EXHIBIT 1.1
3,600,000 Shares
DORAL FINANCIAL CORPORATION
7.25% Noncumulative Monthly Income Preferred Stock, Series C
UNDERWRITING AGREEMENT
May 28, 2002
UBS PAINEWEBBER INCORPORATED OF PUERTO RICO
As lead underwriter and representative
of the several Underwriters named in Schedule 1
American Xxxxxxxxxxxxx Xxxxx, 0xx Xxxxx
Xxxx Xxx, Xxxxxx Xxxx 00000
Ladies and Gentlemen:
DORAL FINANCIAL CORPORATION, a Puerto Rico corporation (the "Company"),
proposes to sell an aggregate of 3,600,000 shares (the "Firm Shares") of the
Company's 7.25% Noncumulative Monthly Income Preferred Stock, Series C (the
"Preferred Stock"), which are to be issued and sold by the Company to you and
the other underwriters named in Schedule 1 hereto (collectively, the
"Underwriters"), for whom you are acting as the representative (the
"Representative"). The Company also has agreed to grant to you and the other
Underwriters an option (the "Option") to purchase up to an additional 540,000
shares of Preferred Stock (the "Option Shares") on the terms and for the
purposes set forth in Section 1(b) hereto. The Firm Shares and the Option Shares
are hereinafter collectively referred to as the "Shares."
The Company hereby confirms as follows its agreements with the
Representative and the several other Underwriters.
1. Agreement to Sell and Purchase.
(a) On the basis of the representations, warranties and
agreements of the Company herein contained and subject to all the terms and
conditions of this Agreement, the Company agrees to sell
to each Underwriter and each Underwriter, severally and not jointly, agrees to
purchase from the Company at a purchase price of $24.2125 per share, the number
of Firm Shares set forth opposite the name of such Underwriter in Schedule 1
hereto, plus such additional number
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of Firm Shares which such Underwriter may become obligated to purchase pursuant
to Section 9 hereof.
(b) Subject to all the terms and conditions of this
Agreement, the Company grants the Option to the several Underwriters to
purchase, severally, but not jointly, the Option Shares at the same price per
share as the Underwriters shall pay for the Firm Shares. The Option may be
exercised only to cover overallotments in the sale of the Firm Shares by the
Underwriters and may be exercised in whole or in part at any time and from time
to time on or before the 30th day after the date of this Agreement (or on the
next business day if the 30th day is not a business day), upon notice (the
"Option Shares Notice") in writing or by telephone (confirmed in writing) by the
Representative to the Company no later than 5:00 p.m., Atlantic Standard time,
at least two and no more than five business days before the date specified for
closing in the Option Shares Notice (the "Option Closing Date") setting forth
the aggregate number of Option Shares to be purchased and the time and date for
such purchase. On the Option Closing Date, the Company will issue and sell to
the Underwriters the number of Option Shares set forth in the Option Shares
Notice and each Underwriter will purchase such percentage of the Option Shares
as is equal to the percentage of Firm Shares that such Underwriter is purchasing
hereunder, as adjusted by the Representative in such manner as it deems
advisable to avoid fractional shares.
2. Delivery and Payment. Delivery of the Firm Shares shall be
made to the Representative for the accounts of the Underwriters at the office of
Fiddler Xxxxxxxx & Xxxxxxxxx, LLP, counsel to the Underwriters, 000 Xxxxx Xxxxxx
Xxx., Xxxxx Xxxxx, Xxxx Xxx, Xxxxxx Xxxx 00000, against payment of the purchase
price by wire transfer of immediately available funds to the bank account
designated by the Company. Such payment shall be made at 10:00 a.m., New York
City time, on the third full business day following the date of this Agreement,
or at such other time on such other date, not later than seven business days
after the date of this Agreement, as may be agreed upon by the Company and the
Representative (such date is hereinafter referred to as the "Closing Date").
Time shall be of the essence and delivery at the time and place specified
pursuant to this Agreement is a further condition of the obligation of each
Underwriter hereunder.
To the extent the Option is exercised, delivery of the Option Shares
against payment by the Underwriters (in the manner specified above) will take
place at the offices specified above for the Closing Date at the time and date
(which may be the Closing Date) specified in the Option Shares Notice.
Certificates evidencing the Shares shall be in definitive form and
shall be registered in such names and in such denominations as the
Representative shall request at least two business days prior to the Closing
Date or the Option Closing Date, as the case may be, by written notice to the
Company. For the purpose of expediting the checking and packaging of
certificates for the Shares, the Company agrees to make such certificates
available for inspection at least 24 hours prior to the Closing Date or the
Option Closing Date, as the case may be.
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Notwithstanding the other provisions of this Section 2, if transactions
in the Shares can be settled through the facilities of The Depository Trust
Company ("DTC"), payment for and delivery of the Shares will be made through the
facilities of DTC if you are a member, unless you have otherwise notified us
prior to the date specified by you, or, if you are not a member, settlement may
be made through a correspondent who is a member pursuant to instruction you may
send to us prior to such specified date.
The cost of original issue tax stamps, if any, in connection with the
issuance, sale and delivery of the Firm Shares and Option Shares by the Company
to the respective Underwriters shall be borne by the Company. The Company will
pay and save each Underwriter and any subsequent holder of the Shares harmless
from any and all liabilities with respect to or resulting from any failure or
delay in paying Federal, state or Commonwealth of Puerto Rico stamp and other
transfer taxes, if any, which may be payable or determined to be payable in
connection with the original issuance, sale or delivery to such Underwriter of
the Firm Shares and Option Shares.
3. Representations and Warranties of the Company. The Company
represents, warrants and covenants to each Underwriter that:
(a) The Company meets the requirements for use of Form
S-3 and a registration statement (Registration No. 333-72740) on Form S-3, as
amended, with respect to the Shares, including a prospectus (the "Base
Prospectus"), has been prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the "Act"), and the
rules and regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder, and has been filed with the
Commission and has become effective. Such registration statement and the Base
Prospectus may have been amended or supplemented prior to the date of this
Agreement; any such amendment or supplement was so prepared and filed, and any
such amendment or supplement filed after the effective date of such registration
statement has become effective. No stop order suspending the effectiveness of
the registration statement has been issued, and, to the Company's knowledge, no
proceeding for that purpose has been instituted or threatened by the Commission.
A prospectus supplement relating to the Shares containing information permitted
to be omitted at the time of effectiveness by Rule 430A of the Rules and
Regulations has been or will be so prepared and filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations on or before the second
business day after the date hereof (or such earlier time as may be required by
the Rules and Regulations); and the Rules and Regulations do not require the
Company to, and, without the Representative's consent, the Company will not,
file a post-effective amendment after the time of execution of this Agreement
and prior to the filing of such final form of prospectus supplement. The
registration statement may be supplemented by one or more forms of preliminary
prospectus supplement, as contemplated by Rule 430 or Rule 430A of the Rules and
Regulations, to be used in connection with the offering and sale of the Shares
(each a "Preliminary Prospectus"). Copies of such registration statement, any
such amendments, and each related Preliminary Prospectus and all documents
incorporated by reference therein that were filed with the Commission on or
prior to the date of this Underwriting Agreement have been delivered to the
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Representative and its counsel. The term "Registration Statement" means such
registration statement as amended at the time it becomes or became effective
(the "Effective Date"), including financial statements and all exhibits and any
information deemed by virtue of Rule 430A of the Rules and Regulations to be
included in such Registration Statement at the Effective Date and any prospectus
supplement filed thereafter with the Commission and shall include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 which were
filed under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). The term "Prospectus" means, collectively, the Base Prospectus together
with any prospectus supplement, in the respective forms they are filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations. Any reference
herein to the terms "amend," "amendment" or "supplement" with respect to the
Registration Statement, the Base Prospectus, any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the filing of any document
under the Exchange Act after the Effective Date, or the date of any Preliminary
Prospectus or the Prospectus, as the case may be, that is incorporated therein
by reference. For purposes of this Underwriting Agreement, all references to the
Registration Statement, the Prospectus, any preliminary prospectus or any
amendment or supplement thereto shall be deemed to include any copy filed with
the Commission pursuant to its Electronic Data Gathering Analysis and Retrieval
System (XXXXX), and such copy shall be identical (except to the extent permitted
by Regulation S-T) to any Prospectus delivered to the Representative for use in
connection with the offering of the Shares by the Company.
