with an assignment duly executed by the
registered owner or his attorney or legal representative in such form as shall
be satisfactory to the Trustee, for an equal aggregate
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principal amount of Bonds of the same maturity, of any denomination or
denominations authorized by this Agreement and bearing interest at the same
rate, and in the same form as the Bonds surrendered for exchange.
The Authority shall make provision for the exchange of the Bonds at the
corporate trust office of the Trustee.
SECTION 206. NEGOTIABILITY, REGISTRATION OF TRANSFER OF BONDS. The
Trustee shall keep books for the registration of transfers of Bonds as provided
in this Agreement. Said registration books shall be available at all reasonable
times for inspection by the Authority, the Borrower, the Guarantor and their
agents and representatives, and the Trustee shall provide to the Borrower and
the Guarantor and the Authority, upon their written request, an accurate copy of
the names and addresses of the Holders set forth on such books.
The transfer of any Bond may be registered only upon the books kept for
the registration and registration of transfers of Bonds upon surrender thereof
to the Trustee, together with an assignment duly executed by the registered
owner or such owner's attorney or legal representative in such form as shall be
satisfactory to the Trustee. Upon any such registration of transfer, the
Authority shall execute and the Trustee shall authenticate and deliver in
exchange for such Bond a new registered Bond or Bonds, registered in the name
of the transferee, of the same maturity, of any denomination or denominations
authorized by this Agreement in the aggregate principal
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amount equal to the principal amount of such Bond and bearing interest at the
same rate.
In all cases in which Bonds shall be exchanged or the transfer of Bonds
shall be registered hereunder, the Authority shall execute and the Trustee shall
authenticate and deliver at the earliest practicable time Bonds in accordance
with the provisions of this Agreement. All Bonds surrendered in any such
exchange or registration of transfer shall forthwith be cancelled by the
Trustee. The Authority or the Trustee may impose a reasonable fee or service
charge for every such exchange or registration of transfer of Bonds sufficient
to reimburse it for any tax or other governmental charge required to be paid
with respect to such exchange or registration of transfer. Neither the Authority
nor the Trustee shall be required to make any such registration of transfer or
exchange of Bonds during a period beginning at the opening of business fifteen
(15) days before the day of the mailing of a notice of redemption of Bonds and
ending at the close of business on the day of such mailing, or after any Bond
has been selected for redemption in whole or in part, except the unredeemed
portion of any Bond being redeemed in part.
SECTION 207. OWNERSHIP OF BONDS; TRANSFER OF TITLE. As to any Bond, the
person in whose name such Bond is registered shall be deemed and regarded as the
absolute owner thereof for all purposes, and payment of or on account of the
principal of and the interest on any such Bond shall be made only to or upon the
order of the registered owner thereof or his legal representative. All such
payments shall be valid and
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effectual to satisfy and discharge the liability upon such Bond including
interest thereon, to the extent of the sum or sums so paid.
The owner of any Bond is hereby granted the power to transfer absolute
title thereto by assignment thereof to a bona fide purchaser for value (present
or antecedent) without notice of prior defenses or equities or claims of
ownership enforceable against his assignor or any person in the chain of title
and before the maturity of such Bond. Every prior owner of any Bond shall be
deemed to have waived and renounced all of his equities or rights therein in
favor of every assignee and every assignee shall acquire absolute title thereto
and to all rights represented thereby.
SECTION 208. AUTHORIZATION OF BONDS. There shall be issued under and
secured by this Agreement Bonds of the Authority in the aggregate initial
principal amount of ________________________________ ___________________
($____________) for the purpose of providing funds, together with other
available funds, to (i) pay the Cost of the Project, (ii) pay a portion of the
Costs of Issuance and (iii) pay interest due on the Bonds during the first
_______ Interest Payment Dates. The Bonds shall be dated the Date of Issuance,
shall be numbered from RA-one (1) upwards, in the case of Serial Bonds, and
RB-one (1) upwards, in the case of Term Bonds, and shall be designated "Puerto
Rico Industrial, Tourist, Educational, Medical and Environmental Control
Facilities Financing Authority, Industrial Revenue Bonds, 1999 Series A (Doral
Financial Center Project)." The interest rate or
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rates, maturity dates, amounts of the Bonds maturing on such dates, and the
Amortization Requirements for the Term Bonds shall be as provided in one or more
resolutions of the Board of Directors of the Authority authorizing the issuance
thereof, which maturity dates and amounts may be supplemented or changed in a
certificate executed by the Executive Director or the Assistant Executive
Director of the Authority executed on the date of issuance of the Bonds or in
the bond purchase agreement delivered by the Underwriters and executed by any
such officer of the Authority, as applicable, if provided for in said resolution
or resolutions.
The Bonds shall be executed substantially in the form and manner set
forth in Exhibit A and shall be deposited with the Trustee for authentication,
but before the Bonds shall be delivered by the Trustee, there shall be filed
with the Trustee the following:
(a) a copy, certified by the Secretary or any Assistant
Secretary of the Authority, of the resolution of the Authority
authorizing the issuance of and awarding such Bonds, specifying the
interest rate or rates for the Bonds, authorizing the execution of the
Loan Agreement and this Agreement, designating the Trustee and
directing the authentication and delivery of the Bonds to or upon the
order of the purchasers mentioned therein upon payment of the purchase
price therein set forth and the accrued interest, if any, on said
Bonds;
(b) an executed counterpart of the Loan Agreement;
(c) the Mortgage Note, a copy of the Mortgage, and a mortgagee
title insurance policy insuring the
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Mortgage as a first priority mortgage on the Property, subject to no
other liens or encumbrances other than those permitted by the Loan
Agreement;
(d) an executed counterpart of the Pledge Agreement;
(e) an opinion of counsel to the Borrower and the Guarantor,
addressed to the Trustee and the Underwriters, that the execution and
delivery of the Loan Agreement has been duly authorized by the Borrower
and the Guarantor, that the Collateral Documents have been duly
authorized by the Borrower, that the Loan Agreement and the Collateral
Documents are in the form so authorized and have been duly executed by
the Borrower and the Guarantor, as applicable, and that, assuming
proper authorization and the execution of the Loan Agreement and the
Collateral Documents by the Authority, the Loan Agreement is a legal,
valid and binding agreement of the Borrower and the Guarantor and the
Collateral Documents are legal, valid and binding agreements of the
Borrower, enforceable against the Borrower and the Guarantor, as the
case may be, in accordance with their terms, except to the extent that
the enforceability of the Loan Agreement and the Collateral Documents
may be limited by bankruptcy, insolvency or other laws affecting
creditors' rights generally and subject to general principles of equity
(regardless of whether said enforceability is considered in a
proceeding in equity or at law) and subject to such other standard
exceptions or qualifications as are acceptable to counsel to the
Authority and the Underwriters, the Pledge Agreement is effective to
create a valid and enforceable
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security interest in favor of the Authority and the Trustee over the
Mortgage Note, which security interest will be perfected upon delivery
of the Mortgage Note to the Trustee, and, upon filing of the Mortgage
in the appropriate section of the Registry of Property of Puerto Rico,
the Mortgage will create a valid and enforceable mortgage lien over the
real property described therein;
(f) an opinion of counsel, who may be counsel for the
Authority, addressed to the Trustee and the Underwriters, substantially
to the effect that: (i) the Authority has the legal right and power to
enter into this Agreement, the Loan Agreement and the Pledge Agreement,
and has duly authorized and validly executed and delivered this
Agreement, the Loan Agreement and the Pledge Agreement, and each such
agreement is legally valid and binding upon the Authority and
enforceable in accordance with its terms, except to the extent that the
enforceability thereof may be limited by bankruptcy, insolvency or
other laws affecting creditors' rights generally and subject to general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law), (ii) this Agreement
creates a legally valid and effective pledge and assignment of the
moneys, securities and funds held or set aside under this Agreement as
security for the Bonds, subject to the application thereof to the
purposes and on the conditions permitted by this Agreement, and that no
filing or recording of any document is necessary in order to make such
pledge and assignment effective or to continue it in effect (or
specifying the place or places, if any, where such
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filing or recording is necessary and furnishing any officially
authenticated certificates, or other documents by which such filing or
recording is evidenced and stating that such filings or recordings have
been made and stating that no other filing or recording is necessary),
(iii) the issuance of the Bonds will not violate any provision of law
or of the by-laws of the Authority or result in the breach of, or
constitute a default under, any agreement, indenture or other
instrument to which the Authority is a party or by which it may be
bound, (iv) no authorization, consent or approval or withholding of
objection of any governmental body or regulatory authority is requisite
to the legal issue of said Bonds (unless such opinion shall show that
no authorization, consent or approval or withholding of objection is
requisite to the legal issue of said Bonds, it shall specify and
furnish any officially authenticated certificates, or other documents,
by which such authorization, consent or approval or withholding of
objection is evidenced and stating that no other authorization, consent
or approval or withholding of objection is required), (v) the Bonds are
legally valid and binding direct obligations of the Authority
enforceable in accordance with their terms and the terms of this
Agreement and have been duly and validly authorized and issued in
accordance with applicable law and this Agreement, and (vi) the
conditions precedent to the delivery of the Bonds have been fulfilled,
and covering such other matters as the Trustee or the Underwriters may
reasonably request.
(g) an Officer's Certificate of the Borrower setting forth the
amount of and the application of the
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proceeds of the Bonds and other funds contributed by the Borrower.
When the documents mentioned in clauses (a) to (g), inclusive, of this
Section shall have been filed with the Trustee and when the Bonds shall have
been executed as required by this Agreement, the Trustee shall authenticate and
deliver the Bonds to or upon the order of the Underwriters, but only upon
payment to the Trustee of the purchase price of the Bonds and the accrued
interest thereon, if any. The Trustee shall be entitled to rely upon such
resolutions, certificates and opinions as to all matters stated
therein.
Simultaneously with the delivery of the Bonds, the proceeds (including
accrued interest, if any) of the Bonds shall be applied by the Trustee as
follows:
(i) to the Authority, _________________________
______________________ ($___________), as payment of the Administrative
Fee; and
(ii) the balance of said proceeds shall be deposited to the
credit of the Construction Fund.
SECTION 209. TEMPORARY BONDS. Until definitive Bonds are ready for
delivery, there may be executed, and upon request of the Authority, the Trustee
shall authenticate and deliver, in lieu of definitive Bonds and subject to the
same limitations and conditions, printed, typewritten, engraved or lithographed
temporary Bonds, in the form of fully registered Bonds without coupons in such
denominations, or in the form of a single registered Bond without coupons in a
denomination equal to the initial aggregate principal amount of such definitive
Bonds, substantially of the
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tenor of the Bonds set forth in this Agreement and with such appropriate
omissions, insertions and variations as may be required.
Until definitive Bonds are ready for delivery, any temporary Bond may,
if so provided by the Authority by resolution, be exchanged at the corporate
trust office of the Trustee, without charge to the Holder thereof, for an equal
aggregate principal amount of temporary fully registered Bonds of authorized
denominations, of like tenor, of the same maturity and bearing interest at the
same rate.
If temporary Bonds are issued, the Authority shall cause the definitive
Bonds to be prepared and to be executed and delivered to the Trustee, and the
Trustee, upon presentation to it at its corporate trust office of any temporary
Bond, shall cancel the same and authenticate and deliver in exchange therefor at
the place designated by the Holder, without charge to the Holder thereof, a
definitive Bond or Bonds of an equal aggregate initial principal amount, of the
same maturity and bearing interest at the same rate as the temporary Bond
surrendered. Until so exchanged the temporary Bonds shall in all respects be
entitled to the same benefit and security of this Agreement as the definitive
Bonds to be issued and authenticated hereunder.
SECTION 210. MUTILATED, DESTROYED, STOLEN OR LOST BONDS. If (a) any
mutilated Bond is surrendered to the Trustee or the Trustee receives evidence to
its satisfaction of the destruction, loss or theft of any Bond, and (b) there is
delivered to the Trustee such security or indemnity as may be required by the
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Trustee to save the Trustee, the Authority, the Borrower and the Guarantor
harmless, then, in the absence of notice to the Authority, the Borrower, the
Guarantor or the Trustee that such Bond has been acquired by a bona fide
purchaser, the Authority shall execute and upon its request the Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, stolen or lost Bond, a new Bond or Bonds of the same tenor, aggregate
principal amount, maturity and interest rate and bearing a number not
contemporaneously outstanding; provided, however, that if any such mutilated,
destroyed, lost or stolen Bond shall have become or shall be about to become due
and payable, or shall have become subject to redemption in full, instead of
issuing a new Bond, the Authority may pay such Bond without surrender thereof,
except that any mutilated Bond shall be surrendered. If, after the delivery of
such new Bond or payment of a destroyed, lost or stolen Bond pursuant to the
proviso to the preceding sentence, a bona fide purchaser of the original Bond in
lieu of which such new Bond was issued presents for payment such original Bond,
the Authority and the Trustee shall be entitled to recover such new Bond (or
such payment) from the person to whom it was delivered or any person taking such
new Bond from such person, except a bona fide purchaser, and shall be entitled
to recover upon the security or indemnity provided therefor to the extent of any
damage, loss, cost or expenses incurred by the Authority, the Borrower, the
Guarantor or the Trustee in connection therewith.
Subject to the provisions of the first paragraph of this Section 210,
every Bond issued pursuant to the
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provisions of this Section in exchange or substitution for any Bond which is
mutilated, destroyed, stolen or lost shall constitute an additional contractual
obligation of the Authority, whether or not the destroyed, stolen or lost Bond
shall be found at any time, or be enforceable by anyone, and shall be entitled
to all the benefits of this Agreement equally and proportionately with any and
all other Bonds duly issued under this Agreement. All Bonds shall be held and
owned upon the express condition that the foregoing provisions are exclusive
with respect to the replacement or payment of mutilated, destroyed, stolen or
lost Bonds, and shall preclude any and all other rights or remedies,
notwithstanding any law or statute existing or hereafter enacted to the contrary
with respect to the replacement or payment of negotiable instruments or other
securities without their surrender.
Upon the issuance of any new Bond under this Section, the Trustee may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other reasonable expenses
(including the fees and expenses of the Trustee) connected therewith.
SECTION 211. BOOK-ENTRY BONDS. (a) Except as provided in subparagraph
(c) of this Section 211, the registered owner of all Bonds shall be the
Securities Depository and, as long as the Securities Depository shall be DTC,
the Bonds shall be registered in the name of Cede & Co., as nominee for DTC. All
provisions of this Article II (other than those provisions contained in Section
208), during the time
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the Bonds are registered in the name of the nominee of DTC, shall be superseded
by the provisions of this Section 211 and the rules of the Securities Depository
applicable thereto to the extent of any conflict therewith. Payments of
principal or interest for any Bond registered in the name of Cede & Co. shall be
made to the account of Cede & Co. at the address indicated for Cede & Co. in the
registration books kept by the Trustee. The "Bonds" referred to in this Section
211 shall refer to the Bonds registered in the name of Cede & Co.
(b) The Bonds shall be initially issued in the form of
separate, single, authenticated fully-registered Bonds in the amount
of each separately stated maturity. Upon initial issuance, the
ownership of each such Bond shall be registered in the registration
books kept by the Trustee in the name of Cede & Co., as nominee of the
Securities Depository. As long as certificates for the Bonds are not
issued pursuant to Section 211(c), the Trustee and the Authority may
treat the Securities Depository (or its nominee) as the sole and
exclusive owner of the Bonds registered in its name for the purposes of
payment of the principal or redemption price of or interest on the
Bonds, selecting the Bonds or portions thereof to be redeemed, giving
any notice permitted or required to be given to the owners of such
Bonds hereunder, registering the transfer of Bonds, obtaining any
consent or other action to be taken by Bondholders and for all other
purposes whatsoever; and neither the Trustee nor the Authority shall
have any responsibility or obligation to any Participant, any
Beneficial Owner or any other person claiming a
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beneficial ownership interest in the Bonds under or through the
Securities Depository or any Participant, or any other person which is
not shown on the registration books of the Trustee as being an owner of
Bonds, with respect to the accuracy of any records maintained by the
Securities Depository or any Participant, the payment to the Securities
Depository or any Participant of any amount in respect of the principal
or redemption price of or interest on the Bonds; any notice which is
permitted or required to be given to Bondholders under this Agreement;
the selection by the Securities Depository or any Participant of any
person to receive payment in the event of a partial redemption of the
Bonds; or any consent given or other action taken by the Securities
Depository as owner of Bonds. The Trustee shall pay all principal and
redemption price of and interest on the Bonds only to or "upon the
order of" the Securities Depository (as that term is used in the
Uniform Commercial Code as adopted in the State of New York), and all
such payments shall be valid and effective to fully satisfy and
discharge the Authority's obligations with respect to the principal or
redemption price of and interest on the Bonds to the extent of the sum
or sums so paid. Except as provided in (c) below, no person other than
the Securities Depository shall receive an authenticated Bond for each
separate stated maturity evidencing the obligation of the Authority to
make payments of the principal or redemption price of and interest on
the Bonds pursuant to this Agreement. Upon delivery by the Securities
Depository to the Trustee of written notice to the effect that the
Securities Depository
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has determined to substitute a new nominee in place of Cede & Co., the
Bonds will be transferable to such new nominee in accordance with
subparagraph (g) below.
(c) In the event the Authority determines that it is in the
best interest of the Authority not to continue the book-entry system of
transfer for the Bonds or that the interest of the owners of the Bonds
might be adversely affected if the book-entry system of transfer is
continued, the Authority may notify the Securities Depository, the
Guarantor and the Trustee, whereupon the Securities Depository will
notify the Participants, of the availability through the Securities
Depository of certificates for the Bonds. In such event, the Trustee
shall issue, transfer and exchange certificates for the Bonds as
requested by the Securities Depository and any Participant or
Beneficial Owner in appropriate amounts in accordance with subparagraph
(g) below. The Securities Depository may determine to discontinue
providing its services with respect to the Bonds at any time by giving
notice to the Authority and the Trustee and discharging its
responsibilities with respect thereto under applicable law, or the
Authority may determine that the Securities Depository is incapable of
discharging its responsibilities and may so advise the Securities
Depository. In either such event, the Authority shall either establish
its own book-entry system or use reasonable efforts to locate another
Securities Depository. Under such circumstances (if there is no
successor Securities Depository), the Authority and the Trustee shall
be obligated to deliver certificates for the Bonds as described in
subparagraph (g) below. In the event certificates for
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the Bonds are so issued, the provisions of this Agreement shall apply
to such Bond certificates in all respects, including, among other
things, the printing of certificates, the transfer and exchange of such
certificates and the method of payment of principal or redemption price
of and interest on such certificates. Whenever the Securities
Depository requests the Authority and the Trustee to do so, the Trustee
and the Authority will cooperate with the Securities Depository in
taking appropriate action after reasonable notice (i) to make available
one or more separate certificates evidencing the Bonds to any
Participant having Bonds credited to its account with the Securities
Depository, or (ii) to arrange for another Securities Depository to
maintain custody of certificates evidencing the Bonds.
(d) Notwithstanding any other provision of this Agreement to
the contrary, so long as any Bond is registered in the name of Cede &
Co., as nominee of DTC, all payments with respect to the principal or
redemption price of and interest on such Bond and all notices with
respect to such Bond shall be made and given, respectively, to DTC as
provided in the Representation Letter.
(e) In connection with any notice or other communication to be
provided to owners of Bonds pursuant to this Agreement by the Authority
or the Trustee or with respect to any consent or other action to be
taken by owners of Bonds, the Authority or the Trustee, as the case may
be, shall establish a record date for such consent or other action and
give the Securities Depository notice of such record date not less than
fifteen (15) calendar days in advance of
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such record date to the extent possible. Such notice to the Securities
Depository shall be given only when the Securities Depository is the
sole Bondholder.
(f) A Securities Depository that is a Holder of one or more
Bonds, may make, give or take, by a proxy or proxies duly appointed in
writing, any request, demand, authorization, direction, notice,
consent, waiver or other action provided in this Agreement to be made,
given or taken by Holders, and a Securities Depository that is a Holder
of one or more Bonds may provide its proxy or proxies to the Beneficial
Owners of interests in any such Bonds through such Securities
Depository's standing instructions and customary practices.
(g) In the event that any transfer or exchange of Bonds is
permitted under subparagraph (b) or (c) hereof, such transfer or
exchange shall be accomplished upon receipt by the Trustee from the
registered owner thereof of the Bonds to be transferred or exchanged
and appropriate instruments of transfer to the permitted transferee,
all in accordance with the applicable provisions of this Agreement. In
the event Bond certificates are issued to owners other than Cede & Co.,
its successor as nominee for DTC as owner of all the Bonds, or another
Securities Depository as owner of all the Bonds, the provisions of this
Agreement shall also apply to, among other things, the printing of such
certificates and the methods of payment of principal or redemption
price of and interest on such certificates.
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ARTICLE III
REDEMPTION OF BONDS
SECTION 301. REDEMPTION OF BONDS. The Bonds shall be subject to
redemption prior to their maturity as provided in this Article III.
(a) The Bonds shall be called for redemption in part, to the extent of
any Bond proceeds that are required to be transferred to the Bond Fund for the
redemption of Bonds pursuant to Section 406 hereof, at a redemption price equal
to the principal amount thereof as of the redemption date, without premium,
plus accrued interest to the date fixed for redemption, such redemption to be
made on the next Interest Payment Date occurring not less than forty-five (45)
days after the Construction Fund Transfer Date.
(b) In the event that the Authority and the Trustee shall
receive written notice pursuant to Section 8.01(b) of the Loan Agreement that
the Borrower shall have elected to prepay all or a portion of the amounts
payable under Section 4.01 of the Loan Agreement pursuant to Section 8.01(a) of
the Loan Agreement, then the Bonds at the time outstanding shall be called for
redemption in whole or in part, as directed by the Borrower, on any date
selected by the Borrower, on or after ________ __________ (__), ___
____________________ (____) at a redemption price equal to the principal amount
of the Bonds to be redeemed as of the date fixed for redemption (which date
shall not be less than forty-five (45) days from the date that notice of such
redemption is received by the Trustee), plus accrued interest to the date fixed
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for redemption plus a premium of ___ percent (__%) of such principal amount if
redeemed prior to _________ _________ (__), ______________________ (____),
_____ percent (__%) if redeemed on or after ________ ________ (__),
_______________________ (____) and prior to ________ ________ (__),
_______________ (____) and without premium if redeemed on ________ ________
(__), _______________________ (____) and thereafter.
(c) In the event the Borrower shall have become
obligated to prepay all or a portion of the amounts payable under Section 4.01
of the Loan Agreement in accordance with Section 8.02(c) or Section 8.02(e) of
the Loan Agreement, the Bonds shall be called for redemption in whole or in
part, as applicable, at a redemption price equal to the principal amount
thereof plus accrued interest to the date fixed for redemption, without
premium, which redemption date shall be the next Interest Payment Date
occurring not less than forty-five (45) days after the Borrower becomes
obligated to make such prepayment pursuant to Sections 8.02(c) or 8.02(e) of
the Loan Agreement.
(d) In the event that the Borrower shall have become
obligated to prepay the entire amount payable under Section 4.01 of the Loan
Agreement in accordance with Section 8.02(d) of the Loan Agreement, the Bonds
shall be called for redemption in whole, on the Interest Payment Date occurring
not less than forty-five (45) days after receipt by the Trustee of the notice
delivered pursuant to Section 8.02(d) of the Loan Agreement, at a redemption
price equal to the principal amount thereof, plus interest accrued to the date
fixed for redemption, without premium.
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(e) The Term Bonds maturing on ________ one (1), two thousand
___________ (20__), are subject to mandatory redemption, in part, beginning on
________ one (1), two thousand ________ (20__), and each Interest Payment Date
thereafter at a redemption price equal to one hundred percent (100%) of the
principal amount thereof plus accrued interest to the date of redemption,
without premium, in a principal amount equal to the Amortization Requirements
specified on Exhibit B hereto (subject to adjustments for any prior purchase or
redemption of said Term Bonds).
The Term Bonds maturing on _________ one (1), two thousand
_________ (20__), are subject to mandatory redemption, in part, beginning on
_____ __________ (__), two thousand __________ (20__), and each Interest
Payment Date thereafter at a redemption price equal to one hundred percent
(100%) of the principal amount thereof plus accrued interest to the date of
redemption, without premium, in a principal amount equal to the Amortization
Requirements specified on Exhibit B hereto (subject to adjustments for any
prior purchase or redemption of said Term Bonds).
(f) In the event that the Authority and the Trustee shall
receive written notice pursuant to Section 8.03 of the Loan Agreement that the
Borrower shall have elected to prepay all or a portion of the amounts payable
under Section 4.01 of the Loan Agreement pursuant to Section 8.03 of the Loan
Agreement, then the Bonds at the time outstanding shall be called for
redemption in whole or in part, as directed by the Borrower, at a redemption
price equal to the principal amount of the Bonds to be redeemed plus accrued
interest to the date fixed for
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redemption, without premium, which redemption date shall not be less than
forty-five (45) days from the date that notice of such redemption is received
by the Trustee.
(g) Except in the case of a redemption of Term Bonds under
Section 301(e), if less than all of the outstanding Bonds shall be called for
redemption, the Bonds shall be redeemed in inverse order of maturity, unless
otherwise directed by the Borrower. If fewer than all of the particular Bonds
of any one maturity shall be called for redemption, the Bonds or portions of
Bonds of any maturity to be redeemed shall be selected by the Trustee by such
method as the Trustee shall deem fair and appropriate; provided, however, that
the portion of any Bond to be redeemed shall be in the principal amount equal
to FIVE THOUSAND DOLLARS ($5,000) or some multiple thereof, and that, in
selecting Bonds for redemption, the Trustee shall treat each Bond as
representing that number of Bonds which is obtained by dividing the principal
amount of such Bond by FIVE THOUSAND DOLLARS ($5,000).
On the forty-fifth (45th) day preceding each Interest Payment
Date for which there is a Amortization Requirement, the Trustee shall proceed
to select for redemption from the Bonds outstanding of the maturity date to be
redeemed a principal amount of Bonds of such maturity date equal to such
Amortization Requirement, and shall call such Bonds for redemption on such
Interest Payment Date and give notice of such call in accordance with Section
302 hereof.
(h) Anything in this Agreement to the contrary
notwithstanding, any amount less than FIVE THOUSAND DOLLARS ($5,000) remaining
with the Trustee after a
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partial redemption of Bonds pursuant to this Section 301 shall remain
deposited in the Bond Fund until the next succeeding Interest Payment
Date, at which time such funds and any interest or income earned
thereon shall be used to pay interest on the Bonds.
(i) In the event that redemptions under Section 301(b) and
Section 301(e) occur on the same Interest Payment Date, the Trustee
shall first select the Bonds subject to redemption under Section 301(e)
and, thereafter, select the Bonds subject to redemption under Section
301(b).
SECTION 302. REDEMPTION NOTICE. Except as stated in Section 211 with
respect to notices to DTC, at least thirty (30) days before the redemption date
of any Bonds, the Trustee shall cause a notice of any such redemption, either
in whole or in part, signed by the Trustee to be mailed, first-class, postage
prepaid, to all Bondholders whose Bonds are to be redeemed and to the
Guarantor. Each such notice shall set forth (a) the date fixed for redemption,
(b) the redemption price to be paid, (c) if fewer than all of the Bonds then
outstanding shall be called for redemption, the distinctive numbers and
letters, if any, of such Bonds to be redeemed and, in the case of Bonds to be
redeemed in part only, the portion of the principal amount thereof to be
redeemed, (d) that on the date fixed for redemption, such redemption price will
become due and payable upon each Bond or portion thereof called for redemption,
and that interest thereon shall cease to accrue on and after said redemption
date, (e) the place where such Bonds or portions thereof called for redemption
are to be
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surrendered for payment of such redemption price, and (f) such other
information as may be required to comply with the requirements of Securities
Exchange Act of 1934 Release No. 34-23856, dated December three (3), nineteen
hundred eighty-six (1986) (the "Redemption Release"). In addition, the Trustee
shall cause a copy of the above notice of redemption to be sent to the persons
specified in Sections B and D of the Redemption Release at least two (2)
business days before notice is given in accordance with the preceding sentence.
In case any Bond is to be redeemed in part only, the notice of redemption which
relates to such Bond shall state also that on or after the redemption date,
upon surrender of such Bond, a new Bond or Bonds of the same maturity and
series, bearing interest at the same rate and in a principal amount equal to
the unredeemed portion of such Bond, will be issued. Failure to comply with the
requirements of the Redemption Release shall not affect the validity of the
proceedings for the redemption of any Bonds, and failure to mail such notice to
any Holder or any defect in any notice so mailed shall not affect the validity
of the proceedings for the redemption of the Bonds of any other Holders.
SECTION 303. EFFECT OF CALLING FOR REDEMPTION. On the date
designated for redemption, notice having been mailed in the manner and under
the conditions hereinabove provided, the Bonds or portions of Bonds so called
for redemption shall become and be due and payable at the redemption price
provided herein for redemption of such Bonds or portions of Bonds on such
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date. If Bonds or portions of Bonds have been duly called for redemption under
the provisions of this Article III, and if sufficient moneys for payment of the
redemption price (including premium, if any,) plus accrued interest, if any, on
such Bonds, or portions of Bonds, to the date fixed for redemption, are held in
a separate account by the Trustee in trust for the Holders of the Bonds or
portions of Bonds to be redeemed, as provided in this Agreement, then interest
on the Bonds or portions of Bonds so called for redemption shall cease to
accrue, such Bonds or portions of Bonds shall cease to be entitled to any
benefit or security under this Agreement or to be deemed outstanding, and the
Holders of such Bonds or portions of Bonds shall have no rights in respect
thereof except to receive payment of the redemption price thereof (including
premium, if any,) plus accrued interest to the date of redemption, and, to the
extent provided in Section 304 hereof, to receive Bonds for any unredeemed
portions of Bonds.
