Document:

Ex101AmendmentNo2toMSRPA

Exhibit 10.1

AMENDMENT NO. 2
TO MASTER SERVICING RIGHTS PURCHASE AGREEMENT
AND SALE SUPPLEMENTS
This Amendment (this “Amendment”), dated as of April 6, 2015 (the “Amendment Effective Date”), among Ocwen Loan Servicing, LLC, a Delaware limited liability company (“Seller”), HLSS Holdings, LLC, a Delaware limited liability company (“Holdings”), Home Loan Servicing Solutions, Ltd. (“HLSS”) and HLSS MSR-EBO Acquisition LLC (“Buyer”).
WITNESSETH:
WHEREAS, Seller, HLSS and Holdings are parties to the Master Servicing Rights Purchase Agreement, dated as of October 1, 2012 (the “Original Agreement”), with respect to the sale by Seller and the purchase by Holdings of certain Rights to MSRs, Servicing Rights and other assets, as such Original Agreement was amended on December 26, 2012 by an Amendment to Master Servicing Rights Purchase Agreement and Sale Supplements, among Seller, HLSS and Holdings (the Original Agreement, as so amended and as further amended from time to time, the “MSR Purchase Agreement”);
WHEREAS, Seller, HLSS and Holdings are parties to certain Sale Supplements to the MSR Purchase Agreement, dated as of February 10, 2012, May 1, 2012, August 1, 2012, September 13, 2012, September 28, 2012, December 26, 2012, March 13, 2013, May 21, 2013, July 1, 2013, and October 25, 2013 (each, as heretofore amended, supplemented and modified from time to time, a “Sale Supplement” and, collectively, the “Sale Supplements”); 
WHEREAS, HLSS proposes to enter into a Share and Asset Purchase Agreement with Buyer, HLSS Advances Acquisition Corp. and New Residential Investment Corp. pursuant to which HLSS will sell and the Buyer, directly and through HLSS Advances Acquisition Corp., will purchase substantially all of the assets of HLSS (the “Transaction”); and
WHEREAS, Seller, HLSS and Holdings desire to amend the MSR Purchase Agreement and the Sale Supplements as provided herein and to evidence Seller’s consent to HLSS’s assignment of its interest under the MSR Purchase Agreement and the Sale Supplements to Buyer.
NOW, THEREFORE, and in consideration of the premises and the mutual covenants herein contained, the parties hereto hereby agree as follows:
RECITALS
Section 1.    Amendment to MSR Purchase Agreement and Sale Supplements.  The MSR Purchase Agreement and each Sale Supplement is hereby amended as follows: 
1.1    Each reference to “HLSS” set forth in (i) Section 2.4(b) of each Sale Supplement, (ii) Section 2.5(a) of each Sale Supplement, (iii) Section 6.7(a) of each Sale Supplement, (iv) Section 6.7(c) of each Sale Supplement, (v) Section 6.10 of each Sale Supplement, 