(b) Each part of the Registration Statement (excluding
any prospectus supplement with respect to an offering of securities other than
the offering of the Shares contemplated hereby), when such part became or
becomes effective, each Preliminary Prospectus, on the date of filing thereof
with the Commission, and the Prospectus and any amendment or supplement thereto,
on the date of filing thereof with the Commission and at the Closing Date
conformed or will conform in all material respects with the requirements of the
Act and the Rules and Regulations; each part of the Registration Statement
(excluding any prospectus supplement with respect to an offering of securities
other than the offering of the Shares contemplated hereby), when such part
became or becomes effective, did not or will not contain an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; each Preliminary
Prospectus, on the date of filing thereof with the Commission, and the
Prospectus and any amendment or supplement thereto, on the date of filing
thereof with the Commission and at the Closing Date, did not or will not include
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; the foregoing shall not apply to the
statements in or omissions from any such document in reliance upon, and in
conformity with, written information relating to any Underwriter furnished to
the Company by the Representative, or by any Underwriter through the
Representative, specifically for use in the preparation thereof. The Company has
not distributed any offering material in connection with the offering or sale of
the Shares other than the Registration Statement, any Preliminary Prospectus,
the Prospectus or any other materials, if any, permitted by the Act.
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(c) The documents incorporated by reference in the
Registration Statement, the Prospectus and any amendment or supplement to such
Registration Statement or such Prospectus, when they became or become effective
under the Act or were or are filed with the Commission under the Exchange Act,
as the case may be, conformed or will conform in all material respects with the
requirements of the Act, the Rules and Regulations, the Exchange Act and the
rules and regulations of the Commission thereunder (the "Exchange Act Rules and
Regulations"), as applicable.
(d) The only directly or indirectly controlled
subsidiaries of the Company (each, a "Subsidiary" and collectively, the
"Subsidiaries") are those listed on Exhibit A hereto. Except as set forth in the
Prospectus or as acquired in connection with the exercise of its rights as a
creditor, or pursuant to a bona fide collateral pledge arrangement, neither the
Company nor any Subsidiary owns, nor at the Closing Date and the Option Closing
Date, will own an interest in any corporation, partnership, trust, joint venture
or other business entity. The Company has been and, at the Closing Date and
Option Closing Date, will be duly organized and validly existing as a
corporation under the laws of the Commonwealth of Puerto Rico and is and, at the
Closing Date and Option Closing Date, will be in good standing with the
Commonwealth of Puerto Rico. The Company is and will be as of the Closing Date
and the Option Closing Date registered with the Board of Governors of the
Federal Reserve System (the "Federal Reserve") as a bank holding company under
the Bank Holding Company Act of 1956 (the "BHCA") and its election to be treated
as a financial holding company under the BHCA is and will remain in full force
and effect. Each of the Subsidiaries is and, at the Closing Date and Option
Closing Date, will be a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation. Each of
the Company and its Subsidiaries is and, at the Closing Date and the Option
Closing Date, will be duly qualified and in good standing as a foreign
corporation in each jurisdiction in which the character or location of its
properties (owned, leased or licensed) or the nature or conduct of its business
or use of its property and assets makes such qualification necessary, except
where the failure to so qualify would not have a material adverse effect on the
condition, financial or otherwise, or the earnings, prospects or business
affairs of the Company and its Subsidiaries taken as a whole.
(e) The outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable and are not subject to any preemptive or similar
rights. The Shares to be issued and sold by the Company will be, upon such
issuance and payment therefor, duly authorized, validly issued, fully paid and
nonassessable and will not be subject to any preemptive or similar rights. The
Company has, and, upon completion of the sale of the Shares, will have, an
authorized, issued and outstanding capitalization as set forth in the
Registration Statement and the Prospectus. The description of the securities of
the Company in the Registration Statement and the Prospectus is, and at the
Closing Date and, if later, the Option Closing Date, will be, complete and
accurate in all respects. No holders of securities of the Company are entitled
to have such securities registered under the Registration Statement, except
where such rights have been waived.
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(f) The consolidated financial statements and the related
notes of the Company included in the Registration Statement or incorporated
therein by reference and the Prospectus present fairly the financial condition
of the Company and its Subsidiaries as of the dates indicated and the
consolidated results of operations and cash flows of the Company and its
Subsidiaries for the periods covered thereby, all in conformity with generally
accepted accounting principles ("GAAP") applied on a consistent basis throughout
the entire periods involved. PricewaterhouseCoopers LLP (the "Accountants"), who
have reported on those of such financial statements and related notes which are
audited, are independent accountants with respect to the Company and its
Subsidiaries within the meaning of the Act and the applicable and published
rules and regulations.
(g) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorization, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for assets,
(iii) access to assets is permitted only in accordance with management's general
or specific authorization, and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(h) Except as set forth in the Registration Statement and
Prospectus, subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus and prior to the Closing Date
and, if later, the Option Closing Date, (i) there has not been, and will not
have been, any material adverse change in the business, properties, financial
condition, net worth or results of operations of the Company and its
Subsidiaries considered as one enterprise, (ii) neither the Company nor any of
its Subsidiaries has entered into, or will have entered into any material
transactions other than pursuant to this Agreement, and (iii) the Company has
not, and will not have, paid or declared any dividends or other distributions of
any kind on any class of its capital stock, except for the payment or
declaration of quarterly dividends on the Company's common stock (the "Common
Stock") and the payment and declaration of monthly dividends on the Company's
outstanding preferred stock in the ordinary course of its business.
(i) The Company and each of its Subsidiaries have good
and marketable title to all properties and assets described in the Registration
Statement, including the documents incorporated by reference therein, and
Prospectus, as owned by it, free and clear of all liens, security interests,
restrictions, pledges, encumbrances, charges, equities, claims, easements,
leases and tenancies (collectively, "Encumbrances") other than those described
in the Registration Statement, or in the documents incorporated by reference
therein, and Prospectus or those that will not materially affect the value of
such properties and assets or will not interfere with the use made and proposed
to be made of such properties and assets. The Company and each of its
Subsidiaries have valid, subsisting and enforceable leases for the properties
and assets described in the Registration Statement or in the documents
incorporated by reference therein, and Prospectus as leased by them, free and
clear of all Encumbrances, other than those described in the Registration
Statement or in
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the documents incorporated by reference therein, and Prospectus, or those that
will not materially affect the value of such properties and assets or will not
interfere with the use made and proposed to be made of such properties and
assets.
(j) The Company is not required to be registered under
the Investment Company Act of 1940, as amended (the "Investment Company Act").
(k) Except as set forth in the Registration Statement, or
incorporated therein by reference, and Prospectus, there are no actions, suits,
arbitrations, claims, governmental or other proceedings (formal or informal), or
investigations pending or threatened against or affecting the Company or any of
its Subsidiaries, or any directors, officers or shareholders of the Company or
any of its Subsidiaries in their respective capacities as such, or any of the
properties or assets owned or leased by the Company or any of its Subsidiaries,
before or by any Federal, state or Commonwealth of Puerto Rico court,
commission, regulatory body, administrative agency or other governmental body,
domestic or foreign (collectively, a "Governmental Body"), wherein an
unfavorable ruling, decision or finding would adversely affect the business,
prospects, financial condition, net worth or results of operations of the
Company and its Subsidiaries taken as a whole and would be required to be
disclosed in the Registration Statement and Prospectus. Neither the Company nor
any Subsidiary is in violation of, or in default with respect to, any law, rule,
or regulation, or any order, judgment, or decree, except as described in the
Prospectus or such as in the aggregate do not now have and can reasonably be
expected in the future not to have a material adverse effect upon the
operations, business, properties, or assets of the Company and its Subsidiaries
taken as a whole; nor is the Company or any Subsidiary presently required under
any order, judgment or decree to take any action in order to avoid any such
violation or default.
