1
EXHIBIT 1
1,350,000 Shares
DORAL FINANCIAL CORPORATION
Common Stock
UNDERWRITING AGREEMENT
January __, 1998
XXXXX XXXXXX & CO., INC.
As Representative of the
several Underwriters named in Schedule I
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
DORAL FINANCIAL CORPORATION, a Puerto Rico corporation (the
"Company"), proposes to sell an aggregate of 1,350,000 shares (the "Firm
Shares") of the Company's common stock, par value $1.00 per share (the "Common
Stock"),which are to be issued and sold by the Company to you and the other
underwriters named in Schedule I hereto (collectively, the "Underwriters"), for
whom you are acting as 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 202,500 shares of Common 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 $______ per share, the number of Firm
Shares set forth opposite the name of such Underwriter in Column (1) of
Schedule I hereto, plus such additional
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number 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 and 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., New York City 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 Stroock & Stroock & Xxxxx LLP, counsel to the Underwriters, 000
Xxxxxx Xxxx, Xxx Xxxx, Xxx 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
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such certificates available for inspection at least 24 hours prior to the
Closing Date or the Option Closing Date, as the case may be.
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 or state 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) A registration statement on Form S-3
(Registration No. 333-_____) relating to the Shares, including a preliminary
prospectus relating to the Shares and such amendments to such registration
statement as may have been required to the date of this Agreement, has been
prepared by the Company under the provisions of the Securities Act of 1933, as
amended (the "Act"), and the rules and regulations (collectively referred to as
the "Rules and Regulations") of the Securities and Exchange Commission (the
"Commission") thereunder, and has been filed with the Commission. The
Commission has not issued any order preventing or suspending the use of the
Prospectus (as defined below) or any Preliminary Prospectus (as defined below)
or instituted or, to the knowledge of the Company, threatened any proceeding
for that purpose. The term "Preliminary Prospectus" as used herein means a
preliminary prospectus relating to the Shares included at any time as part of
the foregoing registration statement or any amendment thereto before it became
effective under the Act and any prospectus filed with the Commission by the
Company pursuant to Rule 424(a) of the Rules and Regulations. Copies of such
registration statement and amendments and of each related Preliminary
Prospectus have been delivered to the Representative. If such registration
statement has not become effective, a further amendment to such registration
statement, including a form of final prospectus, necessary to permit such
registration statement to become effective will be filed promptly by the
Company with the Commission. If such registration statement has become
effective, a final prospectus relating to the Shares containing information
permitted to be omitted at the time of effectiveness by Rule 430A will be filed
by the Company with the Commission in accordance with Rule 424(b) of the Rules
and Regulations promptly after execution and delivery of this Agreement. The
term "Registration Statement" means the registration statement as amended at
the time it becomes or became effective (the "Effective Date"), including all
financial statements and schedules and all exhibits, documents incorporated
therein by reference and all information contained in any final prospectus
filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations
or in a term sheet described in Rule 434 of
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the Rules and Regulations in accordance with Section 4 hereof and deemed to be
included therein as of the Effective Date by Rule 430A of the Rules and
Regulations. The term "Prospectus" means the prospectus relating to the Shares
as first filed with the Commission pursuant to Rule 424(b) of the Rules and
Regulations or, if no such filing is required, the form of final prospectus
relating to the Shares included in the Registration Statement at the Effective
Date. References herein to any document or other information incorporated by
reference in the Registration Statement shall include documents or other
information incorporated by reference in the Prospectus (or if the Prospectus
is not in existence, in the most recent Preliminary Prospectus). References
herein to any Preliminary Prospectus or the Prospectus shall be deemed to
include all documents and information incorporated by reference therein and
shall be deemed to refer to and include any documents and information filed
after the date of such Preliminary Prospectus or Prospectus, as the case may
be, and so incorporated by reference, under the Securities Exchange Act of
1934, as amended (the "Exchange Act").