(vi) Section 6.12 of each Sale Supplement, and (vii) Section 6.13 of each Sale Supplement shall be deemed to constitute a reference to Buyer (or, with respect to Excess Servicing Fees, its direct or indirect assignee).
1.1    Each reference to a “Purchaser” set forth in the MSR Purchase Agreement or any Sale Supplement shall be deemed to include a reference to Buyer; 
1.2    The definition of “Book Value” set forth in Section 1.1 of each Sale Supplement is hereby deleted in its entirety.
1.3    The definition of “Servicing Fee Reset Date” set forth in Section 1.1 of each Sale Supplement is hereby amended by deleting “Servicing Fee Reset Date” in its entirety and replacing such definition with the following: 
““Servicing Fee Reset Date”: The date which is the earlier of (i) the date that is eight (8) years after the Closing Date and (ii) April 30, 2020; provided, that if, as of the date that is six (6) years after the Closing Date, there then exists an uncured Termination Event with respect to any affected Servicing Agreement in this Sale Supplement that is due to a servicer rating downgrade to “Below Average” or lower by S&P or to “SQ4” or lower by Moody’s then the date which is six (6) years after the Closing Date.”.
1.4    The definition of “Servicing Transfer Date” set forth in Section 1.1 of each Sale Supplement is hereby amended by adding to the end of that definition the following: “; provided, however, that such date shall not occur before April 6, 2017;”.
1.5    The definition of “Termination Event” set forth in Section 1.1 of each Sale Supplement is hereby amended by replacing the phrase ““RPS4+” and “RSS4+” by Fitch Ratings” with ““RPS4” and “RSS4” by Fitch Ratings”.
1.6    The definition of “Transferred Servicing Rights” set forth in Section 1.1 of each Sale Supplement is hereby amended by deleting the reference therein to “HLSS” and replacing such reference with a reference to “Holdings”.
1.7    Article 6 of each Sale Supplement is hereby amended by deleting Section 6.10 in its entirety and replacing it with the following:
“6.10  Clean Up Call Rights.  Seller shall exercise its rights under any optional termination or clean up call rights provided for in the Servicing Agreements and the Underlying Documents (the “Clean Up Call Rights”) only as the prior written direction of HLSS specifying the date of exercise, which shall be at least thirty (30) days after the date of such notice from HLSS.  In connection with such exercise of Clean Up Call Rights, Seller hereby sells and transfers to HLSS (or its designee) on an exclusive and “as is” basis the right to all economic beneficial rights to such Clean Up Call Rights (including the right to cause Seller to exercise such Clean Up Call Rights), which include the economic beneficial interest in the right to purchase from the related trust for each Deferred Servicing Agreement all of the assets of such trust, including the mortgage loans and REO properties (collectively, 

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the “Mortgage Loans”) for a payment of 0.50% of the unpaid principal balance of all Performing Mortgage Loans of such trust (which payment is due upon the exercise of any Clean Up Call Rights).  Any purchase and exercise of such Clean Up Call Rights shall be subject to customary “as is” documentation, which HLSS and Seller will negotiate in good faith.  Seller shall give HLSS at least thirty (30) days’ notice prior to the date on which Seller would have to notify the trustee for the related trust of its intent to exercise the related Clean Up Call Rights and will work in good faith with HLSS and the related trustee with respect to the exercise the Clean Up Call Rights. For the avoidance of doubt, HLSS (or its designee) shall fund the exercise of the Clean Ups Call Rights acquired and pay any expenses associated with such exercise (including any of Seller’s reasonable out-of-pocket expenses and any customary transfer expenses and deboarding fees, if applicable) and pay all unreimbursed Servicer Advances and other amounts owed to Holdings with respect to such Servicing Agreement under this Sale Supplement. For purposes of this Section 6.10, “Performing Mortgage Loan” means any Mortgage Loan that is current or thirty (30) days or less delinquent (MBA method). The rights of Seller to payment in respect of any exercise of Clean Up Call Rights under this Section 6.10 by HLSS or its designee shall survive any transfer of servicing pursuant to Section 6.12.” 
1.8    Section 6.12 of each Sale Supplement is hereby amended by adding the following sentence to the end of that section: “Notwithstanding anything to the contrary in this Sale Supplement, none of HLSS or Holdings shall have any right to take any action under this Section 6.12 before April 6, 2017 other than with respect to an affected Servicing Agreement subject to a Termination Event (other than a Standstill Termination Event as defined in Section 6.13 unless, HLSS or Holdings could direct the transfer of servicing notwithstanding the standstill provisions of Section 6.13) and provided further that HLSS may transfer the Excess Servicing Fees at any time.”
1.9    Section 6.13 of each Sale Supplement is hereby amended by adding the following to the end of Section 6.13:  
“Notwithstanding anything to the contrary in this Sale Supplement, with respect to any Termination Event that is related to any servicer rating downgrade in any affected Servicing Agreement (a “Standstill Termination Event”),  none of HLSS or Holdings shall have any right to take any action under this Section 6.13 with respect to such affected Servicing Agreement until April 6, 2017 and only if such Standstill Termination Event is then continuing; unless, with respect to a continuing Standstill Termination Event in an affected Servicing Agreement, Holdings determines in good faith that a trustee (or other party entitled to terminate) intends to terminate Seller as servicer under such affected Servicing Agreement on any day).  Seller agrees to promptly notify Holdings (and to deliver to Holdings a copy of any written notification) of any communication received by Seller from a trustee (or other party entitled to terminate) under an affected Servicing Agreement that is a solicitation of holders for a vote or request for direction or any communication from or on behalf of a trustee under any Deferred Servicing Agreement that such trustee (or other party entitled to terminate) has an intention to terminate Seller’s appointment as servicer under such Deferred Servicing Agreement provided that a solicitation of holders for a vote or request for direction 