(l) The Company and each of its Subsidiaries have and, at
the Closing Date and the Option Closing Date, will have all governmental
licenses, permits, consents, orders, approvals, franchises, certificates and
other authorizations (collectively, "Licenses") necessary to carry on their
respective businesses and own or lease their respective properties as
contemplated in the Registration Statement and Prospectus. The Company and each
of its Subsidiaries have and, at the Closing Date and the Option Closing Date,
will have complied in all material respects with all laws, regulations and
orders applicable to it or its business, assets and properties. Neither the
Company nor any of its Subsidiaries is, nor, at the Closing Date and the Option
Closing Date, will be in default (nor has any event occurred which, with notice
or lapse of time or both, would constitute a default) in the due performance and
observation of any term, covenant or condition of any indenture, mortgage, deed
of trust, voting trust agreement, loan agreement, bond, debenture, note
agreement or other evidence of indebtedness, lease, contract or other agreement
or instrument (collectively, a "contract or other agreement") to which they are
a party or by which their respective properties are bound or affected, the
violation of which would individually or in the aggregate have a material
adverse effect on the condition, financial or otherwise, or the earnings,
prospects or business affairs of the Company and its Subsidiaries taken as a
whole. There are no governmental proceedings or actions pending or
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threatened for the purpose of suspending, modifying or revoking any License held
by the Company and its Subsidiaries.
(m) 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 Shares by the Company, except such as have
been obtained and such as may be required under state or Commonwealth of Puerto
Rico securities or blue sky laws or the bylaws and rules of the National
Association of Securities Dealers, Inc. (the "NASD") in connection with the
purchase and distribution by the Underwriters of the Shares to be sold hereby.
(n) The Company has full power (corporate and other) and
authority to enter into this Agreement and to carry out all the terms and
provisions hereof to be carried out by it. This Agreement has been duly
authorized, executed and delivered by the Company and constitutes a valid and
binding agreement of the Company and is enforceable against the Company in
accordance with the terms hereof, except as rights to indemnity and contribution
may be limited by federal, state or Commonwealth of Puerto Rico securities laws
or the public policy underlying such laws. Except as disclosed in the
Registration Statement and the Prospectus, the execution, delivery and the
performance of this Agreement and the consummation of the transactions
contemplated hereby will not result in the creation or imposition of any
Encumbrance upon any of the properties or assets of the Company or any of the
Subsidiaries pursuant to the terms or provisions of, or result in a breach or
violation of or conflict with any of the terms or provisions of, or constitute a
default under, or give any other party a right to terminate any of its
obligations under, or result in the acceleration of any obligation under, (i)
the Certificate of Incorporation or By-laws of the Company, in each case as
amended, or (ii) any contract or other agreement to which the Company or any of
the Subsidiaries is a party or by which it or any of the respective assets or
properties are bound or affected, the violation of which would individually or
in the aggregate have a material adverse effect on the condition, financial or
otherwise, or the earnings, prospects or business affairs of the Company and its
Subsidiaries, or (iii) any judgment, ruling, decree, order, law, statute, rule
or regulation of any Governmental Body applicable to the Company or any of the
Subsidiaries or their respective businesses or properties, the violation of
which would individually or in the aggregate have a material adverse effect on
the financial condition, or the earnings, prospects or business affairs of the
Company and its Subsidiaries.
(o) No statement, representation, or warranty made by the
Company in this Agreement or made in any certificate or document required by
this Agreement to be delivered to the Representative was or will be, when made,
inaccurate, untrue or incorrect in any material respect. Each certificate signed
by an officer of the Company and delivered to the Representative or counsel for
the Underwriters shall be deemed to be a representation and warranty by the
Company to each Underwriter as to the matters covered thereby.
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(p) Neither the Company nor any of its directors,
officers or affiliates has taken, nor will he, she or it take, directly or
indirectly, any action designed, or which might reasonably be expected in the
future, to cause or result in, under the Act or otherwise, or which has
constituted, stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares or otherwise.
(q) The Shares have been approved for listing on the
Nasdaq National Market ("Nasdaq"), subject only to notice of issuance.
(r) Neither the Company nor any of its Subsidiaries is
involved in any collective labor dispute with its employees nor is any such
dispute threatened or imminent.
(s) Neither the Company nor any of its Subsidiaries nor,
to the Company's best knowledge, any employee or agent of the Company or any
Subsidiary has made any payment of funds of the Company or any Subsidiary or
received or retained any funds of the Company or any Subsidiary in violation of
any law, rule or regulation which payment, receipt or retention of funds is of a
character required to be disclosed in the Prospectus.
(t) The business, operations and facilities of the
Company and its Subsidiaries have been and are being conducted in compliance
with all applicable laws, ordinances, rules, regulations, licenses, permits,
approvals, plans, authorizations or requirements relating to occupational safety
and health, or pollution, or protection of health or the environment (including,
without limitation, those relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants or hazardous or toxic
substances, materials or wastes into ambient air, surface water, groundwater or
land, or relating to the manufacture, processing, distribution, use, treatment
storage, disposal, transport or handling of chemical substances, pollutants,
contaminants or hazardous or toxic substances, materials or wastes, whether
solid, gaseous or liquid in nature) of any governmental department, commission,
board, bureau, agency or instrumentality of the United States, any state, or the
Commonwealth of Puerto Rico or political subdivision thereof, and all applicable
judicial or administrative agency or regulatory decrees, awards, judgments and
orders relating thereto; and neither the Company nor any of its Subsidiaries has
received any notice from any governmental instrumentality or any third party
alleging any violation thereof or liability thereunder (including, without
limitation, liability for costs of investigating or remediating sites containing
hazardous substances and/or damages to natural resources), except where failure
to so comply would not have a material adverse effect on the financial
condition, or the earnings or business affairs of the Company and its
Subsidiaries taken as a whole. The intended use and occupancy of each of the
facilities owned or operated by the Company and its Subsidiaries complies in all
material respects with all applicable codes and zoning laws and regulations, and
there is no pending or threatened condemnation, zoning change, environmental or
other proceeding or action that will in any material respect adversely affect
the size of, use of, improvements on, construction on, or access to such
facilities.
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(u) The Company and each of its Subsidiaries has filed
all foreign, federal, state and local tax returns that are required to be filed
or has requested extensions thereof and has paid all taxes required to be paid
by it and any other assessment, fine or penalty levied against it, to the extent
that any of the foregoing is due and payable, except for any failure to file
that would not have a material adverse effect on the financial condition, or the
earnings or business affairs of the Company and its Subsidiaries taken as a
whole.
(v) The Company meets the requirements for use of Form
S-3 under the Rules and Regulations and the use of Rule 415 under the Rules and
Regulations.
(w) The deposit accounts of Doral Bank, a Subsidiary of
the Company ("Doral Bank") and Doral Bank, FSB, a Subsidiary of the Company
("Doral FSB") are insured by the Savings Association Insurance Fund ("SAIF") of
the Federal Deposit Insurance Corporation ("FDIC") to the legal maximum, and no
proceeding for the termination or revocation of such insurance is pending or
threatened. Doral Bank and Doral FSB are members in good standing of the Federal
Home Loan Bank of New York.
(x) None of the Company, Doral Bank, Doral FSB and their
affiliates, or any of their respective directors or officers is subject to any
order or directive of, or party to any agreement with, any regulatory agency
having jurisdiction with respect to its business or operations except as
disclosed in the Prospectus.
(y) The Company has derived more than 20% of its gross
income from Puerto Rico sources on an annual basis since its incorporation in
1972 in accordance with the applicable sourcing rules under the Puerto Rico
Internal Revenue Code of 1994, as amended.
