EXHIBIT 1
EXECUTION COPY
DORAL FINANCIAL CORPORATION
4 3/4% Perpetual Cumulative Convertible Preferred Stock
PURCHASE AGREEMENT
September 23, 2003
Wachovia Capital Markets, LLC
Acting on behalf of itself and as representative of
the several Initial Purchasers
One Wachovia Center
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Ladies and Gentlemen:
Doral Financial Corporation, a Puerto Rico corporation (the "COMPANY"),
proposes to issue and sell to the several purchasers named in Schedule I hereto
(the "INITIAL PURCHASERS") 1,200,000 shares (the "FIRM SECURITIES") of its
4 3/4% Perpetual Cumulative Convertible Preferred Stock par value $1.00 per
share which shall have the rights, powers and preferences set forth in the
Certificate of Designation (the "CERTIFICATE OF DESIGNATION") of 4 3/4%
Perpetual Cumulative Convertible Perpetual Preferred Stock, a form of which is
attached hereto as Exhibit A (the "CONVERTIBLE PREFERRED STOCK") and up to an
aggregate of 1,380,000 shares of Convertible Preferred Stock (the "OPTION
SECURITIES," and together with the Firm Securities, the "SECURITIES") that the
Initial Purchasers may elect to purchase pursuant to Section 2 hereof, each
having a liquidation preference of $250 per Security, for the aggregate purchase
price listed in Schedule I hereto. The Convertible Preferred Stock is
convertible into common stock ("COMMON STOCK") of the Company.
The Securities will be offered without being registered under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), or qualification
under state securities or blue sky laws, to qualified institutional buyers in
compliance with the exemption from Securities Act registration provided by Rule
144A under the Securities Act.
The Initial Purchasers and their direct and indirect transferees will
be entitled to the benefits of a Registration Rights Agreement dated the Closing
Date (as defined below) among the Company and the Initial Purchasers (the
"REGISTRATION RIGHTS AGREEMENT").
In connection with the sale of the Securities, the Company has prepared
a preliminary offering memorandum (the "PRELIMINARY MEMORANDUM") and will
prepare a final offering memorandum (the "FINAL MEMORANDUM" and, with the
Preliminary Memorandum, each a "MEMORANDUM") including or incorporating by
reference a description of the terms of the Securities, the terms of the
offering and a description of the Company. As used herein, the term "Memorandum"
shall include in each case the documents incorporated by reference therein. The
terms "SUPPLEMENT", "AMENDMENT" and "AMEND" as used herein with respect to a
Memorandum shall include all documents deemed to be incorporated by reference in
the Preliminary Memorandum or Final Memorandum that are filed subsequent to the
date of such Memorandum with the Securities and Exchange Commission (the
"COMMISSION") pursuant to the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT").
1. Representations and Warranties. (A) The Company represents
and warrants to, and agrees with, each of you that as of the date hereof, as of
the Closing Date and as of each Date of Delivery (if any) referred to in Section
4 hereof:
(a) (i) Each document, if any, filed or to be filed pursuant
to the Exchange Act and incorporated by reference in either Memorandum
complied or will comply when so filed in all material respects with the
Exchange Act and the applicable rules and regulations of the Commission
thereunder and (ii) the Preliminary Memorandum does not contain and the
Final Memorandum, in the form used by the Initial Purchasers to confirm
sales on the Closing Date, or any Date of Delivery (as defined in
Section 4), 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, except that the representations and warranties set forth in
this paragraph do not apply to statements or omissions in either
Memorandum based upon information relating to any Initial Purchaser
furnished to the Company in writing by such Initial Purchaser through
you expressly for use therein.
(b) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
Commonwealth of Puerto Rico, has the corporate power and authority to
own its property and to conduct its business as described in each
Memorandum and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or be in good
standing 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 ("MATERIAL
ADVERSE EFFECT"). The Company is registered with the Board of Governors
of the Federal Reserve System (the "FEDERAL RESERVE") as a bank holding
company under the Bank Holding Company Act of 1956 (the "BHCA") and its
election to be treated as a financial holding company under the BHCA is
and will remain in full force and effect.
(c) Each subsidiary of the Company has been duly organized, is
validly existing as a corporation, limited liability company or limited
partnership, as the case may be, in good standing under the laws of the
jurisdiction of its organization, has the corporate, limited liability
company or limited partnership power and authority, as the case may be,
to own its property and to conduct its business as described in each
Memorandum and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or be in good
standing would not have a Material Adverse Effect on the Company and
its subsidiaries, taken as a whole; all of the outstanding shares of
capital stock of the Company have been duly and validly authorized and
issued and are fully paid and non-assessable, and all of the issued
shares of capital stock, membership interests or partnership interests,
as the case may be, of each subsidiary of the Company have been duly
and validly authorized and issued, are fully paid and non-assessable
and are owned directly or indirectly by the Company, free and clear of
all liens, encumbrances, equities or claims.
2
(d) This Agreement has been duly authorized, executed and
delivered by the Company.
(e) The Company has full right, power and authority to execute
and deliver this Agreement and the Registration Rights Agreement
(collectively, the "TRANSACTION DOCUMENTS") to which it is a party and
perform its obligations thereunder, to issue, sell and deliver the
Securities and, upon conversion thereof, to issue and deliver the
Common Stock, issuable upon conversion of the Securities ("CONVERSION
SHARES"); and all corporate action required to be taken for the due and
proper authorization, execution and delivery of each of the Transaction
Documents and the consummation of the transactions contemplated thereby
and the authorization, issuance and delivery of the Securities and,
upon conversion of the Securities, the issuance and delivery of the
Conversion Shares have been duly and validly taken.
(f) The Securities, when issued, sold and delivered in
accordance with the terms hereof, will be duly and validly issued,
fully paid and nonassessable. The Common Stock originally issuable upon
conversion of the Securities has been duly and validly reserved for
issuance, and upon issuance in accordance with the certificate of
incorporation of the Company, shall be duly and validly issued, fully
paid and non-assessable. Neither the issuance, sale or delivery of the
Securities nor, upon the conversion thereof, the issuance or delivery
of the Conversion Shares is subject to any preemptive or similar rights
of stockholders of the Company arising under law or certificate of
incorporation or by-laws of the Company, to any contractual right of
first refusal or other right in favor of any person.
(g) The Certificate of Designation has been duly authorized
and executed by the Company and filed with the Secretary of State of
the Commonwealth of Puerto Rico. Upon issuance and delivery of the
Securities in accordance with this Agreement, the Securities will be
convertible at the option of the holder thereof into the Common Stock
in accordance with the terms of the Certificate of Designation. The
Securities and the Certificate of Designation conform in all material
respects to the description thereof contained in each Memorandum under
the heading "Description of the Preferred Stock."
(h) The Registration Rights Agreement has been duly
authorized, executed and delivered by, and is a valid and binding
agreement of, the Company, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization,
receivership, moratorium and similar laws relating to or affecting
creditors' rights generally and equitable principles of general
applicability (whether applied by a court of law or equity) and except
as rights to indemnification and contribution under the Registration
Rights Agreement may be limited under applicable law.
(i) The execution and delivery by the Company of, and the
performance by the Company of its obligations under the Transaction
Documents, the issuance, sale and delivery of the Securities and, upon
conversion thereof, the issuance and delivery of the Conversion Shares,
will not contravene any provision of applicable law or the certificate
of incorporation or by-laws of the Company and its subsidiaries or any
agreement or
3
other instrument binding upon the Company and its subsidiaries that are
material to the Company and its subsidiaries, taken as a whole, or any
judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Company and its subsidiaries, and no
consent, approval, authorization or order of, or qualification or
filing with, any governmental body or agency is required for the
performance by the Company of their obligations under the Transaction
Documents, except such as may be required by the securities or blue sky
laws of the various states in connection with the offer and sale of the
Securities and by federal and state securities and blue sky laws with
respect to the Company's obligations under the Registration Rights
Agreement.