SECTION 304. REDEMPTION OF PORTION OF BOND. In case part but not all
of a Bond that is outstanding shall be selected for redemption, the registered
owner thereof or his attorney or legal representative shall present and
surrender such Bond to the Trustee for payment of the principal amount thereof
so called for redemption and the redemption premium, if any, on such principal
amount, and the Authority shall execute and the Trustee shall authenticate and
deliver to or upon the order of such registered owner or his attorney or legal
representative, without charge therefor, for the unredeemed portion of the
principal amount of the Bond.
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so surrendered, either a new Bond or Bonds, at the option of the owner or his
attorney or legal representative, of the same maturity, bearing interest at the
same rate, and of any denomination or denominations authorized by this
Agreement.
SECTION 305. CANCELLATION. Upon presentation and surrender, as
hereinabove provided, Bonds redeemed under this Article III or purchased by or
on behalf of the Borrower shall be cancelled by the Trustee.
ARTICLE IV
CONSTRUCTION FUND
SECTION 401. CONSTRUCTION FUND. A special fund is hereby created and
designated the "Industrial Revenue Bonds, 1999 Series A (Doral Financial Center
Project) Construction Fund" (the "Construction Fund"), to the credit of which
such deposits shall be made as are required by the provisions of Section 208 of
this Agreement. Any moneys received by the Trustee from any other source for
the payment of Costs of the Project or the payment of Costs of Issuance shall
also be deposited to the credit of the Construction Fund. ---Subject to the
provisions of Sections 404, 406 and 602 of this Agreement, the moneys in the
Construction Fund shall be held by the Trustee in trust and shall be subject to
a lien and charge in favor of the Holders of the Bonds issued and outstanding
under this Agreement, and for the further security of such Holders, until paid
out or transferred as herein provided.
SECTION 402. PAYMENTS FROM THE CONSTRUCTION FUND. Payment of the Cost
of the Project shall be made from the Construction Fund. All payments from the
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Construction Fund shall be subject to the provisions and restrictions set forth
in this Article IV.
SECTION 403. ITEMS OF COST. For the purposes of this Agreement, the
Cost of the Project shall embrace all costs permitted by the Act in connection
with the construction, development and equipping of the Project, including
without limitation:
(a) Payment to the Borrower, the Guarantor and the Authority,
as the case may be, of such amounts, if any, as shall be necessary to reimburse
the Borrower, the Guarantor and the Authority in full for all advances and
payments made by them or either of them or for their accounts, with respect to
the Project at any time after [__________________] for expenditures in
connection with the acquisition of any property required for the Project, the
preparation of any preliminary study or planning of the Project, or any aspect
of either thereof and any reports or analyses concerning the Project, the
construction, development and equipping of the Project and the acquisition of
all real or personal property deemed necessary in connection with the Project,
or any one or more of said expenditures (including architectural, engineering
and supervisory services);
(b) Payment in full of the outstanding indebtedness secured
by a mortgage on the Project and owed to Scotiabank in the amount of
_____________ ________________________________ DOLLARS ($_________) and
interest thereon, plus the costs related to the cancellation of such
mortgage;
(c) Payment of the Administrative Fee;
(d) Payment of the Costs of Issuance, provided
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that the amount of Costs of Issuance that may be paid from the proceeds of the
Bonds shall be limited to two percent (2%) of the aggregate principal amount of
the Bonds, excluding for purposes of this limitation the amount of the
Administrative Fee, the cost of cancelling any existing mortgage lien on the
Property and of executing and recording the Mortgage, and the cost of the
mortgagee title insurance policy insuring the Mortgage, all of which may be paid
from the proceeds of the Bonds without reference to this limitation;
(e) Payment for labor, services, materials and supplies used
or furnished in site improvement and in the acquisition, construction and
equipping of the Project, payment for the cost of the acquisition, construction
and installation of utility services or other facilities, and all real and
personal property deemed necessary in connection with the Project and payment
for the miscellaneous expenses incidental to, and deposits required in
connection with, any of the foregoing items; and
(f) Payment of any other costs and expenses relating to the
development and construction of the Project or the authorization, issuance and
sale of the Bonds.
SECTION 404. REQUISITES FOR PAYMENTS FROM CONSTRUCTION FUND.
(a) Payments of Costs of the Project from the Construction Fund shall be made
by the Trustee upon the order of the Borrower in accordance with the
provisions of this Section, but no such payment shall be made unless and until
the Trustee shall receive a requisition, prepared and
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signed by a Borrower Representative and, if the Authority so determines by
written notice to the Trustee which the Trustee has received prior to its making
such payment, approved by an Authority Representative; provided, however, that
such approval by the Authority shall not be withheld if the requisition is
consistent with the Act, the Loan Agreement and this Agreement, stating:
(i) the item number of each such payment,
(ii) the name of the person (including the Borrower) to whom
each such payment is due,
(iii) the respective amounts to be paid and to whom such
amounts shall be paid, and
(iv) that obligations in the stated amounts have been
incurred and are presently due and payable, or reimbursable to the Borrower,
and that each item thereof is a proper charge against the Construction Fund,
and has not been previously paid from the Construction Fund.
Upon receipt of any such order and accompanying requisition, the
Trustee shall pay such obligation from the Construction Fund. If prior to
payment of any item in an order the Borrower should for any reason desire not
to pay such item, the Borrower shall give notice of such decision to the
Trustee. In making any disbursement, the Trustee shall pay each such obligation
directly to the Borrower or to any payee designated by a Borrower
Representative, as set forth in the order of the Borrower directing such
disbursement.
SECTION 405. RELIANCE ON REQUISITIONS. All requisitions and orders
received by the Trustee, as
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required in this Article IV as conditions of payment from the Construction
Fund, may be relied upon by the Trustee, and shall be retained by the Trustee,
subject to examination at all reasonable times by the Borrower, the Authority,
the Guarantor, any Bondholder and the agents and representatives thereof.
SECTION 406. BALANCE IN CONSTRUCTION FUND. On the third anniversary of
the Date of Issuance or such later date as may be approved by the Authority
(the "Construction Fund Transfer Date"), any balance remaining in the
Construction Fund (other than amounts retained by the Trustee to pay Costs of
the Project not then due and payable or for which the liability for payment is
in dispute) shall be transferred to the Bond Fund and used to pay the
redemption price of Bonds called for redemption pursuant to Section 301(a)
hereof.
(b) In the event that the Borrower exercises the option under
Section 8.01(a) of the Loan Agreement to prepay in full the amounts payable
under Section 4.01 of the Loan Agreement, the Trustee shall, upon the direction
of the Borrower, deposit in the Bond Fund, on the date the prepayment is made,
any balance remaining in the Construction Fund.
(c) If the principal amount of all outstanding Bonds shall
have become due and payable pursuant to a declaration in accordance with
Section 803 of this Agreement or the giving of a redemption notice pursuant to
Section 301 of this Agreement, the Trustee shall transfer to the Bond Fund any
funds remaining in the Construction Fund.
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ARTICLE V
BOND FUND
SECTION 501. CREATION OF BOND FUND. A special fund is hereby created
and designated "Industrial Revenue Bonds, 1999 Series A (Doral Financial Center
Project) Bond Fund." The moneys in the Bond Fund shall be held by the Trustee in
trust and applied as hereinafter provided and, pending such application, shall
be subject to a lien and charge in favor, and for the further security, of the
Holders until paid out or transferred as herein provided.
SECTION 502. PAYMENTS INTO BOND FUND. There shall be deposited to the
credit of the Bond Fund:
(i) the amount of interest to accrue on the Bonds through
__________ one (1), ____________________ (____);
(ii) all amounts paid by the Borrower under Sections 4.01,
8.01, 8.02 and 8.03 of the Loan Agreement for the payment of principal of,
redemption premium, if any, and interest on the Bonds;
(iii) all amounts paid by the Guarantor under the Loan
Agreement, from time to time, for the payment of the principal amount of, or
interest on the Bonds;
(iv) any amount in the Construction Fund transferred to the
Bond Fund in accordance with the provisions of Section 406 of this Agreement;
(v) all amounts received by the Trustee from the exercise of
remedies hereunder and under the Collateral Documents (net of expenses incurred
by the Trustee); and
(vi) all other moneys received by the Trustee under and
pursuant to any of the provisions of the
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Loan Agreement or otherwise which are permitted or required, or are accompanied
by directions from the Borrower, the Guarantor or the Authority that such
moneys are to be paid into the Bond Fund.
The Trustee shall establish a separate account or subaccount within
the Bond Fund corresponding to the source of moneys specified in this Section
502 for each deposit made into the Bond Fund so that the Trustee may at all
times ascertain the source and date of deposit of the funds in each such
account or subaccount.
The Trustee is authorized to receive at any time payments from the
Borrower or the Guarantor pursuant to the Loan Agreement or otherwise, for
deposit in the Bond Fund.
SECTION 503. USE OF MONEYS IN BOND FUND. Except as otherwise provided
in this Agreement, moneys in the Bond Fund shall be used solely for the payment
of the principal (whether at maturity or upon acceleration or redemption or
otherwise) of, and premium, if any, and interest due or to become due on the
Bonds.
On each Interest Payment Date, the Trustee shall withdraw from the
Bond Fund moneys deposited to the credit of the Bond Fund pursuant to Section
502 hereof, and remit by first class mail or by wire transfer, if applicable,
as provided in Section 203 of this Agreement, to each Holder the amounts
required for paying the interest on the Bonds as such interest becomes due and
payable. On or before each Interest Payment Date on which the payment of
principal, and premium, if any, becomes due and payable, the Trustee shall
withdraw from the Bond Fund and set aside or
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deposit in trust sufficient moneys for paying the principal of and redemption
premium, if any, on all Bonds as such principal and premium, if any, become
due, whether at maturity, upon acceleration or redemption or otherwise.
Any provision in this Agreement to the contrary notwithstanding, no
payment of the principal of and premium, if any, and interest on Bonds held by
or on behalf of the Borrower shall be made by the Trustee.
Any profit realized from the investment of moneys deposited to the
credit of the Bond Fund may be withdrawn by the Borrower.
SECTION 504. APPLICATION AND PLEDGE OF MONEYS IN THE BOND FUND.
Subject to the terms and conditions set forth in this Agreement, and except as
otherwise provided in the last sentence of Section 503 hereof, moneys held for
the credit of the Bond Fund shall be held in trust and disbursed by the Trustee
for (a) the payment of interest on the Bonds issued hereunder, other than Bonds
held by the Borrower, as such interest becomes due and payable, or (b) the
payment of the principal of such Bonds, other than Bonds held by the Borrower,
as such principal becomes due and payable, or (c) the payment of the redemption
price of such Bonds, other than Bonds held by the Borrower, before their
respective maturities, or (d) subject to the prior payment in full or provision
for payment in full of the amounts described in the preceding clauses (a), (b)
and (c), the payment of the principal of or premium, if any, or interest on the
Bonds issued thereunder and held by or on behalf of the Borrower as the same
becomes due and payable, and such moneys are
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hereby pledged to secure, and are charged with, the payments mentioned in this
Section.
SECTION 505. MONEY WITHDRAWN FROM BOND FUND HELD IN TRUST. All money
which the Trustee shall have withdrawn from the Bond Fund or shall have
received from any other source and set aside for the purpose of paying any of
the Bonds hereby secured, either at the maturity thereof or upon call for
redemption or for the purpose of paying any interest on the Bonds hereby
secured, shall be held in trust for the respective Holders of such Bonds. Any
money that is so withdrawn or set aside and that remains unclaimed by the
Holders for a period of two (2) years after the date on which such Bonds shall
have become due and payable may, be paid by the Trustee to the Borrower, as a
Borrower Representative shall direct, and thereafter the Holders shall look
only to the Borrower for payment and then only to the extent of the amount so
received without any interest thereon, and the Authority and the Trustee shall
have no responsibility with respect to such money. Until paid to the Borrower,
any moneys so withdrawn or set aside shall be invested as the Borrower shall
direct in Government Obligations having maturities of thirty (30) days or
less.
SECTION 506. CANCELLATION OF BONDS UPON PAYMENT. All Bonds paid,
redeemed, or purchased by or on behalf of the Borrower, either at or before
maturity, shall be delivered to the Trustee when such payment, redemption or
purchase is made, and such Bonds shall be cancelled. All Bonds cancelled under
any of the provisions of this Agreement shall be held by the Trustee until such
time as they are destroyed by the
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Trustee. The Trustee shall execute a certificate in quadruplicate describing
the details of all Bonds so destroyed, and an executed certificate shall be
filed with each of the Authority, the Guarantor and the Borrower and the other
executed certificate shall be retained by the Trustee.
ARTICLE VI
DEPOSITARIES OF MONEYS, SECURITY FOR DEPOSITS
AND INVESTMENT OF FUNDS
SECTION 601. SECURITY FOR DEPOSITS. All moneys deposited with the
Trustee under the provisions of this Agreement or the Loan Agreement shall be
held in trust and applied only in accordance with the provisions of this
Agreement and shall not, except as otherwise provided in Section 902 of this
Agreement, be subject to lien or attachment by any creditor of the Authority or
the Borrower. Such money shall be held in trust and applied in accordance with
the provisions of this Agreement.
All moneys deposited with the Trustee under this Agreement and the
Loan Agreement in excess of the amount guaranteed by the Federal Deposit
Insurance Corporation or any successor or similar federal agency shall be
continuously secured for the benefit of the Authority and the Holders of the
Bonds, either (a) by lodging with a bank or trust company approved by the
Authority and by the Trustee, as custodian or, if then permitted by law, by
setting aside under control of the trust department of the bank holding such
deposit, as collateral security, Government Obligations or, with the approval
of the Trustee, other marketable securities eligible as security for the
deposit of
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trust funds under regulations of the Comptroller of the Currency of the United
States of America or applicable Commonwealth law or regulations, having a
market value (exclusive of accrued interest) not less than the amount of such
deposit, or (b) if the furnishing of security as provided in clause (a) above
is not permitted by applicable law, in such other manner as may then be
required or permitted by applicable Commonwealth or federal laws and
regulations regarding the security for, or granting a preference in the case
of, the deposit of trust funds; provided, however, that it shall not be
necessary for the Trustee to give security for any moneys which shall be
represented by the investments purchased under the provisions of this Article
as an investment of such moneys.
Subject to the provisions of Section 602, all money deposited with the
Trustee shall be credited to the particular fund or account to which such money
belongs.
SECTION 602. INVESTMENT OF MONEYS. Moneys held for the credit of all
funds and accounts established hereunder, except as provided in Article XIII
hereof, shall be invested and reinvested by the Trustee in such investments,
including but not limited to deposits, investment agreements or other
obligations of the Borrower, the Guarantor or any of their respective
Affiliates or subsidiaries, as directed by a Borrower Representative, or if no
such instruction is given, in Government Obligations with a maturity not
exceeding one-hundred eighty (180) days from the date of investment. Any such
investment shall mature
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not later than the respective dates when the money held for the credit of such
funds or accounts will be required for the purposes intended.
Investment obligations credited to any fund or account established
under this Agreement shall be held by or under the control of the Trustee and
while so held shall be deemed at all times to be part of such fund or account,
and any interest accruing on and any profit realized therefrom shall be
credited to such fund or account and any loss resulting from such investment
shall be charged to such fund or account. Neither the Trustee nor the Authority
shall be liable or responsible for any loss resulting from any such investment,
which shall be the sole responsibility of the Borrower.
The Trustee shall sell at the best price attainable or reduce to cash
a sufficient amount of such investment obligations whenever it shall be
necessary to do so in order to provide money to make any payment or transfer of
money from any such fund or account. The Trustee shall not be liable or
responsible for any loss resulting from any such investment.
Whenever a payment or transfer of money between two or more of the
funds or accounts established pursuant to Articles IV and V of this Trust
Agreement is permitted or required, such payment or transfer may be made in
whole or in part by transfer of one or more investment obligations at a value
determined in accordance with this Article VI.
SECTION 603. VALUATION. For the purpose of determining the amount on
deposit in any fund or
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account, investment obligations in which money in such fund or account is
invested shall be valued (a) at face value in the case of an investment
agreement or if such investment obligations mature within six (6) months from
the date of valuation thereof, and (b) if such investment obligations mature
more than six (6) months after the date of valuation thereof, at the price at
which such investment obligations are redeemable by the holder at his option if
so redeemable, or, if not so redeemable, the investment obligations shall be
valued at the lesser of (i) the cost of such investment obligations minus the
amortization of any premium or plus the amortization of any discount thereon
and (ii) the market value of such obligations.
The Trustee shall value the investment obligations in the funds and
accounts established under this Agreement five (5) Business Days prior to each
Interest Payment Date. In addition, the investment obligations shall be valued
by the Trustee at any time requested by an Authority Representative, a Borrower
Representative or the Guarantor on reasonable notice to the Trustee (which
period of notice may be waived or reduced by the Trustee); provided, however,
that the Trustee shall not be required to value the investment obligations more
than once in any calendar month other than as provided herein.
ARTICLE VII
PARTICULAR COVENANTS AND PROVISIONS
SECTION 701. COVENANT TO PAY BONDS; BONDS LIMITED OBLIGATIONS OF
AUTHORITY. The Authority covenants that it will cause to be paid, when due, the
principal
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of, and redemption premium, if any, and interest on the Bonds on the dates and
in the manner provided herein and in said Bonds according to the true intent
and meaning thereof; provided, that it is understood that such obligations are
not general obligations of the Authority but are limited obligations payable
solely from the payments required to be made by the Borrower and the Guarantor
under the Loan Agreement, any other revenues and funds derived under the Loan
Agreement and the money attributable to proceeds of the Bonds and the income
from the investment thereof, proceeds derived from the exercise of remedies
under the Collateral Documents, and not from any other source or fund. Any
amount in the Bond Fund available for any payment of the principal of and
premium, if any, or interest on the Bonds shall be credited against any amount
required to be caused by the Authority so to be paid. Except as in this
Agreement otherwise provided, such principal, premium and interest are payable
solely from the payments required to be made by the Borrower under Section 4.01
of the Loan Agreement and from any other revenues and funds derived under the
Loan Agreement and this Agreement to the extent provided herein, which payments
under the Loan Agreement, proceeds, revenues and funds to the extent provided
in this Agreement are hereby pledged to the payment thereof in the manner and
to the extent hereinabove particularly specified.
The Bonds issued under the provisions of this Agreement and the
premium, if any, and interest thereon shall not constitute an indebtedness of
either the Commonwealth or any of its political subdivisions, other than the
Authority, and neither the Commonwealth
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nor any of such political subdivisions, other than the Authority, shall be
liable thereon, but the Bonds shall be payable solely from the revenues and
proceeds provided therefor, and the Authority is not obligated to pay the Bonds
or the premium, if any, or interest thereon except from the revenues, property
and proceeds pledged therefor.
SECTION 702. COVENANT TO PERFORM AND AUTHORITY OF THE AUTHORITY. The
Authority shall faithfully perform at all times all of its covenants,
undertakings, and agreements contained in this Agreement, in any Bond executed,
authenticated and delivered hereunder, or in any proceedings of the Authority
pertaining thereto and filed with the Trustee and will faithfully observe and
perform at all times any and all covenants, undertakings, stipulations and
provisions of the Loan Agreement on its part to be observed or performed. The
Authority represents that it is duly authorized under the Constitution and laws
of the Commonwealth, particularly the Act, to issue the Bonds authorized
hereby, to enter into this Agreement and the Pledge Agreement, to assign the
Loan Agreement and the Pledge Agreement and to pledge the payments, receipts,
proceeds and other funds derived from the Loan Agreement in the manner and to
the extent herein set forth as security for the Bonds; that all action on its
part for the issuance of the Bonds and the execution and delivery of this
Agreement, the Loan Agreement and the Pledge Agreement has been duly and
effectively taken; and that such Bonds in the hands of the Holders thereof are
and will be valid and enforceable limited obligations of the Authority
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according to the tenor and import thereof.
SECTION 703. COVENANT AS TO THE LOAN AGREEMENT. The Authority
covenants that it will fulfill its obligations, and that it will require the
Borrower to perform its duties and obligations under the Loan Agreement and the
Collateral Documents. The Authority shall promptly notify the Trustee, the
Guarantor and the Borrower of any actual or alleged Event of Default of which
it has knowledge and shall not execute or agree to any change, amendment,
modification or supplement to this Agreement, the Collateral Documents or the
Loan Agreement, except as is provided in the Loan Agreement and this Agreement.
The Authority shall administer the Loan Agreement and the Collateral Documents
in accordance with their terms and shall not agree to any reduction,
abrogation, waiver, diminution or other modification in any manner and to any
extent whatsoever of the obligation of the Borrower or the Guarantor to make
the payments required under Section 4.01 of the Loan Agreement and otherwise as
provided in the Loan Agreement.
SECTION 704. COVENANT TO PERFORM FURTHER ACTS. The Authority covenants
that it will do, execute, acknowledge and deliver or cause to be done,
executed, acknowledged and delivered, such agreements supplemental hereto and
such further acts, instruments and transfers as the Trustee may reasonably
require for the better pledging unto the Trustee all and singular the payments
and any other revenues and other funds pledged hereby to the payment of the
principal of and premium, if any, and interest on the Bonds.
SECTION 705. TRUSTEE MAY ENFORCE AUTHORITY'S
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RIGHTS UNDER LOAN AGREEMENT. The Loan Agreement, a duly executed counterpart of
which has been filed with the Trustee, sets forth the covenants and obligations
of the Authority, the Borrower and the Guarantor, including a provision in
Section 9.11 thereof that subsequent to the issuance of the Bonds and prior to
Payment of the Bonds, the Loan Agreement may not be effectively amended,
changed, modified, altered or terminated except in accordance with this
Agreement, and reference is hereby made to the Loan Agreement for a detailed
statement of said covenants and obligations of the Borrower and the Guarantor
under the Loan Agreement, and the Authority agrees that the Trustee, subject to
the provisions of the Loan Agreement and this Agreement reserving certain
rights to the Authority and respecting actions by the Trustee in its name or in
the name of the Authority, may enforce all rights of the Authority and all
obligations of the Borrower and the Guarantor under and pursuant to the Loan
Agreement and the Collateral Documents for and on behalf of the Bondholders
whether or not the Authority is in default hereunder.
ARTICLE VIII
DEFAULT AND REMEDIES
SECTION 801. EXTENSION OF INTEREST. In case the time for the payment
of the interest on any Bond shall be extended, whether or not such extension be
by or with the consent of the Authority, such interest shall not be entitled in
case of default hereunder to the benefit or security of this Agreement except
subject to the prior payment in full of the principal of all Bonds then
outstanding and of all interest the time
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for the payment of which shall not have been extended.
SECTION 802. DEFAULTS. Each of the following events is hereby
declared an Event of Default:
(a) payment of the principal of any of the Bonds shall not be
made when the same shall become due and payable, whether at maturity or by
proceedings for redemption, acceleration or pursuant to an Amortization
Requirement or otherwise; or
(b) payment of any installment of interest on any of the
Bonds shall not be made when the same shall become due and payable and such
failure to pay interest shall continue for a period of five (5) days; or
(c) the Borrower or the Guarantor shall commence a voluntary
case under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or shall consent to the entry of an order for relief in an
involuntary case under any such law, or shall consent to the appointment of or
taking possession by a receiver, custodian, liquidator, assignee, trustee or
sequestrator (or other similar official) of itself or of any substantial part
of its property, or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they become due, or
shall take any action in furtherance of any of the foregoing; or
(d) a court having jurisdiction in the premises shall enter
a decree or order for relief in respect of the Borrower or the Guarantor in an
involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a receiver, custodian,
liquidator, assignee, trustee,
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sequestrator (or other similar official) of the Borrower or the Guarantor or of
any substantial part of its properties, or ordering the winding up or
liquidation of its affairs, and the continuance of such decree or order
unstayed and in effect for a period of sixty (60) consecutive days; or
(e) an event of default under the Loan Agreement as defined
in Section 7.01 thereof (other than an event of default described in clauses
(a), (b), (c) or (d) above) shall have occurred, and such event of default
shall not have been remedied or waived.
SECTION 803. ACCELERATION OF MATURITIES. (a) Upon the happening and
continuance of any Event of Default, the Trustee may, and upon the written
request of the Holders of not less than twenty-five percent (25%) in aggregate
principal amount of the Bonds then outstanding shall, by a notice in writing to
the Authority, the Borrower and the Guarantor, declare the principal of all of
the Bonds then outstanding (if not then due and payable), to be immediately due
and payable, and upon such declaration the same shall become and be immediately
due and payable after the date of such notice, anything contained in the Bonds
or in this Agreement to the contrary notwithstanding.
(b) If at any time after the principal of Bonds shall have
been so declared to be due and payable, and before the entry of final judgment
or decree in any suit, action or proceeding instituted on account of such
default, or before the completion of the enforcement of any other remedy under
this Agreement, moneys shall have accumulated in the Bond Fund sufficient to
pay the principal of all Bonds then out-
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standing (except the principal of any Bonds then due and payable only because
of a declaration under this Section 803 and the interest accrued on such Bonds
since the last Interest Payment Date to which interest shall have been paid or
duly provided for), interest on overdue installments of interest (to the extent
permitted by law) at the rate or rates then borne by the Bonds, and the
charges, compensation, expenses, disbursements, advances and liabilities of the
Trustee and all other amounts then payable by the Authority hereunder shall
have been paid or a sum sufficient to pay the same shall have been deposited
with the Trustee, and every other default known to the Trustee in the
observance or performance of any covenant, condition, agreement or provision
contained in the Bonds or in this Agreement (other than a default in the
payment of the principal of such Bonds then due and payable only because of a
declaration under this Section 803), shall have been cured or waived as
provided in Section 814 of this Agreement, then and in every such case the
Trustee, upon the written direction of the Holders of not less than a majority
in aggregate principal amount of the Bonds then outstanding, by a notice in
writing to the Authority, the Guarantor and the Borrower, rescind and annul
such declaration and its consequences, but no such rescission or annulment
shall extend to or affect any subsequent default or impair any right consequent
thereon. Promptly after any such declaration under subsection (a) of this
Section 803, the Trustee shall cause a notice thereof to be mailed, first
class, postage prepaid to all Bondholders. Failure to mail any such notice, or
any defect in any notice so
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mailed, shall not affect the proceedings for such declaration.
SECTION 804. ENFORCEMENT OF REMEDIES. Upon the happening and
continuance of any Event of Default specified in Section 802 hereof and the
acceleration of the Bonds as provided in Section 803 hereof, then and in every
such case the Trustee may, and upon the written direction of the Holders of not
less than twenty-five percent (25%) in aggregate principal amount of the Bonds
then outstanding hereunder, shall proceed, subject to the provisions of Section
902 hereof, to protect and enforce its rights and the rights of the Bondholders
under applicable laws, under the Loan Agreement, the Collateral Documents and
this Agreement by such suits, actions or special proceedings in equity or at
law, or by proceedings in the office of any board or officer having
jurisdiction, either for the specific performance of any covenant or agreement
contained therein or herein or in aid or execution of any power therein or
herein granted or for the enforcement of any proper legal or equitable remedy,
as the Trustee, being advised by counsel, shall deem most effectual to protect
and enforce such rights.
In the enforcement of any remedy under this Agreement, the Trustee in
its own name and as trustee of an express trust shall be entitled to sue for,
enforce payment of and recover judgment for, any and all amounts then or after
any default becoming, and at any time remaining, due from the Authority for
principal, premium, if any, interest or otherwise under any of the provisions
of this Agreement or of
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the Bonds and unpaid, with interest, to the extent permitted by law, on overdue
payments of principal, premium, if any, and interest at the rate or rates of
interest specified in the Bonds, together with any and all costs and expenses
of collection and of all proceedings hereunder and under the Bonds, without
prejudice to any other right or remedy of the Trustee or of the Bondholders,
and to recover and enforce any judgment or decree against the Authority, but
solely as provided herein and in the Bonds, for any portion of such amounts
remaining unpaid, and interest, costs and expenses as above provided, and to
collect (but solely from moneys in the Bond Fund and any other moneys available
for such purpose), in any manner provided by law, the moneys adjudged or
decreed to be payable.
SECTION 805. TRUSTEE MAY FILE CLAIM IN BANKRUPTCY. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other similar judicial
proceeding relative to the Authority, the Borrower or the Guarantor or to
property of the Authority, the Borrower or the Guarantor or the creditors of
any of them, the Trustee (irrespective of whether the principal of the Bonds
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Borrower for the payments equal to overdue principal or interest) shall be
entitled and empowered, by intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole
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amount of principal, and premium, if any, and interest owing and unpaid in
respect of the Bonds and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee (including
any claim for the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel) and of the Bondholders allowed
in such judicial proceeding; and
(ii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same; and any
receiver, custodian, assignee, trustee, liquidator, sequestrator (or other
similar official) in any such judicial proceeding is hereby authorized by each
Bondholder to make such payments to the Trustee, and in the event that the
Trustee shall consent to the making of such payments directly to the
Bondholders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 902 hereof.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Bondholder any plan
of reorganization, arrangement, adjustment or composition affecting the Bonds
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Bondholder in any such proceeding.