(b) On the date that any Preliminary Prospectus
was filed with the Commission, the date the Prospectus is first filed with the
Commission pursuant to Rule 424(b) (if required), at all times subsequent to
and including the Closing Date and, if later, the Option Closing Date and when
any post-effective amendment to the Registration Statement becomes effective or
any amendment or supplement to the Prospectus is filed with the Commission, the
Registration Statement, each Preliminary Prospectus and the Prospectus (as
amended or as supplemented if the Company shall have filed with the Commission
any amendment or supplement thereto), including the financial statements
included in the Prospectus, did or will comply with all applicable provisions
of the Act and the Rules and Regulations and did or will contain all statements
required to be stated therein in accordance with the Act and the Rules and
Regulations. On the Effective Date and when any post-effective amendment to
the Registration Statement becomes effective, no part of the Registration
Statement or any such amendment did or will contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading. At the
Effective Date, the date the Prospectus or any amendment or supplement to the
Prospectus is filed with the Commission and at the Closing Date and, if later,
the Option Closing Date, the Prospectus did not or will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading. The foregoing representations and warranties in this
Section 3(b) do not apply to any statements or omissions made in reliance on
and in conformity with information relating to any Underwriter furnished in
writing to the Company by the Representative specifically for inclusion in the
Registration Statement, each Preliminary Prospectus or Prospectus or any
amendment or supplement thereto. There are no contracts or other documents
required to be filed as exhibits to the Registration Statement by the Act or
the Rules and Regulations that have not been so filed. The documents which are
incorporated by reference in any Preliminary
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Prospectus or the Prospectus or from which information is so incorporated by
reference, when they became effective or were filed with the Commission, as the
case may be, complied in all material respects with the requirements of the Act
and the Rules and Regulations or the Exchange Act and the rules and regulations
thereunder, as applicable, and did not, when such documents were so filed,
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and any documents so filed and incorporated by reference subsequent
to the effective date of the Registration Statement shall, when they are filed
with the Commission, conform in all material respects with the requirements of
the Act and the Rules and Regulations and the Exchange Act and the rules and
regulations thereunder, as applicable.
(c) The only 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 if the Prospectus is not
in existence, in the most recent Preliminary 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 registered as a bank holding company under the Bank Holding Company
Act of 1956 (the "BHCA") and is and, at the Closing Date and Option Closing
Date, will be in good standing with the Board of Governors of the Federal
Reserve System (the "Federal Reserve"). 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.
(d) 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, other
than certain conversion and registration rights issued by the Company to
Popular, Inc., under a certain Exchange Agreement dated July 9, 1997. The
Shares to be issued and sold by the Company will be, upon such issuance and
payment therefor, duly authorized, validly issued, fully paid
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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 (or, if the Prospectus is not in
existence, in the most recent Preliminary Prospectus). The description of the
securities of the Company in the Registration Statement and the Prospectus (or,
if the Prospectus is not in existence, the most recent Preliminary 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.
(e) The consolidated financial statements and the
related notes of the Company included in the Registration Statement or
incorporated therein by reference and the Prospectus (or, if the Prospectus is
not in existence, in the most recent Preliminary 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. Price Waterhouse (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.
(f) 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.
(g) Except as set forth in the Registration
Statement and Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary 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
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declaration of quarterly dividends, on the Company's Common Stock in the
ordinary course of its business and the payment of the monthly dividends to the
holders of the Company's 8% Convertible Cumulative Preferred Stock (Liquidation
Preference $1,000 per share).
(h) 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 (or, if the Prospectus is not in existence, the most
recent Preliminary 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, if the Prospectus is not
in existence, the most recent Preliminary 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 (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus) as
leased by them, free and clear of all Encumbrances, other than those described
in the Registration Statement or in the documents incorporated by reference
therein, and Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary 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.
(i) The Company is not required to be registered
under the Investment Company Act of 1940, as amended (the "Investment Company
Act").