(j) PricewaterhouseCoopers LLP are independent certified
public accountants with respect to the Company and its subsidiaries
within the meaning of Rule 101 of the Code of Professional Conduct of
the American Institute of Certified Public Accountants ("AICPA") and
its interpretations and rulings thereunder. The historical financial
statements (including the related notes) contained in each Memorandum
comply in all material respects with the requirements applicable to a
registration statement on Form S-3 under the Securities Act; such
financial statements have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the
periods covered thereby and present fairly, in all material respects,
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; and the financial information contained in each Memorandum
under the headings "Summary of Historical Consolidated Financial and
Other Operating Data," "Selected Financial Data," and "Capitalization,"
and in the Company's Form 10-K for the year ended December 31, 2002
under the caption "Selected Financial Data" is derived from the
accounting records of the Company and its subsidiaries and fairly
presents the information purported to be shown thereby. The other
historical financial and statistical information and data included in
each Memorandum are, in all material respects, fairly presented.
(k) Except as otherwise disclosed in the Memorandum,
subsequent to the respective dates as of which information is given in
the Memorandum and prior to the Closing Date and, if later, the Date of
Delivery, (i) there has not been, and will not have been, any material
adverse change in the business, properties, financial condition, net
worth or results of operations of the Company and its subsidiaries
considered as one enterprise, (ii) neither the Company nor any of its
subsidiaries has entered into, or will have entered into any material
transactions other than pursuant to this Agreement, and (iii) the
Company has not, and will not have, paid or declared any dividends or
other distributions of any kind on any class of its capital stock,
except for the payment or declaration of quarterly dividends on the
Company's Common Stock and the payment and declaration of monthly
dividends on the Company's outstanding preferred stock in the ordinary
course of its business.
(l) There are no legal or governmental proceedings pending or,
to the knowledge of the Company, threatened to which the Company or any
of its subsidiaries, or any directors or officers of the Company or any
of its subsidiaries is a party, or to which any
4
of the properties of the Company or any of its subsidiaries is subject
other than proceedings accurately described in all material respects in
each Memorandum and proceedings that could not reasonably be expected
to have a Material Adverse Effect on the Company and its subsidiaries,
taken as a whole, or on the power or ability of the Company to perform
its obligations under the Transaction Documents or to consummate the
transactions contemplated by the Final Memorandum.
(m) There are no contracts, documents, pending legal or
governmental actions, suits or proceedings of a character that would be
required to be described in each Memorandum, if it were a prospectus
filed as part of a registration statement under the Securities Act,
that are not set forth or incorporated by reference in each Memorandum.
All descriptions in each Memorandum of such contracts or documents are
accurate in all material respects.
(n) To the knowledge of the Company, no action has been taken
and no statute, rule, regulation or order has been enacted, adopted or
issued by any governmental agency or body which prevents the issuance
of the Securities or suspends the sale of the Securities in any
jurisdiction; no injunction, restraining order or order of any nature
by any federal or state court of competent jurisdiction has been issued
with respect to the Company or any of its subsidiaries which would
prevent or suspend the issuance or sale of the Securities or the use of
the Preliminary Memorandum or the Final Memorandum in any jurisdiction;
no action, suit or proceeding is pending against or, to the knowledge
of the Company, threatened against or affecting the Company or any of
its subsidiaries before any court or arbitrator or any governmental
agency, body or official, domestic or foreign, which could reasonably
be expected to interfere with or adversely affect the issuance of the
Securities or the validity or enforceability of any of the Transaction
Documents or any action taken or to be taken pursuant thereto.
(o) The Company is not in violation of its charter or by-laws
and none of the Company or its subsidiaries is (i) in default, and no
event has occurred which, with notice or lapse of time or both, would
constitute such a default, in the due performance or observance of any
term, covenant or condition contained in any material indenture,
mortgage, deed of trust, loan agreement or other material agreement or
instrument to which it is a party or by which it is bound or to which
any of its property or assets is subject or (ii) in violation in any
material respect of any law, ordinance, governmental rule, regulation,
order or court decree to which it or its property or assets may be
subject, or (iii) is required under any such order or decree to take
any action in order to avoid any such violation or default except, in
the case of clause (i) and (ii), for any default or violation that
could not be reasonably expected to have a Material Adverse Effect on
the Company and its subsidiaries, taken as a whole.
(p) The Company and each of its subsidiaries possess all
material licenses, certificates, authorizations, consents and permits
issued by, and have made all declarations and filings with, the
appropriate federal, state, Commonwealth of Puerto Rico or foreign
regulatory agencies or bodies which are necessary or desirable for the
ownership of their respective properties or the conduct of their
respective businesses as
5
described in each Memorandum, except where the failure to possess or
make the same would not, singularly or in the aggregate, have a
Material Adverse Effect on the Company and its subsidiaries taken as a
whole, and neither the Company nor any of its subsidiaries has received
notification of any revocation or modification of any such license,
certificate, authorization or permit or has any reason to believe that
any such license, certificate, authorization or permit will not be
renewed in the ordinary course, except where such revocation,
modification or nonrenewal could not reasonably be expected to,
singularly or in the aggregate, have a Material Adverse Effect on the
Company and its subsidiaries, taken as a whole.
(q) The Company and each of its subsidiaries have filed all
federal, state, local and foreign income and franchise tax returns
required to be filed through the date hereof and have paid all taxes
due thereon, and no tax deficiency has been determined adversely to the
Company or any of its subsidiaries which has had (nor does the Company
have any knowledge of any tax deficiency which, if determined adversely
to the Company or any of its subsidiaries, could reasonably be expected
to have) a Material Adverse Effect on the Company and its subsidiaries
taken as a whole.
(r) The Company and its subsidiaries (i) are in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("ENVIRONMENTAL Laws"), (ii) have received all permits,
licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are
in compliance with all terms and conditions of any such permit, license
or approval, in each case except as described in each Memorandum or
where such noncompliance with Environmental Laws, failure to receive
required permits, licenses or other approvals or failure to comply with
the terms and conditions of such permits, licenses or approvals would
not, singly or in the aggregate, have a Material Adverse Effect on the
Company and its subsidiaries, taken as a whole.
(s) The Company and each of its subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability; (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 the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences, to the extent necessary.
(t) The Company and each of its subsidiaries have good and
marketable title in fee simple to, or have valid rights to lease or
otherwise use, all items of real and personal property which are
material to the business of the Company and its subsidiaries, in each
case free and clear of all liens, security interests, encumbrances,
claims and defects and imperfections of title except those that do not
materially interfere with the use made and
6
proposed to be made of such property by the Company and its
subsidiaries and could not reasonably be expected to have a Material
Adverse Effect on the Company and its subsidiaries, taken as a whole.
(u) No labor disturbance by or dispute with the employees of
the Company or any of its subsidiaries exists or, to the knowledge of
the Company, is threatened that could reasonably be expected to have a
Material Adverse Effect on the Company and its subsidiaries, taken as a
whole.
(v) No "prohibited transaction" (as defined in Section 406 of
the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder
("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as
amended from time to time (the "CODE")) or "accumulated funding
deficiency" (as defined in Section 302 of ERISA) or any of the events
set forth in Section 4043(b) of ERISA (other than events with respect
to which the 30-day notice requirement under Section 4043 of ERISA has
been waived) has occurred with respect to any employee benefit plan of
the Company or any of its subsidiaries which could reasonably be
expected to have a Material Adverse Effect on the Company and its
subsidiaries taken as a whole, each such employee benefit plan is in
compliance with applicable law, including ERISA and the Code, except
where such noncompliance, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on the Company
and its subsidiaries taken as a whole, the Company and each of its
subsidiaries have not incurred and do not expect to incur liability
under Title IV of ERISA with respect to the termination of, or
withdrawal from, any pension plan for which the Company or any of its
subsidiaries would have any liability; and each such pension plan that
is intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and nothing has occurred, whether by
action or by failure to act, which could reasonably be expected to
cause the loss of such qualification.
(w) Neither the Company nor, to the best knowledge of the
Company, any director, officer, agent employee or other person
associated with or acting on behalf of the Company or any of its
subsidiaries has (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expense relating to
political activity; (ii) made any direct or indirect unlawful payment
to any foreign or domestic government official or employee from
corporate funds; (iii) violated or is in violation of any provision of
the Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any
unlawful bribe, rebate, payoff, influence payment, kickback or other
unlawful payment.
(x) None of the proceeds of the sale of the Securities will be
used, directly or indirectly, for the purpose of purchasing or carrying
any "margin security" as that term is defined in Regulation U of the
Board of Governors of the Federal Reserve System (the "FEDERAL RESERVE
BOARD"), for the purpose of reducing or retiring any indebtedness which
was originally incurred to purchase or carry any margin security or for
any other purpose which might cause any of the Securities to be
considered a "purpose credit" within the meanings of Regulation T, U or
X of the Federal Reserve Board.