SECTION 806. PRO RATA APPLICATION OF FUNDS. Anything in this Agreement
to the contrary notwithstanding, if at any time the moneys in the Bond
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Fund to the extent Bondholders have a right to such funds under this Agreement,
shall not be sufficient to pay the principal amount of or interest on the Bonds
as the same shall become due and payable (either by their terms or by
acceleration under the provisions of Section 803 of this Article) such moneys,
together with any moneys then available or thereafter becoming available for
such purpose, whether through the exercise of the remedies provided for in this
Article or otherwise, shall be applied, following the satisfaction of any
payments due to the Trustee under the provisions of Sections 902 and 906 of
this Agreement, as follows:
(a) If the principal amount of all the Bonds shall not have
become due and payable or shall not have been declared due and payable, all
such moneys shall be applied:
first: to the payment to the persons entitled
thereto of all installments of interest then due and payable in the order in
which such installments became due and payable, with interest on such
installments of interest, to the extent permitted by law, at the rate of such
interest from the respective dates upon which such installments became due and
payable, and, if the amount available shall not be sufficient to pay in full
any particular installment, together with interest thereon, then to the payment
first of the interest on such installment, ratably, according to the amount of
such interest due on such date, and then to the payment of such installment,
ratably, according to the amounts due on such installment, to the persons
entitled thereto, without any discrimination or preference except as to any
difference in the
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respective rates of interest specified in the Bonds;
second: to the payment to the persons entitled
thereto of the unpaid principal of any Bonds which shall have become due and
payable (other than Bonds deemed to have been paid in accordance with Article
XIII hereof) in the order of their due dates, with interest on the principal
amount of such Bonds at the respective rates specified therein from the
respective dates upon which such Bonds became due and payable, and, if the
amount available shall not be sufficient to pay in full the principal of the
Bonds due and payable on any particular date, together with such interest, then
to the payment first of such interest, ratably, according to the amount of such
interest due on such date, and then to the payment of such principal ratably,
according to the amount of such principal due on such date, to the persons
entitled thereto without any discrimination or preference except as to any
difference in the respective rates of interest specified in the Bonds; and
third: to the payment of the interest on and the
principal of the Bonds, and to the redemption of Bonds, all in accordance with
the provisions of this Agreement.
(b) If the principal of all the Bonds shall have become due
and payable or shall have been declared due and payable, all such moneys shall
be applied to the payment of the principal, premium, if any, and interest
(including interest on any overdue installment of interest to the extent
permitted by law) then due upon the Bonds without preference or priority of
principal over interest or of interest over principal or of any installment of
interest over any other
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installment of interest, or of any Bond over any other Bond, ratably, according
to the amounts due respectively for principal, interest and premium, if any, to
the persons entitled thereto without any discrimination or privilege except as
to any difference in the respective rates of interest specified in the Bonds.
The provisions of subsections (a) and (b) of this Section are in all
respects subject to the provisions of Section 801 hereof.
Whenever moneys are to be applied by the Trustee pursuant to the
provisions of this Section, such moneys shall be applied by the Trustee at such
times, and from time to time, as the Trustee in its sole discretion shall
determine, having due regard to the amount of such moneys available for
application and the likelihood of additional moneys becoming available for such
application in the future; the setting aside of such moneys in trust for the
proper purpose shall constitute proper application by the Trustee; and the
Trustee shall incur no liability whatsoever to the Authority, to any Bondholder
or to any other person for any delay in applying any such moneys, so long as
the Trustee acts diligently, having due regard to the circumstances, and
ultimately applies the same in accordance with such provisions of this
Agreement as may be applicable at the time of application by the Trustee.
Whenever the Trustee shall exercise such discretion in applying such moneys, it
shall fix the date (which shall be an Interest Payment Date unless the Trustee
shall deem another date more suitable) upon which such application is to be
made and upon such date interest on the amounts of principal to be
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paid on such date shall cease to accrue. The Trustee shall give such notice as
it may deem appropriate of the fixing of any such date, and shall not be
required to make payment to the Holder of any Bond until such Bond shall be
surrendered to the Trustee for appropriate endorsement, or for cancellation if
fully paid.
SECTION 807. EFFECT OF DISCONTINUANCE OF PROCEEDINGS. In case any
proceeding taken by the Trustee on account of any default shall have been
discontinued or abandoned for any reason, then, and in every such case, the
Authority, the Trustee, the Guarantor, the Borrower and the Bondholders shall
be restored to their former positions and rights hereunder, respectively, and
all rights, remedies, powers and duties of the Trustee shall continue as though
no proceeding had been taken.
SECTION 808. HOLDERS OF A MAJORITY IN PRINCIPAL AMOUNT OF BONDS MAY
CONTROL PROCEEDINGS. Anything in this Agreement to the contrary notwithstanding
(but subject, however, to Sections 803 and 804 hereof), the Holders of a
majority in aggregate principal amount of the Bonds then outstanding hereunder
shall have the right, subject to the provisions of Sections 902 and 906 hereof,
by an instrument or concurrent instruments in writing executed and delivered to
the Trustee, to direct the time, method and place of conducting all remedial
proceedings to be taken by the Trustee hereunder or exercising any trust or
power conferred upon the Trustee, provided that (i) such direction shall not be
otherwise than in accordance with law and the provisions of this Agreement, and
(ii) subject to
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the provisions of Section 901 hereof, the Trustee may take any other action
deemed proper by the Trustee which is not inconsistent with such direction.
SECTION 809. RESTRICTIONS UPON ACTIONS BY INDIVIDUAL BONDHOLDER. No
Holder of any of the Bonds shall have any right to institute any suit, action
or proceeding in equity or at law on any Bond or for the execution of any trust
hereunder or for any other remedy hereunder unless such Holder previously shall
have given to the Trustee written notice of the event of default on account of
which such suit, action or proceeding is to be instituted, and unless also the
Holders of not less than twenty-five percent (25%) in aggregate principal
amount of the Bonds then outstanding shall have made written request of the
Trustee after the right to exercise such powers or right of action, as the case
may be, shall have accrued, and shall have afforded the Trustee a reasonable
opportunity either to proceed to exercise the powers hereinabove granted or to
institute such action, suit or proceeding in its or their name, and unless,
also, there shall have been offered to the Trustee reasonable security and
indemnity against the costs, expenses and liabilities to be incurred therein or
thereby, and the Trustee shall have refused or neglected to comply with such
request within a reasonable time; and such notification, request and offer of
indemnity are hereby declared in every such case, at the option of the Trustee,
to be conditions precedent to the execution of the powers and trusts of this
Agreement or to any other remedy hereunder provided that no such indemnity
shall be required by
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the Trustee to exercise the remedy set forth in Section 803. It is understood
and intended that, except as otherwise above provided or provided in the
immediately succeeding paragraph, no one or more Holders of the Bonds hereby
secured shall have any right in any manner whatever by his or their action to
affect, disturb or prejudice the security of this Agreement, or to enforce any
right hereunder except in the manner herein provided, that all suits, actions
and proceedings at law or in equity shall be instituted, had and maintained in
the manner herein provided and for the benefit of all Holders of such
outstanding Bonds, and that any individual right of action or other right given
to one or more of such Holders by law is restricted by this Agreement to the
rights and remedies herein provided.
Notwithstanding any other provision in this Agreement, the owner of
any Bond shall have the right which is absolute and unconditional to receive
payment of the principal of and premium, if any, and interest on such Bond when
due (whether at maturity, upon redemption or otherwise), and to institute suit
for the enforcement of any such payment, and such right shall not be impaired
without the consent of such owner.
SECTION 810. RECEIVER. Upon the occurrence of an Event of Default and
upon the filing of a suit or other commencement of judicial proceedings to
enforce the rights of the Trustee and of the Bondholders under this Agreement,
the Trustee shall be entitled, as a matter of right, to the appointment of a
receiver or receivers of the payments under the Loan Agreement
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pending such proceedings, with such powers as the court making such appointment
shall confer, whether or not any such amounts payable shall be deemed
sufficient ultimately to satisfy the Bonds outstanding hereunder.
SECTION 811. ACTIONS BY TRUSTEE. All rights of action and claims
under this Agreement or under any of the Bonds secured hereby, enforceable by
the Trustee, may be prosecuted and enforced by it without the possession of any
of the Bonds or the production thereof in the trial or other proceeding
relative thereto, and any such suit, action or proceeding instituted by the
Trustee shall be brought in its name for the benefit of all of the Holders of
such Bonds, subject to the provisions of this Agreement.
SECTION 812. NO REMEDY EXCLUSIVE. No remedy herein conferred upon or
reserved to the Trustee, or to the Holders of the Bonds, is intended to be
exclusive of any other remedy or remedies herein provided, and each and every
such remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or by law.
SECTION 813. NO DELAY OR OMISSION CONSTRUED TO BE A WAIVER. No delay
or omission of the Trustee, or of any Holder of the Bonds to exercise any right
or power accruing upon any default shall impair any such right or power or
shall be construed to be a waiver of any such default or any acquiescence
therein; and every power and remedy given by this Agreement to the Trustee and
the Holders of the Bonds, respectively, may be exercised from time to time and
as often as may be deemed expedient.
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SECTION 814. WAIVER OF PAST DEFAULTS. The Holders of not less than a
majority in aggregate principal amount of the Bonds then outstanding may on
behalf of the Holders of all the Bonds then outstanding waive any past default
under Section 802(e) hereof and its consequences except a default in respect of
a covenant or provision of the Loan Agreement which under Article XII hereof
cannot be modified or amended without the consent of the Holder of each
outstanding Bond affected.
Upon such waiver, such default shall cease to exist, and any event of
default arising therefrom shall be deemed to have been cured, for every purpose
of this Agreement; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
SECTION 815. NOTICE OF DEFAULT. If a default occurs hereunder and a
trust officer of the Trustee has actual knowledge of such default, the Trustee
shall give the Holders of the Bonds, the Borrower, the Guarantor and each
Rating Agency notice of such default as and to the extent provided in the Trust
Indenture Act; provided, however, that in the case of any default of the
character specified in Section 801(e) which in turn is due to any default
specified in 7.01(c) or (d) of the Loan Agreement, no such notice to Holders
shall be given until at least 30 days after the occurrence thereof. For the
purpose of this Section, the term "default" means any event which is, or after
notice or lapse of time or both would become, an Event of Default.
SECTION 816. UNDERTAKING FOR COSTS. All parties
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to this Agreement agree, and each Holder of any Bond by his acceptance thereof
shall be deemed to have agreed, that any court may in its discretion require,
in any suit for the enforcement of any right or remedy under this Agreement, or
in any suit against the Trustee for any action taken or omitted by it as
Trustee, the filing by any party litigant in such suit of an undertaking to pay
the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section shall not apply to any suit instituted by the Trustee, to any suit
instituted by any Bondholder, or group of Bondholders, holding in the aggregate
more than 10% in principal amount of the Bonds then outstanding, or to any suit
instituted by any Bondholder for the enforcement of the payment of the
principal of or interest on any Bond on or after the respective payment dates
therefor expressed in such Bond (or, in the case of redemption, on or after
the applicable redemption date).
ARTICLE IX
CONCERNING THE TRUSTEE
SECTION 901. ACCEPTANCE OF TRUSTS. The Trustee accepts and agrees to
execute the trusts imposed upon it by this Agreement, but only upon the terms
and conditions set forth in this Article and subject to the provisions of this
Agreement, to all of which the parties hereto and the respective Holders of the
Bonds agree. The Trustee also accepts, and agrees to do and
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perform, the duties and obligations imposed upon it by and under the Loan
Agreement, but only upon the terms and conditions set forth in the Loan
Agreement and this Agreement.
SECTION 902. TRUSTEE ENTITLED TO INDEMNITY. With the exception of
Section 803 hereof, the Trustee shall be under no obligation to institute any
suit, or to take any remedial proceedings under this Agreement, the Collateral
Documents or under the Loan Agreement, or to enter any appearance in or in any
way defend against any suit, in which it may be made a defendant, or to take
any steps in the execution of the trusts hereby created or in the enforcement
of any rights and powers hereunder or under the Collateral Documents or the
Loan Agreement until it shall be indemnified to its satisfaction against any
and all costs and expenses, outlays and counsel fees and other reasonable
disbursements, and against all liability; the Trustee may, nevertheless, begin
suit, or appear in and defend suit, or do anything else in its judgment proper
to be done by it as such Trustee, without prior indemnity, and in such case the
Authority shall reimburse and indemnify the Trustee from funds available
therefor under the Collateral Documents or the Loan Agreement for all
liabilities, costs and expenses, outlays and counsel fees and other reasonable
disbursements properly incurred in connection therewith. The Trustee shall be
paid interest on any funds advanced hereunder, at rates customarily charged by
the Trustee, which rates shall in no event be less than the prime rate charged
by the Trustee to commercial customers. Except as otherwise
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provided in Section 803 hereof, if the Authority shall fail to make such
reimbursement or indemnification, the Trustee may reimburse or indemnify itself
from any monies in its possession under the provisions of this Agreement and
shall be entitled to a preference over any of the Bonds outstanding hereunder.
SECTION 903. TRUSTEE NOT RESPONSIBLE FOR INSURANCE, TAXES OR EXECUTION
OF THIS AGREEMENT BY THE AUTHORITY. The Trustee shall not be under any
obligation to effect or maintain insurance or to renew any policies of
insurance or to inquire as to the sufficiency of any policies of insurance
carried by the Borrower, or to report, or make or file claims or proof of loss
for, any loss or damage insured against or which may occur, or to keep itself
informed or advised as to the payment of any taxes or assessments, or to
require any such payment to be made. The Trustee shall have no responsibility
in respect of the validity, sufficiency, due execution or acknowledgment of
this Agreement by the Authority or the validity or sufficiency of the security
provided hereunder or, except as to the authentication thereof, in respect of
the validity of the Bonds or the due execution or issuance thereof. The Trustee
shall not be under any obligation to see that any duties herein imposed upon
any party other than itself, or any covenants herein contained on the part of
any party other than itself to be performed, shall be done or performed, and
the Trustee shall be under no obligation for failure to see that any such
duties or covenants are so done or performed.
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SECTION 904. TRUSTEE NOT RESPONSIBLE FOR ACTS OF THE AUTHORITY OR
APPLICATION OF MONIES APPLIED IN ACCORDANCE WITH THIS AGREEMENT. The Trustee
shall not be liable or responsible because of the failure of the Authority or
the Borrower or of any of their employees or agents to make any collections or
deposits or to perform any act herein required of the Authority or the Borrower
or because of the loss of any monies arising through the insolvency or the act
or default or omission of any other depositary in which such monies shall have
been deposited under the provisions of this Agreement. The Trustee shall not be
responsible for the application of any of the proceeds of the Bonds or any
other monies deposited with it and paid out, withdrawn or transferred hereunder
if such applications, payment, withdrawal or transfer shall be made in
accordance with the provisions of this Agreement. The immunities and exemptions
from liability of the Trustee hereunder shall extend to its directors, officers,
employees and agents.
SECTION 905. CERTAIN DUTIES AND RESPONSIBILITIES OF THE TRUSTEE.
(a) Except during the continuance of an Event of Default specified in Section
802 of this Agreement,
One. The Trustee undertakes to perform such duties
and only such duties as are specifically set forth in this Agreement or the
Loan Agreement, and no implied covenants or obligations shall be read into this
Agreement or the Loan Agreement against the Trustee; and
Two. In the absence of negligence or bad faith on
its part, the Trustee may conclusively rely, as to
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the truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the Trustee and conforming
to the requirements of this Agreement or the Loan Agreement; but in the case of
any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall be
under a duty to examine the same to determine whether or not they conform to
the requirements of this Agreement or the Loan Agreement.
(b) In case an event of default specified in Section 802 of
this Agreement has occurred and is continuing, the Trustee shall exercise such
of the rights and powers vested in it by this Agreement, and use the same
degree of care and skill in their exercise as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs.
(c) None of the provisions of this Agreement shall be
construed to relieve the Trustee from liability for its own negligent action,
its own negligent failure to act, or its own willful mis conduct, except that
One. This subsection shall not be construed to limit
the effect of subsection (a) of this Section;
Two. The Trustee shall not be liable for any error
of judgment made in good faith by a responsible officer or officers of the
Trustee, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
Three. The Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of not less than a majority in aggregate
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Principal amount of the Bonds then outstanding relating to the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under the provisions
of this Agreement; and
Four. No provision of this Agreement or the Loan
Agreement shall require the Trustee 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 it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided, every
provision of this Agreement or the Loan Agreement relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section.
(e) Except as otherwise above provided in this Section:
One. The Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, Bond,
or other paper or document believed by it to be genuine and to be signed or
presented by the proper party or parties;
Two. Whenever in the administration of this
Agreement, prior to the occurrence of an event of default specified in Section
802 hereof, the Trustee shall deem it desirable that a matter be proved or
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established prior to taking or suffering any action hereunder, such matters
(unless other evidence in respect thereof be herein specifically prescribed)
may be deemed to be conclusively proved and established by a certificate of a
Borrower Representative and such certificate, in the absence of bad faith on
the part of the Trustee, shall be full warrant to the Trustee for any action
taken or suffered by it under the provisions of this Agreement upon the faith
thereof;
Three. The Trustee may consult with counsel, and the
advice of such counsel or any written opinion of counsel shall be full and
complete authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in reliance thereon;
Four. The Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, Bond, or other paper or document but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters as it may
see fit, and if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Borrower, personally or by agent or attorney; provided, however, that
the aforesaid right of examination shall be exercised only upon such reasonable
and necessary terms and conditions as the Borrower shall prescribe, which
conditions shall be deemed to include, but not be limited to, reasonable notice
and those conditions necessary to protect the Borrower's trade secrets and
proprietary rights; and
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Five. The Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys and the Trustee
shall not be responsible for any misconduct or negligence on
the part of any agent or attorney appointed with due care by
it hereunder or under the Loan Agreement.
(f) So long as the Trustee shall be responsible for the
payment of Principal and interest on the Bonds, including payments
incidental to a redemption pursuant to Article III of this Agreement,
it shall comply with any and all withholding or information reporting
requirements imposed by the applicable tax laws.
SECTION 906. COMPENSATION. The Authority shall cause the Borrower to
pay to the Trustee its reason able fees and expenses in accordance with Section
4.04(a) of the Loan Agreement. The Trustee reserves the right to charge
additional reasonable fees for additional services not contemplated in this
Agreement as well as extraordinary services upon the occurrence and during the
continuance of an Event of Default. Such additional fees will be reasonable and
calculated based on the costs and expenses incurred by the Trustee and on the
number of hours, employees and internal and external resources dedicated by the
Trustee to such services. If the Borrower shall fail to make any payment
required by this Section 906, the Trustee may, but shall be under no obligation
to, make such payment from any monies in its possession under the provisions of
this Agreement and shall be entitled to a preference therefor over any of the
Bonds
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outstanding hereunder.
SECTION 907. SEMI-ANNUAL STATEMENT OF FUNDS ON DEPOSIT. It shall be
the duty of the Trustee, on or before _________ one (1), ______________________
(____), and semiannually thereafter, to file with the Authority, the Guarantor
and the Borrower a statement setting forth in respect of the six (6) calendar
months preceding the last Interest Payment Date:
(a) the amount withdrawn or transferred by it and the amount
deposited with it on account of each fund held by it under the
provisions of this Agreement,
(b) the amount on deposit with it at the end of such period
to the credit of each such fund,
(c) a brief description of all the obligations held by it as
an investment of monies in each such fund,
(d) the amounts applied to the payment, purchase or
redemption of Bonds and a description of the Bonds so paid, purchased,
or redeemed,
(e) the amount applied to the payment of interest on the
Bonds, and
(f) any other information which the Authority, the Guarantor
or the Borrower may reasonably request from time to time.
All records and files pertaining to the Project and the trusts
hereunder in the custody of the Trustee shall be open at all reasonable times
to the inspection of the Authority, the Guarantor and the Borrower and their
agents and representatives.
SECTION 908. NOTICE OF DEFAULT. Except upon the happening of any event
of default specified in clause (a) or (b) of Section 802, the Trustee shall not
be
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obliged to take notice or be deemed to have notice of any event of default
hereunder or under the Loan Agreement, unless specifically notified in writing
of such event of default by the Holders of not less than twenty-five percent
(25%) in aggregate Principal amount of the Bonds hereby secured and then
outstanding.
SECTION 909. TRUSTEE MAY BE A BONDHOLDER. The bank, national banking
association, or trust company acting as Trustee under this Agreement, and its
directors, officers, employees or agents, may in good faith buy, sell, own,
hold and deal in any of the Bonds, and may join in the capacity of a Bondholder
in any action which any Bondholder may be entitled to take with like effect as
if such bank or trust company were not the Trustee under this Agreement, may
engage, as principal or agent, or be interested in any financial or other
transaction with the Authority or the Borrower, may maintain any and all other
general banking and business relations with the Authority with like effect and
in the same manner as if the Trustee were not a party to this Agreement, and
may act as depository, trustee or agent for any committee or body of Holders of
the Bonds issued under and secured by this Agreement or other obligations of
the Authority with like effect and in the same manner as if the Trustee were
not a party to this Agreement; and no implied covenant shall be read into this
Agreement against the Trustee in respect of such matters.
SECTION 910. TRUSTEE NOT RESPONSIBLE FOR RECITALS. The recitals,
statements and representations contained herein and in the Bonds (excluding the
Trustee's
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certificates of authentication on the Bonds) shall be taken and construed as
made by and on the part of the Authority and not by the Trustee, and the
Trustee shall not be under any responsibility for the correctness of the same.
The Trustee makes no representations as to the validity or sufficiency of this
Agreement, the Loan Agreement or of the Bonds. The Trustee shall not be
accountable for the use or application, other than as herein provided, of any
of the proceeds of the Bonds.
SECTION 911. TRUSTEE NOT RESPONSIBLE FOR RECORDING. The Trustee shall
not be under any obligation to see to the recording or filing of this
Agreement, the Loan Agreement or any other instrument or otherwise to the
giving to any person of notice of the provisions hereof or thereof.
SECTION 912. TRUSTEE MAY RELY ON CERTIFICATES. The Trustee shall be
protected and shall incur no liability in acting or proceeding, or in not
acting or not proceeding, in good faith, reasonably and in accordance with the
terms of this Agreement, upon any resolution, order, notice, request, consent,
waiver, certificate, statement, affidavit, requisition, Bond or other paper or
document which it shall in good faith reasonably believe to be genuine and to
have been adopted or signed by the proper board or person or to have been
prepared and furnished pursuant to and in accordance with the provisions of the
Loan Agreement, or upon the written opinion of any attorney, engineer,
accountant or other expert believed by it to be qualified in relation to the
subject matter, and the Trustee shall not be under any duty to make any
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investigation or inquiry as to any statement contained or matters referred to
in any such instrument.
SECTION 913. QUALIFICATION OF THE TRUSTEE. There shall at all times be
a Trustee hereunder which shall be a corporation organized and doing business
under the laws of the United States of America, the Commonwealth or any state,
authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least FIFTY MILLION DOLLARS ($50,000,000),
subject to supervision or examination by federal, Commonwealth or state
authority, and having its principal trust office in the Commonwealth or in one
of the states of the United States of America. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purposes of
this Section, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect specified in Section 914 hereof.
SECTION 914. DISQUALIFICATION; CONFLICTING INTERESTS. If the Trustee
has or shall acquire a conflicting interest within the meaning of the Trust
Indenture Act, the Trustee shall either eliminate such interest or resign, to
the extent and in the manner provided by, and subject to the provisions of, the
Trust Indenture Act and this Agreement.
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SECTION 915. RESIGNATION AND REMOVAL OF TRUSTEE.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the successor
Trustee under Section 916 hereof.
(b) The Trustee may resign at any time by giving written
notice thereof to the Authority, the Borrower and the Guarantor. If an
instrument of acceptance by a successor Trustee shall not have been
delivered to the Trustee within thirty (30) days after the giving of
such notice of resignation, the retiring Trustee may petition any
court of competent jurisdiction for the appointment of a successor
Trustee.
(c) The Trustee may be removed at any time by demand of the
Holders of a majority in Principal amount of the Bonds then
outstanding, signed in person by such Holders or by their attorneys,
legal representatives or agents and delivered to the Trustee, the
Authority, the Guarantor and the Borrower (such demand to be effective
only when received by the Trustee, the Authority, the Guarantor and
the Borrower).
(d) If at any time:
one. The Trustee shall fail to comply with Section
914(a) hereof and shall fail to resign after written request
therefor by the Borrower or by any Bondholder who shall have
been a bona fide Bondholder for at least six (6) months, or
two. The Trustee shall cease to be eligible under
Section 913 hereof and shall fail to resign after written
request therefor by the Borrower, the
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Guarantor or by any Bondholder who shall have been a bona
fide Bondholder for at least six months, or
three. The Trustee shall become incapable of acting
or shall be adjudged a bankrupt or insolvent or a receiver of
the Trustee or of its property shall be appointed or any
public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, (i) the Authority, the Guarantor or the
Borrower may remove the Trustee, or (ii) subject to Section 802 hereof, any
Bondholder who has been a bona fide Bondholder for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor Trustee.
(e) If the Trustee shall resign, be removed or
become incapable of acting, or if a vacancy shall occur in
the office of Trustee for any cause, the Authority with the
approval of the Borrower and the Guarantor shall promptly
appoint a successor Trustee. If, within one year after such
resignation, removal or incapability, or the occurrence of
such vacancy, a successor Trustee shall be appointed by an
instrument or concurrent instruments in writing executed by
the Holders of a majority in Principal amount of the Bonds
then outstanding delivered to the Authority, the Borrower,
the Guarantor and the retiring Trustee, the successor Trustee
so appointed shall, forthwith, but only upon receipt of the
written approval of such proposed successor Trustee by the
Guarantor and upon its acceptance of such appointment, become
the
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successor Trustee and supersede the successor Trustee
appointed by the Authority and approved by the Borrower and
the Guarantor. If no successor Trustee shall have been so
appointed by the Authority and approved by the Borrower or
the Bondholders and accepted appointment in the manner
hereinafter provided, any Bondholder who has been a bona fide
Holder of a Bond for at least six (6) months may, on behalf
of himself and all others similarly situated, petition any
court of competent jurisdiction for the appointment of a
successor Trustee.
(f) The Authority shall give written notice by first
class mail, postage prepaid, of each resignation and each
removal of the Trustee and each appointment of a successor
Trustee to all Bondholders. Each notice shall include the
name and address of the corporate trust office of the
successor Trustee.
SECTION 916. SUCCESSOR TRUSTEE. Every successor Trustee appointed
hereunder shall execute, acknowledge and deliver to its predecessor, and also
to the Authority and the Borrower, an instrument in writing accepting such
appointment hereunder, and thereupon such successor Trustee without any further
act, shall become fully vested with all the rights, immunities, powers and
trusts, and subject to all the duties and obligations, of its predecessors; but
such predecessor shall, nevertheless, on the written request of its successor
or of the Authority and upon payment of the expenses, charges and other
disbursements of such predecessor which are payable pursuant to the provisions
of Section 906 hereof, execute and deliver an instrument transferring to such
successor Trustee
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all the rights, immunities, powers and trusts of such predecessor hereunder;
and every predecessor Trustee shall deliver all property and monies held by it
hereunder to its successor, subject, nevertheless, to its preference, if any,
provided for in Sections 902 and 906 hereof. Should any instrument in writing
from the Authority be required by any successor Trustee for more fully and
certainly vesting in such Trustee the rights, immunities, powers and trusts
hereby vested or intended to be vested in the predecessor Trustee, any such
instrument in writing shall and will, on request, be executed, acknowledged and
delivered by the Authority.
Notwithstanding any of the foregoing provisions of this Article, any
bank or trust company having power to perform the duties and execute the trusts
of this Agreement and otherwise qualified to act as Trustee hereunder with or
into which the bank or trust company acting as Trustee, may be converted,
merged or consolidated, or to which the corporate trust business assets as a
whole or substantially as a whole of such bank or trust company may be sold,
shall be deemed the successor of the Trustee without the execution or filing of
any paper or any further act on the part of any of the parties hereto.
SECTION 917. PREFERENTIAL COLLECTION OF CLAIMS AGAINST BORROWER OR
GUARANTOR. If and when the Trustee shall be or become a creditor of the
Borrower or the Guarantor (or any other obligor upon the Bonds), the Trustee
shall be subject to the provisions of the Trust Indenture Act regarding the
collection of claims against the Borrower or the Guarantor (or any
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such other obligor).
SECTION 918. COMMUNICATION TO BONDHOLDERS. (a) If three (3) or more
Holders of Bonds (hereinafter referred to as "applicants") apply in writing to
the Trustee, and furnish to the Trustee reasonable proof that each such
applicant has owned a Bond for a period of at least six (6) months preceding
the date of such application, and such application states that the applicants
desire to communicate with other Holders of Bonds with respect to their rights
under this Agreement or under the Bonds and is accompanied by a copy of the
form of proxy or other communication which such applicants propose to transmit,
then the Trustee shall, within five (5) Business Days after receipt of such
application, at its election, either
(i) afford such applicants access to the registration books
kept by the Trustee under the provisions of Section 206 hereof, or
(ii) inform such applicants as to the approximate number of
Holders of Bonds whose names and addresses appear in said registration
books, and as to the approximate cost of mailing to such Bondholders
the form of proxy or other communication, if any, specified in such
application.
If the Trustee shall elect not to afford such applicants access to
said registration books, the Trustee shall, upon the written request of such
applicants, mail to each Bondholder a copy of the form of proxy or other
communication which is specified in such request, with reasonable promptness
after a tender to the Trustee of the material to be mailed and of payment, or
provision for the payment, of the
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reasonable expenses of mailing, unless within five (5) days after such tender,
the Trustee shall mail to such applicants and file with the Commission together
with a copy of the material to be mailed, a written statement to the effect
that, in the opinion of the Trustee, such mailing would be contrary to the best
interests of the Holders of Bonds or would be in violation of applicable law.
Such written statement shall specify the basis of such opinion. If the
Commission, after opportunity for a hearing on the objections specified in the
written statement so filed, shall enter an order refusing to sustain any of
such objections or if, after the entry of an order sustaining one or more of
such objections, the Commission shall find, after notice and opportunity for
hearing, that all the objections so sustained have been met and shall enter an
order so declaring, the Trustee shall mail copies of such material to all
Bondholders with reasonable promptness after the entry of such order and the
renewal of such tender; otherwise the Trustee shall be relieved of any
obligation or duty to such applicants respecting their application.