(j) Except as set forth in the Registration
Statement, or incorporated therein by reference, and Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary 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 or state 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 (or if the Prospectus is
not in existence, in the most recent Preliminary Prospectus). Neither the
Company nor any Subsidiary is in violation of, or
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in default with respect to, any law, rule, or regulation, or any order,
judgment, or decree, except as described in the Prospectus (or if the
Prospectus is not in existence, in the most recent Preliminary 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.
(k) 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 (or, if
the Prospectus is not in existence, the most recent Preliminary 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 threatened for the purpose of suspending, modifying or
revoking any License held by the Company and its Subsidiaries.
(l) 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 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.
(m) 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
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hereof, except as rights to indemnity and contribution may be limited by
federal or state securities laws or the public policy underlying such laws.
Except as disclosed in the Registration Statement and the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary 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 or otherwise, or the
earnings, prospects or business affairs of the Company and its Subsidiaries.
(n) 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.
(o) 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.
(p) The Shares have been approved for quotation
on the National Association of Securities Dealers Automated Quotation National
Market System ("NASDAQ NMS"), subject only to notice of issuance.
(q) 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.
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(r) 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 (or, if
the Prospectus is not in existence, in the most recent Preliminary Prospectus).
(s) 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 or any state 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.
(t) The Company 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.
(u) The Company meets the requirements for use of
Form S-3 under the Rules and Regulations.
(v) The deposit accounts of Doral Bank, a
Subsidiary of the Company ("Doral Bank") are insured by the Savings Association
Insurance Fund
11
("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 is a member in good standing of the
Federal Home Loan Bank of New York.
(w) None of the Company, Doral Bank, 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 (or if the Prospectus is not in existence, in the
most recent Preliminary Prospectus).
4. Agreements of the Company. The Company covenants and
agrees with each of the several Underwriters as follows:
(a) The Company will not, either prior to the
Effective Date or thereafter during such period as the Prospectus is required
by law to be delivered in connection with sales of the Shares by an Underwriter
or dealer, 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) If the Registration Statement is not yet
effective, the Company will use its best efforts to cause the Registration
Statement to become effective not later than the time indicated in Section 6(a)
hereof. The Company will notify the Representative promptly, and will confirm
such advice in writing, (i) when the Registration Statement has become
effective and when any post-effective amendment thereto 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 happening of
any event during the period mentioned in the first sentence of Section 4(f)
that in the judgment of the Company makes any statement of a material fact 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 (v) 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 shall issue any order suspending the
effectiveness of the Registration Statement, the Company will make every
reasonable effort to obtain the withdrawal of such order at the earliest
possible moment. The Company will prepare the Prospectus in a form approved by
the Representative and will file such Prospectus pursuant to Rule
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424(b) under the Act not later than the Commission's close of business on the
second business day following the execution and delivery of this Agreement or,
if applicable, such earlier time as may be required by Rule 430A(a)(3) under
the Act. If the Company has omitted any information from the Registration
Statement pursuant to Rule 430A, the Company will use its best efforts to
comply with the provisions of and make all requisite filings with the
Commission pursuant to said Rule 430A and to notify the 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.
(e) The Company will comply with all the
provisions of all undertakings contained in the Registration Statement.
(f) On the Effective Date, and thereafter from
time to time for such period as the Prospectus is required by the Act to be
delivered, the Company will deliver to each of the Underwriters, without
charge, as many copies of the Prospectus or any amendment or supplement thereto
as the Representative may reasonably request. The Company consents to the use
of the Prospectus or any amendment or supplement thereto by the several
Underwriters and by all dealers to whom the Shares may be sold, both in
connection with the offering or sale of the Shares and for any period of time
thereafter during which the Prospectus is required by law to be delivered in
connection therewith. If during such period of time any event shall occur
which in the judgment of the Company or counsel to the Underwriters should be
set forth in the
13
Prospectus in order to make any statement therein, in the light of the
circumstances under which it was made, not misleading, or in the Registration
Statement in order to make any statement therein not misleading, or if it is
necessary to supplement or amend the Prospectus or the Registration Statement
to comply with law, the Company will forthwith prepare and duly file with the
Commission an appropriate supplement or amendment thereto, and will deliver to
each of the Underwriters, without charge, such number of copies thereof as the
Representative may reasonably request.