7
(y) Except as contemplated hereby, neither the Company nor any
of its subsidiaries is a party to any contract, agreement or
understanding with any person that would give rise to a valid claim
against the Company, any of its subsidiaries, or the Initial Purchasers
for a brokerage commission, finder's fee or like payment in connection
with the offering and sale of the Securities.
(z) The Company is not, and after giving effect to the
offering and sale of the Securities and the application of the proceeds
thereof as described in the Final Memorandum will not be, required to
register as an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended.
(aa) None of the Company or any affiliate (as defined in Rule
501(b) of Regulation D under the Securities Act, an "AFFILIATE") of the
Company has directly, or through any agent, (i) sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any
security (as defined in the Securities Act) which is or will be
integrated with the sale of the Securities in a manner that would
require the registration under the Securities Act of the Securities or
(ii) offered, solicited offers to buy or sold the Securities by any
form of general solicitation or general advertising (as those terms are
used in Regulation D under the Securities Act) or in any manner
involving a public offering within the meaning of Section 4(2) of the
Securities Act.
(bb) None of the Company, its Affiliates or any person acting
on its or their behalf has engaged or will engage in any directed
selling efforts (within the meaning of Regulation S) with respect to
the Securities and the Company and its Affiliates and any person acting
on its or their behalf have complied and will comply with the offering
restrictions requirement of Regulation S.
(cc) Assuming that your representations and warranties herein
are true and compliance by you with your covenants set forth herein, it
is not necessary in connection with the offer, sale and delivery of the
Securities to the Initial Purchasers in the manner contemplated by this
Agreement to register the Securities or the Conversion Shares under the
Securities Act.
(dd) The Securities satisfy the requirements set forth in Rule
144A(d)(3) under the Securities Act.
(ee) The Company and its officers and directors are in
compliance with applicable provisions of the Xxxxxxxx-Xxxxx Act of 2002
and the rules and regulations promulgated in connection therewith (the
"XXXXXXXX-XXXXX ACT") that are effective and are actively taking steps
to ensure that they will be in compliance with other applicable
provisions of the Xxxxxxxx-Xxxxx Act upon the effectiveness of such
provisions including Section 402 related to loans and Sections 302 and
906 related to certifications.
(ff) The deposit accounts of Doral Bank, a subsidiary of the
Company ("DORAL BANK") and Doral Bank, F.S.B., a subsidiary of the
Company ("DORAL FSB") are insured by the Savings Association Insurance
Fund ("SAIF") of the Federal Deposit Insurance
8
Corporation ("FDIC") to the legal maximum, and no proceeding for the
termination or revocation of such insurance is pending or threatened.
Doral Bank and Doral FSB are members of the Federal Home Loan Bank of
New York.
(gg) None of the Company, Doral Bank, Doral FSB and their
affiliates, or any of their respective directors or officers is subject
to any order or directive of, or party to any agreement with, any
regulatory agency having jurisdiction with respect to its business or
operations except as disclosed in the Prospectus.
(hh) The Company has derived more than 20% of its gross income
from Puerto Rico sources on an annual basis since its incorporation in
1972 in accordance with the applicable sourcing rules under the
Internal Revenue Code of 1986, as amended.
(ii) The Company has reasonably determined that it has not
been a passive foreign investment company ("PFIC") within the meaning
of section 1297 of the Internal Revenue Code of 1986, as amended, for
any of its prior taxable years and currently expects to conduct its
affairs in such a manner that it will not meet the existing criteria to
be considered a PFIC for the foreseeable future.
2. Agreements to Sell and Purchase. The Company, subject to
the conditions hereinafter stated, hereby agrees to sell to the several Initial
Purchasers, and each Initial Purchaser, upon the basis of the representations
and warranties herein contained, but subject to the conditions hereinafter
stated, agrees, severally and not jointly, to purchase from the Company the
respective amount of Firm Securities set forth in Schedule I hereto opposite its
name at a purchase price of $244.0625 per share of the Convertible Preferred
Stock (the "PURCHASE PRICE"). In the event and to the extent that the Initial
Purchasers shall exercise the election to purchase Option Securities as provided
below, the Company agrees to issue and sell to each of the Initial Purchasers,
and each of the Purchasers agrees, severally and not jointly, to purchase from
the Company, at the purchase price per share set forth in the first sentence of
this Section 2, that portion of the number of Option Securities as to which such
election shall have been exercised (to be adjusted by you so as to eliminate
fractional shares) determined by multiplying such number of Option Securities by
a fraction, the numerator of which is the maximum number of Option Securities
which such Initial Purchaser is entitled to purchase as set forth opposite the
name of such Initial Purchaser in Schedule I hereto and the denominator of which
is the maximum number of Option Securities that all of the Initial Purchasers
are entitled to purchase hereunder.
The Company hereby grants to the Initial Purchasers the right
to purchase at their election up to 180,000 Option Securities in aggregate, at
the purchase price per share set forth in the paragraph above. Any such election
to purchase Option Securities may be exercised only by written notice from you
to the Company, given within a period of thirty calendar days after the date of
this Agreement, setting forth the aggregate number of Option Securities to be
purchased and the date on which such Option Securities are to be delivered, as
determined by you but in no event earlier than the Closing Date (as defined in
Section 4 hereof) or, unless you and the Company otherwise agree in writing, no
earlier than two or later than ten business days after the date of such notice.
9
The Company shall not and shall cause its directors, executive officers
and certain other stockholders of the Company as listed in Schedule II hereto to
not (i) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, lend, or otherwise transfer or dispose of, directly or
indirectly, any equity securities or any securities convertible into or
exercisable or exchangeable for equity securities or (ii) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the equity securities, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of equity securities or such other securities, in cash or otherwise, for a
90-day period after the date of the Final Memorandum, without the prior written
consent of Wachovia Capital Markets, LLC, other than (i) the Securities offered
hereby, (ii) the shares of Common Stock issuable upon conversion of the
Securities, (iii) pursuant to the requirements of ordinary margin lending by
such person or (iv) the issuance by the Company of shares of Common Stock upon
the exercise of an option or a warrant or the conversion of a security
outstanding on the date of the Final Memorandum of which the Initial Purchasers
have been advised in writing.
3. Terms of Offering. You have advised the Company that the
Initial Purchasers will make an offering of the Securities purchased by the
Initial Purchasers hereunder in accordance with Section 7 hereof on the terms to
be described in the Final Memorandum, as soon as practicable after this
Agreement is entered into as in your judgment is advisable.
4. Payment and Delivery. Payment for the Securities shall be
made to the Company in federal or other funds immediately available in New York
City against delivery of such Securities for the respective accounts of the
several Initial Purchasers at 10:00 a.m., New York City time, on September 29,
2003, or at such other time on the same or such other date as agreed by Wachovia
Capital Markets, LLC and the Company, as shall be designated in writing by
Wachovia Capital Markets, LLC. The time and date of such payment are hereinafter
referred to as the "CLOSING DATE." In addition, in the event that the Initial
Purchasers have exercised their option to purchase any or all of the Option
Securities, payment of the purchase price for, and delivery of such Option
Securities, shall be made at the above mentioned offices of Shearman & Sterling
LLP or at such other place as shall be agreed upon by Wachovia Capital Markets,
LLC and the Company on the relevant date of delivery ("DATE OF DELIVERY") as
specified in the notice from Wachovia Capital Markets, LLC to the Company.
The Securities shall be in definitive form or global form, as
specified by you, and registered in such names and in such denominations as you
shall request in writing not later than two full business days prior to the
Closing Date or the Date of Delivery. The Securities shall be delivered to you
on the Closing Date or the Date of Delivery for the respective accounts of the
several Initial Purchasers, with any transfer taxes payable in connection with
the transfer of the Securities to the Initial Purchasers duly paid, against
payment of the Purchase Price therefore plus accrued interest, if any, to the
date of payment and delivery.
5. Conditions to the Initial Purchasers' Obligations. The
several obligations of the Initial Purchasers to purchase and pay for the
Securities on the Closing Date are subject to the following conditions:
10
(a) Subsequent to the execution and delivery of this Agreement
and prior to the Closing Date:
(i) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a
whole, from that set forth in the Preliminary Memorandum
(including, if applicable, any amendment or supplement
thereto) provided to prospective purchasers of the Securities
that, in your judgment, is material and adverse and that makes
it, in your judgment, impracticable to market the Securities
on the terms and in the manner contemplated in the Final
Memorandum; 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 Memorandum.