(b) Each and every Bondholder, by receiving and holding the same,
agrees with the Authority and the Trustee that neither Authority nor the Trustee
shall be held accountable by reason of the disclosure of any such information as
to the names and addresses of the Bondholders in accordance with Section 918(a),
regardless of the source from which such information was derived, and that the
Trustee shall not be held accountable by reason of mailing any material pursuant
to a request made under Section 918(a).
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SECTION 919. REPORTS BY TRUSTEE. (a) The Trustee shall transmit to the
Bondholders such reports concerning the Trustee and its actions under this
Agreement as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant thereto.
(b) A copy of each such report shall, at the time of such transmission
to Bondholders, be filed by the Trustee with each stock exchange upon which the
Bonds are listed, if any, and also with the Commission. The Authority will
cause the Borrower to notify the Trustee when the bonds are listed on any stock
exchange.
SECTION 920. REPORTS OF BORROWER AND GUARANTOR. (a) The Authority will
cause the Borrower and the Guarantor to file with the Trustee and the
Commission, and transmit to Bondholders, such information, documents and other
reports, and such summaries thereof, as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant to such Act;
provided that any such information, documents or reports required to be filed
with the Commission pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 shall be filed with the Trustee within fifteen (15) days after the
same is so required to be filed with the Commission.
(b) The Borrower and the Guarantor will deliver to the Trustee, within
one hundred twenty (120) days after the end of each fiscal year of the Borrower
and the Guarantor ending after the date hereof, an Officer's Certificate,
stating whether or not to the best knowledge of the signers thereof the
Borrower or
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the Guarantor is in default in the performance and observance of any of the
terms, provisions and conditions of this Agreement (without regard to any
period of grace or requirement of notice provided hereunder) and, if the
Borrower or the Guarantor shall be in default, specifying all such defaults and
the nature and status thereof of which they may have knowledge.
(c) Promptly after the execution and delivery of this Agreement and of
each supplement to this Agreement, the Borrower and the Guarantor will furnish
the Trustee with an Opinion of Counsel, stating that in the opinion of such
counsel this Agreement or such supplement, as the case may be, has been
properly recorded or filed for record so as to make effective of record the
lien intended to be created and reciting the details of such action or stating
that in the opinion of such counsel no such action is necessary to make such
lien effective, and on or before __________ (____) in each subsequent year the
Borrower and the Guarantor will furnish the Trustee with an Opinion of Counsel,
either stating that in the opinion of such counsel such action has been taken
with respect to the recording or filing or rerecording or refiling of this
Agreement and of each supplement as is necessary to maintain the lien of this
Agreement of record, and reciting the details of such action, or stating that
in the opinion of such counsel no such action is necessary to maintain such
lien.
(d) To the extent applicable, the Authority shall cause the Borrower
and the Guarantor to furnish to the Trustee such certificates or opinions of an
engineer, appraiser or other expert as shall be required by the
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Trust Indenture Act in connection with any release of Property from the lien of
the Mortgage in accordance with the Pledge Agreement.
SECTION 921. MONEY HELD IN TRUST. Money held by the Trustee in trust
under this Agreement need not be segregated from other funds except to the
extent required by law. Subject to the provisions of Section 602 hereof, the
Trustee shall be under no liability for interest on any money received by it
under this Agreement except as otherwise agreed with the Authority or the
Borrower.
SECTION 922. CONTINUING DISCLOSURE. If the Guarantor fails to comply
with any of the provisions of the Continuing Disclosure Agreement (as defined
in Section 1.01 of the Loan Agreement), the Trustee may (and, at the request of
the Underwriters or the Holders of at least twenty-five percent (25%) aggre-
gate principal amount of Bonds, shall) or (if such Holder stipulates that no
challenge is made to the adequacy of any information provided) any Holder (or
if the Holder of any Bond is not the beneficial owner, the beneficial owner of
any Bond) may take actions as may be necessary and appropriate, including
seeking specific performance by court order, to cause the Guarantor to comply
with its obligations under Section 1.01 of the Loan Agreement.
ARTICLE X
EXECUTION OF INSTRUMENTS BY BONDHOLDERS AND
PROOF OF OWNERSHIP OF BONDS
SECTION 1001. EXECUTION OF INSTRUMENTS BY BOND HOLDERS AND PROOF OF
OWNERSHIP OF BONDS. (a) Any request, direction, consent or other instrument in
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writing required or permitted by this Agreement to be signed or executed by
Bondholders may be in any number of concurrent instruments of similar tenor and
may be signed or executed by such Bondholders or their attorneys or legal
representatives. Proof of the execution of any such instrument and of the
ownership of Bonds shall be sufficient for any purpose of this Agreement and
shall be conclusive in favor of the Trustee with regard to any action taken by
it under such instrument if made in the following manner:
(i) The fact and date of the execution by any person of any
such instrument may be proved by the verification of any officer in
any jurisdiction who, by the laws thereof, has power to take
affidavits within such jurisdiction, to the effect that such
instrument was subscribed and sworn to before him, or by an affidavit
of a witness to such execution. Where such execution is by a person
other than an individual such verification or affidavit shall also
constitute sufficient proof of the authority of the signer.
(ii) The ownership of Bonds shall be proved by the
registration books kept under the provisions of Section 206 hereof.
Nothing contained in this Section shall be construed as limiting the
Trustee to such proof, it being intended that the Trustee may accept any other
evidence of the matters herein stated which may be sufficient. Any request or
consent of the Holder of any Bond shall bind every future Holder of the same
Bond or any Bond issued in place of such Bond in relation to anything done by
the Trustee in pursuance of such request or consent.
(b) If the Authority shall solicit from the
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Holders any request, direction, consent or other instrument in writing required
or permitted by this Agreement to be signed or executed by Bondholders, the
Authority may, at its option, fix in advance a record date for the
determination of Holders entitled to give such request, direction, consent or
other instrument, but the Authority shall have no obligation to do so. If such
a record date is fixed, such request, direction, consent or other instrument
may be given before or after such record date, but only the Holders of record
at the close of business on such record date shall be deemed to be Holders for
the purposes of determining whether Holders of the requisite proportion of
Bonds have authorized or agreed or consented to such request, direction,
consent or other instrument, and for that purpose the Bonds shall be computed
as of such record date; provided that no such consent by the Holders on such
record date shall be deemed effective unless such consent shall become
effective pursuant to the provisions of this Agreement not later than six (6)
months after the record date.
ARTICLE XI
SUPPLEMENTS AND AMENDMENTS TO AGREEMENT
SECTION 1101. SUPPLEMENTS AND AMENDMENTS NOT REQUIRING BONDHOLDER
CONSENT. The Authority and the Trustee may, without the consent or approval of,
or notice to, any of the Bondholders, at any time and from time to time, enter
into such supplements and amendments to this Agreement, in form satisfactory to
the Trustee, as shall not, in the opinion of the Trustee, be detrimental to the
interests of the Bondholders (which supplements and amendments shall
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thereafter form a part hereof):
(a) to cure any ambiguity or formal defect or omission or to
make any other changes with respect to matters or questions arising
under this Agreement which shall not be inconsistent with the
provisions of this Agreement, or
(b) to grant to or confer upon the Trustee for the benefit of
the Bondholders, any additional rights, remedies, powers, authority or
security that may lawfully be granted to or conferred upon the
Bondholders or the Trustee, or
(c) to add to the covenants of the Authority for the benefit
of the Bondholders or to surrender any right or power herein conferred
upon the Authority, or
(d) to add to this Agreement or any supplement or amendment
hereto such other terms, conditions and provisions as may be required
by the Trust Indenture Act or similar federal statute.
SECTION 1102. SUPPLEMENTS AND AMENDMENTS REQUIRING CONSENT OF HOLDERS
OF A MAJORITY IN PRINCIPAL AMOUNT OF BONDS. With the consent of the Holders of
not less than a majority in aggregate principal amount of the Bonds at the time
outstanding, the Authority and the Trustee may, from time to time and at any
time, enter into supplements and amendments to this Agreement for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of any supplement or amendment to this
Agreement or of modifying in any manner the rights of the Holders of the Bonds;
provided, however, that nothing herein contained shall permit, or be construed
as permitting, without the consent of each
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Bondholder affected, (a) an extension of the time for the payment of the
principal of and premium, if any, or the interest on any Bond, or (b) a
reduction in the principal amount of any Bond or the redemption premium or the
rate of interest thereon, or (c) the creation of any lien or security interest
with respect to the Loan Agreement or the payments thereunder, other than the
lien created by this Agreement, or (d) a preference or priority of any Bond or
Bonds over any other Bond or Bonds, or (e) a reduction in the aggregate
principal amount of the Bonds required for consent to such supplement or
amendment or any waiver hereunder. Nothing herein contained, however, shall be
construed as making the approval by Bondholders of the execution of any
supplemental agreement as authorized in Section 1001 hereof.
It shall not be necessary for the consent of the Holders of Bonds
under this Section to approve the particular form of any proposed supplement or
amendment but it shall be sufficient if such consent shall approve the
substance thereof.
If at any time the Authority shall request the Trustee to enter into
any supplement or amendment to this Agreement for any of the permitted purposes
of this Section, the Trustee shall, at the expense of the Authority, cause
notice of the proposed execution of such supplement or amendment to be mailed,
postage prepaid, to all Bondholders. Such notice shall briefly set forth the
nature of the proposed supplement or amendment and shall state that copies
thereof are on file at the corporate trust office of the Trustee for inspection
by all Bondholders. The Trustee shall not, however, be subject to any
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liability to any Bondholder by reason of its failure to mail the notice
required by this Section, and any such failure or any defect in such notice
shall not affect the validity of such supplement or amendment when consented to
as provided in this Section.
Whenever, at any time within one (1) year after the date of the
mailing of such notice, the Authority shall deliver to the Trustee an
instrument or instruments in writing purporting to be executed by the Holders
of not less than a majority in aggregate principal amount of the Bonds then
outstanding, which instrument or instruments shall refer to the proposed
supplement or amendment described in such notice and shall specifically consent
to and approve the execution thereof in substantially the form of the copy
thereof referred to in such notice, thereupon, but not otherwise, the Trustee
may execute such supplement or amendment in substantially such form, without
liability or responsibility to any Holder of any Bond, whether or not such
Holder shall have consented thereto.
If the Holders of not less than a majority in aggregate principal
amount of the Bonds outstanding at the time of the execution of such supplement
or amendment or any record date established in connection therewith pursuant to
Section 1001(b) hereof shall have consented to and approved the execution as
herein provided, no Holder of any Bond shall have any right to object to the
execution of such supplement or amendment, or to object to any of the terms and
provisions contained therein or the operation thereof or in any manner to
question the propriety of the execution thereof, or to enjoin or restrain the
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Trustee or the Authority from executing the same or from taking any action
pursuant to the provisions thereof.
SECTION 1103. SUPPLEMENTS AND AMENDMENTS DEEMED PART OF AGREEMENT. The
Trustee is authorized to join with the Authority in the execution of any
supplement or amendment herein provided. Any supplement or amendment to this
Agreement executed in accordance with the provisions of this Article shall
thereafter form a part of this Agreement, and all of the terms and conditions
contained in any such supplement or amendment as to any provision authorized to
be contained therein shall be and shall be deemed to be part of the terms and
conditions of this Agreement for any and all purposes. Upon the execution of
any supplement or amendment to this Agreement pursuant to the provisions of
this Article, this Agreement shall be and be deemed to be modified and amended
in accordance therewith, and the respective rights, duties and obligations
under this Agreement of the Authority, the Trustee and all Holders of Bonds
then outstanding shall thereafter be determined, exercised and enforced
hereunder, subject in all respects to such modifications and amendments. In
case of the execution and delivery of any supplement or amendment, express
reference may be made thereto in the text of any Bonds issued thereafter, if
deemed necessary or desirable by the Trustee.
SECTION 1104. DISCRETION OF TRUSTEE IN ENTERING INTO SUPPLEMENTS AND
AMENDMENTS. In each and every case provided for in this Article, the Trustee
shall not be obligated to execute any proposed supplement or
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amendment, if the rights, obligations and interests of the Trustee would be
thereby affected, and the Trustee shall not be under any responsibility or
liability to the Authority, the Borrower or to any Bondholder or to anyone
whomsoever for its refusal in good faith to enter into any such supplement or
amendment if such supplement or amendment is deemed by it to be contrary to the
provisions of this Article.
The Trustee shall be entitled to receive, and shall be fully protected
in relying upon, an opinion of any counsel, as conclusive evidence that any
such proposed supplement or amendment does or does not comply with the
provisions of this Agreement, and that it is or is not proper for it, under the
provisions of this Article, to join in the execution of such supplement or
amendment.
SECTION 1105. CONSENT OF BORROWER AND THE GUARANTOR REQUIRED. Anything
herein to the contrary notwithstanding, any amendment, modification or
supplement to this Agreement pursuant to this Article XI shall not become
effective unless and until the Borrower and the Guarantor shall have consented
thereto in writing.
ARTICLE XII
SUPPLEMENTS AND AMENDMENTS TO
THE LOAN AGREEMENT AND THE COLLATERAL DOCUMENTS
SECTION 1201. SUPPLEMENTS AND AMENDMENTS NOT REQUIRING CONSENT. The
Authority, the Borrower and the Guarantor may enter into, and the Trustee may
consent to, from time to time and at any time, such amendments and supplements
to the Loan Agreement and the Collateral Documents, in form satisfactory to the
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Trustee, as shall not be inconsistent with the terms and provisions thereof
and, in the opinion of the Trustee shall not be detrimental to the interests of
the Bondholders (which supplements and amendments shall thereafter form a part
thereof),
(a) to identify more precisely the Project, or
(b) to cure any ambiguity or formal defect or omission in the
Loan Agreement or the Collateral Documents or in any supplement
thereto, or
(c) to grant to or confer upon the Authority or Trustee for
the benefit of the Bondholders any additional rights, remedies,
powers, authority or security that may lawfully be granted to or
conferred upon the Authority, the Bondholders or the Trustee, or
(d) to add to the covenants of the Borrower or the Guarantor,
for the benefit of the Bondholders or to surrender any right or power
therein conferred upon the Borrower or the Guarantor, or
(e) to make any other change to the Loan Agreement which, in
the judgment of the Trustee, will not restrict, limit or reduce the
obligation of the Borrower or the Guarantor to make the payments under
the Loan Agreement required to pay the principal of or interest on the
Bonds, or otherwise impair the security of the Bondholders under this
Agreement or the Collateral Documents, provided such action shall not
materially adversely affect the interests of the Bondholders, or
(f) to implement the provisions of Section 5 of the Pledge
Agreement, including by executing such consents and releases as shall
be required by the Borrower and contemplated in such Section 5.
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SECTION 1202. SUPPLEMENTS AND AMENDMENTS REQUIRING CONSENT OF HOLDERS
OF A MAJORITY IN PRINCIPAL AMOUNT OF BONDS. Except for supplements or
amendments provided for in Section 1201, the Authority shall not enter into and
the Trustee shall not consent to any supplement or amendment to the Loan
Agreement or the Collateral Documents unless notice of the proposed execution
of such supplement or amendment shall have been given to the Holders and the
Holders of not less than a majority in aggregate principal amount of the Bonds
then outstanding shall have consented to and approved the execution thereof,
all as provided for in Section 1102 hereof in the case of supplements and
amendments to this Agreement and with the same effect as provided in Section
1103; provided that the Trustee shall be entitled to exercise its discretion in
consenting or not consenting to any such supplement or amendment, and to rely
on an Opinion of Counsel, in the same manner as provided for in Section 1104
hereof in the case of supplements and amendments to this Agreement.
SECTION 1203. CONSENT OF TRUSTEE REQUIRED. Anything herein to the
contrary notwithstanding, any such supplement or amendment pursuant to this
Article XII shall not become effective unless and until the Trustee shall have
consented thereto in writing.
ARTICLE XIII
DEFEASANCE
SECTION 1301. DEFEASANCE. If there is paid or caused to be paid from
the Bond Fund to the Holders of all of the Bonds secured hereby the principal
of, premium, if any, and interest which is and shall
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thereafter become due and payable thereon, together with all other sums payable
hereunder by the Authority, then and in that case the rights, title and interest
of the Trustee hereunder shall cease and terminate, and such Bonds shall cease
to be entitled to any lien, benefit or security under this Agreement. In such
event, the Trustee shall transfer and assign to the Borrower all property then
held by the Trustee, shall execute such documents as may be reasonably required
by the Authority or the Borrower to evidence such transfer and assignment and
shall turn over to the Borrower any surplus in the Bond Fund and any balance
remaining in the Construction Fund. If the Authority shall pay or cause to be
paid to the Holders of less than all of the outstanding Bonds the principal of,
premium, if any, and interest which is and shall thereafter become due and
payable upon such Bonds, such Bonds, or portions thereof, shall cease to be
entitled to any lien, benefit or security under this Agreement.
Any outstanding Bond, or any portion thereof in the principal amount
of FIVE THOUSAND DOLLARS ($5,000) or any multiple thereof, shall be deemed to
have been paid within the meaning and with the effect expressed in this Section
1301 when the whole amount of the principal of, premium, if any, and interest
on such Bond shall have been paid or when (a) in case said Bonds or portions
thereof have been selected for redemption in accordance with Section 301 hereof
prior to their maturity, the Borrower shall have given to the Trustee
irrevocable instructions to give in accordance with the provisions of Section
302 hereof notice of redemption of such Bonds, or portions
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thereof, (b) there shall be on deposit with the Trustee moneys or Defeasance
Obligations which shall not contain provisions permitting the redemption
thereof other than at the option of the holder, the principal of and the
interest on which when due, and without any reinvestment thereof, will provide
moneys which shall be sufficient to pay when due the principal of and interest
due and to become due on said Bonds or portions thereof on or prior to the
redemption date or maturity date thereof, as the case may be, (c) in the event
said Bonds, or portions thereof, do not mature and are not to be redeemed
within the next succeeding sixty (60) days, the Borrower shall have given the
Trustee irrevocable instructions to give notice, as soon as practicable in the
same manner as a notice of redemption is given pursuant to Section 302 hereof,
to the Holders of said Bonds, or portions thereof, stating that the deposit of
moneys or Defeasance Obligations required by clause (b) of this paragraph has
been made with the Trustee and that said Bonds are deemed to have been paid in
accordance with this Section and stating such maturity or redemption date upon
which moneys are to be available for the payment of the principal of and
interest on said Bonds, or portions thereof, (d) the Trustee shall have
received an opinion of counsel experienced in bankruptcy matters, satisfactory
to the Trustee, the Guarantor and the Authority, to the effect that the payment
to the Bondholders of the moneys described in clause (b) of this paragraph
would not constitute a voidable preference under the provisions of the United
States Bankruptcy Code in the event of an Act of Bankruptcy, and (e) the
Trustee
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shall have received an Opinion of Counsel experienced in federal tax matters
satisfactory to the Trustee and the Authority, to the effect that the deposit
of the moneys or Defeasance Obligations described in clause (b) of this
paragraph would not adversely affect the treatment of the interest received by
Bondholders as income from sources within the Commonwealth for purposes of the
Code or otherwise would not result in an Event of Taxability (assuming
continuing compliance by the Borrower with the source of income covenants set
forth in the Loan Agreement). Neither the moneys nor the Defeasance Obligations
deposited with the Trustee pursuant to this Section nor principal or interest
payments on any such obligations shall be withdrawn or used for any purpose
other than, and shall be held in trust for, the payment of the principal of and
interest on said Bonds, or portions thereof. If the Defeasance Obligations
deposited with the Trustee pursuant to this Section are purchased with proceeds
of refunding bonds issued by the Authority, such Defeasance Obligations must
meet the requirements of the Act. If payment of less than all of the Bonds is
to be provided for in the manner and with the effect expressed in this Section,
the Trustee shall select such Bonds, or portions thereof, in the manner
specified in Section 301 hereof for selection for redemption of less than all
of the Bonds in the principal amounts designated to the Trustee by the
Borrower.
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ARTICLE XIV
MISCELLANEOUS PROVISIONS
SECTION 1401. COVENANTS OF AUTHORITY BIND ITS SUCCESSORS. In the event
of the dissolution of the Authority, all of the covenants, stipulations,
obligations and agreements contained in this Agreement by or on behalf of or
for the benefit of the Authority shall bind or inure to the benefit of the
successor or successors of the Authority from time to time and any officer,
board, commission, authority, agency or instrumentality to whom or to which any
power or duty affecting such covenants, stipulations, obligations and
agreements shall be transferred by or in accordance with law.
SECTION 1402. NOTICES. Any notice, demand, direction, request or other
instrument authorized or required by this Agreement to be given to or filed
with the Authority, the Trustee, the Borrower or the Guarantor shall be in
writing and shall be deemed to have been sufficiently given or filed for all
purposes of this Agreement if mailed, by registered mail, return receipt
requested, postage prepaid, or if delivered by hand or by telecopier, with
verification of receipt by the addressee, addressed as follows:
If to the Authority: Puerto Rico Industrial, Tourist, Educational,
Medical and Environmental Control Facilities Financing Authority, c/o
Government Development Bank for Puerto Rico, Minillas Government Center, De
Diego Avenue and Baldorioty de Castro, Stop 22, Santurce, Puerto Rico 00911,
Attention: Executive Director.
If to the Borrower: Doral Properties, Inc., 1159
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Franklin D. Roosevelt Ave., San Juan, Puerto Rico 00920, Attention: Chief
Executive Officer.
If to the Trustee: Citibank, N.A., One Citibank Drive 2 South, Rio
Piedras, Puerto Rico 00926, Attention: Trust Department.
If to the Guarantor: Doral Financial Corporation, 1159 Franklin D.
Roosevelt Ave., San Juan, Puerto Rico 00920, Attention: Chief Executive
Officer.
With a copy in each case to: Standard & Poor's Ratings Service, 55
Water Street, New York, New York 10041, Moody's Investors Services, 99 Church
Street, New York, New York 10007, and Duff & Phelps, 55 East Monroe Street,
Chicago, Illinois, 60608.
All documents received by the Trustee under the provisions of this
Agreement, or photographic copies thereof, shall be retained in its possession
until this Agreement shall be released in accordance with the provisions of the
Agreement, subject at all reasonable times, during regular business hours and
upon reasonable prior notice to the Trustee, to the inspection of the Authority
and the Bondholders and the agents and representatives thereof.
A duplicate copy of each notice, certificate, request or other
communication given hereunder to the Authority, the Borrower, the Trustee or
the Guarantor, shall also be given to each of the others. The Authority, the
Trustee, the Borrower and the Guarantor may, by notice given hereunder,
designate any further or different addresses to which subsequent notices,
certificates or other communications shall be sent.
SECTION 1403. SUBSTITUTE MAILING. In case, by reason of the suspension
of regular mail service as a
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result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Bondholders when such notice is required to be
given pursuant to any provision of this Agreement, any manner of giving notice
as shall be satisfactory to the Trustee and the Authority shall be deemed to be
a sufficient giving of such notice.
SECTION 1404. RIGHTS UNDER AGREEMENT. Except as herein otherwise
expressly provided, nothing in this Agreement expressed or implied is intended
or shall be construed to confer upon any person other than the parties hereto,
the Borrower, the Guarantor and the Holders of the Bonds any right, remedy or
claim, legal or equitable, under or by reason of this Agreement or any
provision hereof, this Agreement and all its provisions being intended to be
and being for the sole and exclusive benefit of the parties hereto, the
Borrower, the Guarantor and the Holders from time to time of the Bonds issued
hereunder.
SECTION 1405. SEVERABILITY. In case any one or more of the provisions
of this Agreement or of the Bonds issued hereunder shall for any reason be held
to be illegal or invalid, such illegality or invalidity shall not affect any
other provision of this Agreement or of the Bonds, but this Agreement and the
Bonds shall be construed and enforced as if such illegal or invalid provision
had not been contained therein. In case any covenant, stipulation, obligation
or agreement contained in the Bonds or in this Agreement shall for any reason
be held to be in violation of law, then such covenant, stipulation, obligation
or agreement shall be deemed to be the covenant,
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stipulation, obligation or agreement of the Authority to the full extent
permitted by law.
SECTION 1406. COVENANTS OF AUTHORITY NOT COVENANTS OF OFFICIALS
INDIVIDUALLY. No covenant, stipulation, obligation or agreement contained herein
or in the Bonds shall be deemed to be a covenant, stipulation, obligation or
agreement of any present or future member, agent or employee of the Authority in
his individual capacity, and neither the members of the Board of Directors of
the Authority nor any other officer of the Board of Directors of the Authority
or the Authority executing the Bonds shall be liable personally on the Bonds or
be subject to any personal liability or accountability by reason of the issuance
thereof. No member of the Board of the Authority and no officer, agent or
employee of the Board of the Authority shall incur any personal liability in
acting or proceeding or in not acting or not proceeding, in good faith,
reasonably and in accordance with the terms of this Agreement.
SECTION 1407. COMMONWEALTH LAW GOVERNS. This Agreement shall be
governed by and construed in accordance with the laws of the Commonwealth.
SECTION 1408. PAYMENTS DUE ON SATURDAYS, SUNDAYS AND HOLIDAYS. In any
case where the date of maturity of interest on or principal of the Bonds or the
date fixed for redemption of any Bonds shall be any day other than a Business
Day, then payment of interest or principal need not be made on such date but
may be made on the next succeeding Business Day with the same force and effect
as if made on the date of maturity or the date fixed for redemption and no
interest on such
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payment shall accrue for the period after such date.
SECTION 1409. HEADINGS NOT PART OF AGREEMENT. Any headings preceding
the text of the several articles hereof, and any table of contents or marginal
notes appended to copies hereof, shall be solely for convenience of reference
and shall not constitute a part of this Agreement, and they shall not affect
its meaning, construction or effect.
ACCEPTANCE
The appearing parties accept this Deed as drafted and confirm that the
same has been drawn in accordance with their instructions.
I, the Notary, hereby certify that the appearing parties read this
Deed, and that I advised the appearing parties of their right to have witnesses
present at its execution, which right they waived, and that I advised them of
the legal effect of this Deed; and they acknowledged that they understood the
contents of this Deed and such legal effect, and thereupon they signed this
Deed before me, affixing their initials to each and every page thereof.
I, the Notary, DO HEREBY ATTEST.
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EXHIBIT A
[FORM OF SERIAL AND TERM BONDS]
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
THE AUTHORITY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE
& CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL IN AS MUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
No. [For Serial Bonds: RA-____] $
[For Term Bonds: RB-____]
UNITED STATES OF AMERICA
COMMONWEALTH OF PUERTO RICO
PUERTO RICO INDUSTRIAL, TOURIST, EDUCATIONAL, MEDICAL
AND ENVIRONMENTAL CONTROL FACILITIES FINANCING AUTHORITY
INDUSTRIAL REVENUE BOND
1999 SERIES A
(DORAL FINANCIAL CENTER PROJECT)
INTEREST RATE MATURITY DATE CUSIP NO.
------------------------------------------------------------------------------
%
Date of Issuance: , 1999
Principal Amount: DOLLARS ($ )
Registered Owner: Cede & Co.
Puerto Rico Industrial, Tourist, Educational, Medical and
Environmental Control Facilities Financing Authority (the "Authority"), a body
corporate and politic constituting a public corporation and governmental
instrumentality of the Commonwealth of Puerto Rico (the "Commonwealth"), for
value received, hereby promises to pay, solely from the special fund provided
therefor as hereinafter set forth, to the Registered Owner mentioned above, or
registered assigns or legal representatives, on the Maturity Date set forth
above (or earlier as hereinafter referred to), upon the presentation and
surrender hereof at the corporate trust office of the Trustee (hereinafter
mentioned), in the Municipality of San Juan, Puerto Rico, the Principal Amount
set forth above in any coin or currency of the United States of America which on
the date of payment thereof is legal tender for the payment of public and
private debts, and to pay, solely from said special fund, to the person (the
"Holder") in whose name this Bond (or one or more Predecessor Bonds, as defined
in the Trust Agreement hereinafter mentioned)
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is registered at the close of business on the fifteenth (15th) day (whether or
not a Business Day) of the month immediately preceding an Interest Payment Date
(hereinafter defined), by check mailed to the Registered Owner at his address as
it appears on the registration books kept by the Trustee, interest on such
Principal Amount from the Interest Payment Date next preceding the date of
authentication to which interest shall have been paid, unless such date of
authentication is an Interest Payment Date to which interest shall have been
paid, in which case it shall bear interest from such date or unless
authenticated prior to , 1999, in which case this Bond shall bear
interest from the Date of Issuance referred to above, monthly on the first
(1st) day of each month (each such date, an "Interest Payment Date"),
commencing 1, 1999, in like coin or currency, at the Interest Rate set
forth above until payment of said Principal Amount. Interest is computed on the
basis of a 360-day year of twelve 30-day months. As used herein, "Business Day"
means any day of the year other than a Saturday, Sunday or other day in which
commercial banks in the Commonwealth are generally closed for business to the
public.
This Bond and the interest thereon shall not be deemed to constitute
an indebtedness of either the Commonwealth or any of its political
subdivisions, other than the Authority, and neither the Commonwealth nor any
such political subdivisions, other than the Authority, shall be liable thereon,
but this Bond shall be payable as to principal, redemption premium, if any, and
interest solely from the special fund provided therefor as hereinafter set
forth.
This [Serial][Term] Bond is one of a duly authorized issue of
industrial revenue bonds of the Authority in the aggregate principal amount of
$ , designated as "Puerto Rico Industrial, Tourist, Educational,
Medical and Environmental Control Facilities Financing Authority Industrial
Revenue Bonds, 1999 Series A (Doral Financial Center Project)" (the "Bonds"),
consisting of $ aggregate principal amount of Serial Bonds (the
"Serial Bonds") and $ aggregate principal amount of Term Bonds (the
"Term Bonds" and collectively with the Serial Bonds, the "Bonds"). The Bonds
are being issued for the purpose of providing funds, together with other
available funds, to (i) pay a portion of the Costs of the Project (as defined
in the Loan Agreement hereinafter referred to), (ii) pay certain expenses
incurred in connection with the authorization and issuance of the Bonds and
(iii) pay interest due on the Bonds during the first ________ Interest Payment
Dates.