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regarding termination of Seller’s appointment as servicer shall not necessarily evidence, but could evidence depending on the language and the circumstances, intent of such trustee (or other party entitled to terminate) to terminate.”
1.1    Section 7.7 of each Sale Supplement is hereby amended by deleting Section 7.7 in its entirety, and replacing such section with the following:
“7.7  Servicing Fee Reset Date.  No later than six (6) months prior to the Servicing Fee Reset Date, Holdings shall commence negotiating in good faith an extension of the Servicing Fee Reset Date and the servicing fees payable to Seller. If Seller and Holdings are unable to agree to such servicing fees prior to the Servicing Fee Reset Date, Seller shall, upon Holdings’ written direction to such effect, transfer the Servicing Rights relating to all of the Deferred Servicing Agreements to a third party servicer (including any affiliate of Holdings) identified by Holdings with respect to which all required Third Party Consents with respect to the Deferred Servicing Agreements can be obtained. Notwithstanding anything to the contrary in this Sale Supplement, after the Servicing Reset Date and prior to any transfer of servicing under this section, all fees payable to Seller under this Sale Supplement shall continue to be paid and the Servicing Agreement shall continue to be deemed a Deferred Servicing Agreement hereunder.  Upon any transfer of servicing pursuant to this Section 7.7, an amount equal to the consideration for the transfer of related accrued and unpaid servicing fees for such Deferred Servicing Agreement shall be paid to Seller so long as Holdings receives the amount of the accrued and unpaid Retained Servicing Fee and Retained Servicing Fee Shortfall, if any, owing Holdings at the date of transfer (whether or not then due and payable hereunder).”
Section 2.    Subservicing Agreement.  All applicable amendments to the MSR Purchase Agreement and each Sale Supplement made under this Amendment shall be correspondingly made to the Subservicing Agreement and each Subservicing Sale Supplement (as defined in the MSR Purchase Agreement) prior to the Servicing Transfer Date (as defined in each Sale Supplement, giving effect to this Amendment).   
Section 3.    Servicer Ratings.  In the event that (i) Seller’s servicer rating by S&P is downgraded to below “Average” or lower and this causes a reduction in advance rates (any such event, a “SAF Downgrade Event”) in Holdings’ existing HSART and/or HSART II advance financing facility with respect to any Servicing Agreement and (ii) such SAF Downgrade Event causes a reduction in Holdings’ rate of return or causes Holdings to have increased costs of funding (any such amounts,  “Increased Costs”) during any calendar month, Seller shall pay to Holdings Increased Costs in respect of such month within 5 Business Days of demand therefor  in an amount not to exceed $3,000,000 for any calendar month; provided that such payments shall not exceed $36,000,000, in aggregate; provided, further, that Holdings commits to use commercially reasonable efforts to assist Seller in curing any such SAF Downgrade Event by obtaining amendments to the variable funding note indenture supplements for the HSART and HSART II transaction . Holdings may request payment for Increased Costs pursuant to this Section 3 for only twelve calendar months.  Holdings shall calculate the Increased Costs in its reasonable discretion.  Holdings shall 