(b) The Initial Purchasers shall have received on the Closing
Date a certificate, dated the Closing Date and signed by an executive
officer of the Company, to the effect that the representations and
warranties of the Company contained in this Agreement are true and
correct as of the Closing Date and that the Company has complied with
all of the agreements and satisfied all of the conditions on its part
to be performed or satisfied hereunder on or before the Closing Date.
The officer signing and delivering such certificate may rely upon the
best of his or her knowledge as to proceedings threatened.
(c) The Initial Purchasers shall have received on the Closing
Date the opinions of Xxxxxxxxxxx Xxxxxx & Xxxxxxx LLP, outside counsel
for the Company, and Xxxxxxxx Xxxxxx Munich, general counsel for the
Company, each dated the Closing Date, to the effect set forth in
Exhibits B and C, respectively. Such opinions shall be rendered to the
Initial Purchasers at the request of the Company and shall so state
therein.
(d) The Initial Purchasers shall have received on the Closing
Date an opinion of Shearman & Sterling LLP, New York counsel for the
Initial Purchasers, dated the Closing Date in form and substance
satisfactory to the Initial Purchasers.
(e) The Initial Purchasers shall have received on the Closing
Date an opinion of X'Xxxxx & Xxxxxx, special Puerto Rico counsel for
the Initial Purchasers, dated the Closing Date, to the effect set forth
in Exhibit D.
(f) The Initial Purchasers shall have received on each of the
date hereof and the Closing Date a letter, dated the date hereof or the
Closing Date, as the case may be, in form and substance satisfactory to
the Initial Purchasers, from PricewaterhouseCoopers LLP, independent
public accountants, with respect to the Company and its subsidiaries,
containing statements and information of the type ordinarily included
in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in or
incorporated by reference into each Memorandum;
11
provided that the letter delivered on the Closing Date shall use a
"cut-off date" not earlier than two business days prior to the Closing
Date.
(g) Prior to the Closing Date, the Certificate of Designation
will be duly executed by the Company and filed with the Secretary of
State of the Commonwealth of Puerto Rico and will become effective in
accordance with the provisions of the General Corporate Law of the
Commonwealth of Puerto Rico.
(h) The "lockup" agreements, each substantially in the form of
Exhibit E hereto, between the initial purchasers and certain
stockholders, executive officers and directors of the Company as listed
in Schedule II hereto relating to sales and certain other dispositions
of shares of the equity securities or certain other securities,
delivered to you on or before the date hereof, shall be in full force
and effect on the Closing Date.
(i) In the event that the Initial Purchasers exercise their
option provided in Section 2 hereof to purchase all or any portion of
the Option Securities, the representations and warranties of the
Company contained herein and the statements in any certificates
furnished by the Company hereunder shall be true and correct as of each
Date of Delivery, and, the several obligations of the Initial
Purchasers to purchase the Option Securities hereunder are subject to
the conditions set forth in this Section 5, except that the opinions,
certificates and letters required by Sections 5(a)-5(f) shall be dated
the relevant Date of Delivery.
6. Covenants of the Company. In further consideration of the
agreements of the Initial Purchasers contained in this Agreement, the Company
covenants with each Initial Purchaser as follows:
(a) To furnish to you in New York City, without charge, prior
to 10:00 a.m. New York City time on the business day next succeeding
the date of this Agreement and during the period mentioned in Section
6(c), as many copies of the Final Memorandum, any documents
incorporated by reference therein and any supplements and amendments
thereto as you may reasonably request.
(b) Before amending or supplementing either Memorandum, to
furnish to you a copy of each such proposed amendment or supplement and
not to use any such proposed amendment or supplement to which you
reasonably object.
(c) If, during such period after the date hereof and prior to
the date on which all of the Securities shall have been sold by the
Initial Purchasers, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Final
Memorandum in order to make the statements therein, in the light of the
circumstances when the Final Memorandum is delivered to a purchaser,
not misleading, or if, in the opinion of counsel for the Initial
Purchasers, it is necessary to amend or supplement the Final Memorandum
to comply with applicable law, forthwith to prepare and furnish, at its
own expense, to the Initial Purchasers, either amendments or
supplements to the Final Memorandum so that the statements in the Final
Memorandum as so amended or
12
supplemented will not, in the light of the circumstances when the Final
Memorandum is delivered to a purchaser, be misleading or so that the
Final Memorandum, as amended or supplemented, will comply with
applicable law.
(d) To qualify the Securities for offer and sale under the
securities or blue sky laws of such jurisdictions as you shall
reasonably request; provided that the Company and its subsidiaries
shall not be obligated to qualify as a Foreign corporation in any
jurisdiction in which they have not so qualified or to file a general
consent to service of process in any jurisdiction.
(e) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or
cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including, but not limited to: (i)
the fees, disbursements and expenses of the Company's counsel and the
Company's accountants in connection with the issuance and sale of the
Securities and all other fees or expenses in connection with the
preparation of each Memorandum and all amendments and supplements
thereto, including all printing costs associated therewith, and the
delivering of copies thereof to the Initial Purchasers, in the
quantities herein above specified, (ii) all costs and expenses related
to the transfer and delivery of the Securities to the Initial
Purchasers, including any transfer or other taxes payable thereon,
(iii) the cost of printing or producing any blue sky or legal
investment memorandum in connection with the offer and sale of the
Securities under state securities laws and all expenses in connection
with the qualification of the Securities for offer and sale under state
securities laws as provided in Section 6(d) hereof, including filing
fees and the reasonable fees and disbursements of counsel for the
Initial Purchasers in connection with such qualification and in
connection with the blue sky or legal investment memorandum, (iv) any
fees charged by rating agencies for the rating of the Securities, (v)
the fees and expenses, if any, incurred in connection with the
admission of the Securities for trading in PORTAL or any appropriate
market system, (vi) the costs and charges of any transfer agent,
registrar or depositary, (vii) the cost of the preparation, issuance
and delivery of the Securities, (viii) the costs and expenses of the
Company relating to investor presentations on any "road show"
undertaken in connection with the marketing of the offering of the
Securities, including, without limitation, expenses associated with the
production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with
the prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants,
and the cost of any aircraft chartered in connection with the road
show, (ix) all other costs and expenses incident to the performance of
the obligations of the Company hereunder for which provision is not
otherwise made in this Section.
(f) Neither the Company nor any Affiliate will sell, offer for
sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in the Securities Act) which could be integrated
with the sale of the Securities in a manner which would require the
registration under the Securities Act of the Securities.
13
(g) Not to solicit any offer to buy or offer or sell the
Securities by means of any form of general solicitation or general
advertising (as those terms are used in Regulation D under the
Securities Act) or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act.
(h) While any of the Securities remain "restricted securities"
within the meaning of the Securities Act, to make available, upon
request, to any seller of such Securities the information specified in
Rule 144A(d)(4) under the Securities Act, unless the Company is then
subject to Section 13 or 15(d) of the Exchange Act.
(i) If requested by you, to use its best efforts to permit the
Securities to be designated PORTAL securities in accordance with the
rules and regulations adopted by the National Association of Securities
Dealers, Inc. relating to trading in the PORTAL Market.
(j) During the period of two years after the Closing Date and
the Date of Delivery (if any), the Company will not, and will not
permit any of their affiliates (as defined in Rule 144 under the
Securities Act) to resell any of the Securities which constitute
"restricted securities" under Rule 144 that have been reacquired by any
of them.
(k) Not to take any action prohibited by Regulation M under
the Exchange Act in connection with the distribution of the Securities
contemplated hereby.