The Bonds are parity obligations, except for differences in interest
rates and, in certain instances, order of redemption, and are issued under and
pursuant to a trust agreement, dated , 1999 (said trust agreement
together with all supplements and amendments thereto as therein permitted being
hereinafter referred to as the "Trust Agreement"), between the Authority and
Citibank, N.A., as trustee (said bank and any bank, banking association or
trust company becoming successor trustee under the Trust Agreement being herein
called the "Trustee"), a copy of which Trust Agreement is on file at the
corporate trust office of the Trustee. Reference is hereby made to the Trust
Agreement for the provisions, among others, with respect to the custody and
application of the proceeds of the Bonds, the collection and disposition of
payments under the Loan Agreement (hereinafter mentioned) and other revenues, a
description of the funds charged with and pledged to the payment of the
principal of, premium, if any, and interest on the Bonds, the nature and extent
of the security for the Bonds, the terms and conditions
<PAGE> 127
under which the Bonds are or may be issued, the rights, duties and obligations
of the Authority and of the Trustee and the rights of the Holders of the Bonds
and by the acceptance of this Bond, the Holder hereof assents to all of the
provisions of the Trust Agreement and the Loan Agreement. All capitalized terms
not defined herein shall have the meanings assigned to such terms in the Trust
Agreement.
This Bond is issued, and the Trust Agreement and the Loan Agreement
were made and entered into, under and pursuant to the Puerto Rican Federal
Relations Act and the Constitution and laws of the Commonwealth, including Act
No. 121 of the Legislature of Puerto Rico, approved June 27, 1977, as amended
(the "Act"), and under and pursuant to resolutions duly adopted by the
Authority.
The Authority has entered into a loan and guaranty agreement, dated
______________, 1999 (said loan and guaranty agreement together with all
supplements and amendments thereto as permitted by the Trust Agreement being
hereinafter referred to as the "Loan Agreement"), with Doral Properties, Inc.
(the "Borrower"), a Puerto Rico corporation, and Doral Financial Corporation
(the "Guarantor"), a Puerto Rico corporation, under which the Authority has
agreed to lend to the Borrower the proceeds of the Bonds, and, in consideration
of the loan, the Borrower has agreed, among other things, to make payments to
the Trustee in such amounts and at such times as are required to provide for
timely payment of the principal of, redemption premium, if any, and interest on
the Bonds and certain fees and expenses of the Authority and the Trustee. The
Loan Agreement further obligates the Borrower to perform, observe and comply,
or cause performance, observance and compliance, with certain covenants,
conditions and agreements set forth in the Loan Agreement, including certain
obligations respecting the use and operation of the Project for the purposes
stated therein. The Loan Agreement provides that any payments in respect of the
Bonds shall be made directly to the Trustee for the account of the Authority,
and that the Borrower's obligation to make such payments shall be absolute and
unconditional, without right of set-off for any reason. Under the Loan
Agreement, the Guarantor has unconditionally guaranteed the Borrower's
obligations thereunder, including the Borrower's payment obligations.
Pursuant to the Trust Agreement, the Authority has, for the benefit of
the owners of the Bonds, assigned and conveyed to the Trustee in trust the
Authority's rights, title and interest in the Loan Agreement (subject to the
reservation of certain rights of the Authority, including its rights to payment
of certain expenses and to indemnity) and the payments thereunder and other
revenues derived therefrom. The Trust Agreement further provides that any
payments under the Loan Agreement are to be deposited with the Trustee to the
credit of a special fund designated "Industrial Revenue Bonds, 1999 Series A
(Doral Financial Center Project) Bond Fund," which special fund is equally and
ratably pledged to and charged with the payment of the principal of and
interest all Bonds.
The Bonds are additionally secured by the assignment by the Authority
to the Trustee of its rights under a pledge of a mortgage note secured by a
first mortgage on all of the real property where the Project will be located.
The Bonds maturing after __________, ____ are subject to redemption
prior to maturity, at the option of the Borrower, in whole or in part (as
<PAGE> 128
directed by the Borrower) on any date selected by the Borrower, on or after
__________, ____, at a redemption price equal to the principal amount thereof
plus accrued and unpaid interest up to the redemption date (the "Redemption
Price"), plus a premium of __% of such principal amount if redeemed prior to
__________, ____, __% if redeemed on or after __________, ____ and prior to
___________, ____ and without premium if redeemed on __________, ____ and
thereafter.
The Bonds are subject to mandatory redemption in part, prior to
maturity, to the extent of any Bond proceeds remaining in the Construction
Fund, at a redemption price equal to the principal amount thereof as of the
redemption date, plus accrued and unpaid interest up to the redemption date,
without premium, which redemption date shall be the next Interest Payment Date
occurring not less than forty-five days (45) days after the third anniversary
of the Date of Issuance or such later date as may be approved by the Authority.
The Bonds are subject to mandatory redemption in whole or in part to
the extent required under the Pledge Agreement upon the occurrence of an
Eminent Domain, damage to or the destruction of the Project, at a redemption
price equal to the principal amount thereof plus accrued and unpaid interest up
to the redemption date, without premium, which redemption date shall be the
next Interest Payment Date occurring not less than forty-five (45) days after
receipt by the Trustee of the notice delivered pursuant to Section 8.02(e) of
the Loan Agreement and sufficient moneys to effect such redemption.
The Bonds are subject to mandatory redemption in whole upon the
occurrence of an Event of Taxability, at a redemption price equal to the
principal amount thereof plus accrued and unpaid interest up to the redemption
date, without premium, which redemption date shall be the next Interest Payment
Date occurring not less than forty-five (45) days after receipt by the Trustee
of the notice delivered pursuant to Section 8.02(d) of the Loan Agreement.
The Bonds are subject to mandatory redemption in whole upon the
cessation of operations of the Project as an Industrial Facility within the
meaning of the Act, at a redemption price equal to the principal amount thereof
plus accrued and unpaid interest up to the redemption date, without premium,
which redemption date shall be the next Interest Payment Date occurring not
less than forty-five (45) days after receipt by the Trustee of the notice
delivered pursuant to Section 8.02(d) of the Loan Agreement.
The Term Bonds maturing on ___________, ____, are subject to mandatory
redemption, in part, to the extent of the Amortization Requirements therefor
set forth in the Trust Agreement, beginning on _________, ____, and each
Interest Payment Date thereafter at a redemption price equal to 100% of the
principal amount thereof plus accrued and unpaid interest up to the redemption
date, without premium.
The Term Bonds maturing on __________, ____, are subject to mandatory
redemption, in part, to the extent of the Amortization Requirements therefor
set forth in the Trust Agreement, beginning on ___________, _____, and each
Interest Payment Date thereafter at a redemption price equal to 100% of the
principal amount thereof plus accrued and unpaid interest up to the redemption
date, without premium.
<PAGE> 129
The Bonds are subject to extraordinary optional redemption in whole or
in part, at the option of the Borrower, upon the damage, destruction or taking
of the Project or a change in law or judicial action curtailing the use of the
Project or imposing unreasonable burdens thereon or voiding or making
impossible of performance the Loan Agreement or the Trust Agreement, in the
circumstances and as otherwise provided in the Loan Agreement, at a redemption
price equal to the principal amount thereof plus accrued and unpaid interest up
to the redemption date, without premium, which redemption date shall be the
next Interest Payment Date occurring not less than forty-five (45) days after
receipt by the Trustee of the notice delivered pursuant to Section 8.03 of the
Loan Agreement.
Except with respect to the mandatory redemption of the Term Bonds as
described above, if less than all of the outstanding Bonds are to be redeemed,
the Bonds shall be redeemed in inverse order of maturity, unless otherwise
requested by the Borrower. If less than all of the particular Bonds of any one
maturity shall be called for redemption, the particular Bonds or portions of
Bonds of any maturity to be redeemed shall be selected by the Trustee in such
manner as the Trustee shall deem fair and appropriate; provided, however, that
the portion of any Bond to be redeemed shall be in the principal amount equal
to FIVE THOUSAND DOLLARS ($5,000) or some multiple thereof, and that, in
selecting Bonds for redemption, the Trustee shall treat each Bond as
representing that number of Bonds which is obtained by dividing the principal
amount of such Bond by FIVE THOUSAND DOLLARS ($5,000). If a Bond is delivered
for partial redemption, the Trustee shall deliver to or upon the order of the
Holder, without charge therefor, for the unredeemed portion of such Bond, a new
Bond or Bonds in principal amount equal to the unredeemed portion thereof.
At least thirty (30) days before the redemption date of any Bonds,
either in whole or in part, the Trustee shall cause a notice of any such
redemption, signed by the Trustee, to be mailed, first-class, postage prepaid,
to all Bondholders whose Bonds are to be redeemed, but failure to mail any such
notice to any Holder or any defect in any notice so mailed shall not affect the
validity of the proceedings for the redemption of any Bonds, nor the validity
of the proceedings for the redemption of the Bonds of any other Holders.
If any Bonds are not properly presented for payment at their
redemption date, or if any Bonds are not presented for payment when due
(whether at their respective scheduled maturity dates, upon acceleration, upon
call for redemption or otherwise), the Holders thereof shall look only to the
moneys set aside for such purpose by the Trustee. Any moneys unclaimed by such
Holders after a period of two (2) years may be paid to the Borrower, and
thereafter the Holders of such Bonds shall look only to the Borrower for
payment thereof.
The Holder of this Bond shall have no right to enforce the provisions
of the Trust Agreement or to institute any action to enforce the covenants
therein, or to take any action with respect to any Event of Default under the
Trust Agreement, or to institute, appear in or defend any suit or other
proceeding with respect thereto, except as provided in Section 809 of the Trust
Agreement. The Trustee is not required to enforce the Trust Agreement unless it
receives indemnity satisfactory to it.
Upon the occurrence of certain Events of Default, and on the
conditions, in the manner and with the effect set forth in Section 803 of the
Trust Agreement, the principal of all Bonds then outstanding under the Trust
Agreement may be declared to be immediately due and payable before the stated
<PAGE> 130
maturities thereof, together with the interest accrued thereon. The Trustee may
withhold notice of certain Events of Default if it determines that to give such
notice would not be in the best interest of the Bondholders.
Modifications or alterations of the Trust Agreement or any trust
agreement supplemental thereto, or the Loan Agreement or any loan agreement
supplemental thereto, may be made only to the extent and in the circumstances
permitted by the Trust Agreement.
The Bonds are issuable as fully registered Bonds without coupons, in
denominations of not less than $5,000 principal amount and integral multiples
thereof.
The transfer of this Bond is registrable by the Registered Owner
hereof in person or by his attorney or legal representative at the corporate
trust office of the Trustee, but only in the manner and subject to the
limitations and conditions provided in the Trust Agreement and upon surrender
and cancellation of this Bond. Upon any such registration of transfer, the
Authority shall execute and the Trustee shall authenticate and deliver in
exchange for this Bond a new Bond or Bonds for an equal aggregate principal
amount, of authorized denominations, of the same maturity and interest rate,
registered in the name of the transferee. The Authority or the Trustee may
impose a reasonable fee or service charge for every exchange or registration of
transfer of Bonds sufficient to reimburse it for any tax or other governmental
charge required to be paid with respect to such exchange or registration of
transfer. Neither the Authority nor the Trustee shall be required to make any
such exchange or registration of transfer of Bonds during the fifteen (15) days
prior to the date of first giving of notice of redemption or exchange or after
such Bond has been selected for redemption.
The Bonds shall be deemed to have been paid if, among other things,
there shall have been deposited with the Trustee sufficient moneys or
Defeasance Obligations the principal of and the interest on which when due, and
without any reinvestment thereof, will provide sufficient moneys to pay when
due the principal of and interest on the Bonds. Thereafter, the Holder of the
Bonds must look only to such moneys or Defeasance Obligations for payment.
Subject to the provisions for registration stated herein and contained
in the Trust Agreement, nothing contained in this Bond or in the Trust
Agreement shall affect or impair the negotiability of this Bond. As declared by
the Act, this Bond shall at all times be, and shall be understood to be, a
negotiable instrument under the laws of the Commonwealth.
Pursuant to the Act, the Authority, as agent for the Common wealth,
hereby includes said Commonwealth's pledge to and agreement with the Holder of
the Bonds and with those persons or entities who may enter into contracts with
the Authority pursuant to the Act that the Commonwealth shall not limit or
alter the rights vested in the Authority pursuant to the Act until the Bonds
and interest thereon are fully met and discharged and such contracts are fully
performed and fulfilled on the part of the Authority; provided, however, that
nothing contained in this pledge shall affect or alter such limitation if
adequate measures are provided by law for the protection of the Holder of the
Bonds or those who have entered into such contracts with the Authority.
<PAGE> 131
This Bond is issued with the intent that the laws of the Commonwealth
shall govern its construction, except that the rights, limitations of rights,
immunities, duties and obligations of the Trustee shall be governed by and
construed in accordance with the laws of the jurisdiction under which it is
organized.
All acts, conditions and things required by the Puerto Rican Federal
Relations Act, the Constitution and laws of the Common wealth and the rules and
regulations of the Authority to happen, exist and be performed precedent to and
in connection with the issuance of this Bond and the execution and delivery of
the Trust Agreement and the Loan Agreement have happened, exist and have been
performed as so required.
This Bond shall not be valid or become obligatory for any purpose or
be entitled to any benefit or security under the Trust Agreement until this
Bond shall have been authenticated by the execution by the Trustee of the
certificate of authentication endorsed hereon.
IN WITNESS WHEREOF, Puerto Rico Industrial, Tourist, Educational,
Medical and Environmental Control Facilities Financing Authority has caused
this Bond to bear the facsimile signatures of the Executive Director of the
Authority and the Secretary of the Authority, and a facsimile of its corporate
seal to be imprinted hereon, all as of the Date of Issuance.
PUERTO RICO INDUSTRIAL, TOURIST,
EDUCATIONAL, MEDICAL AND ENVIRONMENTAL
CONTROL FACILITIES FINANCING AUTHORITY
By:
---------
Executive Director
By:
--------
Secretary
[FACSIMILE OF CORPORATE SEAL]
CERTIFICATE OF AUTHENTICATION
This is one of the Bonds issued under the provisions of the
within-mentioned Trust Agreement.
BANCO POPULAR DE PUERTO RICO, as Trustee
By:
-------
Authorized Officer
Date of authentication:
---------------------
<PAGE> 132
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ____________________________ [please print or typewrite
name and address of transferee] the within Bond and all rights
thereunder, and hereby irrevocably constitutes and appoints
__________________ attorney to register the transfer of the within
Bond on the books kept for registration thereof, with full power of
substitution in the premises.
Date: Signature:
-------------------- ------------------------------
NOTICE: The signature to this
assignment must correspond with
the name as it appears upon the
face of the within Bond in every
particular, without alteration or
enlargement or any change whatever.
Signature Guaranteed by:*
-----------------------------------------
- ---------------------------
*Signatures must be guaranteed by a commercial bank or trust company having an
office or correspondent in San Juan, Puerto Rico, or by a member firm of the
New York Stock Exchange.
<PAGE> 1
EXHIBIT 4.5
CONTINUING DISCLOSURE AGREEMENT
This Continuing Disclosure Agreement, dated October __, 1999 (the
"Disclosure Agreement"), is executed and delivered by and among Doral
Properties, Inc., S.E. (the "Borrower"), Doral Financial Corporation ("Doral
Financial"), and Citibank, N.A. (the "Trustee"), in connection with the
issuance of $______ Puerto Rico Industrial, Tourist, Educational, Medical and
Environmental Control Facilities Financing Authority Industrial Revenue Bonds,
1999 Series A (Doral Financial Center Project) (the "Bonds"). The Bonds have
the CUSIP Numbers set forth in Schedule A attached hereto. The Bonds are being
issued pursuant to a Trust Agreement, dated as of October __, 1999 (the "Trust
Agreement"), between Puerto Rico Industrial, Tourist, Educational, Medical and
Environmental Control Facilities Financing Authority (the "Authority") and the
Trustee. The proceeds from the sale of the Bonds are being loaned by the
Authority to the Borrower pursuant to a Loan and Guaranty Agreement, dated as
of October __, 1999 (the "Loan Agreement"), between the Authority, the Borrower
and Doral Financial. The Borrower is a wholly-owned subsidiary of Doral
Financial. Doral Financial is unconditionally guaranteeing the Borrower=s
obligations under the Loan and Guaranty Agreement. The Borrower, Doral
Financial and the Trustee covenant and agree as follows:
SECTION 1. PURPOSE OF THE DISCLOSURE AGREEMENT. This Disclosure
Agreement is being executed and delivered by Doral Financial, the Borrower and
the Trustee for the benefit of the Bondholders and the Beneficial Owners (as
defined herein) of the Bonds and in order to assist the Participating
Underwriters (as defined herein) in complying with the Rule (as defined
herein). Doral Financial, the Borrower and the Trustee acknowledge that the
Authority has assumed no responsibility with respect to any reports, notices or
disclosures provided or required under this Disclosure Agreement, and has no
liability to any person, including any Beneficial Owner or Bondholder, with
respect to any such reports, notices or disclosures.
<PAGE> 2
SECTION 2. DEFINITIONS. In addition to the definitions set forth in
the Trust Agreement, which definitions apply to any capitalized term used in
this Disclosure Agreement unless otherwise defined in this Disclosure
Agreement, the following capitalized terms shall have the following meanings:
"ANNUAL REPORT" means the Annual Report provided by the Borrower and
Doral Financial pursuant to, and as described in, Sections 3 and 4 of this
Disclosure Agreement.
"BENEFICIAL OWNER" means the purchaser of any Bond who is deemed the
owner thereof for income tax purposes.
"LISTED EVENTS" means any of the events listed in Section 5(a) of this
Disclosure Agreement (other than the failure to comply with Section 3 hereof).
"MSRB" means the Municipal Securities Rulemaking Board, organized
under the Securities Exchange Act of 1934.
"NATIONAL REPOSITORY" means any nationally recognized municipal
securities information repository then recognized by the Securities and
Exchange Commission for purposes of the Rule. As of the date of this Disclosure
Agreement the following are National Repositories:
Bloomberg Municipal Repository
P.O. Box 840
Princeton, New Jersey 08542-0840
Phone: (609) 279-3200
Fax: (609) 279-5962
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<PAGE> 3
Kenny Information Systems, Inc.
65 Broadway
New York, New York 10006
Attn: Kenny Repository Service
Phone: (212) 770-4595
Fax: (212) 797-7994
Thompson NRMSIR
395 Hudson Street
New York, New York 10004
Attn: Municipal Disclosure
Phone: (212) 807-3814
Fax: (212) 989-9282
DPC Data Inc.
One Executive Drive
Fort Lee, New Jersey 07024
Phone: (201) 346-0701
Fax: (201) 947-0107
"PARTICIPATING UNDERWRITERS" means each broker, dealer or municipal
securities dealer acting as an underwriter in the primary offering of the
Bonds.
"REPOSITORY" means each National Repository and each State Repository.
"RULE" means Rule 15c2-12 adopted by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as the same may be
amended from time to time.
"STATE REPOSITORY" means any public or private repository or entity
designated by the Commonwealth of Puerto Rico as a state repository for the
purpose of the Rule and recognized as such by the Securities and Exchange
Commission. As of the date of this Disclosure Agreement, there is no State
Repository.
SECTION 3. PROVISION OF ANNUAL REPORTS. The Borrower and Doral
Financial shall, within one hundred twenty (120) days after the end of
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<PAGE> 4
each fiscal year of Doral Financial (currently December 31), file with each
Repository an Annual Report which is consistent with the requirements of
Section 4 of this Disclosure Agreement including: (i) the audited financial
statements of Doral Financial and (ii) operating data relating to Doral
Financial=s revenues, expenditures, financial operations and indebtedness. All
financial statements included as part of the Annual Report shall be prepared in
accordance with generally accepted accounting principles. The Annual Report may
be submitted as a single document or as separate documents comprising a
package, and may cross-reference other information as provided in Section 4 of
this Disclosure Agreement.
SECTION 4. CONTENT OF ANNUAL REPORT. The Annual Report shall contain
or incorporate by reference operating data and financial information relating
to Doral Financial generally of the type found in Doral Financial=s Annual
Report on Form 10-K for the year ended December 31, 1998, which is incorporated
by reference in the Official Statement and Prospectus relating to the Bonds,
dated October __, 1999, and a copy of the audited financial statements of Doral
Financial prepared in accordance with generally accepted accounting principles.
So long as Doral Financial is subject to the informational and other
requirements of Section 13 and Section 14 of the Securities Exchange Act of
1934 applicable to publicly-traded companies, Doral Financial expects to
provide this financial information and operating data by filing with each
Repository copies of its Annual Report on Form 10-K, as filed with the
Securities and Exchange Commission. However, Doral Financial prepared and filed
with the Securities and Exchange Commission its 1998 Annual Report in order to
comply with the informational and other requirements of Section 13 and Section
14 of the Securities Exchange Act, not in order to comply with the requirements
of the Rule. The scope of information included in such Annual Report was
determined pursuant to the requirements of Section 13 and Section 14 of the
Securities Exchange Act, and not pursuant to the requirements of the Rule.
Accordingly, in the event that at any
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<PAGE> 5
time in the future Doral Financial ceases to be subject to the informational
and other requirements of Section 13 and Section 14 of the Securities Exchange
Act, Doral Financial reserves the right to modify the scope and format of the
financial information and operating data filed with each Repository, provided
that such financial information and operating data will include at least its
audited financial statements prepared in accordance with generally accepted
accounting principles and information of the type generally found in items 1,
2, 3 and 7 of its Annual Report on Form 10-K.
Any or all of the items listed above may be included by
specific reference to other documents, including official statements of debt
issues with respect to which the Borrower or Doral Financial is an "obligated
person" (as defined by the Rule), which have been filed with each Repository or
the Securities and Exchange Commission. If the document included by reference
is a final official statement, it must be available from the MSRB. The Borrower
and Doral Financial shall clearly identify each such documents so included by
reference in any Annual Report.
SECTION 5. REPORTING OF SIGNIFICANT EVENTS. (a) In accordance with the
provisions of this Section 5, the Borrower and Doral Financial shall give
notice of any failure of the Borrower or Doral Financial to comply with Section
3 hereof and of the occurrence of any of the following events with respect to
the Bonds, if material, within the meaning of the Securities Exchange Act of
1934, as the same may be amended from time to time, to the MSRB and to each
Repository:
1. principal or interest payment delinquencies;
2. non-payment related defaults;
3. unscheduled draws on debt service reserves reflecting
financial difficulties;
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<PAGE> 6
4. unscheduled draws on credit enhancements reflecting
financial difficulties;
5. substitution of credit or liquidity providers, or their
failure to perform;
6. adverse tax opinions or events affecting the tax exempt
status of the Bonds, including the occurrence of an Event of Taxability (as
defined in the Loan Agreement);
7. modifications to rights of the holders (including
Beneficial Owners) of the Bonds;
8. Bond calls;
9. defeasances;
10. release, substitution, or sale of property Securing
repayment of the Bonds; and
11. rating changes.
The Borrower and Doral Financial shall not be required to provide
notice of the Listed Event described in item (8) above with respect to any
scheduled redemption, not otherwise contingent upon the occurrence of an event,
even if the originally scheduled amounts are reduced by prior optional
redemptions or purchases of Bonds, if (i) the terms, dates and amounts of such
redemption are set forth in the Official Statement and Prospectus relating to
the Bonds, (ii) the only open issue is which Bonds will be redeemed in the case
of a partial redemption, (iii) notice of redemption is given to the Bondholders
as required under the terms of the Bonds and the Trust Agreement and (iv)
public notice of redemption is given pursuant to Securities Exchange
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<PAGE> 7
Act of 1934 Release No. 34-23856 of the Securities of Exchange Commission.
(b) The Borrower and Doral Financial acknowledge that their
failure to comply with their obligations under this Disclosure Agreement will
be considered by any broker, dealer or municipal securities dealers before
recommending the purchase and sale of the Bonds in the secondary market.
SECTION 6. TERMINATION OF REPORTING OBLIGATION. The obligations of the
Borrower and Doral Financial under this Disclosure Agreement shall terminate
upon the defeasance or provision for payment, prior redemption or payment in
full of all of the Bonds.
SECTION 7. AMENDMENT; IMPOSSIBILITY OF PERFORMANCE. (a)
Notwithstanding any other provision of this Disclosure Agreement, the Borrower,
Doral Financial and the Trustee may amend the covenants set forth in Sections 3
and 5 of this Disclosure Agreement (and the Trustee shall agree to any
amendment so requested by the Borrower and Doral Financial), only if each of
the following conditions has been met:
(i) the amendment or waiver is made in connection with a
change in circumstances that arises from a change in legal requirements, change
in law, or change in the identity, nature, or status of the Borrower or Doral
Financial; the covenants, as amended, or the provisions as waived, would have
complied with the requirements of the Rule at the time of award of the Bonds,
after taking into account any amendments or change in circumstances; and the
amendment does not materially impair the interests of Bondholders or Beneficial
Owners, as determined by parties unaffiliated with the Borrower or Doral
Financial; or
(ii) all or any part of the Rule, as interpreted by the staff
of the Securities and Exchange Commission at the date of the
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<PAGE> 8
adoption of such interpretation, ceases to be in effect for any reason, and the
Borrower and Doral Financial elect that the covenants herein shall be deemed
amended accordingly.
(b) The Borrower, Doral Financial and the Trustee further
agree that the annual financial information containing any amended operating
data or financial information will explain, in narrative form, the reasons for
the amendment and the impact of the change in the type of operating data or
financial information being provided.
(c) If any part of the financial information or operating
data required by Section 4 hereof to be in an Annual Report can no longer be
generated because the operations to which it is related have been materially
changed or discontinued, the Borrower and Doral Financial will disseminate a
statement to such effect as part of the Annual Report for the year in which
such event first occurs.
SECTION 8. ADDITIONAL INFORMATION. Nothing in this Disclosure
Agreement shall be deemed to prevent the Borrower and Doral Financial from
disseminating any other information, using the means of dissemination set forth
in this Disclosure Agreement or any other means of communication, or including
any other information in any Annual Report or notice of occurrence of a Listed
Event, in addition to that which is required by this Disclosure Agreement. If
the Borrower and Doral Financial choose to include any information in any
Annual Report or notice of occurrence of a Listed Event, in addition to that
which is specifically required by this Disclosure Agreement, the Borrower and
Doral Financial shall have no obligation under this Disclosure Agreement to
update such information or include it in any future Annual Report or notice of
occurrence of a Listed Event.
SECTION 9. DEFAULTS. In the event of a failure of the Borrower or
Doral Financial to comply with any provision of this Disclosure Agreement, the
Trustee may (and, at the request of any Participating
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Underwriter or the Beneficial Owners of at least 25% in aggregate principal
amount of outstanding Bonds, shall), or (if such Beneficial Owner stipulates
that no challenge is made to the adequacy of any information provided) any
Beneficial Owner may take such actions as may be necessary and appropriate,
including seeking mandamus or specific performance by court order, to cause the
Borrower and Doral Financial to comply with their obligations under this
Disclosure Agreement; provided that any such action may be instituted only in
the federal court located in the Commonwealth of Puerto Rico or in any
Commonwealth of Puerto Rico court. A default under this Disclosure Agreement
shall not be deemed an Event of Default under the Trust Agreement or the Loan
Agreement or any other related instrument, and the sole remedy under this
Disclosure Agreement in the event of any failure by the Borrower or Doral
Financial to comply with this Disclosure Agreement shall be an action to compel
performance. Nothing in this Section shall be deemed to restrict rights or
remedies of any holder pursuant to the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, or other applicable
laws.
SECTION 10. COOPERATION. The Borrower and Doral Financial agree to
make their representatives available to meet with representatives of the
Trustee to discuss the Annual Reports, financial condition and results of
operation and to provide such information in connection therewith as may be
reasonably requested by the Trustee.
SECTION 11. JOINT AND SEVERAL LIABILITY. The Borrower and Doral
Financial shall be jointly and severally liable for all obligations of either
corporation pursuant to this Disclosure Agreement.
SECTION 12. BENEFICIARIES. This Disclosure Agreement shall inure
solely to the benefit of the Authority, the Borrower, Doral Financial, the
Trustee, the Participating Underwriters, the Bondholders
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and the Beneficial Owners from time to time of the Bonds, and shall create no
rights in any other person or entity.
SECTION 13. COUNTERPARTS. This Disclosure Agreement may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
SECTION 14. RECORD KEEPING. The Borrower and Doral Financial shall
maintain records of all Annual Reports and reports pursuant to Section 5 hereof
including the content thereof, the names of the entities with whom the same
were filed and the date of filing thereof.
SECTION 15. GOVERNING LAW. This Disclosure Agreement shall be governed
by the laws of the Commonwealth of Puerto Rico.
DORAL PROPERTIES, INC.
By:
--------------------------------
Name:
Title:
DORAL FINANCIAL CORPORATION
By:
--------------------------------
Name:
Title:
CITIBANK, N.A., AS TRUSTEE
By:
--------------------------------
Name:
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Title:
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SCHEDULE A
CUSIP NUMBERS
<PAGE> 1
EXHIBIT 4.6
DEED NUMBER ( )
DEED OF CONSTITUTION OF FIRST MORTGAGE
In the City of San Juan, Commonwealth of Puerto Rico, this ___________
(__th) day of October, nineteen hundred ninety nine (1999).
BEFORE ME
_______________________, Attorney-at-Law and Notary Public in and for the
Commonwealth of Puerto Rico with residence in ____________, Puerto Rico, and
offices on ___________San Juan, Puerto Rico.