4. Agreements of the Company. The Company covenants and agrees
with each of the several Underwriters as follows:
(a) The Company will cause the Prospectus Supplement to
be filed as contemplated by Section 3(a) hereof (but only if the Representative
has not reasonably objected thereto by notice to the Company after having been
furnished a copy within a reasonable time prior to filing) and will notify the
Representative promptly of such filing. The Company will not during such period
as the Prospectus is required by law to be delivered in connection with sales of
the Shares by any Underwriter or dealer (the "Prospectus Delivery Period"), file
any amendment or supplement to the Registration Statement or the Prospectus,
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) The Company will use its best efforts to cause the
Registration Statement to remain effective through the completion of the
Underwriters' distribution of the Shares, and will notify the Representative
promptly, and will confirm such advice in writing, (i) of the preparation
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and filing (subject to Section 4(a)) of any post-effective amendment and when
any such 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 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 suspension of the
qualification or registration of the Shares for offering or sale in any
jurisdiction, or of the initiation or threat of any proceeding for any such
purpose; (v) of the happening of any event during the Prospectus Delivery Period
that in the judgment of the Company makes any statement made in the Registration
Statement or the Prospectus untrue or that requires the making of any changes in
the Registration Statement or the Prospectus in order to make the statements
therein, in light of the circumstances in which they are made, not misleading
and (vi) of receipt by the Company or any representative or attorney of the
Company of any other communication from the Commission relating to the Company,
the Registration Statement, any preliminary prospectus or the Prospectus. If at
any time the Commission or any jurisdiction shall threaten to issue, or shall
issue, any order suspending the effectiveness of the Registration Statement or
suspending the qualification or registration of the Shares for sale in any
jurisdiction, the Company will make every reasonable effort to prevent the
issuance of such order and, if such an order should be issued, to obtain the
withdrawal of such order at the earliest possible moment. The Company will use
its best efforts to comply with the provisions of and make all requisite filings
with the Commission pursuant to Rule 430A and to notify the Representative
promptly of all such filings.
(c) If, at any time when a Prospectus relating to the
Shares is required to be delivered under the Act, any event occurs as a result
of which, in the judgment of the Company or in the opinion of counsel for the
Underwriters, the 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 Prospectus or the Registration Statement to comply with the Act
or the Rules and Regulations, the Company will promptly notify the
Representative thereof and, subject to Section 4(b) hereof, will prepare and
file with the Commission, at the Company's expense, an amendment to the
Registration Statement or an amendment or supplement to the Prospectus that
corrects such statement or omission or effects such compliance.
(d) The Company will furnish to the Representative,
without charge, two signed copies of the Registration Statement and of any
post-effective amendment thereto, including financial statements and schedules,
and all exhibits thereto and will furnish to the Representative, without charge,
for transmittal to each of the other Underwriters, copies of the Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules but without exhibits.
12
(e) The Company will comply with all the provisions of
all undertakings contained in the Registration Statement.
(f) During the Prospectus Delivery Period, the Company
will promptly furnish to the Underwriters, without charge, as many copies of
each preliminary prospectus, the Prospectus (containing the Prospectus
Supplement) and any amendment or supplement thereto as the Underwriters may from
time to time reasonably request. The Company consents to the use of the
Prospectus, as amended or supplemented from time to time, by the Underwriters
and by all dealers to whom the Shares may be sold, both in connection with the
offering or sale of the Shares and, thereafter, during the Prospectus Delivery
Period. If during the Prospectus Delivery Period any event shall occur which in
the judgment of the Company or counsel to the Underwriters should be set forth
in the Prospectus in order to make any statement therein, in the light of the
circumstances under which it was made, not misleading, or if, in the reasonable
opinion of counsel to the Underwriters, it is necessary to supplement or amend
the Prospectus to comply with law, the Company will forthwith prepare and duly
file with the Commission an appropriate supplement or amendment thereto. Except
as required by the Exchange Act or the Exchange Act Rules and Regulations, the
Company shall not file any document under the Exchange Act before the
termination of the Prospectus Delivery Period if such document would be deemed
to be incorporated by reference into the Prospectus to which the Representative
reasonably objects.
(g) Prior to any public offering of the Shares by the
Underwriters, the Company will cooperate with the Representative and its counsel
in connection with the registration or qualification of the Shares for offer and
sale under the securities or blue sky laws of such jurisdictions as the
Representative may reasonably request; provided, that in no event shall the
Company be obligated to qualify to do business in any jurisdiction where it is
not now so qualified or to take any action which would subject it to general
service of process in any jurisdiction where it is not now so subject.
(h) During the period of five years commencing on the
Closing Date, the Company will furnish to the Representative and each other
Underwriter who may so request copies of such financial statements and other
periodic and special reports as the Company may from time to time distribute
generally to the holders of any class of its capital stock, and will furnish to
the Representative and each other Underwriter who may so request a copy of each
annual or other report it shall be required to file with the Commission.
(i) The Company will make generally available to its
security holders as soon as practicable, but not later than ninety (90) days
after the close of the period covered thereby, an earnings statement (in form
complying with the provisions of Section 11(a) of the Act and Rule 158 of the
Rules and Regulations) covering a twelve-month period beginning not later than
the first day of the Company's fiscal quarter next following the "effective
date" (as defined in said Rule 158) of the Registration Statement.
13
(j) The Company will apply the net proceeds from the
offering and sale of the Shares in the manner set forth in the Prospectus under
"Use of Proceeds."
(k) The Company will not at any time, directly or
indirectly, take any action intended, or which might reasonably be expected, to
cause or result in, or which will constitute, stabilization of the price of the
shares of Preferred Stock to facilitate the sale or resale of any of the Shares.
5. Expenses.
(a) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the Company will pay,
or reimburse if paid by the Representative, all costs and expenses incidental to
the performance of the obligations of the Company under this Agreement,
including, but not limited to, costs and expenses of or relating to (i) the
preparation, printing and filing by the Company of the Registration Statement
and exhibits thereto, each Preliminary Prospectus prior to or during the period
specified in the first sentence of Section 4(f) but not exceeding nine (9)
months after the Effective Date, the Prospectus and any amendment or supplement
to the Registration Statement or the Prospectus, (ii) the preparation and
delivery of certificates representing the Shares, (iii) furnishing (including
costs of shipping and mailing) such copies of the Registration Statement, the
Prospectus and any Preliminary Prospectus, and all amendments and supplements
thereto, as may be requested for use in connection with the offering and sale of
the Shares by the Underwriters or by dealers to whom Shares may be sold, (iv)
the listing of the Shares on the Nasdaq, (v) the filing fees and out-of-pocket
expenses relating to such filings for any filings required to be made by the
Underwriters with the NASD, (vi) the registration or qualification of the Shares
for offer and sale under the securities or blue sky laws of such jurisdictions
designated pursuant to Section 4(g) and the preparation and printing of
preliminary, supplemental and final blue sky memoranda, (vii) counsel and
accountants to the Company, and (viii) the transfer agent for the Shares.
(b) If the transactions contemplated by this Agreement
are not consummated or if this Agreement is terminated by the Company pursuant
to any of the provisions hereof, the Company will reimburse the Representative
for all of their accountable out-of-pocket fees and expenses (including the
fees, disbursements and other charges of their counsel) incurred by them in
connection herewith.
6. Conditions of the Obligations of the Underwriters. The
obligations of each Underwriter hereunder are subject to the following
conditions:
(a) All filings required under Rule 424 and 430A of the
Rules and Regulations to be made by the Company prior to the Closing shall have
been made by the Company.
14
(b) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall be pending or threatened by the Commission, (ii) no order
suspending the effectiveness of the Registration Statement or the qualification
or registration of the Shares under the securities or blue sky laws of any
jurisdiction shall be in effect, and no proceeding for such purpose shall be
pending before or threatened or contemplated by the Commission or the
authorities of any such jurisdiction, (iii) any request for additional
information on the part of the staff of the Commission or any such authorities
shall have been complied with to the satisfaction of the staff of the Commission
or such authorities, and (iv) after the date hereof no amendment or supplement
to the Registration Statement or the Prospectus shall have been filed unless a
copy thereof was first submitted to the Representative and the Representative
did not object thereto in good faith, and the Representative shall have received
certificates, dated the Closing Date and the Option Closing Date and signed by
the Chief Executive Officer, the President or any Senior Executive Vice
President of the Company and the Chief Financial Officer, the Treasurer or the
Chief Accounting Officer of the Company (who may, as to proceedings threatened,
rely upon the best of their information and belief), to the effect of the
foregoing clauses (i), (ii) and (iii).
(c) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) there shall not have
been a material adverse change in the general affairs, business, properties,
management, financial condition or results of operations of the Company whether
or not arising from transactions in the ordinary course of business, and (ii)
the Company shall not have sustained any material loss or interference with its
business, assets or properties from fire, explosion, flood or other casualty, or
from any labor dispute or any court or legislative or other governmental action,
order or decree, which is not set forth in the Registration Statement and the
Prospectus.