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provide Seller the calculation of, and information regarding, such Increased Costs as reasonably requested by Seller.
Section 4.    Cooperation with Financings. Seller hereby agrees to use commercially reasonable efforts to reasonably cooperate with Holdings in the execution, delivery and performance of servicing advance financing facility agreements reasonably requested by Holdings (including, without limitation, the execution, delivery and performance of servicing advance financings substantially similar to the existing servicing advance financing facilities related to the Servicing Agreements). Seller shall not be entitled to additional compensation in connection with the execution, delivery and performance of such servicer advance financing facility agreements.
Section 5.    Consent to Assignment from HLSS to Buyer.  The Seller by execution of this Amendment hereby unconditionally and irrevocably consents to the assignment by HLSS to the Buyer of all HLSS’s right, title and interest in, to and under the MSR Purchase Agreement and each Sale Supplement and all Excess Servicing Fees (as defined in any Sale Supplement) of HLSS, including, without limitation, the Excess Servicing Fees accruing after the date of this Amendment and any future assignment by the Buyer of any of the foregoing (the “Assignment”) so long as in the case of any future assignment the assignor and assignee give written notice of such assignment to Seller and written direction of where to make payments in respect of the related Excess Servicing Fees. 
Section 6.    Seller’s Additional Agreements. Seller, by execution of this Amendment hereby (a) releases and waives any existing contractual agreement of Buyer and its affiliates with Seller not to acquire or trade in securities issued by any trust related to any Servicing Agreement or any servicer advancing financing facility collateralized or supported by any servicer advances arising under any Servicing Agreement and (b) agrees to publish the loan level information currently provided to the related trustees by Seller related to securities issued by any trust related to any Deferred Servicing Agreement. Until the termination of the related Deferred Servicing Agreement or the date on which the unpaid principle balance of the related Mortgage Loans serviced by Seller is zero, whichever occurs first, Seller agrees to publish such information in a publicly available format on a monthly basis by a mutually agreed date each month on a routine basis. Buyer and Seller may mutually agree to publish on a routine basis additional information reasonably requested by Buyer that is material to a purchaser of the related securities to the extent disclosure of such information is not prohibited by the related Deferred Servicing Agreement. Such additional information shall be published as soon as reasonably practicable following a written request from the Buyer to the publish such information in a format mutually agreed between Seller and Buyer.
Section 7.    Buyer’s Assumption.  By execution of this Amendment, HLSS MSR-EBO Acquisition LLC hereby assumes all obligations of HLSS under the MSR Purchase Agreement and each Sale Supplement, whether currently existing or accruing after the date of this Amendment.

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Section 8.    Effectiveness.  The effectiveness of this Amendment is subject to (i) delivery of executed signature pages by all parties hereto and (ii) the consummation and closing of the Transaction.
Section 9.    Limited Effect.  
9.1    Upon the effectiveness of this Amendment, each reference in the MSR Purchase Agreement and each Sale Supplement to “this Agreement”, “Sale Supplement”, “hereunder”, “hereof”, “herein”, or words of like import shall mean and be a reference to the MSR Purchase Agreement and such Sale Supplement as amended hereby, and each reference to the MSR Purchase Agreement or any Sale Supplement in any other document, instrument or agreement, executed and/or delivered in connection with any transaction contemplated in the MSR Purchase Agreement or any Sale Supplement shall mean and be a reference to the MSR Purchase Agreement or such Sale Supplement as amended hereby.
9.2    Except as expressly amended and modified by this Amendment, the MSR Purchase Agreement and the Sale Supplements shall continue to be, and shall remain, in full force and effect in accordance with their terms.
9.3    Except as expressly set forth above, the execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of any party hereto or constitute a waiver of any provision of any other agreement.
Section 10.    Counterparts.  This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same instrument.  Any signature page to this Amendment containing a manual signature may be delivered by facsimile transmission or other electronic communication device capable of transmitting or creating a printable written record, and when so delivered shall have the effect of delivery of an original manually signed signature page.
Section 11.    GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS (OTHER THAN SECTION 5-1401 AND SECTION 5-1402 OF THE GENERAL OBLIGATIONS LAW) AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 12.    Headings.  The descriptive headings of the various sections of this Amendment are inserted for convenience of reference only and shall not be deemed to affect the meaning or construction of any of the provisions thereof.
Section 13.    Severability.  The failure or unenforceability of any provision hereof shall not affect the other provisions of this Amendment.  Whenever possible each provision of this Amendment shall be interpreted in such manner as to be effective and valid under 