APPEAR
AS PARTY OF THE FIRST PART: DORAL PROPERTIES, INC., employer identification
number _________, a corporation organized and existing under the laws of the
Commonwealth of Puerto Rico (hereinafter called the "Mortgagor"), herein
represented by ____________, of legal age, ________, business executive and
resident of _______, Puerto Rico, who has been duly authorized to appear in this
public instrument on behalf and in representation of the Mortgagor, which
authority he will show wherever and whenever required to do so.
I, the Notary, hereby certify that I personally know the person appearing
herein and from his statements I also attest as to his age, civil status,
occupation and residence. The person appearing herein assures me that he has,
and in my judgment he does have, the legal capacity necessary for this act, and
for that purposes he freely and voluntarily
STATES
FIRST: The Property: The Mortgagor is the owner of record with valid, good,
insurable and
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marketable fee simple title ("pleno dominio") of the real property described in
paragraph TWENTY THIRD of this Deed, hereinafter referred to as the "Property".
SECOND: The Mortgage Note: Simultaneously herewith Mortgagor has subscribed
before the undersigned Notary a Mortgage Note to the order of the bearer
(hereinafter called the "Mortgage Note"), which is literally transcribed in
paragraph FOURTEENTH hereof.
THIRD: Creation of the Mortgage: In order to guarantee and secure:
(i) The full and complete payment of the principal of the Mortgage
Note and the interest accruing thereon, as herein established.
(ii) The performance and observance of the terms and conditions
contained herein and in the Mortgage Note.
(iii) An additional credit in the amount set forth in paragraph
FIFTEENTH hereof to cover interest in addition to that secured by law
(hereinafter called the "Interest Credit").
(iv) An additional credit in the amount set forth in paragraph
FIFTEENTH hereof to cover any amounts that may be paid by or advanced by the
Mortgagee (as hereinafter defined) hereunder, together with interest thereon
(hereinafter called the "Credit for Additional Advances").
(v) An additional credit which Mortgagor undertakes to pay as a
liquidated amount (hereinafter called the "Credit for Collection Costs and
Fees"), in the amount set forth in
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paragraph FIFTEENTH hereof, to cover costs and expenses (including attorney's
fees) of the Mortgagee in the event that such Mortgagee shall have to take
recourse to the courts, including bankruptcy proceedings, or to any other
governmental agency in order to collect all or any part of the principal
thereof or any interest thereon (by foreclosure or other proceedings or
action).
(The Interest Credit, the Credit for Additional Advances and the Credit for
Collection Costs and Fees shall be hereinafter collectively referred to as the
"Additional Credits").
Mortgagor hereby constitutes and creates a voluntary first priority
mortgage (the "Mortgage") in favor of the bearer or any future holder or
transferee of the Mortgage Note (hereinafter referred to as the "Mortgagee") on
the following property (hereinafter collectively referred to as the "Mortgaged
Property"):
(a) the Property described in Paragraph TWENTY THIRD of this Deed;
(b) all of Mortgagor's buildings, structures, additions, fixtures, and
improvements, appurtenances and facilities now located thereon and those new
buildings and structures, additions, fixtures, and improvements hereafter
erected or placed or constructed on said Property and all materials intended for
the construction, reconstruction, alteration and repair of such buildings or
improvements now or hereafter erected thereon or hereafter constructed, all of
which
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materials shall be deemed to be included within the Mortgaged Property
immediately upon the delivery thereof to the Property;
(c) all of the rights, title and interest of the Mortgagor, in and to,
all and singular, the tenements, hereditaments, rights of way, easements,
appendages and appurtenances, licenses, passages, waters, water rights, riparian
rights, and other rights, liberties and privileges thereof or in any way or
hereafter appertaining, including any other claim at law or in equity, franchise
or license and the reversion and reversions, and remainder and remainders
thereof and any other property belonging or appertaining to the Property, and
all of the right, title and interest of the Mortgagor in and to any streets,
ways, alleys, strips or gores of the Property or any part thereof;
(d) all of the Mortgagor's rights, title and interest (but none of
its obligations) as landlord, whether named as such therein or by assignment or
otherwise, to receive payments of money under all leases or similar agreements
of all or part of the Property or of space therein, or at any time hereafter
made and any and all amendments, modifications, supplements, renewals and
extensions thereof, including without limitation all rents, additional rents,
revenues, earnings, profits and income, payments incident to any assignment,
sublease or surrender of any lease, claims for forfeited deposits and claims for
damages, now due or hereafter to become due with respect to any such lease or
similar agreement;
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(e) all awards, compensations and payments in respect of taking by
condemnation or eminent domain of any of the foregoing, subject to the terms of
paragraph SIXTH hereof;
(f) all indemnities to which Mortgagor and the Mortgagee may be entitled
under any policy of insurance covering the Mortgaged Property or any part
thereof, subject to the terms of paragraph FIFTH (Five) hereof;
(g) all of the Mortgagor's rights, title and interest to all furniture,
furnishings, fixtures, machinery, apparatus and equipment, now or hereafter
located on the Property, or located in, or used, or procured for use, in
connection with the operation, maintenance or protection of any of the
buildings, structures, improvements or facilities located or to be located in
the Property, including, without limitation, lighting, plumbing, sanitary, air
conditioning equipment and fire protection systems, now owned or hereafter
acquired by the Mortgagor, which under the Civil Code of Puerto Rico may
properly be characterized or classified as real or immovable property either by
nature or by destination; and
(h) all renewals and replacements of, substitutions for and additions to the
Property, and all other property, real personal or mixed now owned or hereafter
acquired by Mortgagor or in any way appertaining to such Property as well as all
lands which may be consolidated or grouped with the Property.
FOURTH: [RESERVED].
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FIFTH: Obligations of Mortgagor: For the consideration heretofore set forth
the Mortgagor is obliged and undertakes as follows:
One: To satisfy the debt as set forth in the Mortgage Note.
Two: To pay prior to delinquency and without requiring any notice from
Mortgagee, all Impositions and satisfy any claim, lien or encumbrance against
the Mortgaged Property which may be or become superior to this Mortgage, and to
permit no default or delinquency on any other lien, encumbrance or charge
against the Mortgaged Property, unless and to the extent only that any such item
is being contested in good faith by appropriate proceedings and appropriate
reserves have been set aside with respect thereto in conformity with generally
accepted accounting principles in effect from time to time in the United States
of America.
Three: To maintain the Mortgaged Property as required under any pledge
agreement or other instrument under which the Mortgage Note is assigned or
pledged. In the event the Mortgagor fails to care for and maintain in good
condition the buildings existing upon or that may in the future be constructed
on the Mortgaged Property or the improvements to the same, the Mortgagee, after
giving reasonable prior written notice to Mortgagor and reasonable time to
remedy, may make such repairs as in its judgment may be necessary for the
preservation of the Mortgaged Property and its appurtenances, and the total sum
thus invested
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shall be considered as due and demandable and shall be considered as secured by
the Mortgage herein constituted.
Four: To pay all reasonable costs, expenses and disbursements
including a reasonable amount for attorney's fees, as well as all reasonable
expenses incurred or satisfied by the Mortgagee at any time for perfection of
title of the Mortgaged Property, and all such costs, expenses and disbursements
of Mortgagee, if satisfied by Mortgagee, shall be considered secured in their
entirety by the Mortgage herein constituted.
Five: To keep the Mortgaged Property insured against such hazards and
with such coverage, as may be required under any pledge agreement or other
instrument under which the Mortgage Note is assigned or pledged.
Six: To furnish Mortgagee within ten (10) business days after request
in person, or within twenty (20) business days after request by mail, a written
statement duly acknowledging the amount due on or secured by, whether for
principal or interest, this Mortgage or the Mortgage Note, and whether any
offsets or defenses exist against such debt.
Seven: To comply with all laws, ordinances, regulations, covenants,
conditions and restrictions affecting the Mortgaged Property and the operation
thereof.
Eight: To deliver to Mortgagee with reasonable promptness such
information with respect to the Mortgaged Property as Mortgagee may reasonably
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request from time to time.
SIXTH: Condemnation. In the event of a taking of all or any part of the
Mortgaged Property as a result of or in lieu of condemnation or eminent domain,
all awards and payments made on account of such taking shall be distributed and
applied as may be required under any pledge agreement or other instrument under
which the Mortgage Note is assigned or pledged.
SEVENTH: Additional Advances. If Mortgagor should fail to make punctual
payment of any Impositions, or should fail to maintain insurance coverage on
the Mortgaged Property as required from time to time by the Mortgagee, or
should fail to discharge any mortgage lien, encumbrance or charge upon the
Mortgaged Property, or any part thereof, which is prohibited herein or by the
terms of a pledge agreement or other instrument under which the Mortgage Note
is assigned or pledged, or should fail to maintain the Mortgaged Property in
good condition, or should fail to perform any other term or covenant of such
pledge agreement or other instrument, then Mortgagee, after giving prior notice
to Mortgagor, but without consent of or demand upon Mortgagor and without
waiving or releasing any obligation or default, may (but shall be under no
obligation to) advance such funds as may in Mortgagee's judgment be needed for
the purpose of performing such terms or covenants and Mortgagee may, in such
event, take such other and further action as it may consider necessary or
appropriate for such purposes. All sums so
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advanced or paid by Mortgagee and all reasonable costs and expenses (including
reasonable attorney's fees and expenses) so incurred, together with interest
thereon at the interest rate set forth in the Mortgage Note from the date of
payment or incurring, shall constitute additional Indebtedness secured by this
Mortgage and shall be paid by Mortgagor to Mortgagee on demand.
EIGHTH: Further Assurances; Additional Security: Mortgagor, at its
expense, will execute, acknowledge, deliver and record all such instruments and
take all such action as Mortgagee for time to time may reasonably request for
better assuring to Mortgagee the property and rights hereby mortgaged and
assigned or intended so to be. Without notice to or consent of Mortgagor, and
without impairment of the lien of, and rights under this Mortgage, Mortgagee
may take (but Mortgagor shall not be obligated to furnish) from Mortgagor or
from any other person or persons additional security for the Mortgage Note or
for the obligations of the Mortgagor secured by the assignment or pledge of the
Mortgage Note; and neither the giving of this Mortgage nor the acceptance of
any such additional security shall prevent Mortgagee from resorting first to
such additional security, or to the security created by this Mortgage, in
either case without affecting Mortgagee's lien and rights under this Mortgage.
NINTH: Foreclosure Valuation: In compliance with Article One Hundred
Seventy Nine (179) of the Mortgage Law of Puerto Rico (Act Number One Hundred
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Ninety Eight (198) of August eighth (8th), nineteen hundred seventy nine
(1979), Mortgagor hereby declares and agrees that the value of the Mortgaged
Property is as set forth in Paragraph FIFTEENTH hereof under the title
"Foreclosure Valuation".
TENTH: Foreclosure: In the event that the Mortgage Note is assigned or
pledged or otherwise encumbered as collateral security for the payment of any
other note or debt, the Mortgagor agrees:
(a) That Mortgagee may foreclose this Mortgage and may exercise all
other rights, remedies, powers and privileges provided herein or now or
hereafter existing at law, in equity, by statute, or otherwise, without first
foreclosing the pledge or other lien so constituted upon the Mortgage Note, to
the same extent and with the same force and effect as if the Mortgage Note had
been assigned or transferred directly to Mortgagee rather than assigned or
pledged as collateral security, provided nothing contained in this Paragraph
TENTH shall relieve Mortgagee from the obligation to comply with the terms of
the pledge agreement or other instrument under which the Mortgage Note is
assigned or pledged.
(b) The Mortgagee may in any action to foreclose this Mortgage or the
Mortgage Note, or upon the occurrence of a default under this Mortgage or under
any obligation secured by a lien upon the Mortgage Note, petition the court
having jurisdiction in the premises to appoint a receiver for the Mortgaged
Property, including all rents, issues and profits therefrom, and said receiver
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shall have the broadest powers and faculties usually granted to a receiver by a
court and his appointment shall be made by the court as a matter of absolute
right granted to the Mortgagee without taking into consideration the value of
the Mortgaged Property or the solvency of the Mortgagor or of any other party
to the action, and the Mortgagor hereby consents to the appointment of such a
receiver and agrees not to oppose the same.
ELEVENTH: Expenses of Deed; Recording Fees. All costs and expenses relating
to the drafting, preparation and execution of this Deed shall be for the account
of the Mortgagor.
TWELFTH: Definitions. As used in this Mortgage, the following terms are
defined as follows: (a) "Impositions" shall mean all real estate and other
taxes, all assessments made (including, without limitation, all assessments for
public improvements or benefits, whether or not commenced or completed prior to
the date hereof or while this Mortgage is in force), water, sewer, electricity,
utility and other rents, rates and charges, excises, levies, license fees,
permit fees, inspection fees and other authorization fees and other charges, in
each case whether general or special, ordinary or extraordinary, or foreseen or
unforeseen of every character (including all penalties or interest thereon)
which at any time are assessed, levied, confirmed or imposed on or in respect of
or be a lien upon (i) the Mortgaged Property or any part thereof or any rents,
issues, income, profits or earnings therefrom or any estate, right or interest
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therein or (ii) any occupancy, use or possession of or sales from the Mortgaged
Property or any part thereof or (iii) this Mortgage, any interest hereon or any
other payments due from the Mortgagor under the terms of this Mortgage;
excepting, however, the income taxes now or hereafter imposed by the United
States under the Internal Revenue Code of Nineteen hundred eighty six (1986) as
amended, and by the Commonwealth of Puerto Rico under the Income Tax Act of
Nineteen hundred fifty-four (1954) as amended, The Internal Revenue Code of
Puerto Rico of Nineteen hundred ninety-four (1994), as amended, the Municipal
License Tax Act of Nineteen hundred seventy-four (1974), as amended, or under
any other Act of Congress or Act of the Legislature of Puerto Rico of the same
nature, modifying, amending, or substituting the statutes above mentioned, as
long as they do not become a lien on the Mortgaged Property; (b) "Indebtedness"
shall mean (i) the Impositions; (ii) principal and interest of the Mortgage
Note; (iii) the credits referenced in paragraph FIFTEENTH of this Deed; and
(iv) any and all Payments which Mortgagor is or may be obliged to make under
this Deed of Mortgage.
THIRTEENTH: Successors and Assigns: All the terms of this Mortgage
shall apply to and be binding upon the successors and assigns of Mortgagor and
all persons claiming under or through Mortgagor or any such successor or assign,
and shall inure to the benefit of Mortgagee. Neither this Mortgage nor any term
hereof may be changed, waived, discharged or terminated verbally, but only
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by an instrument in writing signed by the Mortgagee, notice of which is
endorsed on the Mortgage Note.
FOURTEENTH: The Mortgage Note: The Mortgage Note referred to in paragraph
SECOND of this Deed is literally transcribed herein as follows:
"MORTGAGE NOTE
VALUE: [$ ]
DUE DATE: OCTOBER ____, 2029
FOR VALUE RECEIVED, the undersigned promises to pay to the BEARER (the
"Mortgagee") the principal sum of [ ] DOLLARS ($[ ]). The unpaid balance of this
obligation shall bear interest from the date of this Mortgage Note until full
payment hereof, at an annual rate equal to ______________ (__%). Payments of
interest and principal shall be made at the office or domicile of the Mortgagee
within or without the Commonwealth of Puerto Rico, or at such other place as the
Mortgagee may from time to time designate in writing.
The undersigned hereby waives presentment, protest, demand and notice of
non-payment.
Payments of both principal and interest are to be made in lawful money of
the United States of America.
The following shall be events of default hereunder:
(a) if default shall be made in the due and punctual payment of any
principal of and/or interest on this Mortgage Note when and as the same shall
become due and payable; or
(b) if default shall be made by the undersigned in the due performance
of or compliance with any of the terms of the Deed of Mortgage (as hereinafter
defined) which secures this Mortgage Note; or
(c) if an Event of Default shall exist under any document or agreement
pursuant to which this Mortgage Note is pledged, assigned, or otherwise
encumbered; or
(d) if any material representation or warranty of the undersigned made
in the Deed of Mortgage or in any agreement pursuant to which this Mortgage Note
is pledged or assigned shall be false in any material respect on the date when
made.
Upon the occurrence of any event of default described above and in
addition to any other remedies for which the holder of this Mortgage Note
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may be entitled under the Deed of Mortgage (as hereinafter defined), then, upon
expiration of any applicable notice, grace and cure period, the entire
principal amount of this Mortgage Note at the time outstanding shall, at the
option of the holder of this Mortgage Note, become immediately due and payable
without notice or demand. Failure to exercise this option shall not constitute
a waiver of the right to exercise such option in the event of any subsequent
default.
This Mortgage Note is secured by a mortgage constituted pursuant to the
terms of Deed Number _____ (___) of Constitution of First Mortgage, executed on
the date hereof before the undersigned Notary Public, and the Mortgagee is
entitled to the benefit and security provided for in said Deed of Constitution
of First Mortgage and in any agreement executed by the undersigned assigning,
pledging, or otherwise encumbering this Mortgage Note as security for the
obligations described therein, and may enforce the agreements of the undersigned
contained in said Deed of Mortgage and in each of said agreements or
instruments, and may exercise the remedies provided thereby or otherwise in
respect thereof without being required first to foreclosure on the pledge or
other lien or encumbrances so constituted upon this Mortgage Note, all in
accordance with the terms of said Deed of Mortgage and said agreements or
instruments. No reference herein to instruments and no provision of this
Mortgage Note or of said agreements or instruments shall alter or impair the
obligations of the undersigned hereunder, which are continuing, absolute and
unconditional, nor shall such reference affect the negotiability hereof under
the Commercial Transactions Act of Puerto Rico, or any other applicable law.
In case the Mortgagee shall take recourse to foreclosure or other judicial
proceedings for the collection of all or any of the principal hereof or any
interest hereon, the undersigned hereby agrees to pay an additional amount of
[] DOLLARS ($__________) as a liquidated amount without necessity of further
liquidation or approval by the Court to cover costs and expenses (including
attorney's fees and expenses) of such foreclosure or judicial proceedings.
In San Juan, Puerto Rico this ___ day of October, 1999.
DORAL PROPERTIES, INC. (Signed) _________________________
By: __________________________ as authorized representative of Doral
Properties, Inc.
Affidavit Number: ____
Acknowledged and subscribed to before me by _________________________, of
legal age, single, business executive and resident of San Juan, Puerto Rico, as
authorized representative of Doral
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Properties, Inc. In San Juan, Puerto Rico, this ___ day of October,
1999.
By: (Signed) _______________________________
Notary Public
(Notarial Seal)
FIFTEENTH: Various Sums:
(i) The principal Amount of the Mortgage Note is: [ ] DOLLARS ($____)
(ii) The 'Interest Credit' is:____________ ($____)
(iii) The 'Credit for Additional Advances' is: ($____)
(iv) The 'Credit for Collection Costs and Fees' is: __________ ($____)
(v) The 'Foreclosure Valuation' is $_____ DOLLARS ($_____).
SIXTEENTH: Mortgagor Warranties and Representations: Mortgagor represents
and warrants that:
(i) It is the owner with valid, good, marketable, insurable and fee
simple title (pleno dominio) to the Mortgaged Property and to all rights and
titles appertaining thereto.
(ii) It has good and lawful authority to mortgage the Mortgaged
Property and all rights appertaining thereto, in the manner and form hereby
mortgaged.
(iii) The Mortgaged Property is free and clear of all liens and
encumbrances whatsoever on a parity with or superior to the liens of this
Mortgage, except for those set forth in paragraph TWENTY THIRD of this Deed.
(iv) The Mortgaged Property is free from
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unpaid taxes and assessments.
(v) It will warrant and defend said Mortgaged Property and the validity
and priority of this Mortgage against all and every person or persons claiming
the same or any part thereof.
(vi) It will execute whatever additional documents or instruments that
may be necessary to record this document as a first mortgage in the Registry of
Property as required by Mortgagee.
SEVENTEENTH: Notice: All notices or demands in writing sent by registered
or certified mail, return receipt requested, through the United States mail,
addressed to the owner of record of the Mortgaged Property shall constitute
sufficient notice and demand upon the Mortgagor in any of the cases required by
this instrument or by the relevant provisions of law. The Mortgagor will give
immediate notice by mail to the Mortgagee of any proposed condemnation
proceedings and of any fire, damage, or other casualty to the Mortgaged Property
or of any conveyance transfer or change of ownership of the fee. The holder of
the Mortgage Note, its agents or servants shall have the right to inspect the
Mortgaged Property from time to time during normal business hours and as often
as the Mortgagee may reasonably request.
EIGHTEENTH: Waiver of Moratorium and Redemption: The Mortgagor, to the full
extent that it may lawfully do so, agrees that it will not at any time insist
upon or plead or in any way take advantage of and waives any redemption, or
moratorium law now or hereafter in force and effect which would
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prevent or hinder the enforcement of the provisions of this Deed or any rights
or remedies the Mortgagee may have hereunder or by law.
NINETEENTH: Rights of Way, Easements and the like: The Mortgagor will
maintain, preserve and renew all rights of way, easements, apparent signs,
grants, privileges, licenses and franchises reasonably necessary for the use of
the Mortgaged Property from time to time and will not, without the prior written
consent of the Mortgagee, initiate, join in or consent to any private
restrictive covenant, zoning ordinance, or other public or private restriction
as to the use of the Mortgaged Property which could have a material adverse
effect on the Mortgaged Property.
TWENTIETH: Mortgage Interest Not Usurious: The Mortgagor warrants and
represents to Mortgagee that no interest to be accrued and payable under the
Mortgage is or will be usurious under Puerto Rican laws and regulations or other
applicable laws and regulations.
Anything herein to the contrary notwithstanding, the obligations of the
Mortgagor under this Mortgage, shall be subject to the limitation that payments
of interest shall not be required to the extent that receipt of any such payment
by the Mortgagee would be contrary to provisions of law applicable to the
Mortgagee limiting the maximum rate of interest which may be charged or
collected by the Mortgagee.
TWENTY FIRST: Indemnification: Mortgagor will protect, indemnify and save
harmless Mortgagee from
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and against any liabilities, obligations, damages, penalties, claims, causes of
action, costs, charges and expenses (including, without limitation, attorney's
fees and expenses) which may be imposed, upon or incurred by or asserted
against Mortgagee, except those caused by Mortgagee, its agents or employees,
by reason of (a) any accident, injury or damage to any person or property
occurring on or about the Mortgaged Property or any part thereof; (b) any use,
or condition of the Mortgaged Property or any part thereof; (c) any failure of
the Mortgagor to perform or comply with any of the provisions hereof including,
without limitation, the provisions of paragraph TWENTY FIFTH hereunder; or (d)
any necessity to defend any of the rights, title or interest conveyed or
created by this Mortgage.
Upon receipt by Mortgagee of a notice of any claim or of the commencement
of any action against Mortgagee, in respect to the above indemnity or to any
indemnity or contribution agreement contained herein, Mortgagee will promptly
give written notice of the claim or commencement of action to Mortgagor. In case
such notice or any such claim or action shall be given, Mortgagor may assume the
defense of such claim or action, including the employment of counsel and payment
of expenses. Mortgagee shall have the right to employ its own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense of
Mortgagee unless the employment of such counsel shall have been authorized in
writing by the
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Mortgagor or if Mortgagor shall not promptly have employed counsel to have
charge of the defense of such claim or action or Mortgagee shall have reasonably
concluded that there may be defenses available to it which are different from or
additional to those available to Mortgagor (in which case, Mortgagor shall not
have the right to direct the defense of such claim or action on behalf of the
Mortgagee), in any of which events such fees and expenses shall be borne by the
Mortgagor, but the Mortgagor shall not be responsible for the fees and expenses
of more than one counsel for Mortgagee. Mortgagor shall not be liable to
indemnify Mortgagee for any settlement of such claim or action effected without
Mortgagor's consent.
Any amounts payable to Mortgagee under this paragraph TWENTY FIRST which
are not paid within ten (10) days after written demand therefor by Mortgagee
shall bear interest at the rate set forth in the Mortgage Note from the date of
such demand, and such amounts, together with interest, shall be deemed to be
indebtedness secured by this Mortgage.
TWENTY SECOND: Limitations on Liens: Except with the prior written consent
of Mortgagee, Mortgagor shall not create, assume, incur or suffer to exist any
mortgage, pledge, lien, charge or other security interest or encumbrance on the
Mortgaged Property or any part thereof other than the
following:
(a) the lien of the first mortgage constituted
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pursuant to the terms of this Deed;
(b) those set forth in paragraph TWENTY THIRD of this Deed;
(c) those permitted under any pledge agreement or other instrument
under which the Mortgage Note is pledged or assigned or under any Trust
Agreement or Loan Agreement secured thereby.
TWENTY THIRD: Description of the Property: The Property is described as
follows:
The Property appears recorded in the Registry of Property, [ ] Section of
San Juan at page [ ], volume [ ] of [ ] (hereinafter the "Registry"), property
number [ ], [ ] [(__)] inscription.
The Property was formed pursuant to [ ]
By its origin, the Property is subject of record to the following:
By itself, the Property is subject to the following liens and encumbrances:
TWENTY FOUR: Miscellaneous:
(a) The headings of the clauses of this Mortgage have been inserted
for convenience or reference only and shall in no way define, modify or restrict
any of the provisions hereof;
(b) If any one or more of the provisions contained herein or in the
Mortgage Note shall be held invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provisions hereof or thereof, but each shall be
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<PAGE> 21
considered as if such illegal, invalid or unenforceable provision had never
been included;
(c) No failure or delay on the part of the Mortgagee in exercising any
power or right hereunder shall operate as a waiver thereof or a waiver of any
other term, provision or condition hereof (no single or partial exercise of any
such right or power shall preclude any other or further exercise thereof or the
exercise of any other right or power hereunder) and all rights and remedies of
the Mortgagee hereunder are cumulative and shall not be deemed exclusive of any
rights or remedies provided by law;
(d) Should the Mortgagor satisfy the Mortgage Note and the obligations
for which the Mortgage Note is pledged or assigned as collateral security in the
time and manner heretofore set forth, and respectively, comply with, and
diligently execute all agreements and stipulations herein set forth, then the
Mortgagee shall execute in its favor the corresponding release and cancellation
of this Mortgage.
TWENTY FIVE: Environmental Matters:
(a) Hazardous Substances. Except to the extent that failure to comply would
not have a material adverse effect on the Mortgagor or the Mortgaged Property
and/or would not result in or create an encumbrance, charge or claim of any kind
upon the Mortgaged Property, the Mortgagor shall:
(i) not store (except in compliance with all laws, ordinances, and
regulations pertaining thereto), dispose of, release
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<PAGE> 22
or allow the release of any hazardous substance, solid waste or oil, as defined
in forty-two (42) United States Code ("USC") Sections nine six zero one (9601)
et sequitur, forty-two (42) USC Sections six nine zero one (6901) et sequitur,
fifteen (15) USC sections two six zero one (2601) et sequitur, and the
regulations promulgated thereunder, and all applicable federal, state and local
laws, rules and regulations, on the Mortgaged Property;
(ii) neither directly nor indirectly transport or arrange for the
transport of any hazardous substance or oil (except in compliance with all laws,
ordinances and regulations pertaining thereto);
(iii) in the event of any change in the laws governing the assessment,
release or removal of hazardous substances, which change would lead a prudent
lender to require additional testing to avail itself of any statutory insurance
or limited liability, take all such action (including, without limitation, the
conducting of engineering tests at the sole expense of the Mortgagor) to confirm
that no hazardous substance or oil is or ever was stored, released or disposed
of on the Mortgaged Property; and
(iv) provide the Mortgagee with written notice: (aa) upon the Mortgagor
obtaining knowledge of the release of any hazardous substance or oil at or from
the Mortgaged Property; (bb) upon the Mortgagor's receipt of any notice to such
effect from any federal, state, or other governmental authority making an
assessment of any expense
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<PAGE> 23
incurred in connection with the containment, removal or remediation of any
hazardous substance or oil at or from the Mortgaged Property, for which the
Mortgagor may be liable or for which expense a lien may be imposed on the
Mortgaged Property.
For purposes of this section, the terms "hazardous substance" and "release"
shall have the meanings specified in the Comprehensive Environmental Response,
Compensation and Liability Act of nineteen hundred eighty (1980), forty two (42)
USC Sections nine six zero one (9601) et sequitur, ("CERCLA") and the terms
"solid waste" and "disposal" (or "disposed") shall have the meanings specified
in the Resource Conservation and Recovery Act of nineteen hundred seventy six
(1976), forty two (42) USC Sections six nine zero one (6901) et sequitur,
("RCRA") and regulations promulgated thereunder; provided, in the event either
CERCLA or RCRA is amended so as to broaden the meaning of any term defined
thereby, such broader meaning shall apply as of the effective date of such
amendment and provided further, to the extent that the laws of the jurisdiction
where the Mortgaged Property is located establish a meaning for "hazardous
substance", "release", "solid waste", or "disposal" which is broader than
specified in either CERCLA and RCRA, such broader meaning shall apply.
(b) Environmental Assessment. In addition to the Mortgagee's rights
under Section (a) (iii), the Mortgagee may, if it has reasonable basis for such
request, without regard to whether Mortgagor is in
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<PAGE> 24
default hereunder or under the Mortgage Note, require that Mortgagor obtain one
or more environmental assessments of the Mortgaged Property prepared by a
geohydrologist, an independent engineer or other qualified consultant or expert
approved by the Mortgagee evaluating or confirming (i) whether any hazardous
substances or other toxic substances are present in the soil or water at or
adjacent to the Mortgaged Property and (ii) whether the use and operation of
the Mortgaged Property comply with all applicable federal, state and local
laws, rules and regulations (herein called "Environmental Laws") relating to
air quality, environmental control, release of oil, hazardous material,
hazardous wastes and hazardous substances, and any and all other applicable
environmental laws. Environmental assessments may include detailed visual
inspections of the Mortgaged Property including, without limitation, any and
all storage area, and the taking of soil samples, surface water samples and
ground water samples, as well as such other investigations or analyses as are
necessary or appropriate for a complete determination of the compliance of the
Mortgaged Property and the use and operation thereof with all applicable
Environmental Laws.