(l) The Securities (and all securities issued in exchange
therefore or in substitution thereof) shall bear the following legend
until, in our judgment, such legend shall no longer be necessary or
advisable because such Securities are no longer subject to the
restrictions on transfer described therein:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING
THIS SECURITY, AGREES FOR THE BENEFIT OF DORAL FINANCIAL CORPORATION
THAT (a) THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED OTHER THAN (1) TO THE COMPANY, (2) IN A TRANSACTION
ENTITLED TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE SECURITIES ACT (IF AVAILABLE), (3) SO LONG AS THIS SECURITY IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A"), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR
OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE l44A (AS INDICATED BY
THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE
REVERSE OF THIS SECURITY), (4) PURSUANT TO ANOTHER AVAILABLE EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT, SUBJECT, IN THE CASE OF
CLAUSES (2) OR
14
(4), TO THE RECEIPT BY DORAL FINANCIAL CORPORATION OF AN OPINION OF
COUNSEL OR SUCH OTHER EVIDENCE ACCEPTABLE TO DORAL FINANCIAL
CORPORATION THAT SUCH RESALE, PLEDGE OR TRANSFER IS EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR (5) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND THAT (b) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE OF
THE RESALE RESTRICTIONS REFERRED TO HEREIN AND DELIVER TO THE
TRANSFEREE (OTHER THAN A QUALIFIED INSTITUTIONAL BUYER) PRIOR TO THE
SALE A COPY OF THE TRANSFER RESTRICTIONS APPLICABLE HERETO (COPIES OF
WHICH MAY BE OBTAINED FROM US).
THE HOLDER OF THIS SECURITY IS ENTITLED TO THE BENEFITS OF A
REGISTRATION RIGHTS AGREEMENT (AS SUCH TERM IS DEFINED IN THE
CERTIFICATE OF DESIGNATION REFERRED TO ON THE REVERSE HEREOF) AND, BY
ITS ACCEPTANCE HEREOF, AGREES TO BE BOUND BY AND TO COMPLY WITH THE
PROVISIONS OF SUCH REGISTRATION RIGHTS AGREEMENT.
(m) Prior to the Closing Date, the Certificate of Designation
will be duly executed by the Company and filed with the Secretary of
State of the Commonwealth of Puerto Rico and will become effective in
accordance with the provisions of the General Corporation Law of the
Commonwealth of Puerto Rico.
7. Offering of Securities; Restrictions on Transfer. (fff)
Each Initial Purchaser, severally and not jointly, represents and warrants that
such Initial Purchaser is a qualified institutional buyer as defined in Rule
144A under the Securities Act (a "QIB"). Each Initial Purchaser, severally and
not jointly, agrees with the Company that (i) it will not solicit offers for, or
offer or sell, such Securities by any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Securities Act)
or in any manner involving a public offering within the meaning of Section 4(2)
of the Securities Act and (ii) it will solicit offers for such Securities only
from, and will offer such Securities only to, persons that it reasonably
believes to be QIBs, in purchasing such Securities are deemed to have
represented and agreed as provided in the Final Memorandum under the caption
"Notice to Investors".
8. Indemnity and Contribution. (ggg) The Company agrees to
indemnify and hold harmless each Initial Purchaser, each person, if any, who
controls any Initial Purchaser within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, and each affiliate of any
Initial Purchaser within the meaning of Rule 405 under the Securities Act from
and against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) caused by
any untrue statement or alleged untrue statement of a material fact contained in
either Memorandum (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto), or caused by any omission or
alleged omission to state therein a material fact necessary to make the
statements
15
therein in the light of the circumstances under which they were made not
misleading, except (i) insofar as such losses, claims, damages or liabilities
are caused by any such untrue statement or omission or alleged untrue statement
or omission based upon information relating to any Initial Purchaser furnished
to the Company in writing by such Initial Purchaser through any of you expressly
for use therein and (ii) insofar as the sale to the person asserting any such
losses, claims, damages or liabilities was an initial resale by such Initial
Purchaser and any such losses, claims, damages or liabilities of or with respect
to such Initial Purchaser results from the fact that both (A) to the extent
required by applicable law, the Company has sustained the burden of proving that
a copy of the Final Memorandum was not sent or given to such person at or prior
to the written confirmation of the sale of such Securities to such person and
(B) the untrue statement in or omission from the Preliminary Memorandum was
corrected in the Final Memorandum unless, in either case, such failure to
deliver the Final Memorandum was a result of the Company's failure to provide
copies of the corrected Final Memorandum to such Initial Purchaser prior to the
written confirmation of the sale of such Securities.
(b) Each Initial Purchaser agrees, severally and not jointly,
to indemnify and hold harmless the Company, their directors, their officers and
each person, if any, who controls the Company within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act to the same
extent as the foregoing indemnity from the Company to such Initial Purchaser,
but only with reference to information relating to such Initial Purchaser
furnished to the Company in writing by such Initial Purchaser through any of you
expressly for use in either Memorandum or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to Section 8(a) or 8(b), such person (the
"INDEMNIFIED PARTY") shall promptly notify the person against whom such
indemnity may be sought (the "INDEMNIFYING PARTY") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by Wachovia Capital Markets, LLC, in the case of parties
indemnified pursuant to Section 8(a), and by the Company, in the case of parties
indemnified pursuant to Section 8(b). The indemnifying party shall not be liable
for any settlement of any proceeding effected without its written consent, but
if settled with such consent or if there be a final judgment for the plaintiff,
the indemnifying party agrees to indemnify the indemnified party
16
from and against any loss or liability by reason of such settlement or judgment.
No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened proceeding
in respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party from
all liability on claims that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in Section
8(a) or 8(b) is unavailable to an indemnified party or insufficient in respect
of any losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Initial Purchasers on
the other hand from the offering of the Securities or (ii) if the allocation
provided by clause 8(d)(i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause 8(d)(i) above but also the relative fault of the Company on the one
hand and of the Initial Purchasers on the other hand in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Initial
Purchasers on the other hand in connection with the offering of the Securities
shall be deemed to be in the same respective proportions as the net proceeds
from the offering of the Securities (before deducting expenses) received by the
Company and the total discounts and commissions received by the Initial
Purchasers, in each case as set forth in the Final Memorandum, bear to the
aggregate offering price of the Securities. The relative fault of the Company on
the one hand and of the Initial Purchasers on the other hand shall be determined
by reference to, among other things, 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 by the Initial
Purchasers and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Initial
Purchasers' respective obligations to contribute pursuant to this Section 8 are
several in proportion to the respective number of Securities they have purchased
hereunder, and not joint.
(e) The Company and the Initial Purchasers agree that it would
not be just or equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation (even if the Initial Purchasers were treated
as one entity for such purpose) or by any other method of allocation that does
not take account of the equitable considerations referred to in Section 8(d).
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in Section 8(d) shall be deemed to
include, subject to the limitations set forth above, 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 8, no Initial Purchaser shall be required to contribute any amount in
excess of the amount by which the total price at which the Securities resold by
it in the initial placement of such Securities were offered to investors exceeds
the amount of any damages that such Initial Purchaser has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent
17
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section 8 are
not exclusive and shall not limit any rights or remedies that may otherwise be
available to any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in
this Section 8 and the representations, warranties and other statements of the
Company and of the Initial Purchasers contained in this Agreement shall remain
operative and in full force and effect regardless of (i) any termination of this
Agreement, (ii) any investigation made by or on behalf of any Initial Purchaser,
any person controlling any Initial Purchaser or any affiliate of any Initial
Purchaser or by or on behalf of the Company, their officers or directors or any
person controlling the Company and (iii) acceptance of and payment for any of
the Securities.
9. Termination. The Initial Purchasers may terminate this
Agreement by notice given by you to the Company, if, after the execution and
delivery of this Agreement and prior to the Closing Date or the Date of Delivery
(i) trading generally shall have been suspended or materially limited on, or by,
as the case may be, any of the New York Stock Exchange, the American Stock
Exchange, the Nasdaq National Market, the Chicago Board of Options Exchange, the
Chicago Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company or the Company shall have been suspended on any
exchange or in any over-the-counter market, (iii) a material disruption in
securities settlement, payment or clearance services in the United States shall
have occurred, (iv) any moratorium on commercial banking activities shall have
been declared by federal, New York State or Commonwealth of Puerto Rico
authorities or (v) there shall have occurred any outbreak or escalation of
hostilities, or any change in financial markets or any calamity or crisis that,
in your sole judgment, is material and adverse and which, singly or together
with any other event specified in this clause (v), makes it, in your sole
judgment, impracticable or inadvisable to proceed with the offer, sale or
delivery of the Securities on the terms and in the manner contemplated in the
Final Memorandum.
10. Effectiveness. Defaulting Initial Purchasers. This
Agreement shall become effective upon the execution and delivery hereof by the
parties hereto.