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applicable law, but if any provision of this Amendment shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Amendment.
Section 14.    Interpretation.  Whenever the context and construction so require, all words used in the singular number herein shall be deemed to have been used in the plural, and vice versa, and the masculine gender shall include the feminine and neuter and the neuter shall include the masculine and feminine.
Section 15.    Definitions.  Capitalized terms used but not defined herein have the meaning set forth in the MSR Purchase Agreement.
[SIGNATURE PAGES FOLLOW]

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IN WITNESS WHEREOF, each party hereto has caused this Amendment to be executed and delivered by its respective officer thereunto duly authorized as of the date above written.

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OCWEN LOAN SERVICING, LLC

By:     
Name: 
Title: 

9

HLSS HOLDINGS, LLC

By:    
Name: 
Title: 

10

HOME LOAN SERVICING SOLUTIONS, LTD.

By:    
Name: 
Title: 

11

HLSS MSR-EBO ACQUISITION LLC
By: NEW RESIDENTIAL INVESTMENT 
       CORP., its sole member
 

By:    
Name: Cameron MacDougall
Title: Secretary 

12ex10-1.htm

Exhibit 10.1

 

 

CONVERTIBLE LOAN AGREEMENT

 

THIS CONVERTIBLE LOAN AGREEMENT made as of the 7th of April, 2015 (the "Effective Date").

 

BETWEEN:

 

DEL TORO SILVER CORP., with an address at 320 North Carson Street, Carson City, Nevada 89701

 

(hereinafter referred to as the "Company")

 

AND:

 

Patrick Fagen, with an address at 2229 Tahoe Vista Drive, South lake Tahoe, CA 96150 (hereinafter referred to as the "Lender")

 

WHEREAS:

 

A.     The Company has borrowed from the Lender, and the Lender has provided to the Company, certain funds (defined herein as the "Loan"), which the parties have agreed to make subject to the terms and conditions set forth herein;

 

B.     The Loan is convertible (the "Conversion") into securities of the Company consisting of common shares of the Company with a par value of $0.001 (the "Shares") upon the terms and conditions set forth herein; and

 

C.     The Lender understands and acknowledges to the Company that this Agreement is being made pursuant to an exemption (the "Exemption") from registration provided by Section 4(2) of the United States Securities Act of 1933, as amended (the "Securities Act") and Rule 506 of Regulation D of the Securities Act for the private offering of securities.

 

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual covenants and agreements herein contained, the receipt of which is hereby acknowledged by each of the parties hereto, the parties hereto covenant and agree each with the other (the "Agreement") as follows:

 

1.       Representations and Warranties of the Lender

 

(a)     The Lender represents and warrants to, and covenants and agrees with the Company that:

 

	 	
(i)
	
the Lender makes the Loan to the Company and acquires the Conversion Right (as defined herein) in reliance upon the Exemption from registration provided by Section 4(2) of the Securities Act and Rule 506 of Regulation D of the Securities Act for the private offering of securities;

 

	 	
(ii)
	
the Lender is eligible to make the Loan to the Company and acquire the Conversion Right in the Company under Regulation D, and all statements set forth in the Declaration of Regulation D Eligibility, attached hereto as Schedule A, are true and correct and may be relied upon by the Company; further, all information, representations and warranties contained in this Agreement, or that have been otherwise given to the Company, are correct and complete as of the date hereof, and may be relied upon by the Company;

 

	 	
(iii)
	
the Lender is aware of the significant economic and other risks involved in making the Loan to the Company and in acquiring and/or exercising the Conversion Right;

 

 

 

 

 - 2 -

 

 

	 	
(iv)
	
the Lender has consulted with its own legal advisor as to this Agreement and its eligibility to acquire and/or exercise the Conversion Right under the laws of its home jurisdiction and acknowledges that the Company has made no effort and takes no responsibility for the consequences to the Lender as an investor acquiring this Conversion right and, in particular, in purchasing the securities upon exercise, if any, of the Conversion Right;