(d) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there shall have been no
litigation or other proceeding instituted against the Company or any of its
officers, directors or shareholders in their capacities as such, or any of its
assets or properties, before or by any Governmental Body in which litigation or
proceeding an unfavorable ruling, decision or finding would materially and
adversely affect the business, properties, financial condition, net worth or
results of operations of the Company.
(e) Each of the representations and warranties of the
Company contained herein shall be true and correct at the Closing Date and, with
respect to the Option Shares, at the Option Closing Date, as if made on such
date, and all covenants and agreements herein contained to be performed on the
part of the Company and all conditions herein contained to be fulfilled or
complied with by the Company at or prior to the Closing Date and, with respect
to the Option Shares, at or prior to the Option Closing Date, shall have been
fully performed, fulfilled or complied with.
15
(f) The Representative shall have received an opinion,
dated the Closing Date and the Option Closing Date, from Xxxxxxxxxxx Xxxxxx &
Xxxxxxx, LLP, Puerto Rico counsel for the Company to the following effect:
(i) The Company has been duly organized and validly
existing as a corporation under the laws of the Commonwealth of Puerto
Rico and is in good standing with the Commonwealth of Puerto Rico. Each
of Doral Mortgage Corporation ("Doral Mortgage"), Doral Securities,
Inc. ("Doral Securities"), Doral FSB, Doral Insurance Agency, Inc.
("Doral Insurance") and Doral Bank, each a Subsidiary, is a corporation
duly organized, validly existing and in good standing under the laws of
its respective jurisdiction of incorporation. Each of the Company,
Doral Mortgage, Doral Securities, Doral FSB, Doral Insurance and Doral
Bank is duly qualified and in good standing as a foreign corporation in
each jurisdiction in which the character or location of its properties
(owned, leased or licensed) or the nature or conduct of its business or
use of its property and assets makes such qualification necessary,
except where the failure to so qualify would not have a material
adverse effect on the financial condition, or the earnings or business
affairs of the Company and its Subsidiaries taken as a whole;
(ii) The Company has an authorized capitalization as set
forth in the Prospectus; the Company has duly authorized the issuance
and sale of the Shares to be sold by it hereunder; such Shares, when
issued by the Company and paid for in accordance with the terms hereof,
will be validly issued, fully paid and nonassessable and will conform
in all material respects to the description thereof contained in the
Prospectus and will not be subject to any preemptive, subscription or
other similar rights; the Shares have been duly authorized for listing
on the Nasdaq, subject only to official notice of issuance; and no
holders of securities of the Company are entitled to have such
securities registered under the Registration Statement, except for
holders who have waived any such registration rights;
(iii) The Registration Statement is effective under the
Act; any required filing of the Prospectus Supplement pursuant to Rule
424(b) has been made in the manner and within the time period required
by Rule 424(b); and to the best knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement or any
amendment thereto and no order directed at any document incorporated by
reference in the Registration Statement or of the Rule 462(b)
Registration Statement or any amendment thereto has been issued, and,
no proceedings for that purpose have been instituted or are pending or
are threatened or contemplated under the Act;
(iv) The Registration Statement and the Prospectus as of
its date, appeared on their face to be appropriately responsive, in all
material respects (other than the documents incorporated therein by
reference and not including the financial statements, schedules and
other financial data contained therein, as to which such counsel need
not express any opinion), with the requirements of the Act and the
related rules and regulations thereunder;
16
(v) The descriptions contained and summarized in the
Registration Statement, or incorporated therein by reference, and the
Prospectus are accurate and fairly represent in all material respects
the information required to be shown in the Registration Statement and
Prospectus by the Act and the Rules and Regulations; and the statements
set forth under the headings "Risk Factors - Payment of Dividends May
Be Restricted by Doral Financial's Contracts," "Description of Capital
Stock," and "Taxation" in the Prospectus, insofar as such statements
constitute a summary of the legal matters, documents or proceedings
referred to therein, provide an accurate summary of such legal matters,
documents and proceedings;
(vi) To the knowledge of such counsel, there are no
contracts or documents which are required by the Act to be described in
the Registration Statement or the Prospectus or to be filed as exhibits
to the Registration Statement which are not filed or incorporated
therein by reference as required by the Act and the Rules and
Regulations;
(vii) To the knowledge of such counsel after reasonable
investigation, there is not pending or threatened against the Company
or any of the Subsidiaries any legal action or proceeding, suit,
arbitration, claim, or governmental or other proceeding (informal or
formal) or investigation before or by any Governmental Body, of a
character required to be disclosed in the Registration Statement or the
Prospectus which is not so disclosed therein or in the materials
incorporated by reference therein, and to the knowledge of such
counsel, no such proceedings have been threatened against the Company
or any of its Subsidiaries or any of their respective assets or
properties. To the knowledge of such counsel after reasonable
investigation, neither the Company nor any Subsidiary is in violation
of, or in default with respect to, any law, rule, or regulation, or any
order, judgment or decree, except as described in the Registration
Statement or Prospectus or in the materials incorporated by reference
therein, or such as in the aggregate do not now have and can reasonably
be expected in the future not to have a material adverse effect upon
the operations, business, properties, or assets of the Company and its
Subsidiaries taken as a whole; nor is the Company or any Subsidiary
presently required under any order, judgment or decree to take any
action in order to avoid any such violation or default;
(viii) The Company has full legal right, power, and
authority to enter into this Agreement and to consummate the
transactions provided for herein; and this Agreement has been duly
authorized, executed and delivered by the Company;
(ix) None of the Company's execution or delivery of this
Agreement, its performance hereof, its consummation of the transactions
contemplated herein or its application of the net proceeds of the
offering in the manner set forth under the caption "Use of Proceeds,"
conflicts or will conflict with or results or will result in any breach
or violation of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any
Encumbrance upon, any property or assets of the Company pursuant to (A)
the terms of the Certificate of Incorporation or By-laws of the
Company, in each case as
17
amended; (B) the terms of any contract or other agreement to which the
Company is a party or by which it is or may be bound or to which any of
its properties is or may be subject and of which such counsel has
knowledge; (C) any statute, rule or regulation of any Governmental Body
having jurisdiction over the Company or any of its activities or
properties; or (D) the terms of any judgment, decree or order of any
arbitrator or Governmental Body having such jurisdiction and of which
such counsel has knowledge; and no consent, approval, authorization or
order of any Governmental Body has been or is required for the
Company's performance of this Agreement or the consummation of the
transactions contemplated hereby, except such as have been obtained
under the Act or may be required under state or Commonwealth of Puerto
Rico securities or blue sky laws in connection with the purchase and
distribution by the Underwriters of the Shares;
(x) To such counsel's knowledge, the conduct of the
respective businesses of the Company and its Subsidiaries is not in
violation of any federal, state or local statute, administrative
regulation or other law, which violation is likely to have a material
adverse effect on the Company and its Subsidiaries taken as a whole;
and the Company and its Subsidiaries have obtained all material
licenses as are necessary or required for the conduct of their
businesses as presently conducted;
(xi) The Company is not required to be registered as an
investment company under the Investment Company Act;
(xii) To the knowledge of such counsel, the Company is not
in any breach or violation of any of the terms or provisions of, or in
default under (nor has an event occurred which with notice or lapse of
time or both would constitute a default or acceleration under), (A) the
terms of its Certificate of Incorporation or By-laws, in each case as
amended; (B) the terms of any contract or other agreement known to such
counsel after reasonable investigation to which the Company is a party
or by which the Company is or may be bound or to which any of its
properties or assets is or may be subject, which breach, violation or
default could have a material adverse effect on the Company and its
Subsidiaries taken as a whole; (C) any statute, rule or regulation of
any Governmental Body having jurisdiction over the Company or any of
its activities, assets or properties, which breach, violation or
default could have a material adverse effect on the Company and its
Subsidiaries taken as a whole; or (D) the terms of any judgment, decree
or order, known to such counsel after reasonable investigation, of any
arbitrator or Governmental Body having such jurisdiction, which breach,
violation or default could have a material adverse effect on the
Company and its Subsidiaries taken as a whole;
(xiii) The deposit accounts of Doral Bank and Doral Bank,
FSB are insured by the SAIF of the FDIC to the legal maximum, and to
such counsel's knowledge no proceeding for the termination or
revocation of such insurance is pending or threatened. Doral Bank and
18
Doral Bank, FSB are members in good standing of the Federal Home Loan
Bank of New York; and
(xiv) To the knowledge of such counsel, none of the Company
or any of its Subsidiaries, or any of their respective directors or
officers is subject to any order or directive of, or party to any
agreement with, any regulatory agency having jurisdiction with respect
to the business or operations of the Company or any of its
Subsidiaries, except as disclosed in the Registration Statement or the
Prospectus or in the materials incorporated by reference therein and
except for that certain Memorandum of Understanding dated June 10, 2001
between Doral Securities, Inc. and the Office of the Commissioner of
Financial Institutions of Puerto Rico.