(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 Effective 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
holders of its securities, as soon as may be practicable, but in no event later
than the last day of the fifteenth full calendar month following the calendar
quarter in which the Effective Date falls, a consolidated earnings statement
(which need not be audited but shall be in reasonable detail) for a period of
12 months commencing after the Effective Date, and satisfying the provisions of
Section 11(a) of the Act (including Rule 158 of the Rules and Regulations).
(j) The Company will apply the net proceeds from
the offering and sale of the Shares to be sold by the Company 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 Common Stock to facilitate the sale or resale of any of the Shares.
14
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
incident 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 quotation of the Shares on the NASDAQ NMS,
(v) 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), including the reasonable fees, disbursements and other charges of
counsel to the Underwriters in connection therewith, 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 its accountable out-of-pocket fees and expenses
(including the fees, disbursements and other charges of its counsel) incurred
by it in connection herewith, up to an aggregate amount of $_______.
6. Conditions of the Obligations of the Underwriters.
The obligations of each Underwriter hereunder are subject to the following
conditions:
(a) Notification that the Registration Statement
has become effective shall be received by the Representative not later than
3:00 p.m., New York City time, on the date of this Agreement or at such later
date and time as shall be consented to in writing by the Representative and all
filings required by Rule 424 of the Rules and Regulations and Rule 430A shall
have been made.
(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
15
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 of the
Company and the Chief Financial 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.
(f) The Representative shall have received an
opinion, dated the Closing Date and the Option Closing Date, from Xxxxxxxxxxx
Xxxxxx & Xxxxxxx, 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
16
is in good standing with the Commonwealth of Puerto Rico.
Each of Doral Mortgage Corporation ("Doral Mortgage") 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 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; all of the outstanding shares
of Common Stock have been duly authorized and validly issued
by the Company, are fully paid and nonassessable and are free
of any preemptive or other rights to subscribe for any of the
Shares; 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 quotation on
the NASDAQ NMS; 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 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 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
17
opinion), with the requirements of the Act and the related
rules and regulations thereunder;
(v) The descriptions contained and summarized in
the Registration Statement, or incorporated therein by
reference, and the Prospectus of contracts and other documents
are accurate and fairly represent in all material respects the
information required to be shown by the Act and the Rules and
Regulations; and the statements set forth under the headings
"Recent Developments," Risk Factors--Holding Company
Structure," "Business," "Description of Capital Stock,"
"Certain Federal Income Tax Considerations" and "Certain
Puerto Rico Income Tax Considerations" 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 action,
suit, arbitration, claim, 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. 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 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; this Agreement has been duly
authorized, executed and delivered by the Company; this
Agreement, assuming due authorization, execution and delivery
by each other party hereto, is a valid and binding
18
agreement of the Company, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other
laws now or hereafter in effect relating to or affecting
creditors' rights generally or by general principles of equity
relating to the availability of remedies and except as rights
to indemnity and contribution may be limited by federal or
state securities laws or the public policy underlying such
laws;
(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 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
securities or blue sky laws in connection with the purchase
and distribution by the Underwriters of the Shares;
(x) To such counsel's knowledge after reasonable
investigation, 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
licenses as are necessary or required for the ownership,
leasing and operation of their respective properties and 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;
19
(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; (C) any statute, rule or regulation of any
Governmental Body having jurisdiction over the Company or any
of its activities, assets or properties; 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) To such counsel's knowledge after reasonable
investigation, no legal or governmental proceedings are
pending to which the Company or any of its Subsidiaries is a
party or by which the assets or property of the Company or any
of its Subsidiaries is subject that are required to be
described in the Registration Statement or the Prospectus and
are not described 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;
(xiv) The deposit accounts of Doral Bank 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 is a member in good standing of the Federal Home Loan
Bank of New York; and
(xv) To the knowledge of such counsel, none of the
Company, Doral Bank, 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 Registration Statement
or the Prospectus.