If, on the Closing Date, or any Date of Delivery, any one or
more Initial Purchasers shall fail or refuse to purchase Securities that it or
they have agreed to purchase hereunder on such date, and the aggregate principal
amount of Securities which such defaulting Initial Purchaser or Initial
Purchasers agreed but failed or refused to purchase is not more than one-tenth
of the aggregate principal amount of Securities to be purchased on such date,
the other Initial Purchasers shall be obligated severally in the proportions
that the principal amount of Securities set forth opposite their respective
names in Schedule I bears to the aggregate principal amount of Securities set
forth opposite the names of all such non-defaulting Initial Purchasers, or in
such other proportions as you may specify, to purchase the Securities which such
defaulting Initial Purchaser or Initial Purchasers agreed but failed or refused
to purchase on such date; provided that in no event shall the principal amount
of Securities that any Initial Purchaser has agreed to purchase pursuant to this
Agreement be increased pursuant to this Section 10 by an amount in excess of 10%
of such principal amount of Securities without the written consent of such
Initial Purchaser. If, on the Closing Date, or any Date of Delivery, any Initial
Purchaser or
18
Initial Purchasers shall fail or refuse to purchase Securities which it or they
have agreed to purchase hereunder on such date and the aggregate principal
amount of Securities with respect to which such default occurs is more than
one-tenth of the aggregate principal amount of Securities to be purchased on
such date, and arrangements satisfactory to you and the Company for the purchase
of such Securities are not made within 36 hours after such default, this
Agreement shall terminate without liability on the part of any non-defaulting
Initial Purchaser or of the Company. In any such case either you or the Company
shall have the right to postpone the Closing Date, but in no event for longer
than seven days, in order that the required changes, if any, in the Final
Memorandum or in any other documents or arrangements may be effected. Any action
taken under this paragraph shall not relieve any defaulting Initial Purchaser
from liability in respect of any default of such Initial Purchaser under this
Agreement.
If this Agreement shall be terminated by the Initial
Purchasers, or any of them, because of any failure or refusal on the part of the
Company to comply with the terms or to fulfill any of the conditions of this
Agreement, or if for any reason the Company shall be unable to perform their
obligations under this Agreement, the Company will reimburse the Initial
Purchasers or such Initial Purchasers as have so terminated this Agreement with
respect to themselves, severally, for all out-of-pocket expenses (including the
fees and disbursements of their counsel) reasonably incurred by such Initial
Purchasers in connection with this Agreement or the offering contemplated
hereunder. If this Agreement is terminated by reason of the default of one or
more of the Initial Purchasers, the Company shall not be obligated to reimburse
each such defaulting Initial Purchaser on account of such expenses.
11. Notices, etc. All statements requests, notices and
agreements hereunder shall be in writing, and:
(A) If to the Initial Purchasers shall be delivered or sent by
mail, telex or facsimile transmission to Wachovia Capital Markets, LLC, 00
Xxxxxx Xxxxxx, Xxx Xxxxxxxxx, XX, 00000, Attention: Syndicate Group, (Fax:
000-000-0000), with a copy to Shearman & Sterling LLP, 000 Xxxxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xxxx X. Xxxxxxxxx, Esq. (Fax: 000-000-0000);
and
(B) If to the Company, shall be delivered or sent by mail,
telex or facsimile transmission to Doral Financial Corporation, 1451 Xxxxxxxx X.
Xxxxxxxxx Avenue, San Xxxx, Puerto Rico, 00920-2717, Attention: Senior Executive
Vice President and Treasurer (Fax: 000-000-0000), with a copy to Xxxxxxxxxxx
Xxxxxx & Xxxxxxx LLP, Popular Center Building, 19th Floor, 000 Xxxxx Xxxxxx,
Xxxx Xxx, Xxxxxx Xxxx, 00000, Attention: Xxxxxxx Xxxxxxx, Esq. (Fax:
000-000-0000).
12. Parties. This Agreement shall inure to the benefit of and
be binding upon the Company, the Initial Purchasers and their respective
successors and assigns. This Agreement and the terms and provisions hereof are
for the sole benefit of only those persons, except that (i) the representations,
warranties, indemnities and agreements of the Company contained in this
Agreement shall also be deemed to be for the benefit of the person or persons,
if any, who control any Initial Purchaser within the meaning of either Section
15 of the Securities Act or Section 20 of the Exchange Act, and each affiliate
of any Initial Purchaser within the meaning of
19
Rule 405 under the Securities Act and (ii) the representations, warranties,
indemnities and agreements of the Initial Purchasers contained in this Agreement
shall also be deemed to be for the benefit of officers and directors of the
Company and any person who controls the Company within the meaning of either
Section 15 of the Securities Act and Section 20 of the Exchange Act. Nothing in
this Agreement is intended or shall be construed to give any person, other than
the persons referred to in this Section 12, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision contained
herein.
13. Amendments. No amendment or waiver of any provision of
this Agreement, nor any consent or approval to any departure therefrom, shall in
any event be effective unless the same is in writing and signed by the partied
hereto.
14. Counterparts. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
15. Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
16. Headings. The headings of the sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed a
part of this Agreement.
20
Very truly yours,
DORAL FINANCIAL CORPORATION
By: /s/ Xxxxx X. Xxxxx
--------------------------------
Name: Xxxxx X. Xxxxx
Title: Senior Executive Vice
President and Treasurer
[Purchase Agreement Signature Page]
Accepted as of the date hereof
WACHOVIA CAPITAL MARKETS, LLC
Acting on behalf of itself and as a representative of the
several Initial Purchasers
By: /s/ Xxxx Xxxxxx Xxxxxxx
------------------------------
Name: Xxxx Xxxxxx Xxxxxxx
Title: Senior Vice President
[Purchase Agreement Signature Page]
SCHEDULE I
AGGREGATE AMOUNT OF
INITIAL PURCHASER SECURITIES TO BE PURCHASED
----------------- --------------------------
Wachovia Capital Markets, LLC $180,000,000
Xxxxx Xxxxxx & Co., Inc. $ 45,000,000
UBS Investment Bank $ 45,000,000
Deutsche Bank Securities Inc. $ 30,000,000
------------
Total $300,000,000
============
SCHEDULE II
Xxxxxxx Xxxxx
Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxxx, Xx.
Xxxx X. Xxxxx
Xxxx X. Xxxxxx
Xxxxxx Xxxx
Xxxxx Xxxxx
Xxxxxx X. Xxxxxxx
Xxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
Xxxxxxx Xxxxxxxx
Xxxxxxxx Xxxxxx Munich
Xxxxxxxxx X. Xxxx
Xxxxxx Xxxxx
Xxxxx Xxxxx, Xx.
EXHIBIT A
FORM OF CERTIFICATE OF DESIGNATION OF 4 3/4% PERPETUAL
CUMULATIVE CONVERTIBLE PREFERRED STOCK
A-1
EXHIBIT B
OPINION OF OUTSIDE COUNSEL FOR THE COMPANY
The opinion of the counsel for the Company, to be delivered
pursuant to Section 5(c) of the
Purchase Agreement, shall be to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
Commonwealth of Puerto Rico, and has the corporate power and authority
to own its property and to conduct its business as described in the
Final Memorandum. Each of Doral Mortgage Corporation, Doral Securities,
Inc, Doral FSB, Doral Insurance Agency, Inc. and Doral Bank, is a
corporation duly organized, validly existing and in good standing under
the laws its respective jurisdiction of incorporation. Each of the
Company and Doral Mortgage Corporation, Doral Securities, Inc., Doral
FSB, Doral Insurance Agency, Inc. and Doral Bank are duly qualified as
a foreign corporation to transact business and are in good standing in
each other jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the
conduct of business, except for such jurisdictions where the failure to
so qualify would not have a Material Adverse Effect.
(ii) The
Purchase Agreement has been duly authorized, executed
and delivered by the Company.
(iii) The statements in the Final Memorandum under the caption
"Certain Tax Considerations," insofar as such statements constitute a
summary of the United States federal and Puerto Rican income tax laws
referred to therein, are accurate and fairly summarize in all material
respects the United States federal and Puerto Rican income tax laws
referred to therein.
(iv) The authorized, issued and outstanding shares of capital
stock of the Company are as set forth in the column entitled "Actual"
under the caption "Capitalization."