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and public officials and, as to matters involving the
application of laws of any other jurisdiction than the Commonwealth of Puerto
Rico and the United States (to the extent satisfactory in form and scope to
counsel for the Underwriters) such counsel may rely upon the opinion of local
(including in-house) counsel to the Company. The foregoing opinion shall also
state that such counsel has no reason to believe that the Underwriters are not
justified in relying upon such opinion of local counsel, and copies of such
opinion shall be delivered to the Representative and its counsel.
In addition, such counsel shall state that in the course of the
preparation of the Prospectus, such counsel has participated in conferences with
officers and representatives of the Company and with the Accountants, at which
conferences such counsel made inquiries of such officers, representatives and
Accountants and discussed the contents of the Prospectus and, on the basis of
the foregoing nothing has come to such counsel's attention that causes such
counsel to believe that the Prospectus as of the date it became effective and as
of the Closing Date contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus as of the date thereof
and as of the Closing Date, contained any untrue statement of a material fact or
omitted or omits 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 (it being understood that such
counsel need not express any opinion with respect to the financial statements,
schedules and other financial data included in the Prospectus). Such counsel may
state that they make no representation that they have independently verified the
accuracy or completeness of the statements contained in the Registration
Statement and Prospectus.
References to the Registration Statement and the Prospectus in this
paragraph (f) shall include any amendment or supplement thereto at the date of
such opinion.
(g) The Representative shall have received an opinion, dated the
Closing Date and the Option Closing Date, from Fiddler Xxxxxxxx & Xxxxxxxxx,
LLP, counsel to the Underwriters, which opinion shall be satisfactory in all
respects to the Representative.
(h) Concurrently with the execution and delivery of this
Agreement, or, if the Company elects to rely on Rule 430A, on the date of the
Prospectus, the Accountants shall have furnished to the Representative a letter,
dated the date of its delivery (the "Original Letter"), addressed to the
Representative and in form and substance satisfactory to the Representative, to
the effect that:
(i) they are independent accountants within the meaning
of the Act and the applicable published rules and regulations
thereunder;
(ii) in their opinion, the consolidated financial
statements of the Company and its Subsidiaries audited by them and
incorporated by reference in the Prospectus comply as to form in all
material respects with the applicable accounting requirements of the
Act, the Exchange Act and the published rules and regulations
thereunder with respect to registration statements on Form S-3;
(iii) on the basis of procedures (but not an audit in
accordance with generally accepted auditing standards) consisting of
(a) reading the minutes of meetings of the stockholders and the Board
of Directors of the Company and its Subsidiaries since December 31,
2001 as set forth in the minute books through a specified date not more
than five business days prior to the date of delivery of the Original
Letter; (b) performing the procedures specified by the American
Institute of Certified Public Accountants for a review of interim
financial information as described in SAS No. 71, "Interim Financial
Information," on the unaudited consolidated interim financial
statements of the Company and its Subsidiaries included in the
Prospectus and reading the unaudited interim financial data for the
period from the date of the latest balance sheet incorporated by
reference in the Prospectus to the date of the latest available interim
financial data; and (c) making inquiries of certain officials of the
Company who have responsibility for financial and accounting matters
regarding the specific items for which representations are requested
below; nothing has come to their attention (as of a date not more than
five business days prior to the date of the delivery of such letter) as
a result of the foregoing procedures that caused them to believe that:
(1) the unaudited consolidated interim financial statements, if any,
incorporated by reference in the Registration Statement and/or in the
Prospectus, do not comply as to form in all material respects with the
applicable accounting requirements of the Exchange Act and the
published rules and regulations thereunder; (2) any material
modifications should be made to the unaudited consolidated interim
financial statements, if any, incorporated by reference in the
Registration Statement and/or in the Prospectus, for them to be in
conformity with generally accepted accounting principles; (3) (i) at
the date of the latest available interim financial data and at a
specified date not more than five business days prior to the date of
delivery of the Original Letter there was any change in the capital
stock, deposits, federal funds purchased
20
or securities sold under agreements to repurchase or any decreases in
the consolidated stockholders' equity (only as to the latest interim
financial data) of the Company and its Subsidiaries as compared with
amounts shown in the December 31, 2001 balance sheet incorporated by
reference in the Prospectus and (ii) for the period from January 1,
2002 to the latest interim financial data available which should be no
later than forty (40) days prior to the date of delivery of the
Original Letter, there were any decreases, as compared with the
corresponding period in the preceding year, in consolidated net
interest income, other income, income before taxes or in the total or
per share amounts of net income, except in all instances for changes or
decreases which the Registration Statement discloses have occurred or
may occur, or they shall state any specific changes or decreases; and
(iv) the information set forth under the captions
"Prospectus Summary - Summary Consolidated Financial and Other Data,"
"Prospectus Summary - Consolidated Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends," "Capitalization," "Selected
Consolidated Financial and Other Data," and "Description of Capital
Stock," which is expressed in dollars (or percentages derived from such
dollar amounts) and has been obtained from accounting records which are
subject to the internal controls of the Company's accounting system or
which has been derived directly from such accounting records and
analysis or computations, is in agreement with such records or
computations made therefrom.
At the Closing Date and, as to the Option Shares, the Option
Closing Date, the Accountants shall have furnished to the Representative a
letter, dated the date of its delivery, which shall confirm, on the basis of a
review in accordance with the procedures set forth in the Original Letter, that
nothing has come to their attention during the period from the date of the
Original Letter referred to in the prior sentence to a date (specified in the
letter) not more than five business days prior to the Closing Date or the Option
Closing Date, as the case may be, which would require any change in the Original
Letter if it were required to be dated and delivered at the Closing Date or the
Option Closing Date, as the case may be.
In the event that the letters referred to above set forth any
such changes, decreases or increases, it shall be a further condition to the
obligations of the Underwriters that (A) such letters shall be accompanied by a
written explanation of the Company as to the significance thereof, unless the
Representative deems such explanation unnecessary, and (B) such changes,
decreases or increases do not, in the sole judgment of the Representative, make
it impractical or inadvisable to proceed with the purchase and delivery of the
Shares as contemplated by the Registration Statement and the Prospectus, as
amended as of the date hereof.
(i) At the Closing Date and, as to the Option Shares, the
Option Closing Date, there shall be furnished to the Representative an accurate
certificate, dated the date of its delivery, signed by each of the Chief
Executive Officer, the President or any Senior Executive Vice President and the
Chief Financial Officer, the Treasurer or the Chief Accounting Officer of the
Company, in
21
form and substance satisfactory to the Representative, to the effect that to the
best of their knowledge:
(i) Each signer of such certificate has carefully
examined the Registration Statement and the Prospectus and (A) as of
the date of such certificate, (x) the Registration Statement does not
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 and (y) the Prospectus does
not 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 (B) since the Effective Date no
event has occurred as a result of which it is necessary to amend or
supplement the Prospectus in order to make the statements therein not
untrue or misleading in any material respect;
(ii) Each of the representations and warranties of the
Company contained in this Agreement were, when originally made, and
are, at the time such certificate is delivered, true and correct in all
respects; each of the covenants required herein to be performed by the
Company on or prior to the date of such certificate has been duly,
timely and fully performed and each condition herein required to be
complied with by the Company on or prior to the delivery of such
certificate has been duly, timely and fully complied with.