 

	 	
(v)
	
no federal or state agency has passed upon, or make any finding or determination as to the fairness of this investment, and that there have been no federal or state agency recommendations or endorsements of the investment made hereunder;

 

	 	
(vi)
	
the Lender acknowledges that:

 

	 	
A.
	
there are substantial restrictions on the sale or transferability of any Shares acquired upon exercise of the Conversion Right and understands that, although the Company is a reporting company, the Lender is, upon exercising the Conversion Rights, purchasing unregistered securities;

 

	 	
B.
	
the Lender may not be able to liquidate this investment in the event of any financial emergency and will be required to bear the economic risk of this investment for a lengthy or even indefinite period of time;

 

	 	
C.
	
the Company is not contractually obligated to register under the Securities Act any Shares acquired upon an exercise of the Conversion Right; and

 

	 	
D.
	
any Shares acquired by the Lender upon exercise of the Conversion Right may never be sold or otherwise transferred without registration under the Securities Act, unless an exemption from registration is available.

 

	 	
(vii)
	
the Lender, alone or with its advisor, has enough knowledge and experience in financial and business matters to make it capable of evaluating the merits and risks of investing in the Company;

 

	 	
(viii)
	
the Lender makes the Loan to the Company and acquires the Conversion Right as principal for its own account and not for the benefit of any other person;

 

	 	
(ix)
	
the Lender understands that any Certificates representing Shares acquired by the Lender upon exercise of the Conversion Right will have a resale legend on them that will read substantially as follows:

 

The Securities have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”) and are being offered and sold within the United States only to Accredited Investors (as defined in Rule 501(a) of Regulation D under the U.S. Securities Act). Prospective subscribers of the Securities in the United States are hereby notified that the seller of the Securities is relying upon the exemption from the provisions of Section 5 of the U.S. Securities Act provided in Section 4(2) of the U.S. Securities Act and Rule 506 of Regulation D under the U.S. Securities Act for non-public offerings. The Securities offered hereby are not transferable except in accordance with the restrictions described herein. 

 

	 	
(x)
	
the Lender has good and sufficient right and authority to enter into this Agreement and to carry out the transactions contemplated by this Agreement on the terms and conditions contained herein.

 

 

 

 

 - 3 -

 

 

(b)     The representations, warranties, covenants and agreements of and by the Lender contained in, or delivered pursuant to, this Agreement shall be true at and as of the Effective Date and shall remain in full force and effect throughout the term of this Agreement.

 

2.        The Loan

 

(a)     Subject to the terms of this Agreement, the Lender hereby agrees to loan to the Company, and the Company hereby agrees to borrow from the Lender, the principal sum of US$2,100 (the "Loan") which has been provided on April 7, 2015 (the "Advancement Date).

 

(b)     The principal amount of the Loan, and any accrued and unpaid interest calculated in accordance with section 2(c), shall be due and payable in full by 5:00 p.m. local time in Las Vegas, Nevada, one (1) year from any applicable Advancement Date (the “Due Date”). If such day falls on a Sunday or statutory holiday, then by 5:00 p.m. local time in Las Vegas, Nevada, on the first business day thereafter the Due Date.

 

(c)     The Loan shall bear interest at a rate of 8% per annum (the "Interest") calculated in arrears on the principal amount of the Loan outstanding. Interest shall be payable annually, on the subsequent anniversaries of the Advancement Date.

 

(d)     The Company shall be entitled to prepay any sum up to the full amount of the Loan and accrued interest then outstanding at any time without penalty or bonus.

 

(e)     At any time after the Advancement Date, the Lender may by written notice (the "Notice") to the Company along with the Declaration attached hereto as Schedule A, exercise its rights of Conversion in respect of either a portion of or the total outstanding amount of the Loan plus accrued Interest as of that date into Shares of the Company, at the price of US$.0025 per Share (the “Conversion Right”).

 

(f)     Within seven (7) days of Notice by the Lender exercising its Conversion Rights hereunder, the Company shall cause to be delivered a Share Certificate to the Lender representing the number of Shares acquired by the Lender pursuant to the calculation set out in subparagraph 2(e) of this Agreement.