In addition, such counsel shall state that in the course of
the preparation of the Registration Statement and 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 Registration Statement and 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 Registration
20
Statement as of the date it was declared effective 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 statement therein not misleading or
that the Prospectus as of the date thereof, 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 Registration
Statement or 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.
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.
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 Stroock &
Stroock & Xxxxx LLP, counsel to the Underwriters, which opinion shall be
satisfactory in all respects to the Representative. In rendering such opinion,
such counsel may rely as to all matters of law of the Commonwealth of Puerto
Rico upon the opinion of Xxxxxxxxxxx Xxxxxx & Xxxxxxx, San Xxxx, Puerto Rico.
(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 included in the
21
Registration Statement 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 S3;
(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, 1996 as set forth in the
minute books through a specified date not more than three
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 Registration Statement and
reading the unaudited interim financial data for the period
from the date of the latest balance sheet included in the
Registration Statement 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 a result of the foregoing procedures that caused
them to believe that: (1) the unaudited consolidated interim
financial statements, included in the Registration Statement,
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, included in the Registration
Statement, 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, loans payable, or securities sold under
agreements to repurchase or any decreases in the consolidated
stockholders' equity of the Company and its Subsidiaries as
compared with amounts shown in the December 31, 1996 balance
sheet included in the Registration Statement or (ii) for the
period from January 1, 1997 to a specified date not more than
three business 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 revenues, 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
22
(iv) the information set forth under the captions
"Summary of Consolidated Financial and Operating Data","
"Recent Developments," "Price Range of Common Stock and
Dividend Policy," "Capitalization," "Selected Financial Data,"
"Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Business," 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 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, 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 and the Chief Financial Officer of the Company, in 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
23
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 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 quotation on the NASDAQ NMS.
(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.
All such opinions, certificates, letters and other documents
will be in compliance with the provisions hereof only if they are satisfactory
in form and
24
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 or state 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 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
25
supplement thereto), unless such failure to deliver the Prospectus (as amended
or supplemented) was the result 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, 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, each
director of the Company and each officer of the Company who signed the
Registration Statement 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 or
state 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," the information in the
first two paragraphs on the inside front cover of any Preliminary Prospectus
and the Prospectus consisting of the legends regarding stabilization and
passive market making transactions and the statement contained in the first
paragraph of the cover page of the Prospectus 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 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
26
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 such 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 8 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
27
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 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 of the Company, each
officer of the Company who signed the Registration Statement 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 (e). 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), will 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).
28
(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
securities generally shall have been suspended by the Commission or by the
NASDAQ NMS, (ii) minimum or maximum prices shall have been established for the
Common Stock or securities generally on either the NASDAQ NMS or the New York
Stock Exchange, 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 or New York
State 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 Firm 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 terminate without liability on the
part of any nondefaulting Underwriter, 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 Firm 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
29
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: Xxxxxxx Xxxxx, or (b) if to the Underwriters, to the Representative
at the offices of Xxxxx Xxxxxx & Co., Inc., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: A. Xxxxx Xxxxxx. 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 of
the Company, the officers of the Company who have signed the Registration
Statement 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.
30
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 STATE OF NEW YORK,
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: _________________________________
Name:
Title:
Confirmed as of the date first
above mentioned:
XXXXX XXXXXX & CO., INC.
By: _______________________________
Name:
Title:
Acting on its behalf and
as the Representative of the
other several Underwriters
named in Schedule I hereof.
31
SCHEDULE I
UNDERWRITERS
Aggregate Number of
Company Shares to
be Purchased
Xxxxx Xxxxxx & Co., Inc.
32
EXHIBIT A
LIST OF SUBSIDIARIES
1. Doral Mortgage Corporation
2. Doral Securities, Inc.
3. Centro Hipotecario, Inc.
4. Doral Bank