(v) The statements in the Final Memorandum under the headings
"Description of the Preferred Stock," "Description of Capital Stock,"
"Transfer Restrictions", "Risk Factors - We could be prevented from
paying dividends on shares of the preferred stock," and "Risk Factors -
Banking regulations may also restrict our ability to pay dividends,"
and the statements under the headings "Business - Regulation - Mortgage
Banking Business," "- Regulation - Banking Operations," "- Puerto
Rico Regulation," "- Savings Bank Regulation," "- Certain Regulatory
Restrictions on Investments in Company Common Stock," "- Regulation -
Broker-Dealer Operations," and "- Regulation - Insurance Operations"
of the Company's most recent annual report on Form 10-K, to the extent
that they constitute summaries of matters of law or regulation or legal
conclusions or of the Company's Certificate of Designation, certificate
of incorporation
B-1
and by-laws, have been reviewed by such counsel and fairly summarize
the matters described therein in all material respects; all
descriptions in the Final Memorandum of statutes and material contracts
and other documents are accurate in all material respects and such
counsel does not have actual knowledge of any contracts, documents,
current or pending legal or governmental actions, suits or proceedings
which would be required to be described in the Final Memorandum if the
Final Memorandum were a prospectus included in a registration statement
on Form S-1 which are not described as so required.
(vi) The Securities have been duly authorized by the Company
for issuance and sale pursuant to this Agreement and, when issued
against payment of the consideration therefor, will be validly issued,
fully paid and non-assessable and will not be subject to preemptive or
other similar rights of any security holder of the Company. No holder
of the Securities is or will be subject to personal liability under the
certificate of incorporation or by-laws or Certificate of Designation
by reason of being such a holder. The form of certificate used to
evidence the Securities is in due and proper form and complies with the
applicable statutory requirements and with any applicable requirements
of the certificate of incorporation or by-laws of the Company or the
Certificate of Designation.
(vii) The Certificate of Designation has been duly authorized
and executed by the Company and filed with the Secretary of State of
the Commonwealth of Puerto Rico and has become effective in accordance
with the provisions of the General Corporation Law of the Commonwealth
of Puerto Rico. Upon issuance and delivery of the Securities in
accordance with this Agreement, the Securities will be convertible at
the option of the holder thereof into the Conversion Shares in
accordance with the terms of the Certificate of Designation.
(viii) The Securities and the Conversion Shares being sold
pursuant to this Agreement conform in all material respects to the
statements relating thereto contained in the Final Memorandum, and such
descriptions conform to the rights set forth in the instruments
defining the Securities and the Conversion Shares.
(ix) The Conversion Shares have been duly authorized and
reserved for issuance by the Company upon conversion of the Securities.
The Conversion Shares, when issued upon such conversion, will be
validly issued, fully paid and non-assessable and will not be subject
to preemptive or other similar rights of any securityholder of the
Company. No holder of the Conversion Shares is or will be subject to
personal liability under the certificate of incorporation or by-laws or
Certificate of Designation by reason of being such a holder.
(x) The Company has full right, power and authority to execute
and deliver each of the Transaction Documents and the Certificate of
Designation and to perform its obligations thereunder; and all
corporate action required to be taken for the due and proper
authorization, execution and delivery of each of the Transaction
Documents and the Certificate of Designation and the consummation of
the transactions contemplated thereby have been duly and validly taken.
B-2
(xi) The Registration Rights Agreement has been duly
authorized, executed and delivered by, and is a valid and binding
agreement of, the Company enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization,
receivership, moratorium and similar laws relating to or affecting
creditors' rights generally and equitable principles of general
applicability (whether applied by a court of law or equity) and except
as rights to indemnification and contribution under the Registration
Rights Agreement may be limited under applicable law.
(xii) The execution, delivery and performance by the Company
of each of the Transaction Documents or execution and filing of the
Certificate of Designation and the consummation of the transactions
contemplated by the Transaction Documents and compliance by the Company
with its obligations thereunder will not (a) result in any violation of
the provisions of the charter or by-laws of the Company, (b) violate
any statute, rule or regulation of the United States, the Commonwealth
of Puerto Rico or the State of Delaware, (c) to the knowledge of such
counsel, conflict with or result in a 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 lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant
to, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument, except for breaches, violations, defaults,
liens, charges or encumbrances which are not material to the Company
and its subsidiaries taken as a whole, or (d) to the knowledge of such
counsel, violate any judgment, order, or decree of any court or
arbitrator or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties or
assets; and no consent, approval, authorization or order of, or filing
or registration with, any such court or arbitrator or governmental
agency or body under any such statute, judgment, order, decree, rule or
regulation is required for the execution, delivery and performance by
the Company of each of the Transaction Documents, or execution and
filing of the Certificate of Designation and the consummation of the
transactions contemplated by the Transaction Documents and compliance
by the Company with its obligations thereunder, except for such
consents, approvals, authorizations, filings, registrations or
qualifications (i) which have been obtained or made prior to the
Closing Date and (ii) as may be required to be obtained or made under
the Securities Act and applicable state or Commonwealth of Puerto Rico
securities laws as provided in the Registration Rights Agreement.
(xiii) After due inquiry, such counsel does not know of any
legal or governmental proceedings pending or threatened to which the
Company or any of its subsidiaries is a party or to which any of the
properties of the Company or any of its subsidiaries is subject other
than proceedings fairly summarized in all material respects in the
Final Memorandum and proceedings which would not be required to be
described in the Final Memorandum if the Final Memorandum were a
prospectus included in a registration statement on Form S-1 under the
Securities Act.
(xiv) The Company is not, and after giving effect to the
offering and sale of the Securities and the application of the proceeds
thereof as described in the Final Memorandum will not be, required to
register as an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended.
B-3
(xv) Based upon the representations, warranties and agreements
of the Company in Sections 1 and 6 of the
Purchase Agreement and of the
Initial Purchasers in Section 7 of the
Purchase Agreement, it is not
necessary in connection with the offer, sale and delivery of the
Securities to the Initial Purchasers under the
Purchase Agreement or in
connection with the initial resale of such Securities by the Initial
Purchasers in accordance with Section 7 of the
Purchase Agreement to
register the Securities or the Conversion Shares under the Securities
Act of 1933.
(xvi) To the knowledge of such counsel, none of the Company or
any of its subsidiaries, or any of their respective directors or
officers is subject to any order or directive of, or party to any
agreement with, any regulatory agency having jurisdiction with respect
to the business or operations of the Company or any of its
subsidiaries, except as disclosed in the Memorandum or in the materials
incorporated by reference therein and except for that certain
Memorandum of Understanding dated June 10, 2001 between Doral
Securities, Inc. and the Office of the Commissioner of Financial
Institutions of Puerto Rico.
(xvii) The deposit accounts of Doral Bank and Doral Bank, FSB
are insured by the Savings Association Insurance Fund ("SAIF") of the
Federal Deposit Insurance Corporation ("FDIC") to the legal maximum,
and to such counsel's knowledge no proceeding for the termination or
revocation of such insurance is pending or threatened. Doral Bank and
Doral Bank, FSB are members of the Federal Home Loan Bank of
New York.
(xviii) In addition, such counsel shall also state that such
counsel has participated in conferences with officers of the Company
and its subsidiaries and with the independent public accountants for
the Company and its subsidiaries concerning the preparation of each
Memorandum and, although such counsel has made certain inquiries and
investigations in connection with the preparation of each Memorandum,
it is not passing upon and, except as expressly set forth in paragraphs
(iv) and (vi) above, does not assume any responsibility for the
accuracy or completeness of the statements contained in or incorporated
by reference in each Memorandum and has not independently checked or
verified the factual statements contained or incorporated by reference
therein, and nothing has come to the attention of such counsel that
causes such counsel to believe that (i) each document incorporated by
reference in the Final Memorandum (except for the financial statements
and financial schedules and other financial and statistical data
included or incorporated by reference therein, as to which such counsel
need not express any belief), did not comply as to form when filed with
the Commission in all material respects with the Exchange Act and the
rules and regulations of the Commission thereunder and (ii) the Final
Memorandum (except for the financial statements and financial schedules
and other financial and statistical data included or incorporated by
reference therein, as to which such counsel need not express any
belief) when issued contained, or as of the date such opinion is
delivered contains, any untrue statement of a material fact or omitted
or omits 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.
B-4
The opinion of such counsel may be limited to the law of the
Commonwealth of Puerto Rico and the federal laws of the United States and may
have customary assumptions and qualifications. In rendering 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.