(iii) No stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto and no
order directed at any document incorporated by reference in the
Registration Statement or any amendment thereto or the Prospectus has
been issued, and no proceedings for that purpose have been instituted
or threatened or, to the best of the Company's knowledge, are
contemplated by the Commission.
(j) The Shares shall be qualified for sale in such states and
possessions as the Representative may reasonably request, each such
qualification shall be in effect and not subject to any stop order or other
proceeding on the Closing Date and the Option Closing Date.
(k) Prior to the Closing Date, the Shares shall have been accepted
for listing on the Nasdaq, subject only to official notice of issuance.
(l) The Company shall have furnished to the Representative such
certificates, letters and other documents, in addition to those specifically
mentioned herein, as the Representative may have reasonably requested as to the
accuracy and completeness at the Closing Date and the Option Closing Date of any
statement in the Registration Statement or the Prospectus, as to the accuracy at
the Closing Date and the Option Closing Date of the representations and
warranties of the Company, as to the performance by the Company of its
obligations hereunder, or as to the fulfillment of the conditions concurrent and
precedent to the obligations hereunder of the Underwriters.
22
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are satisfactory in form and
substance to you. The Company will furnish you with such conformed copies of
such opinions, certificates, letters and other documents as you shall reasonably
request.
7. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Underwriter, the directors, officers, employees and agents of each Underwriter
and each person, if any, who controls each Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, from and against any
and all losses, claims, damages or liabilities, joint or several (and actions in
respect thereof), to which they, or any of them, may become subject under the
Act or other Federal, state or Commonwealth of Puerto Rico statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
(i) any untrue statement or alleged untrue statement made by the Company in
Section 3 of this Agreement, (ii) any untrue statement or alleged untrue
statement of any material fact contained in (A) any Preliminary Prospectus, the
Registration Statement or the Prospectus or any amendment or supplement to the
Registration Statement or the Prospectus or (B) any application or other
document, or any amendment or supplement thereto, executed by the Company or
based upon written information furnished by or on behalf of the Company filed in
any jurisdiction in order to qualify the Shares 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 Prospectus, the Registration Statement or
the Prospectus or any amendment or supplement to the Registration Statement or
the Prospectus or any Application a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse,
as incurred, each Underwriter and each such other person for any legal or other
expenses reasonably incurred by such Underwriter or such other person in
connection with investigating defending or appearing as a third-party witness in
connection with any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case to the extent that
any such loss, claim, damage or liability is based solely upon an untrue
statement or omission or alleged untrue statement or omission in any of such
documents made in reliance upon and in conformity with information relating to
any Underwriter furnished in writing to the Company by the Representative on
behalf of any Underwriter expressly for inclusion therein; Provided, further,
that such indemnity with respect to any Preliminary Prospectus shall not inure
to the benefit of any Underwriter (or any such other person) from whom the
person asserting any such loss, claim, damage, liability or action purchased
Shares which are the subject thereof to the extent that any such loss, claim,
damage or liability (i) results from the fact that such Underwriter failed to
send or give a copy of the Prospectus (as amended or supplemented) to such
person at or prior to the confirmation of the sale of such Shares to such person
in any case where such delivery is required by the Act and (ii) arises out of or
is based upon an untrue statement or omission of a material fact contained in
such Preliminary Prospectus that was corrected in the Prospectus (or any
amendment or supplement thereto), unless such failure to deliver the Prospectus
(as amended or supplemented) was the result
23
of noncompliance by the Company with Section 4(f). This indemnity agreement will
be in addition to any liability that the Company might otherwise have. The
Company will not, without the prior written consent of each Underwriter, 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 or any person who
controls such Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act is a party to each claim, action, suit or proceeding),
unless such settlement, compromise or consent includes an unconditional release
of each Underwriter and each such other person from all liability arising out of
such claim, action, suit or proceeding.
(b) Each Underwriter will indemnify and hold harmless the Company,
its officers and directors and each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
against any losses, claims, damages or liabilities (or actions in respect
thereof) to which the Company and any such director, officer or controlling
person may become subject under the Act or other federal, state or Commonwealth
of Puerto Rico statutory law or regulation, at common law or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus or any amendment or supplement to the
Registration Statement or the Prospectus or any Application, or material fact
required to be stated therein or (ii) the omission or the alleged omission to
state in the Registration Statement, any Preliminary Prospectus or the
Prospectus or any amendment or supplement to the Registration Statement or the
Prospectus, or any Application, a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through the Representative expressly for use therein; and, subject to the
limitation set forth immediately preceding this clause, will reimburse, as
incurred, any legal or other expenses reasonably incurred by the Company and any
such director, officer or controlling person in connection with investigating or
defending any such loss, claim, damage, liability or any action in respect
thereof. The Company acknowledges that, for all purposes under this Agreement,
the statements set forth under the heading "Underwriting" constitute the only
information relating to any Underwriter furnished in writing to the Company by
the Representative on behalf of the Underwriters expressly for inclusion in the
Registration Statement, any Preliminary Prospectus or the Prospectus. This
indemnity agreement will be in addition to any liability that each Underwriter
might otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party
or parties under this Section 7, notify such indemnifying party or parties of
the commencement thereof, but the omission so to notify the indemnifying party
or parties will not relieve it or them from any liability which it or they may
have to any indemnified party under the foregoing provisions of this Section 7
or otherwise unless, and only to the extent that, such
24
omission results in the forfeiture of substantive rights or defenses by the
indemnifying party. If any such action is brought against an indemnified party
and it notifies an indemnifying party or parties of its commencement, the
indemnifying party or parties against which a claim is made will be entitled to
participate therein and, to the extent that it or they may wish, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified party;
provided, however, that if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be one or more legal defenses available
to it and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnifying party shall not have
the right to direct the defense of such action on behalf of such indemnified
party or parties and such indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of such indemnified
party or parties. After notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof and approval by such
indemnified party of counsel appointed to defend such action, the indemnifying
party will not be liable to such indemnified party under this Section 7 for any
legal or other expenses other than reasonable costs of investigation
subsequently incurred by such indemnified party in connection with the defense
thereof, unless (i) the indemnified party shall have employed separate counsel
in accordance with the proviso to the next preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the reasonable fees and expenses of more than one
separate counsel (in addition to the fees and expenses of local counsel
necessary in connection with any such proceedings) in any one action or separate
but substantially similar actions in the same jurisdiction arising out of the
same general allegations or circumstances, designated by the Representative in
the case of paragraph (a) of this Section 7, representing the indemnified
parties under paragraph (a) who are parties to such action or actions), or (ii)
the indemnifying party has authorized in writing the employment of counsel for
the indemnified party at the expense of the indemnifying party. After such
notice from the indemnifying party to such indemnified party, the indemnifying
party will not be liable for the costs and expenses of any settlement of such
action effected by such indemnified party without the written consent of the
indemnifying party, unless such indemnified party waived its rights under this
Section 7 in which case the indemnified party may effect such a settlement
without such consent.
(d) If the indemnification provided for in the foregoing
paragraphs of this Section 7 is unavailable or insufficient to hold harmless an
indemnified party under paragraph (a) or (b) above in respect of any losses,
claims, damages or liabilities (or actions in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) (i) in such proportion as is
appropriate to reflect the relative benefits received by the indemnifying party
or parties, on the one hand, and the indemnified party, on the other, from the
offering of the Shares or (ii) if, but only if, the allocation provided by the
foregoing clause (i) is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the indemnifying party or parties on
the one hand, and the indemnified party, on the other, in connection with the
statements or
25
omissions or alleged statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Company, on the one hand, and the Underwriters, on the other, shall be deemed to
be in the same proportion as the total proceeds from the offering of the Shares
(before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the Prospectus. Relative
fault shall be determined by reference to whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or the
Representative on behalf of the Underwriters, the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriters agree that it would not
be just and equitable if contributions pursuant to this Section 7(d) were to be
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take into account the equitable considerations referred to herein. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, liabilities (or actions in respect thereof) referred to above in this
Section 7(d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this Section 7(d),
no Underwriter shall be required to contribute any amount in excess of the total
underwriting discounts received by it with respect to the Shares purchased by
such Underwriter under this Agreement, less the aggregate amount of any damages
that such Underwriter has otherwise been required to pay in respect of the same
or any substantially similar claim. No person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) will be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute as provided in
this Section 7(d) are several in proportion to their respective underwriting
obligations and not joint. For purposes of this Section 7(d), each person, if
any, who controls an Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act will have the same rights to contribution as such
Underwriter, and each director or officer of the Company and each person, if
any, who controls the Company within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, will have the same rights to contribution as the
Company, subject in each case to the provisions of this paragraph (d). Any party
entitled to contribution will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a claim
for contribution may be made under this Section 7(d), notify any such party or
parties from whom contribution may be sought, but the omission so to notify will
not relieve the party or parties from whom contribution may be sought from any
other obligation(s) it or they may have hereunder or otherwise than under this
paragraph (d) or to the extent that such party or parties were not adversely
affected by such omission. The contribution agreement set forth above shall be
in addition to any liabilities which any indemnifying party may otherwise have.