ACCEPTANCE
The appearing parties ratify, confirm and accept this Deed because the same
has been drawn in accordance with their instructions.
I, the Notary, do hereby certify that this document was read by the
appearing parties; that I,
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<PAGE> 25
the Notary, and the said appearing parties can read and understand the English
language; that I the Notary, advised the appearing parties of the legal effects
of this document in particular to the following: (a) that title reports were
prepared by an independent third party and not by the undersigned Notary; (b)
that a certified copy of this deed must be presented for recordation in the
appropriate Registry of the Property; (c) of the possibility that other
documents affecting the rights herein created are presented for recordation
prior to the execution and/or presentation of a certified copy of this deed and
of the preference or seniority that said intervening liens, encumbrances and/or
rights may gain by such prior execution or earlier presentation to the Registry
of the Property; (d) of the desirability of verifying the status of liens and
encumbrances on the Property as may appear from the Registry of the Property on
this date and of the adverse consequences which may result from the failure to
do so; and (e) of the possible existence and pendency of additional unrecorded
statutory liens and real property taxes (including the statutory legal mortgage
in favor of the Commonwealth of Puerto Rico).
I, the Notary, do hereby certify that the appearing party signed this Deed,
and initialed every page hereof in my presence; that this document was executed
by the party before me, the Notary, after waiving his right to request the
presence of witnesses of which right I appraised him.
I, the Notary, do hereby ATTEST.
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<PAGE> 1
EXHIBIT 4.8
===============================================================================
PLEDGE AND SECURITY AGREEMENT
BETWEEN
PUERTO RICO INDUSTRIAL, TOURIST,
EDUCATIONAL, MEDICAL AND ENVIRONMENTAL CONTROL
FACILITIES FINANCING AUTHORITY
AND
DORAL PROPERTIES, INC.
DATED OCTOBER __, 1999
===============================================================================
This Pledge and Security Agreement has been assigned to Citibank, N.A.,
as Trustee under a Trust Agreement dated the date hereof, as amended or
supplemented from time to time, from Puerto Rico Industrial, Tourist,
Educational, Medical and Environmental Control Facilities Financing Authority to
such Trustee. A copy of such Trust Agreement may be inspected at the corporate
trust office of the Trustee at [ ], San Juan, Puerto Rico.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section 1. Defined Terms .............................................. 1
Section 2. Grant of Security; Pledge of Mortgage
Note ....................................................... 2
Section 3. Rights of the Authority and the Trustee .................... 3
Section 4. Application of Funds ....................................... 6
Section 5. [RESERVED] ................................................. 6
Section 6. Representations and Warranties ............................. 10
Section 7. Maintenance of Property .................................... 12
Section 8. Compliance with Laws ....................................... 12
Section 9. Insurance .................................................. 13
Section 10. Damage, Destruction and Condemnation ....................... 15
Section 11. Redemption Upon Occurrence of a Casualty
Or a Taking ................................................ 25
Section 12. Right of Entry ............................................. 25
Section 13. Headings, etc .............................................. 26
Section 14. Usury Laws ................................................. 26
Section 15. Further Assurances ......................................... 26
Section 16. No Waiver; Cumulative Remedies ............................. 27
Section 17. Amendments, etc ............................................ 27
Section 18. Addresses for Notices, etc ................................. 28
Section 19. Binding Effect ............................................. 29
Section 20. Severability of Provisions ................................. 29
Section 21. Governing Law .............................................. 29
Section 22. Offsets .................................................... 29
Section 23. Sole Discretion of the Authority ........................... 30
Section 24. Actions and Proceedings .................................... 30
Section 25. Transfer and Assignments ................................... 30
</TABLE>
<PAGE> 3
PLEDGE AND SECURITY AGREEMENT
Pledge Agreement dated this __ day of October, 1999, by and between
DORAL PROPERTIES, INC., a Puerto Rico corporation (the "Borrower"), and PUERTO
RICO INDUSTRIAL, TOURIST, EDUCATIONAL, MEDICAL AND ENVIRONMENTAL CONTROL
FACILITIES FINANCING AUTHORITY, a public corporation and government
instrumentality of the Commonwealth of Puerto Rico (the "Authority").
The Authority and Citibank, N.A. (the "Trustee") are entering into a
Trust Agreement dated as of the date hereof (the "Trust Agreement") pursuant to
which the Authority is issuing its Industrial Revenue Bonds, 1999 Series A
(Doral Financial Center Project) (the "Bonds") for the purpose of providing
funds to make a loan to the Borrower under a Loan and Guaranty Agreement to be
dated the date hereof (the "Loan Agreement"). The Loan Agreement provides that
the Borrower will make all payments of principal, premium, if any, and interest
due on the Bonds. As a condition to the making of such loan, the Authority has
requested the Borrower to enter into this Agreement. Pursuant to the Trust
Agreement, the Authority is assigning to the Trustee, as security for the
payment of the Bonds, its rights under the Loan Agreement and under this
Agreement, other than certain reserved rights.
NOW, THEREFORE, in consideration of the premises and the benefits to be
received by the Borrower from the issuance of the Bonds, and in order to induce
the Authority to issue the Bonds, the parties hereto agree as follows:
SECTION 1. DEFINED TERMS. Unless otherwise defined herein, all terms
used herein shall have the meanings assigned to such terms in the Trust
Agreement or in the Loan Agreement. For
<PAGE> 4
purposes of this Agreement, the following terms shall have the following
meanings:
"EVENT OF DEFAULT" shall mean and include any one or more of the Events
of Default specified in the Loan Agreement or the Trust Agreement.
"MINOR PARCELS" means the parcels identified as Parcel B and Parcel C
in the Mortgage.
SECTION 2. GRANT OF SECURITY; PLEDGE OF MORTGAGE NOTE.
(a) As security for the payment and performance of all the
obligations of the Borrower and Guarantor under the Loan Agreement and the
Collateral Documents, whether matured or unmatured, contingent or liquidated
(collectively, the "Secured Obligations"), the Borrower hereby pledges and
assigns, and grants to the Authority and the Trustee, for their benefit and the
benefit of the Bondholders, a continuing lien on and security interest in, all
of the Borrower's rights, title and interest in and to (i) the Mortgage Note,
(ii) all interest, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange for
the Mortgage Note, and (iii) all proceeds of any and all of the foregoing
(collectively, the "Pledged Collateral").
(b) This Agreement shall constitute a formal pledge and security
agreement, and the Authority, the Trustee and the other beneficiaries hereunder
shall have all the rights, powers and remedies of a pledgee and secured party
provided by the laws of the Commonwealth of Puerto Rico in addition to the
rights and remedies
2
<PAGE> 5
provided in this Agreement and under the Mortgage and the Mortgage Note.
(c) The Authority and the Trustee shall each, individually, be
entitled to hold the Mortgage Note in pledge until payment in full of all of the
obligations secured hereby.
(d) Without limiting the generality of the foregoing, this
Agreement secures the payment of all amounts that constitute part of the Secured
Obligations but for the fact that they are unenforceable or not allowable due to
the existence of a bankruptcy, reorganization or similar case or proceeding
involving the Borrower.
SECTION 3. RIGHTS OF THE AUTHORITY AND THE TRUSTEE.
(a) The Authority or the Trustee shall each be entitled, in its
sole and absolute discretion, to take such action or refrain from taking such
action, and to exercise the rights and remedies available to the Authority,
under this Agreement, the Mortgage and the Mortgage Note as the Authority or the
Trustee from time to time may deem appropriate. The Trustee may, upon the
occurrence of an Event of Default, at its option exercise any one or more of the
following rights: foreclose the pledge of the Mortgage Note, foreclose the
Mortgage, and exercise those remedies provided under the Mortgage or under
applicable law, including the remedies available to a secured party under Act
No. 108 of August 17, 1995, of the Legislature of Puerto Rico, as amended,
including, without limitation:
3
<PAGE> 6
(i) Without notice to or demand upon Borrower, make such
payments and do such acts as the Authority or the Trustee may deem necessary to
protects its security interest in the Pledged Collateral, including, without
limitation, paying, purchasing, contesting, or compromising any encumbrance,
charge, mortgage, lien or security interest which is prior to or superior to the
security interest granted hereunder or under the Mortgage, and in exercising any
such powers or authority to pay all expenses, for the account of Borrower,
incurred by the Authority or the Trustee in connection therewith (and all such
expenses paid by the Authority or the Trustee for the account of Borrower shall
be secured by the Collateral Documents); and
(ii) Sell, lease or otherwise dispose of the Pledged
Collateral at public sale, with or without having the Pledged Collateral at the
place of sale, and upon such terms and in such manner as the Authority or the
Trustee may determine, at which sale each of the Authority and the Trustee may
be a purchaser.
(b) The Borrower agrees that, to the extent notice of sale of the
Pledged Collateral shall be required prior to the exercise of any rights of the
Authority or the Trustee under this Section 3, at least thirty (30) days' prior
written notice to the Borrower of the time and place of any public sale or the
time after which any private sale is to be made shall constitute reasonable
notice.
(c) The rights of the Authority or the Trustee under the
Collateral Documents shall be separate, distinct and cumulative, and none of
them shall be in exclusion of the others.
(d) The Borrower agrees that the Authority or the Trustee may,
from time to time, exercise any and all rights and remedies
4
<PAGE> 7
under the Loan Agreement, the Trust Agreement and the Collateral Documents,
including without limitation commencement of actions against the Borrower to
recover sums owing thereunder and to obtain injunctive relief and specific
enforcement of the covenants hereof and thereof.
(e) Upon full satisfaction by the Borrower of the Secured
Obligations, the Authority will promptly endorse the Mortgage Note to the order
of the Borrower, without recourse, and deliver the Mortgage Note to the
Borrower.
SECTION 4. APPLICATION OF FUNDS. Any amounts realized from the exercise
of the remedies available to the Authority or the Trustee hereunder shall be
applied in the following order: first, to the payment of all taxes or
assessments on the Property which are liens prior in rank to the Mortgage and
that the Authority or the Trustee may consider necessary or desirable to pay,
except those taxes or assessments subject to which any sale of the Pledged
Collateral shall have been made, second to the payment of the costs and expenses
(including fees and disbursements of counsel) incurred in enforcing the
provisions of the Collateral Documents, which costs and expenses shall be
secured by the Collateral Documents, third, to the payment of any of the Secured
Obligations, as set forth in the Trust Agreement, and fourth, any excess to be
paid to the Borrower, to whomever may be lawfully entitled to receive the same
or as a court may direct.
5
<PAGE> 8
SECTION 5. RELEASES FROM LIEN OF MORTGAGE IN CONNECTION WITH
SALE OF MINOR PARCELS.
(a) In connection with any sale of a Minor Parcel, the Borrower
shall be entitled, subject to compliance with the conditions set forth in this
Section 5, to release from the lien of the Mortgage such Minor Parcel.
(b) As a condition to any release from the Mortgage described in
clause (a), the Borrower shall be required to deliver to the Trustee the
following:
(i) an appraisal from a real estate appraiser of
recognized standing acceptable to the Trustee that shall show an appraised value
for the property subject to the Mortgage after such release equal to or
exceeding the outstanding principal amount of the Bonds;
(ii) an opinion of counsel to the effect that (A) the
sale of the Minor Parcel and the execution by the Trustee of the release being
requested by the Borrower is permitted by the Trust Agreement, the Loan
Agreement and the Collateral Documents, and that all conditions to such
execution have been satisfied, (B) such proposed sale and release described in
clause (a) proposed to be taken by the Borrower do not conflict with or would
cause a default under the Collateral Documents, and (C) the execution by the
Borrower of the agreements proposed to be executed have been duly authorized by
the Borrower;
(iii) such mortgage notes, mortgage deeds or other
documents as shall be required to cause the amount secured by the Mortgage to be
not less than the principal outstanding amount of the Bonds; and
6
<PAGE> 9
(iv) any other documents required by the Trust Indenture
Act, including but not limited to such documents as may be required under
Section 314(d) of the Trust Indenture Act.
SECTION 6. REPRESENTATIONS AND WARRANTIES. The Borrower hereby
represents and warrants to the Authority as follows:
(a) That all of the representations and warranties made by the
Borrower in the Mortgage, the Loan Agreement and in any other Related Document
are true and correct as of the date hereof and Borrower hereby repeats and
restates each such representation and warranty herein with the same force and
effect as if originally set forth herein at length;
(b) The Borrower is a corporation duly organized and existing
under the laws of the Commonwealth of Puerto Rico;
(c) The execution, delivery and performance by the Borrower of
this Agreement, the Loan Agreement, the Mortgage Note and the Mortgage are
within the Borrower's powers, have been duly authorized by all necessary action
on the part of the Borrower, do not require any governmental approval, or any
other approval, and do not contravene any statute, regulation, decree or other
governmental restriction in Puerto Rico or in the United States applicable to
the Borrower or contravene any contractual restriction binding on the Borrower
or its property;
(d) This Agreement, the Loan Agreement, the Mortgage Note and the
Mortgage constitute legal, valid and binding obligations of the Borrower
enforceable against the Borrower in accordance with their respective terms,
except as enforcement may be limited by
7
<PAGE> 10
bankruptcy, insolvency or other laws of general application relating to the
enforcement of creditors' rights;
(e) The Borrower has good, marketable and insurable title in fee
simple absolute ("pleno dominio") to all of the Property, free and clear of all
mortgages, pledges, assignments, liens, encumbrances, charges, claims, leases or
rights of others of any kind, except Permitted Liens;
(f) The Mortgage is in proper form for recordation in accordance
with Puerto Rico law and, upon its recordation, will constitute a duly perfected
first priority lien on the Property in accordance with Puerto Rico law, subject
only to Permitted Liens; and
(g) All mortgage recording taxes, notary fees, and similar related
taxes, stamps, fees and expenses required to be paid in connection with the
execution, recordation or filing of the Mortgage have been paid in full.
(h) This Agreement creates a valid and perfected first priority
security interest in the Mortgage Note securing the payment of the Secured
Obligations upon possession thereof being taken by the Authority or the Trustee.
(i) No authorization, approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is required
either (i) for the pledge of the Mortgage Note pursuant to this Agreement, or
(ii) for the exercise by the Authority or the Trustee of any of its rights and
remedies hereunder.
8
<PAGE> 11
SECTION 7. MAINTENANCE OF PROPERTY. The Borrower will at all
times maintain, preserve and keep all and each part of the Property
as required under the Loan Agreement.
SECTION 8. COMPLIANCE WITH LAWS. The Borrower will at all
times:
(i) comply with all laws, regulations, decrees,
ordinances and other requirements of any governmental authority having
jurisdiction over the Property relating to permits, licenses, leases, franchises
and rights of the Borrower to conduct its business and the erection, repair and
use of the buildings, structures, machinery, plant and other property covered by
the Mortgage;
(ii) make adequate reserves for, and pay and discharge,
all taxes, assessments and municipal and governmental fees, rates and charges
lawfully required to be paid the Borrower, as well as
all lawful claims for labor, materials and supplies, and other debts,
liabilities and charges which, if unpaid, might by law become a lien or charge
upon the property of the Borrower or lead to a suspension of its business, and
will exhibit to the Authority, upon its request, receipts for, or other
satisfactory evidence of, each such payment.
SECTION 9. INSURANCE
(a) The Borrower at its expense will keep the Property and all
structures and improvements erected thereon insured against loss or damage by
fire, flood, earthquake, explosion, smoke damage, windstorm and hurricane,
standard extended coverage perils,
9
<PAGE> 12
business interruption, and such other hazards, and in such amounts, as are
normally carried by entities engaged in the same or a similar business in Puerto
Rico.
(b) All policies of insurance shall be issued by an insurer
acceptable to the Authority (or the Trustee, as the Authority's assignee) duly
licensed to do business in the Commonwealth of Puerto Rico and (except for
public liability insurance) shall contain the standard mortgagee
non-contribution clause endorsement or an equivalent endorsement satisfactory to
the Authority (or the Trustee, as the Authority's assignee) naming the Trustee
as loss payee. The public liability policies will name the Trustee as additional
insured. The Borrower shall pay the premiums for the policies as the same become
due and payable. Not later than thirty (30) days prior to the expiration date of
each of the policies, the Borrower will deliver to the Authority and the Trustee
a renewal policy or policies marked "premium paid" or accompanied by other
evidence of payment of premium satisfactory to the Authority and
the Trustee.
(c) In addition to the foregoing requirements, each policy of
insurance required to be carried hereunder shall contain a provision whereby the
insurer (i) agrees that such policy shall not be canceled, modified or denied
renewal without at least thirty (30) days prior written notice to the Authority
and the Trustee, (ii) waives any right to claim any premiums or commissions
against the Authority and the Trustee, and (iii) provides that the Authority and
the Trustee are permitted to make payments to effect the confirmation of such
policy upon notice of cancellation due to nonpayment of premiums. In the event
any such policy shall contain breach of warranty provisions, such policy shall
provide that in respect of the interests of the Authority or the Trustee such
10
<PAGE> 13
policy shall not be invalidated by any action or inaction of the Borrower or any
other Person and shall insure the Authority and the Trustee regardless of any
breach or violation of any warranty, declarations or conditions contained in
such policy by the Borrower or any other Person. The Borrower will not violate
or permit to be violated any of the conditions, provisions, or requirements of
any insurance policy required hereunder.
(d) If at any time the Authority or the Trustee is not in receipt
of written evidence that all insurance required hereunder is in force and
effect, the Authority and the Trustee shall have the right, but not the
obligation, with prior written notice to the Borrower, to take such action as
the Authority or the Trustee deems necessary to protect its interest in the
Property, including, without limitation, the obtaining of such insurance
coverage as the Authority or the Trustee deems appropriate, and all expenses
incurred by the Authority and the Trustee in connection with such action or in
obtaining such insurance and keeping it in effect shall be paid by Borrower upon
demand and be secured by the Collateral Documents.
(e) If the Property shall be damaged or destroyed, in whole or in
part, by fire or other casualty, the Borrower shall give prompt notice thereof
to the Authority and the Trustee, and the Authority and the Trustee may make
proof of loss if not promptly made or diligently pursued by the Borrower.
Notwithstanding any damage or destruction to the Property or any part thereof,
the Borrower shall continue to pay all amounts required to be paid under the
Loan Agreement at the time and in the manner provided in the Loan Agreement.
11
<PAGE> 14
SECTION 10. DAMAGE, DESTRUCTION AND CONDEMNATION. (a) Unless the
Borrower shall have exercised its option to prepay the amounts payable under the
Loan Agreement pursuant to the provisions of Article VIII thereof, if prior to
full Payment of the Bonds (i) the Property or any portion thereof is destroyed
(totally or partially) or is damaged by fire or other casualty (a "Casualty"),
or (ii) title to any interest in, or the temporary use of, the Property or any
part thereof shall be taken under the exercise of the power of eminent domain
(or any proceedings in lieu thereof) by any governmental body or by any Person
acting under governmental authority (a "Taking"), the Borrower shall be subject
to the provisions of this Section with respect to the application of insurance,
condemnation or other proceeds to which the Borrower would be entitled by reason
of such damage, casualty or taking.
(b) In the event of any Casualty, the Borrower shall give notice
thereof to the Authority and the Trustee, which shall describe the nature and
extent of such damage or destruction, and shall set forth the Borrower's best
estimate at that time of the cost of repair, restoration or rebuilding (the
"Restoration") of the damaged Property and the period of time required to
complete such Restoration. Any amounts received or payable as a result of a
Casualty shall be paid and delivered directly to the Authority or the Trustee,
as the Authority's assignee, by the concerned insurance companies. The insurance
proceeds, net of all the costs, fees and expenses incurred by the Authority, the
Trustee and the Borrower in the collection thereof (the "Net Insurance
Proceeds"), received or payable on account of a Casualty shall be applied as
herein stated.
12
<PAGE> 15
(i) If the estimated cost of the Restoration does not
exceed $100,000, the Trustee shall make available to the Borrower the Net
Insurance Proceeds with no further requirement or restriction of any nature, and
the Borrower shall be free either to undertake the Restoration or not to
undertake the Restoration.
(ii) If the estimated cost of the Restoration exceeds
$100,000 and but does not exceed $20,000,000, and if no default under this
Agreement, the Loan Agreement, the Mortgage, the Mortgage Note or the Trust
Agreement exists, and no event shall have occurred which, with the giving of
notice or the passage of time, or both, would constitute such default, the Net
Insurance Proceeds shall be delivered by the Authority to the Borrower, who
shall promptly and diligently apply the same exclusively to the Restoration of
the Property. In the event the costs and expenses of the Restoration exceed the
Net Insurance Proceeds, the Borrower will pay the difference.
(iii) If the estimated cost of the Restoration exceeds
$20,000,000 or the provisions of clause (i) or (ii) above are otherwise
inapplicable, the Authority, the Trustee, and the Borrower will cause the Net
Insurance Proceeds resulting from any event described in Section 10(a)(i) to be
deposited with the Trustee, in trust for the benefit of the Bondholders, until
disbursed as provided herein. All Net Insurance Proceeds so deposited shall be
applied as follows:
(A) In the event (1) of a Casualty of all or substantially all of the
Property which, in the judgment of the Borrower, renders the Property remaining
after such Casualty physically or
13
<PAGE> 16
economically not suitable for the restoration, replacement or rebuilding of such
Property to substantially its condition, character and value immediately prior
to the occurrence of such Casualty (any such Casualty hereinafter referred to as
a "Total Casualty") or (2) that the Borrower does not elect to or cannot apply
the Net Insurance Proceeds as provided in, or cannot otherwise comply with the
conditions of, Section 10(b)(iii)(B), then the Net Insurance Proceeds shall be
applied to the redemption of Bonds in whole or in part in accordance with
Section 8.02(e) of the Loan Agreement.
(B) In cases other than upon the occurrence of a Total Casualty,
the Borrower may elect to apply the Net Insurance Proceeds toward the cost of
the Restoration of the damaged Property by giving written notice of its
intention as promptly as possible after the occurrence of such Casualty to the
Authority and the Trustee. The Authority or the Trustee shall make available the
Net Insurance Proceeds to the Borrower, who shall promptly and diligently apply
the same exclusively to the Restoration of the Property. The Net Insurance
Proceeds shall be disbursed by the Trustee to the Borrower from time to time as
the work progresses, pursuant to certifications issued by the Borrower; provided
that prior to the commencement of any work on the Restoration of the damaged
Property and to any disbursement of Net Insurance Proceeds to, or upon the order
of, the Borrower, the Borrower shall submit, deliver or otherwise deposit with
the Authority and the Trustee:
(1) an estimate of the cost of the Restoration of the
damaged Property approved by an architect or engineer licensed in
Puerto Rico;
14
<PAGE> 17
(2) the plans and specifications for the Restoration of
the damaged Property prepared by an architect or engineer licensed in Puerto
Rico;
(3) evidence of adequate insurance coverage during the
Restoration; and
(4) evidence that the contemplated Restoration of the
damaged Property shall be of a character and nature such that the Property shall
return to the same or similar function than the one they had immediately prior
to the occurrence of the Casualty.
In addition to the foregoing, the following conditions shall
be complied with:
(i) There shall exist no uncured Event of Default under
this Agreement, the Loan Agreement, the Mortgage, the Mortgage Note, or the
Trust Agreement, and no event shall have occurred which, with the giving of
notice or the passage of time, or both, would constitute such an Event of
Default.
(ii) The Restoration of the damaged Property shall be done
and completed by the Borrower in an expeditious and diligent fashion, in
compliance with all applicable laws, statutes, ordinances, regulations, orders,
rules and covenants.
(iii) All costs and expenses incurred by the Authority or
the Trustee in connection with making the Net Insurance Proceeds and the funds
deposited by the Borrower pursuant to the provisions hereof available to the
Borrower for the Restoration of the damaged
15
<PAGE> 18
Property, including, without limitation, counsel fees, shall be paid by the
Borrower.
(iv) In the event that the Borrower fails to comply with
any of the foregoing, the Net Insurance Proceeds on account of a Casualty shall
be applied by the Authority as provided in Section 10(b)(iii)(A) above.
(v) In the event the costs and expenses of the
Restoration exceed the Net Insurance Proceeds, the Borrower will pay the
difference.
(c) In the event of a Taking of all or any part of the Property,
or the commencement of any proceedings or negotiations which might result in
such Taking, the Borrower will promptly give written notice thereof to the
Authority and the Trustee generally describing the nature and extent of such
Taking or the nature and extent of the Taking which might result therefrom. The
Authority and the Trustee may each participate jointly with the Borrower in said
proceedings or negotiations, and the Borrower shall deliver to the Authority and
the Trustee all instruments and necessary documents to permit such
participation. The Borrower shall file and prosecute its claim or claims for any
such award or payment in good faith and with due diligence. The Borrower will
pay all reasonable costs, fees, and expenses incurred by the Authority and the
Trustee in connection with any Taking and seeking and obtaining any award or
payment on account thereof, including, without limitation, attorney's fees.
16
<PAGE> 19
All awards and payments on account of a Taking shall be delivered to
the Authority or the Trustee, as the Authority's assignee. The Borrower shall
execute and deliver any and all assignments, endorsements or other instruments
necessary to assign and transfer to the Authority and the Trustee all such
awards and payments free and clear of all liens and encumbrances. The awards and
payments on account of a Taking, net of all the costs, fees and expenses
incurred by the Authority, the Trustee and the Borrower in the collection
thereof (the "Net Condemnation Proceeds"), shall be applied as stated herein.
The Authority, the Trustee, and the Borrower will cause the Net Condemnation
Proceeds resulting from any event described in Section 10(a)(ii) involving
amounts in excess of $20,000,000 to be deposited with the Trustees AS described
above. All Net Condemnation Proceeds so deposited shall be applied as follows:
(i) In the case of a Taking of all or substantially all
of the Property which in the judgment of the Borrower renders the Property
remaining after such Taking physically or economically not feasible or suitable
for the Restoration of such property to substantially its condition, character
and value immediately prior to the occurrence of such Taking (any such Taking
hereinafter referred to as a "Total Taking"), the Net Condemnation Proceeds
shall be applied to the redemption of the Bonds in accordance to Section 8.02(e)
of the Loan Agreement.
(ii) In all cases other than upon the occurrence of a
Total Taking, if the Net Condemnation Proceeds do not exceed
17
<PAGE> 20
$100,000, the Trustee shall make available to the Borrower the Net Condemnation
Proceeds with no further requirements or restriction of any nature.
(iii) In all cases other than upon the occurrence of a
Total Taking, if the Net Condemnation Proceeds exceed $100,000 but do not exceed
$20,000,000, and if no default under this Agreement, the Loan Agreement, the
Mortgage, the Mortgage Note or the Trust Agreement exists, and no event shall
have occurred which, with the giving of notice or passage of time, or both,
would constitute such default, the Net Insurance Proceeds shall be delivered by
the Authority or the Trustee to the Borrower who shall promptly and diligently
apply the same exclusively to the Restoration of the Property. In the event such
costs and expenses exceed the Net Condemnation Proceeds, the Borrower will pay
the difference.
(iv) In all cases other than upon the occurrence of a
Total Taking, if the Net Condemnation Proceeds shall exceed $20,000,000, the
Borrower may elect to apply the Net Condemnation Proceeds toward the cost of the
Restoration of the Property in the same manner and subject to the same terms and
conditions established for cases other than a Total Casualty in Section 10(b)
above.
(d) The Authority shall cooperate fully with Borrower, at the
expense of Borrower, in filing any proof of loss with respect to any insurance
policy covering the casualties described in Section 10(a) hereof and in the
prosecution or defense of any prospective or pending condemnation proceeding
with respect to the Property or any
18
<PAGE> 21
part thereof, or any property of Borrower in connection with which the Property
is used and may, with the prior written consent of the Authority, litigate in
any proceeding resulting therefrom and in the name and on behalf of the
Authority. In no event will the Authority voluntarily settle, or consent to the
settlement of, any proceeding arising out of any insurance claim or any
prospective or pending condemnation proceeding with respect to the Property or
any part thereof without the written consent of an Authorized Borrower
Representative.
SECTION 11. REDEMPTION UPON OCCURRENCE OF A CASUALTY OR A TAKING. In
the event the Trustee shall, pursuant to the provisions of Section 10 hereof, be
entitled to retain and apply the Net Insurance Proceeds or the Net Condemnation
Proceeds to the redemption of Bonds, the Trustee shall direct the mandatory
redemption of Bonds in accordance with the Loan Agreement and the Trust
Agreement (i) in whole in the event of a Total Taking or a Total Casualty or
(ii) in whole or in part, to the extent of such Net Insurance Proceeds or Net
Condemnation Proceeds, in the event of a Casualty other than a Total Casualty or
a Taking other than a Total Taking. The Trustee shall also apply the Net
Insurance Proceeds or Net Condemnation Proceeds to the redemption of Bonds to
the extent the Borrower exercises its option to redeem Bonds pursuant to Section
8.03 of the Loan Agreement.
SECTION 12. RIGHT OF ENTRY. The Authority and the Trustee and their
agents shall have the right, after reasonable prior notice to
19
<PAGE> 22
the Borrower, to enter and inspect the Property during normal business hours.
SECTION 13. HEADINGS, ETC. The headings and captions of the various
Sections of this Agreement are for convenience of reference only and are not to
be construed as defining or limiting, in any way, the scope or intent of the
provisions hereof.
SECTION 14. USURY LAWS. This Agreement, the Mortgage, the Loan
Agreement and the Mortgage Note are subject to the express condition that at no
time shall the Borrower be obligated or required to pay interest on the
obligations secured thereby and hereby at a rate which could subject the holder
of the Mortgage Note or beneficiary of the above documents to either civil or
criminal liability as a result of being in excess of the maximum interest rate
which the Borrower is permitted by law to contract or agree to pay. If by the
terms of this Agreement, the Loan Agreement, the Mortgage or the Mortgage Note,
the Borrower is at any time required or obligated to pay interest at a rate in
excess of such maximum rate, the rate of interest shall be deemed to be
immediately reduced to such maximum rate and the interest payments in excess of
such maximum rate shall be applied and shall be deemed to have been payments in
reduction of principal.
