Exhibit 10.2
EXECUTION COPY
ADVISORY SERVICES AGREEMENT
This Advisory Services Agreement
(this “ Agreement ”) is made as of July 19,
2007, by and among Bear Stearns Merchant Manager III, L.P., a
Cayman Islands exempted limited partnership (the “
Advisor ”) and Doral Financial Corporation, a
corporation organized under the laws of the Commonwealth of Puerto
Rico (the “ Company ”).
RECITALS :
Doral Holdings, L.P., a Cayman
Islands exempted limited partnership (the “
Partnership ”), and the Company are parties to a Stock
Purchase Agreement, dated as of May 16, 2007 (the “
Purchase Agreement ”).
The Company desires to retain the
Advisor with respect to the services described herein.
NOW, THEREFORE, the parties agree as
follows:
1. Term . This Agreement
shall commence on the date hereof and shall terminate (except as
provided in the immediately following sentence) on the earliest to
occur of (a) the occurrence of a Termination Event and
(b) the fifth anniversary of the date hereof (the “
Term ”). The provisions of Sections 3(c) ,
4(b) , 5 , 6 , 7 , 8 , 9
, 10 , 12 , and 13 and obligations to pay any
outstanding unpaid fees hereunder shall survive the termination of
this Agreement. As used herein, “ Termination Event
” means 60 days following delivery by the Company to the
Advisor of written notice of termination of this Agreement.
2. Services .
(a) The
Advisor shall perform or cause to be performed the following
services for the Company and its subsidiaries:
(i) identification, support, negotiation and analysis of
acquisitions and dispositions by the Company or its subsidiaries;
(ii) support, negotiation and analysis of financing
alternatives, including, without limitation, in connection with
acquisitions, capital expenditures and refinancing of existing
indebtedness, assistance in the preparation of financial
projections, and monitoring of compliance with financing
agreements; and (iii) advice with respect to procurement,
information technology, accounting and tax matters.
(b) The
Advisor and the Company’s board of directors shall agree upon
the time and manner in which requested services are to be performed
by the Advisor. The Advisor shall provide and devote to the
performance of this Agreement such partners, employees and agents
of the Advisor as the Advisor shall deem appropriate to the
furnishing of the services required. The Advisor is an independent
contractor and nothing in this Agreement shall be construed to
imply that the Advisor is a partner or joint venturer with, or an
agent or fiduciary of, the Company.
3. Advisory Fee .
(a) Subject
to Section 3(d) , in consideration of the
Advisor’s undertaking to provide advisory services hereunder,
during the Term of this Agreement, the Company shall pay the
Advisor an annual advisory fee (the “ Advisory Fee
”) equal to (i) for the period beginning July 1,
2007 (or if later, the date hereof) and ending June 30, 2008,
$1,500,000, (ii) for the twelve-month period beginning
July 1, 2008 and ending June 30, 2009, $2,000,000,
(iii) for the twelve-month period beginning July 1, 2009
and ending June 30, 2010, $2,500,000, (iv) for the
twelve-month period beginning July 1, 2010 and ending
June 30, 2011, $3,000,000, and (v) for the twelve-month
period beginning July 1, 2011 and ending June 30, 2012,
$3,500,000, in each case, payable in advance beginning on the date
hereof and thereafter in annual installments on August 31 of
each year (or if such date is not a business day, on the latest
business day preceding such date, each an “ Advance
Payment Date ”). The Advisory Fees shall be payable by
the Company whether or not the Company actually requests that the
Advisor provide the services described in Section 2 above.
All Advisory Fees shall be fully earned when paid, and shall not be
refundable, in whole or in part.
(b) The
first installment of the Advisory Fee, for the period beginning on
the date hereof and ending June 30, 2008, shall be payable on
the date hereof in an amount equal to $1,500,000 and will not be
pro rated.
(c) Upon
a Termination Event, the Company shall be obligated to pay to the
Advisor, the remaining Advisory Fees that would otherwise be
payable to the Advisor pursuant to this Section 3 through
the earlier of (i) the fifth anniversary of the date of this
Agreement or (ii) the second anniversary of the date of the
Termination Event.
(d) Notwithstanding
anything to the contrary in Section 3(a)(ii), (iii) ,
(iv) or (v) , if on any Advance Payment Date
beginning August 31, 2009, the amount of the annual
installment of the Advisory Fee advanced on the previous Advance
Payment Date for the immediately previous twelve-month period ended
June 30 as described in Section 3(a) above (such
period, the “ Prior Fee Period ”) exceeds three
percent (3.0%) of the Company’s actual consolidated pre-tax
income, before dividends on its preferred and common stock, for
such Prior Fee Period, then the amount of the annual installment of
the Advisory Fee then payable shall be reduced by such excess
amount. In the event that an advance payment is made on
August 31, 2011, then on or prior to August 31, 2012 the
Company shall determine whether the Advance paid on August 31,
2011 (without giving effect to any reduction in the previous
sentence) exceeds 3% of the Company’s actual consolidated
pre-tax income, before dividends on its preferred and common stock
for the twelve-month period ended June 30, 2012, and if it so
exceeds then the Advisor shall promptly reimburse the Company for
such excess. For the avoidance of doubt, each reference in this
Section 3(d) to an Advance Payment Date occurring on
August 31 shall be deemed, if such August 31 is not a
business day, to be a reference to the Advance Payment Date on the
latest business day preceding such date.
4. Expenses .
(a) In
addition to Advisory Fees, the Company shall reimburse the Advisor,
promptly upon request, for all reasonable out-of-pocket expenses
incurred by the Advisor in
2
connection with the Advisor’s performance of services
hereunder, including fees and expenses paid to consultants,
subcontractors
|