No party will be liable for contribution with respect to any action or claim
settled without its written consent (which consent will not be unreasonably
withheld).
26
(e) The indemnity and contribution agreements contained in this
Section 7 and the representations and warranties of the Company contained in
this Agreement shall remain operative and in full force and effect regardless of
(i) any investigation made by or on behalf of the Underwriters, (ii) acceptance
of any of the Shares and payment therefor or (iii) any termination of this
Agreement.
8. Termination. The obligations of the several Underwriters under
this Agreement may be terminated at any time prior to the Closing Date (or, with
respect to the Option Shares, on or prior to the Option Closing Date), by notice
to the Company from the Representative, without liability on the part of any
Underwriter to the Company if, prior to delivery and payment for the Firm Shares
(or the Option Shares, as the case may be), in the sole judgment of the
Representative, (i) trading in the Common Stock or the Preferred Stock or
securities generally shall have been suspended by the Commission or by the
Nasdaq, (ii) minimum or maximum prices shall have been established for the
Common Stock or the Preferred Stock or securities generally on either the Nasdaq
or the NYSE, or additional material governmental restrictions, not in force on
the date of this Agreement, shall have been imposed upon trading in securities
generally by any of such market or exchange or by order of the Commission or any
court or other Governmental Authority, (iii) a general banking moratorium shall
have been declared by the United States, New York State, or Commonwealth of
Puerto Rico authorities, or (iv) any material adverse change in the financial or
securities markets in the United States or any outbreak or material escalation
of hostilities or declaration by the United States of a national emergency or
war or other calamity or crisis shall have occurred, the effect of any of which
is such as to make it, in the sole judgment of the Representative, impracticable
or inadvisable to market the Shares on the terms and in the manner contemplated
by the Prospectus. Any termination pursuant to Section 8 shall be without
liability of any party to any other party except as provided in Sections 5(a)
and 7.
9. Default of Underwriters. If one or more Underwriters default
in their obligations to purchase Firm Shares or Option Shares hereunder and the
aggregate number of such Shares that such defaulting Underwriter or Underwriters
agreed but failed to purchase is ten percent or less of the aggregate number of
Firm Shares or Option Shares to be purchased by all of the Underwriters at such
time hereunder, the other Underwriters may make arrangements satisfactory to the
Representative for the purchase of such Shares by other persons (who may include
one or more of the nondefaulting Underwriters, including the Representative),
but if no such arrangements are made by the Closing Date or the related Option
Closing Date, as the case may be, the other Underwriters shall be obligated
severally in proportion to their respective commitments hereunder to purchase
the Firm Shares or Option Shares that such defaulting Underwriter or
Underwriters agreed but failed to purchase. If one or more Underwriters so
default with respect to an aggregate number of Shares that is more than ten
percent of the aggregate number of Firm Shares or Option Shares, as the case may
be, to be purchased by all of the Underwriters at such time hereunder, and if
arrangements satisfactory to the Representative are not made within 36 hours
after such default for the purchase by other persons (who may include one or
more of the nondefaulting Underwriters, including the Representative) of the
Shares with respect to which such default occurs, this Agreement will
27
terminate without liability on the part of any nondefaulting Underwriter and the
Company other than as provided in Section 10 hereof. In the event of any default
by one or more Underwriters as described in this Section 9, the Representative
shall have the right to postpone the Closing Date or the Option Closing Date, as
the case may be, established as provided in Section 9 hereof for not more than
seven business days in order that any necessary changes may be made in the
arrangements or documents for the purchase and delivery of the Firm Shares or
Option Shares, as the case may be. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 9. Nothing herein shall relieve any defaulting Underwriter from
liability for its default.
10. Survival. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Company, its
officers, and the several Underwriters set forth in this Agreement or made by or
on behalf of them, respectively, pursuant to this Agreement shall remain in full
force and effect, regardless of (i) any investigation made by or on behalf of
the Company, any of its officers or directors, any Underwriter or any
controlling person referred to in Section 7 hereof and (ii) delivery of and
payment for the Shares. The respective agreements, covenants, indemnities and
other statements set forth in Sections 6 and 8 hereof shall remain in full force
and effect, regardless of any termination or cancellation of this Agreement.
11. Notices. Notice given pursuant to any of the provisions of
this Agreement shall be in writing and, unless otherwise specified, shall be
mailed or delivered (a) if to the Company, at the office of the Company, 1159
Xxxxxxxx X. Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxxxxx Xxxx 00000, Attention: Xxxxx X.
Xxxxx, Senior Executive Vice President and Treasurer, or (b) if to the
Underwriters, to the office of the Representative, American Xxxxxxxxxxxxx Xxxxx,
0xx Xxxxx, Xxxx Xxx, Xxxxxx Xxxx 00000, Attention: Xxxx X. Xxxxx, Managing
Director. Any such notice shall be effective only upon receipt. Any notice under
Section 7 or 8 may be made by telex or telephone, but if so made shall be
subsequently confirmed in writing.
12. Successors. This Agreement shall inure to the benefit of and
shall be binding upon the several Underwriters, the Company, and their
respective successors and legal representatives, and nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person any legal or equitable right, remedy or claim under or in respect of this
Agreement, or any provisions herein contained, this Agreement and all conditions
and provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (i)
the indemnities of the Company contained in Section 7 of this Agreement shall
also be for the benefit of any person or persons who control any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
and (ii) the indemnities of the Underwriters contained in Section 7 of this
Agreement shall also be for the benefit of the directors and officers of the
Company and any person or persons who control the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act. No purchaser of Shares
from any Underwriter shall be deemed a successor because of such purchase. This
Agreement shall not be assignable by either party hereto without the prior
written consent of the other party.
28
13. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF PUERTO RICO,
WITHOUT GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS.
14. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the agreement
among the Company and the several Underwriters.
Very truly yours,
DORAL FINANCIAL CORPORATION
By: /s/ Xxxxx X. Xxxxx
--------------------------------------
Name: Xxxxx X. Xxxxx
Title: Senior Executive Vice President
Confirmed as of the date first above mentioned:
UBS PAINEWEBBER
INCORPORATED OF PUERTO RICO
By: /s/ Xxxx Xxxxx
-----------------------------
Name: Xxxx Xxxxx
Title: Managing Director
Acting on its behalf and as lead underwriter of
the several Underwriters named in Schedule 1
hereof.
29
SCHEDULE 1
UNDERWRITERS
Aggregate Number
of Shares to be
Purchased
----------------
UBS PaineWebber Incorporated of Puerto Rico ... 2,160,000
Popular Securities, Inc. ...................... 720,000
BBVA Capital Markets of Puerto Rico , Inc. .... 120,000
Xxxxx Xxxxxxxx & Xxxxx, Inc. .................. 10,000
Oriental Financial Services Corp. ............. 200,000
Santander Securities Corporation .............. 380,000
Xxxxx Xxxxxx & Co, Inc. ....................... 10,000
Total: 3,600,000
=========
30
EXHIBIT A
LIST OF SUBSIDIARIES
1. Doral Mortgage Corporation
2. Doral Securities, Inc.
3. Centro Hipotecario, Inc.
4. Doral Bank
5. Doral Bank, FSB
6. Doral Money, Inc.
7. SANA Investment Mortgage Bankers, Inc.
8. Doral Properties, Inc.
9. Doral International, Inc.
10. Doral Insurance Agency, Inc.
11. Doral Capital, Inc. (inactive)