SECTION 15. FURTHER ASSURANCES. The Borrower hereby agrees to promptly
execute and deliver such additional agreements and instruments and to promptly
take such additional action as the Authority or the Trustee may at any time and
form time to time
20
<PAGE> 23
request in writing in order for the Authority or the Trustee to obtain the full
benefits and rights granted or purported to be granted by this Agreement and to
fully and continually perfect the security interests created hereby.
SECTION 16. NO WAIVER; CUMULATIVE REMEDIES. No failure or delay on the
part of the Authority or the Trustee in exercising any right, power or remedy
hereunder or under or in connection with the Mortgage Note or the Mortgage shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy hereunder or under or in
connection with the Mortgage Note or the Mortgage. The remedies herein and in
the Mortgage provided are cumulative and not exclusive of any remedies provided
by law.
SECTION 17. AMENDMENTS, ETC. No amendment, modification, termination,
or waiver of any provision of this Agreement, the Mortgage Note or the Mortgage
nor consent to any departure by the Borrower therefrom shall in any event be
effective unless the same shall be in writing and signed by the Authority and
the Trustee, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. No notice to or
demand on the Borrower in any case shall entitle the Borrower to any other or
further notice or demand in similar or other circumstances.
21
<PAGE> 24
SECTION 18. ADDRESSES FOR NOTICES, ETC. All notices requests, demands,
directions and other communications hereunder or in connection with the Mortgage
Note or the Mortgage shall be in writing (including telegraphic communication)
and mailed by certified or registered mail, return receipt requested, or
confirmed telecopier or delivered to the applicable party at the address
indicated below:
If to the Borrower:
Doral Financial Corporation, Inc.
Attention:
Telecopier:
If to the Authority:
Puerto Rico Industrial, Tourist, Educational,
Medical and Environmental Control Facilities
Financing Authority
c/o Government Development Bank for Puerto Rico
G.P.O. Box 42001
San Juan, Puerto Rico 00940
Attention: Executive Director
Telecopier: 726-1440
or, as to each party, at such other or additional address as shall be designated
by such party in a written notice to each other party complying as to delivery
with the terms of this Section. All such notices, requests, demands, directions
and other communications shall, when mailed or telecopied, be effective when
deposited in the mail or dispatched by telecopier, respectively, addressed as
aforesaid.
22
<PAGE> 25
SECTION 19. BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the Borrower, the Authority and their respective
successors and assigns.
SECTION 20. SEVERABILITY OF PROVISIONS. Any provision of this
Agreement, the Mortgage Note or the Mortgage which is prohibited or
unenforceable in Puerto Rico shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof.
SECTION 21. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of Puerto Rico.
SECTION 22. OFFSETS. The Authority and its assignees shall take the
Mortgage, the Mortgage Note and this Agreement, to the extent permitted by law,
free and clear of all offsets of any nature whatsoever which Borrower may have
against the Authority or its assignees and no such offset shall be interposed or
asserted by the Borrower in any action or proceeding brought by the Authority or
any such assignee and any such right to interpose or assert any such offset in
any such action or proceeding is hereby expressly waived by the Borrower.
SECTION 23. SOLE DISCRETION OF THE AUTHORITY. Unless expressly stated
to the contrary herein, wherever pursuant to this Agreement, the Mortgage Note
or the Mortgage, the Authority may exercise any right given to it to approve or
disapprove, or any arrangement or
23
<PAGE> 26
term is to be satisfactory to the Authority, the decision of the Authority to
approve or disapprove or to decide that arrangements or terms are satisfactory
or not satisfactory shall be in the sole discretion of the Authority and shall
be final and conclusive.
SECTION 24. ACTIONS AND PROCEEDINGS. The Authority shall have the right
to appear in and defend any action or proceeding brought with respect to the
Property and to bring any action or proceeding, in the name or on behalf of the
Borrower, which the Authority in its discretion, feels should be brought to
protect its interest in the Property, and shall proceed in accordance with the
Mortgage.
SECTION 25. TRANSFER AND ASSIGNMENTS. The Borrower hereby acknowledges
and consents to the transfer and assignment by the Authority to the Trustee,
pursuant to the terms of the Trust Agreement, of all of the Authority's rights
and interest under the Loan Agreement, the Mortgage, the Mortgage Note and this
Agreement, and acknowledge that upon such transfer and assignment the Trustee
shall be entitled to all of the benefits and security thereof and hereof. The
Authority acknowledges and consents to the transfer and assignment of the
Borrower's interest in this Agreement and the other Collateral Documents in
accordance with and subject to compliance with the terms of the Loan Agreement.
24
<PAGE> 27
IN WITNESS WHEREOF, the parties hereto have caused this Pledge and
Security Agreement to be duly executed by their respective officers thereunto
duly authorized on the date first above written, in San Juan, Puerto Rico.
DORAL PROPERTIES, INC.
By:
------------------------------------------
PUERTO RICO INDUSTRIAL, TOURIST,
EDUCATIONAL, MEDICAL AND
ENVIRONMENTAL CONTROL FACILITIES
FINANCING AUTHORITY
By:
------------------------------------------
Carlos Colon de Armas
Executive Director
Acknowledged:
CITIBANK, N.A.,
as Trustee under the Trust
Agreement
By:
----------------------------
AGREED AND ACCEPTED:
DORAL FINANCIAL CORPORATION
as Guarantor of the obligations
of the Borrower under this
Agreement
By:
----------------------------
25
<PAGE> 1
EXHIBIT 5
PIETRANTONI MENDEZ & ALVAREZ LLP
BANCO POPULAR CENTER - SUITE 1901
209 MUNOZ RIVERA AVENUE
SAN JUAN, PUERTO RICO 00918
SWITCHBOARD (787) 274-1212
TELECOPIER (787) 274-1470
October 12, 1999
Doral Financial Corporation
Doral Properties, Inc.
1159 Franklin D. Roosevelt Avenue
San Juan, Puerto Rico 00920
Re: Doral Financial Corporation
Doral Properties, Inc.
Registration Statement on Form S-3 (File Nos. 333-83877
and 333-83877-01)
Ladies and Gentlemen:
Reference is made to the Registration Statement on Form S-3 (File Nos.
333-83877 and 333-83877-01) dated July 27, 1999, as amended by a Pre-Effective
Amendment No. 1 dated the date hereof (the "Registration Statement") filed by
Doral Financial Corporation, a Puerto Rico corporation (the "Guarantor") and
Doral Properties, Inc., a Puerto Rico corporation (the "Borrower"), relating to
the undivided interests in a loan and guaranty agreement to be entered into by
and among Puerto Rico Industrial, Tourist, Educational, Medical and
Environmental Control Facilities Financing Authority ("AFICA"), the Borrower
and the Guarantor in connection with the issuance by AFICA of $44,425,000 of
its Industrial Revenue Bonds, 1999 Series A (Doral Financial Center Project)
(the "Bonds"), which undivided interests (the "Securities") will be registered
under the Securities Act of 1933, as amended. The Bonds will be issued pursuant
to a trust agreement to be entered into by and between AFICA and Citibank,
N.A., as trustee (the "Trustee"). The proceeds of the Bonds will be loaned by
AFICA to the Borrower pursuant to such loan and guaranty
<PAGE> 2
agreement, and the loan and guaranty agreement will be assigned to the Trustee
under the trust agreement.
We advise you that we have examined originals or copies, certified or
otherwise identified to our satisfaction, of: (i) the certificate of
incorporation and by-laws of each of the Borrower and the Guarantor; (ii) the
draft loan and guaranty agreement filed as an exhibit to the Registration
Statement (the "Loan Agreement"); (iii) the draft trust agreement filed as an
exhibit to the Registration Statement (the "Trust Agreement"); and (iv) such
other documents, instruments and certificates of officers and representatives
of the Borrower, the Guarantor and public officials, and we have made such
examination of law, as we have deemed appropriate as the basis for the opinion
hereinafter expressed. In making such examination, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to
us as originals and the conformity to original documents of documents submitted
to us as certified or photostatic copies.
We have assumed that the Loan Agreement shall have been duly
authorized, executed and delivered by the Borrower, the Guarantor and AFICA and
that the Trust Agreement shall have been duly authorized, executed and
delivered by AFICA and the Trustee, all to be completed timely in the manner
presently proposed in the Registration Statement.
We have also assumed that AFICA and the Trustee shall be duly
organized, validly existing and in good standing under the laws of their
respective jurisdiction of organization and duly qualified to engage in the
activities contemplated by the Loan Agreement and the Trust Agreement,
respectively. We have also assumed that the Loan Agreement and the Trust
Agreement constitute the legally valid, binding and enforceable obligations of
AFICA enforceable against AFICA in accordance with their terms and that the
Trust Agreement constitutes the legally valid, binding and enforceable
obligation of the Trustee enforceable against the Trustee in accordance with
its terms.
Based upon the foregoing, and upon the taking of the actions described
above, it is our opinion that the Securities will have been duly authorized by
the Borrower and the Guarantor and when the Registration Statement shall have
been declared effective, the Loan Agreement and the Trust Agreement shall have
been duly executed by all parties thereto in the forms filed as exhibits to the
Registration Statement, and the Securities shall have been sold and delivered
as contemplated by the Registration Statement, the Securities will be entitled
to the benefits of the
2
<PAGE> 3
Trust Agreement, and the Securities will constitute a valid and legally binding
obligation of the Borrower and the Guarantor, enforceable against the Borrower
and the Guarantor in accordance with its terms, except as limited by bankruptcy,
insolvency and other laws affecting creditors' rights generally and by equitable
principles limiting the availability of remedies and the discretion of the court
before which any proceeding therefor may be brought.
We are attorneys admitted to practice in the Commonwealth of Puerto
Rico. We express no opinion herein concerning the laws of any jurisdiction
other than the laws of the United States of America and the Commonwealth of
Puerto Rico.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and we further consent to the reference made to us under
the caption "Legal Matters" in the Official Statement and Prospectus. In giving
the foregoing consent, we do not thereby admit that we are within the category
of persons whose consent is required under Section 7 of the Securities Act of
1933, as amended.
Very truly yours,
/s/ Pietrantoni Mendez & Alvarez LLP
3
<PAGE> 1
EXHIBIT 8
[LETTERHEAD OF FIDDLER GONZALEZ & RODRIGUEZ, LLP]
October 12, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Doral Financial Corporation
Registration Statement on Form S-3 (File Nos. 333-83877 and
333-83877-01)
Dear Sir or Madam:
Reference is made to the Registration Statement on Form S-3 (File Nos.
333-83877 and 333-83877-01) dated July 27, 1999, as amended by a Pre-Effective
Amendment No. 1 dated the date hereof (the "Registration Statement") filed by
Doral Financial Corporation, a Puerto Rico corporation (the "Guarantor") and
Doral Properties, Inc., a Puerto Rico corporation (the "Borrower"), relating to
the undivided interests in a loan and guaranty agreement (the "Loan Agreement")
to be entered into by and between Puerto Rico Industrial, Tourist, Educational,
Medical and Environmental Control Facilities Financing Authority ("AFICA"), the
Borrower and the Guarantor in connection with the issuance by AFICA of
$44,425,000 of its Industrial Revenue Bonds, 1999 Series A (Doral Financial
Center Project) (the "Bonds"), which undivided interests (the "Securities")
will be registered under the Securities Act of 1933, as amended. The Bonds will
be issued pursuant to a trust agreement (the "Trust Agreement") to be entered
into by and between
<PAGE> 2
AFICA and Citibank, N.A., as trustee (the "Trustee"). The proceeds of the Bonds
will be loaned by AFICA to the Borrower pursuant to the Loan Agreement, which
will be assigned to the Trustee pursuant to the Trust Agreement.
We advise you that we have examined originals or copies, certified or
otherwise identified to our satisfaction, of: (i) the draft of the Loan
Agreement filed as an exhibit to the Registration Statement; (ii) the draft of
the Trust Agreement filed as an exhibit to the Registration Statement; and
(iii) such other documents, instruments and certificates of officers and
representatives of the Borrower, the Guarantor and public officials, and we
have made such examination of law, as we have deemed appropriate as the basis
for the opinion hereinafter expressed. In making such examination, we have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as originals and the conformity to original documents of
documents submitted to us as certified or photostatic copies.
We have assumed that the Loan Agreement shall have been duly
authorized, executed and delivered by the Borrower, the Guarantor and AFICA and
that the Trust Agreement shall have been duly authorized, executed and
delivered by AFICA and the Trustee, all to be completed timely in the manner
presently proposed in the Registration Statement.
We have also assumed that the Borrower, the Guarantor and the Trustee
shall be duly organized, validly existing and in good standing under the laws
of their respective jurisdiction, that the Borrower and the Guarantor shall be
duly qualified to engage in the activities contemplated by the Loan Agreement,
and that the Trustee shall be duly qualified to engage in the activities
contemplated by the Trust Agreement. We have also assumed that the Loan
Agreement constitutes the legally valid, binding and enforceable obligations of
the Borrower and the Guarantor enforceable against the Borrower and the
Guarantor in accordance with its terms and that the Trust Agreement constitutes
the legally valid, binding and enforceable obligation of the Trustee
enforceable against the Trustee in accordance with its terms.
All capitalized words and terms used in this opinion letter and not
otherwise defined herein will have the meanings ascribed to them in the Trust
Agreement.
Based upon the foregoing, and upon the taking of the actions described
above, it is our opinion that:
1. The Bonds, and the transfer of the Bonds, including any gain
derived upon the sale of the Bonds, are exempt from Puerto
Rico income tax pursuant to Article 8(b) of the Act.
2. Interest on the Bonds is (i) excluded from the gross income of
the recipient thereof for Puerto Rico income tax purposes
pursuant to Section 1022(b)(4)(B) of the Puerto Rico Internal
Revenue Code of 1986, as amended (the "PR-Code"); (ii) exempt
from Puerto Rico income tax and alternative minimum tax
pursuant to Section
<PAGE> 3
1022(b)(4)(B) of the PR-Code, Article 8(b) of the Act, and
Section 3 of the Puerto Rican Federal Relations Act (the
"PRFRA"); and (iii) exempt from Puerto Rico municipal license
tax pursuant to Section 9(25) of the Puerto Rico Municipal
License Tax Act of 1974, as amended, and Section 3 of the
PRFRA.
3. The Bonds are exempt from Puerto Rico personal property tax
pursuant to Section 3.11 of the Puerto Rico Municipal
Property Tax Act of 1991, as amended, and Section 3 of the
PRFRA.
4. The Bonds are exempt from Puerto Rico (i) gift tax with
respect to donors who are residents of Puerto Rico at the
time the gift is made and (ii) estate tax with respect to
estates of decedents who are residents of Puerto Rico at the
time of death, excluding in each case United States citizens
who acquired their United States citizenship other than by
reason of birth or residence in Puerto Rico.
5. The Bonds will be considered an obligation of an
instrumentality of Puerto Rico for purposes of (i) the
non-recognition of gain rules of Section 1112(f)(2)(A) of the
PR Code applicable to certain involuntary conversions and
(ii) the exemption from the surtax imposed by Section 1102 of
the PR Code available to corporations and partnerships that
have a certain percentage of their net income invested in
obligations of instrumentalities of Puerto Rico and certain
other investments.
6. Interest on the Bonds constitutes "industrial development
income" under Section 2(j) of the Puerto Rico Industrial
Incentives Act of 1963, the Puerto Rico Industrial Incentives
Act of 1978, the Puerto Rico Tax Incentives Act of 1987, and
the Puerto Rico Tax Incentives Act of 1998, as amended
(collectively, the "Acts"), when received by a holder of a
grant of tax exemption issued under any of the Acts that
acquired the Bonds with "eligible funds," as such term is
defined in the Acts.
7. Assuming that the Borrower complies with the source of income
representations, warranties and covenants contained in the
Loan Agreement, then:
(A) Interest received or accrued on the Bonds is
excludable from gross income pursuant to Section
933(1) of the Code if the holder of the Bonds is an
individual who is a bona fide resident of Puerto
Rico during the entire taxable year in which the
interest is received or accrued.
(B) Interest received or accrued on the Bonds is not
subject to United States federal income tax if the
holder of the Bonds is a corporation organized under
the laws of Puerto Rico or any foreign country and
such interest is not effectively connected with the
conduct of a trade or business in the United States
by such corporation.
<PAGE> 4
8. Interest on the Bonds is not excluded from the gross income
of the recipient thereof for United States federal income tax
purposes under Section 103(a) of the Code.
United States taxpayers, other than individuals who are bona fide
residents of Puerto Rico during the entire taxable year, will be subject to
United States federal income tax on gain realized upon the sale or exchange of
the Bonds. Pursuant to Notice 89-40, 1989-1 CB 681, gain on the sale of the
Bonds (not including original issue discount accruing under the Code as of the
date of such sale or exchange) by an individual who is a bona fide resident of
Puerto Rico for purposes of Section 865(g)(1) of the Code will constitute
income from sources within Puerto Rico and will qualify for the exclusion
provided in Section 933(1) of the Code, provided that the Bonds do not
constitute inventory property in such individual's hands.
Ownership of the Bonds may result in having a portion of the interest
expense allocable to interest on the Bonds disallowed for purposes of computing
the regular tax and the alternative minimum tax for Puerto Rico income tax
purposes.
This opinion is limited to the above, and we express no other opinion
regarding Puerto Rico or United States tax consequences arising from ownership
or disposition of the Bonds.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and the inclusion of the form of this firm's opinion as
Appendix A to the official statement and prospectus included in the
Registration Statement. We further consent to the reference made to us under
the captions "Summary-Tax Consequences," "Taxation" and "Legal Matters" in the
official statement and prospectus.
Very truly yours,
/s/ Fiddler Gonzalez & Rodriguez, LLP
<PAGE> 1
EXHIBIT 12
DORAL FINANCIAL CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
SIX
MONTH
PERIOD
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
--------- -----------------------------------------------------
1999 1998 1997 1996 1995 1994
--------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
INCLUDING INTEREST ON DEPOSITS
EARNINGS:
Pre-tax income from continuing operations $ 37,930 $ 59,839 $ 37,797 $31,279 $22,060 $18,745
Plus:
Fixed Charges (excluding capitalized interest) 66,500 115,894 62,269 47,130 44,442 23,996
-------- -------- -------- ------- ------- -------
TOTAL EARNINGS $104,430 $175,733 $100,066 $78,409 $66,502 $42,741
======== ======== ======== ======= ======= =======
FIXED CHARGES:
Interest expensed and capitalized $ 65,251 $114,396 $ 60,912 $45,857 $43,380 $23,252
Amortized premiums, discounts, and capitalized
expenses related to indebtedness 611 544 526 586 372 83
An estimate of the interest component within rental expense 712 1,080 831 687 690 661
-------- -------- -------- ------- ------- -------
TOTAL FIXED CHARGES $ 66,574 116,020 62,269 47,130 44,442 23,996
======== ======== ======== ======= ======= =======
RATIO OF EARNINGS TO FIXED CHARGES 1.57 1.51 1.61 1.66 1.50 1.78
======== ======== ======== ======= ======= =======
EXCLUDING INTEREST ON DEPOSITS
EARNINGS:
Pre-tax income from continuing operations $ 37,930 $ 59,839 $ 37,797 $31,279 $22,060 $18,745
Plus:
Fixed Charges (excluding capitalized interest) 51,935 98,456 52,255 41,604 41,081 22,891
-------- -------- -------- ------- ------- -------
TOTAL EARNINGS $ 89,865 $158,295 $ 90,052 $72,883 $63,141 $41,636
======== ======== ======== ======= ======= =======
FIXED CHARGES:
Interest expensed and capitalized $ 50,686 $ 96,916 $ 50,898 $40,331 $40,019 $22,147
Amortized premiums, discounts, and capitalized
expenses related to indebtedness 611 544 526 586 372 83
An estimate of the interest component within rental expense 712 1,080 831 687 690 661
-------- -------- -------- ------- ------- -------
TOTAL FIXED CHARGES $ 52,009 98,540 52,255 41,604 41,081 22,891
RATIO OF EARNINGS TO FIXED CHARGES 1.73 1.61 1.72 1.75 1.54 1.82
======== ======== ======== ======= ======= =======
</TABLE>
<PAGE> 1
EXHIBIT 23.3
[PRICEWATERHOUSECOOPERS LOGO]
- -------------------------------------------------------------------------------
PricewaterhouseCoopers LLP
PO Box 363566
San Juan PR 00936-3566
Telephone (787 754-9090
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated March 5, 1999 relating to the
financial statements, which appears in Doral Financial Corporation's Annual
Report on Form 10-K for the year ended December 31, 1998. We also consent to the
reference to us under the heading "Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
San Juan, Puerto Rico
October 12, 1999
<PAGE> 1
EXHIBIT 25
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE
PURSUANT TO SECTION 305(B)(2) [ ]
------------------------
CITIBANK, N.A.
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
13-5266470
(I.R.S. EMPLOYER IDENTIFICATION NUMBER)
399 PARK AVENUE, NEW YORK, NEW YORK 10043
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)
MANUEL MORERA - RESIDENT VICE PRESIDENT (787) 766-2043
CITIBANK N.A.
ONE CITIBANK DRIVE 2 SOUTH
RIO PIEDRAS, PUERTO RICO 00926
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
</TABLE>
-----------------------
DORAL FINANCIAL CORPORATION
DORAL PROPERTIES, INC.
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
COMMONWEALTH OF PUERTO RICO 66-0312162 - DORAL FINANCIAL CORPORATION
(STATE OR OTHER JURISDICTION OF 66-0572283 - DORAL PROPERTIES, INC.
INCORPORATION OR ORGANIZATION) (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
1159 F. D. ROOSEVELT AVENUE
PUERTO NUEVO, PUERTO RICO 00920
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
-------------------------
UNDIVIDED INTERESTS IN LOAN TO DORAL PROPERTIES, INC. MADE PURSUANT TO LOAN AND
GUARANTY AGREEMENT AMONG PUERTO RICO INDUSTRIAL, TOURIST, EDUCATIONAL, MEDICAL
AND ENVIRONMENTAL CONTROL FACILITIES FINANCING AUTHORITY, AND DORAL PROPERTIES,
INC. AND DORAL FINANCIAL CORPORATION, AND UNDIVIDED INTERESTS IN GUARANTY OF
DORAL FINANCIAL CORPORATION PURSUANT TO THE ABOVE-MENTIONED LOAN AND GUARANTY
AGREEMENT RELATING TO PUERTO RICO INDUSTRIAL, TOURIST, EDUCATIONAL, MEDICAL
AND ENVIRONMENTAL CONTROL FACILITIES FINANCING AUTHORITY (AFICA)
INDUSTRIAL REVENUE BONDS, 1999 SERIES A
(DORAL FINANCIAL CENTER PROJECT)
(TITLE OF INDENTURE SECURITIES)
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY
TO WHICH IT IS SUBJECT.
NAME ADDRESS
COMPTROLLER OF THE CURRENCY WASHINGTON, D.C.
FEDERAL RESERVE BANK OF NEW YORK NEW YORK, NY
33 LIBERTY STREET
NEW YORK, NY
FEDERAL DEPOSIT INSURANCE CORPORATION WASHINGTON, D.C.
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
YES.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH
SUCH AFFILIATION.
NONE.
ITEMS 3 THROUGH 15.
THE OBLIGORS ARE NOT CURRENTLY IN DEFAULT UNDER ANY OF THEIR
OUTSTANDING SECURITIES FOR WHICH CITIBANK, N.A. IS THE
TRUSTEE. ACCORDINGLY, RESPONSES TO ITEMS 3 THROUGH 15 OF FORM
T-1 ARE NOT REQUIRED UNDER GENERAL INSTRUCTION B.
ITEM 16. LIST OF EXHIBITS.
LIST BELOW ALL EXHIBITS FILED AS A PART OF THIS STATEMENT OF
ELIGIBILITY.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE
COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS EXHIBITS
HERETO.
EXHIBIT 1 - COPY OF ARTICLES OF ASSOCIATION OF THE TRUSTEE,
AS NOW IN EFFECT. (EXHIBIT 1 TO T-1 TO REGISTRATION STATEMENT
NO. 2-79983)
EXHIBIT 2 - COPY OF CERTIFICATE OF AUTHORITY OF THE TRUSTEE
TO COMMENCE BUSINESS. (EXHIBIT 2 TO T-1 TO REGISTRATION
STATEMENT NO. 2-29577).
2
<PAGE> 3
EXHIBIT 3 - COPY OF AUTHORIZATION OF THE TRUSTEE TO EXERCISE
CORPORATE TRUST POWERS. (EXHIBIT 3 TO T-1 TO REGISTRATION
STATEMENT NO. 2-55519)
EXHIBIT 4 - COPY OF EXISTING BY-LAWS OF THE TRUSTEE. (EXHIBIT
4 TO T-1 TO REGISTRATION STATEMENT NO. 33-34988)
EXHIBIT 5 - NOT APPLICABLE.
EXHIBIT 6 - THE CONSENT OF THE TRUSTEE REQUIRED BY SECTION
321(B) OF THE TRUST INDENTURE ACT OF 1939. (EXHIBIT 6 TO T-1
TO REGISTRATION STATEMENT NO. 33-19227.)
EXHIBIT 7 - COPY OF THE LATEST REPORT OF CONDITION OF
CITIBANK, N.A. (AS OF JUNE 30, 1999 - ATTACHED)
EXHIBIT 8 - NOT APPLICABLE.
EXHIBIT 9 - NOT APPLICABLE.
------------------
SIGNATURE
PURSUANT TO THE REQUIREMENTS OF THE TRUST INDENTURE ACT OF 1939, THE
TRUSTEE, CITIBANK, N.A., A NATIONAL BANKING ASSOCIATION ORGANIZED AND EXISTING
UNDER THE LAWS OF THE UNITED STATES OF AMERICA, HAS DULY CAUSED THIS STATEMENT
OF ELIGIBILITY TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, ALL IN SAN JUAN, PUERTO RICO, ON THE 7TH DAY OF OCTOBER, 1999.
CITIBANK, N.A.
BY \S\ KARL FROMM
------------------
VICE PRESIDENT
3
<PAGE> 4
Charter No. 1461
Comptroller of the Currency
Northeastern District
REPORT OF CONDITION
CONSOLIDATING
DOMESTIC AND FOREIGN
SUBSIDIARIES OF
Citibank, N.A.
of New York in the State of New York, at the close of business on June 30,
1999, published in response to call made by Comptroller of the Currency, under
Title 12, United States Code, Section 161. Charter Number 1461 Comptroller of
the Currency Northeastern District.
<TABLE>
<S> <C>
Perpetual preferred stock and related surplus .......................................................... 0
Common stock ........................................................................................... $ 751,000
Surplus ................................................................................................ 9,609,000
Undivided profits and capital reserves ................................................................. 11,201,000
Net unrealized holding gains (losses) on available-for-sale securities ................................. 27,000
Accumulated net gains (losses) on cash flow hedges ..................................................... 0
Cumulative foreign currency translation adjustments .................................................... (699,000)
TOTAL EQUITY CAPITAL ................................................................................... $ 20,889,000
TOTAL LIABILITIES AND
EQUITY CAPITAL ......................................................................................... $ 309,515,000
ASSETS
Thousands
of dollars
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin ..................................................... $ 9,506,000
Interest-bearing balances .............................................................................. 12,615,000
Held-to-maturity securities ............................................................................ 0
Available-for-sale securities .......................................................................... 36,981,000
Federal funds sold and securities purchased under agreements to resell ................................. 7,560,000
Loans and lease financing receivables:
Loans and Leases, net of unearned income ............................................................... $ 197,415,000
LESS: Allowance for loan and lease losses 4,704,000
Loans and leases, net of unearned income, allowance, and reserve ....................................... $ 192,711,000
Trading assets ......................................................................................... 27,650,000
Premises and fixed assets (including capitalized leases) ............................................... 3,924,000
Other real estate owned ................................................................................ 366,000
Investments in unconsolidated subsidiaries and
associated companies ................................................................................... 1,123,000
Customers' liability to this bank on acceptances outstanding ........................................... 1,228,000
Intangible assets ...................................................................................... 4,017,000
Other assets ........................................................................................... 11,834,000
TOTAL ASSETS ........................................................................................... $ 309,515,000
LIABILITIES
Deposits: In domestic offices .......................................................................... $ 41,555,000
Noninterest bearing .................................................................................... $ 13,930,000
Interest bearing ....................................................................................... 27,625,000
In foreign offices, Edge and Agreement subsidiaries, and IBFs .......................................... 179,468,000
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
Noninterest bearing .................................................................................... 13,309,000
Interest bearing ....................................................................................... 166,159,000
Federal funds purchased and
securities sold under agreements to repurchase ......................................................... 7,516,000
Trading liabilities .................................................................................... 24,124,000
Other borrowed money (includes mortgage indebtedness and obligations under
capitalized leases):
With a remaining maturity of one year or less .......................................................... 11,128,000
With a remaining maturity of more than one year through three years .................................... 1,454,000
With a remaining maturity of more than three years ..................................................... 2,512,000
Bank's liability on acceptances executed and outstanding ............................................... 1,283,000
Subordinated notes and debentures ...................................................................... 6,600,000
Other liabilities ...................................................................................... 12,986,000
TOTAL LIABILITIES ...................................................................................... $ 288,626,000
EQUITY CAPITAL
</TABLE>
I, Roger W. Trupin, Controller of the above-named bank do hereby declare that
this Report of Condition is true and correct to the best of my knowledge and
belief.
ROGER W. TRUPIN CONTROLLER
We, the undersigned directors, attest to the correctness of this Report of
Condition. We declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions and
is true and correct.
PAUL J. COLLINS
JOHN S. REED
WILLIAM R. RHODES