 

(g)     Notwithstanding any of the foregoing, Interest shall be calculated and included in any Conversion of the Loan.

 

3.        Covenants and Agreements of the Lender

 

(a)     The Lender covenants and agrees with the Company that the Lender shall not make demand for payment of the Loan prior to the Due Date unless the Loan has become due and payable in accordance with the provisions of this Agreement.

 

4.       Default

 

(a)     If one or more of the following events shall occur, namely:

 

	 	
(i)
	
the Company fails to repay the Loan or the Interest thereon on the Due Date;

 

	 	
(ii)
	
the Company makes an assignment for the benefit of its creditors or files a petition in bankruptcy or is adjudicated insolvent or bankrupt or petitions or applies to any tribunal for any receiver, receiver manager, trustee, liquidator or sequestrator of or for the Company or any of the Company's assets or undertaking, or the Company makes a proposal or compromise with its creditors or if an application or a petition similar to any of the foregoing is made by a third party creditor and such application or petition remains unstayed or undismissed for a period of thirty (30) days;

 

 

 

 

 - 4 -

 

 

	 	
(iii)
	
an order of execution against any of the Company's assets remains unsatisfied for a period of ten (10) days;

 

	 	
(iv)
	
the Company fails to observe and comply with any material term, condition or provision of this Agreement or any other agreement or document delivered hereunder, and such failure continues unremedied for a period of thirty (30) days;

 

	 	
(v)
	
any representations, warranties, covenants or agreements contained in this Agreement or any document delivered to the Lender hereunder are found to be untrue or incorrect as at the date thereof; or

 

	 	
(vi)
	
the holder (including the Lender) of any mortgage, charge or encumbrance on any of the Company's assets and undertaking does anything to enforce or realize on such mortgage, charge or encumbrance;

 

then the Loan and all accrued Interest to the date of such default shall, at the option of the Lender, immediately become due and payable without presentment, protest or notice of any kind, all of which are waived by the Company. 

 

5.        Independent Legal Advice

 

(a)     The Lender acknowledges that:

 

	 	
(i)
	
Macdonald Tuskey, Corporate and Securities Lawyers received instructions from the Company and does not represent the Lender;

 

	 	
(ii)
	
the Lender has been requested to obtain its own independent legal advice on this Agreement prior to signing this Agreement;

 

	 	
(iii)
	
the Lender has been given adequate time to obtain independent legal advice;

 

	 	
(iv)
	
by signing this Agreement, the Lender confirms that it fully understands this Agreement; and

 

	 	
(v)
	
by signing this Agreement without first obtaining independent legal advice, the Lender waives its right to obtain independent legal advice.

 

6.       General

 

(a)     For the purposes of this Agreement, time is of the essence.

 

(b)     The parties hereto shall execute and deliver all such further documents and instruments and do all such acts and things as may either before or after the execution of this Agreement be reasonably required to carry out the full intent and meaning of this Agreement.

 

(c)     This Agreement shall be construed in accordance with the laws of the State of Nevada.

 

(d)     This Agreement may be assigned by the Lender subject to any assignee making requisite representations to meet applicable securities law exemptions; this Agreement may not be assigned by the Company.

 

(e)     This Agreement may be signed by the parties in as many counterparts as may be deemed necessary, each of which so signed shall be deemed to be an original, and all such counterparts together shall constitute one and the same instrument.

 

 

 

 

 - 5 -

 

(f)     All notices, requests, demands or other communications hereunder shall be in writing and shall be "deemed delivered" to a party on the date it is hand delivered to such party's address first above written, or to such other address as may be given in writing by the parties hereto.

 

IN WITNESS WHEREOF the parties have hereunto set their hands effective as of the date first above written.

 

DEL TORO SILVER CORP.

 

Per:     /s/ Greg Painter                                          
           Greg Painter, President and CEO of Del Toro Silver Corp.

 

 

 

 

 

 

/s/ Patrick Fagen                                                    

 

                   Patrick Fagen, Lender

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