B-5
EXHIBIT C
OPINION OF GENERAL COUNSEL FOR THE COMPANY
The opinion of the counsel for the Company, to be delivered
pursuant to Section 5(c) of the
Purchase Agreement, shall be to the effect that:
such counsel has participated in conferences with officers of the Company and
its subsidiaries and with the independent public accountants for the Company and
its subsidiaries concerning the preparation of each Memorandum and, although
such counsel has made certain inquiries and investigations in connection with
the preparation of each Memorandum, it is not passing upon and does not assume
any responsibility for the accuracy or completeness of the statements contained
in or incorporated by reference in each Memorandum and has not independently
checked or verified the factual statements contained or incorporated by
reference therein, and nothing has come to the attention of such counsel that
causes such counsel to believe that (i) each document incorporated by reference
in the Final Memorandum (except for the financial statements and financial
schedules and other financial and statistical data included therein, as to which
such counsel need not express any belief), did not comply as to form when filed
with the Commission in all material respects with the Exchange Act and the rules
and regulations of the Commission thereunder and (ii) the Final Memorandum
(except for the financial statements and financial schedules and other financial
and statistical data, as to which such counsel need not express any belief) when
issued contained, or as of the date such opinion is delivered contains, any
untrue statement of a material fact or omitted or omits 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.
C-1
EXHIBIT D
OPINION OF SPECIAL PUERTO RICO COUNSEL FOR THE INITIAL PURCHASERS
The opinion of special Puerto Rico counsel for the Initial
Purchasers, to be delivered pursuant to Section 5(e) of the Purchase Agreement,
shall be to the effect that:
(i) The Purchase Agreement has been duly authorized, executed
and delivered by the Company.
(ii) The statements in the Final Memorandum under the headings
"Description of the Preferred Stock," "Description of the Capital
Stock," and "Certain Tax Considerations - Puerto Rico Taxation," to the
extent that they constitute summaries of matters of Puerto Rico law or
regulation or legal conclusions on Puerto Rico legal matters, have been
reviewed by such counsel and fairly summarize the matters described
therein in all material respects.
(iii) The Securities have been duly authorized by the Company
for issuance and sale pursuant to this Agreement and, when issued
against payment of the consideration therefor, will be validly issued,
fully paid and non-assessable and will not be subject to preemptive or
other similar rights arising under Puerto Rico law or under the
certificate of incorporation or by-laws of the Company of any security
holder of the Company. No holder of the Securities is or will be
subject to personal liability under the certificate of incorporation or
by-laws of the Company or under the Certificate of Designation solely
by reason of being such a holder. The form of certificate used to
evidence the Securities is in due and proper form and complies with
applicable Puerto Rico statutory requirements and with any applicable
requirements of the certificate of incorporation or by-laws of the
Company or of the Certificate of Designation.
(iv) The Certificate of Designation has been duly authorized
and executed by the Company and filed with the Secretary of State of
the Commonwealth of Puerto Rico and has become effective in accordance
with the provisions of the General Corporate Law of the Commonwealth of
Puerto Rico. Upon issuance and delivery of the Securities in accordance
with this Purchase Agreement, the Securities will be convertible at the
option of the holder thereof into the Conversion Shares in accordance
with the terms of the Certificate of Designation.
(v) The Securities and the Conversion Shares being sold
pursuant to this Agreement conform in all material respects to the
statements relating thereto contained in the Final Memorandum, and such
descriptions conform in all material respects to the rights set forth
in the instruments defining the Securities and the Conversion Shares.
(vi) The Conversion Shares have been duly authorized and
reserved for issuance by the Company upon conversion of the Securities.
The Conversion Shares, when issued upon such conversion, will be
validly issued, fully paid and non-assessable and will not be subject
to preemptive or other similar rights arising under Puerto Rico law
D-1
or under the certificate of incorporation or by-laws of the Company of
any securityholder of the Company. No holder of the Conversion Shares
is or will be subject to personal liability under the certificate of
incorporation or by-laws of the Company or under the Certificate of
Designation solely by reason of being such a holder.
(vii) The Company has full right, power and authority under
Puerto Rico law and under its certificate of incorporation and by-laws
to execute and deliver each of the Transaction Documents and the
Certificate of Designation and to perform its obligations thereunder;
and all corporate action required to be taken under Puerto Rico law and
under its certificate of incorporation and by-laws for the due and
proper authorization, execution and delivery of each of the Transaction
Documents and the Certificate of Designation and the consummation of
the transactions contemplated thereby have been duly and validly taken.
(viii) The Registration Rights Agreement has been duly
authorized, executed and delivered by the Company.
(ix) The execution, delivery and performance by the Company of
each of the Transaction Documents, the execution and filing of the
Certificate of Designation, the consummation of the transactions
contemplated by the Transaction Documents, and compliance by the
Company with its obligations thereunder will not (a) result in any
violation of the provisions of the certificate of incorporation or
by-laws of the Company or (b) violate any statute, rule or regulation
of the Commonwealth of Puerto Rico; and no consent, approval,
authorization or order of, or filing or registration with, any court or
arbitrator or governmental agency or body under any such statute, rule
or regulation is required for the execution, delivery and performance
by the Company of each of the Transaction Documents, the execution and
filing of the Certificate of Designation, the consummation of the
transactions contemplated by the Transaction Documents, and compliance
by the Company with its obligations thereunder, except for such
consents, approvals, authorizations, filings, registrations or
qualifications (i) which have been obtained or made prior to the
Closing Date and (ii) as may be required to be obtained or made under
the Commonwealth of Puerto Rico securities laws.
The opinion of such counsel may be limited to the laws of the
Commonwealth of Puerto Rico and may have customary assumptions and
qualifications. In rendering 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.
D-2
EXHIBIT E
FORM OF LOCK-UP LETTER
September 23, 2003
Wachovia Capital Markets, LLC
One Wachovia Center
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Ladies and Gentlemen:
The undersigned understands that Wachovia Capital Markets, LLC
("WACHOVIA") proposes to enter into a Purchase Agreement (the "PURCHASE
AGREEMENT") with
Doral Financial Corporation, a Puerto Rico corporation (the
"COMPANY") providing for the private offering pursuant to Rule 144A (the
"OFFERING") by the Initial Purchasers (the "INITIAL PURCHASERS"), of up to
1,380,000 shares (the "SHARES") of the 43/4% Perpetual Cumulative Convertible
Perpetual Preferred Stock par value $1.00 per share of the Company (the
"PREFERRED STOCK"), each having a liquidation preference of $250 per Share.
To induce the Initial Purchasers that may participate in the Offering
to continue their efforts in connection with the Offering, the undersigned
hereby agrees that, without the prior written consent of Wachovia on behalf of
the Initial Purchasers, it will not, during the period commencing on the date
hereof and ending 90 days after the date of the final offering memorandum
relating to the Offering (the "OFFERING MEMORANDUM"), (1) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any equity securities
or any securities convertible into or exercisable or exchangeable for equity
securities or (2) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
equity securities, whether any such transaction described in clause (1) or (2)
above is to be settled by delivery of equity securities or such other
securities, in cash or otherwise. The foregoing sentence shall not apply to (a)
the sale of any Shares to the Initial Purchasers pursuant to the Purchase
Agreement, (b) transactions relating to shares of Preferred Stock or other
securities acquired in open market transactions after the completion of the
Offering or (c) the requirements of ordinary margin lending by the undersigned.
In addition, the undersigned agrees that, without the prior written consent of
Wachovia on behalf of the Initial Purchasers, it will not, during the period
commencing on the date hereof and ending 90 days after the date of the Offering
Memorandum, make any demand for or exercise any right with respect to, the
registration of any shares of equity securities or any security convertible into
or exercisable or exchangeable for equity securities.
The undersigned understands that the Company and the Initial Purchasers
are relying upon this Lock-Up Agreement in proceeding toward consummation of the
Offering. The undersigned
E-1
further understands that this Lock-Up Agreement is irrevocable and shall be
binding upon the undersigned's heirs, legal representatives, successors and
assigns.
Whether or not the Offering actually occurs depends on a number of
factors, including market conditions. Any Offering will only be made pursuant to
a Purchase Agreement, the terms of which are subject to negotiation between the
Company and the Initial Purchasers.
Very truly yours,
------------------------------
Name:
------------------------------
Address:
E-2
