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EXHIBIT 1.1
1,740,000 Shares
DORAL FINANCIAL CORPORATION
8.35% Noncumulative Monthly Income Preferred Stock, Series B
UNDERWRITING AGREEMENT
August 29, 2000
PAINEWEBBER INCORPORATED OF PUERTO RICO
As joint-lead underwriter and co-representative
of the several Underwriters named in Schedule 1
American International Plaza, PH
Hato Rey, Puerto Rico 00918
POPULAR SECURITIES, INC.
As joint-lead underwriter and co-representative
of the several Underwriters named in Schedule 1
Banco Popular Center, 10th Floor
Hato Rey, Puerto Rico 00918
Ladies and Gentlemen:
DORAL FINANCIAL CORPORATION, a Puerto Rico corporation (the "Company"),
proposes to sell an aggregate of 1,740,000 shares (the "Firm Shares") of the
Company's 8.35% Noncumulative Monthly Income Preferred Stock, Series B (the
"Preferred Stock"), which are to be issued and sold by the Company to you and
the other underwriters named in Schedule 1 hereto (collectively, the
"Underwriters"), for whom you are acting as representatives (the
"Representatives"). The Company also has agreed to grant to you and the other
Underwriters an option (the "Option") to purchase up to an additional 260,000
shares of Preferred Stock (the "Option Shares") on the terms and for the
purposes set forth in Section 1(b) hereto. The Firm Shares and the Option Shares
are hereinafter collectively referred to as the "Shares."
The Company hereby confirms as follows its agreements with the
Representatives and the several other Underwriters.
1. Agreement to Sell and Purchase.
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(a) On the basis of the representations, warranties and
agreements of the Company herein contained and subject to all the terms and
conditions of this Agreement, the Company agrees to sell to each Underwriter and
each Underwriter, severally and not jointly, agrees to purchase from the Company
at a purchase price of $24.2125 per share, the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule 1 hereto, plus such additional
number of Firm Shares which such Underwriter may become obligated to purchase
pursuant to Section 9 hereof.
(b) Subject to all the terms and conditions of this
Agreement, the Company grants the Option to the several Underwriters to
purchase, severally, but not jointly, the Option Shares at the same price per
share as the Underwriters shall pay for the Firm Shares. The Option may be
exercised only to cover overallotments in the sale of the Firm Shares by the
Underwriters and may be exercised in whole or in part at any time and from time
to time on or before the 30th day after the date of this Agreement (or on the
next business day if the 30th day is not a business day), upon notice (the
"Option Shares Notice") in writing or by telephone (confirmed in writing) by the
Representatives to the Company no later than 5:00 p.m., Atlantic Standard time,
at least two and no more than five business days before the date specified for
closing in the Option Shares Notice (the "Option Closing Date") setting forth
the aggregate number of Option Shares to be purchased and the time and date for
such purchase. On the Option Closing Date, the Company will issue and sell to
the Underwriters the number of Option Shares set forth in the Option Shares
Notice and each Underwriter will purchase such percentage of the Option Shares
as is equal to the percentage of Firm Shares that such Underwriter is purchasing
hereunder, as adjusted by the Representatives 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 Representatives for the accounts of the Underwriters at the office
of Fiddler Gonzalez & Rodriguez, LLP, counsel to the Underwriters, 254 Munoz
Rivera Ave., Sixth Floor, Hato Rey, Puerto Rico 00918, 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 Representatives (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
Representatives shall request at least two business days
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prior to the Closing Date or the Option Closing Date, as the case may be, by
written notice to the Company. For the purpose of expediting the checking and
packaging of certificates for the Shares, the Company agrees to make such
certificates available for inspection at least 24 hours prior to the Closing
Date or the Option Closing Date, as the case may be.
The cost of original issue tax stamps, if any, in connection with the
issuance, sale and delivery of the Firm Shares and Option Shares by the Company
to the respective Underwriters shall be borne by the Company. The Company will
pay and save each Underwriter and any subsequent holder of the Shares harmless
from any and all liabilities with respect to or resulting from any failure or
delay in paying Federal, state or Commonwealth of Puerto Rico stamp and other
transfer taxes, if any, which may be payable or determined to be payable in
connection with the original issuance, sale or delivery to such Underwriter of
the Firm Shares and Option Shares.
3. Representations and Warranties of the Company. The Company
represents, warrants and covenants to each Underwriter that:
(a) The Company meets the requirements for use of Form
S-3 and a registration statement (Registration No. 333-76259) on Form S-3, as
amended, with respect to the Shares, including a prospectus (the "Base
Prospectus"), has been carefully prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the "Act"), and the
rules and regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder, and has been filed with the
Commission and has become effective. Such registration statement and prospectus
may have been amended or supplemented prior to the date of this Agreement; any
such amendment or supplement was so prepared and filed, and any such amendment
or supplement filed after the effective date of such registration statement has
become effective. No stop order suspending the effectiveness of the registration
statement has been issued, and, to the Company's knowledge, no proceeding for
that purpose has been instituted or threatened by the Commission. A prospectus
supplement and a final prospectus containing information permitted to be omitted
at the time of effectiveness by Rule 430A of the Rules and Regulations has been
or will be so prepared and filed with the Commission pursuant to Rule 424(b) of
the Rules and Regulations on or before the second business day after the date
hereof (or such earlier time as may be required by the Rules and Regulations);
and the Rules and Regulations do not require the Company to, and, without the
Representatives' consent, the Company will not, file a post-effective amendment
after the time of execution of this Agreement and prior to the filing of such
final form of prospectus. The registration statement may be supplemented by one
or more forms of preliminary prospectus supplement, as contemplated by Rule 430
or Rule 430A of the Rules and Regulations, to be used in connection with the
offering and sale of the Shares (each a "Preliminary Prospectus"). Copies of
such registration statement, any such amendments, and each related Preliminary
Prospectus and all documents incorporated by reference therein that were filed
with the Commission on or prior to the date of this Underwriting Agreement have
been delivered to the Representatives and their counsel. The term "Registration
Statement" means such registration statement as amended at the time it becomes
or became effective (the "Effective Date"), including financial statements and
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all exhibits and any information deemed by virtue of Rule 430A of the Rules and
Regulations to be included in such Registration Statement at the Effective Date
and any prospectus supplement filed thereafter with the Commission and shall
include the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 which were filed under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). The term "Prospectus" means, collectively, the Base
Prospectus together with any prospectus supplement, in the respective forms they
are filed with the Commission pursuant to Rule 424(b) of the Rules and
Regulations. Any reference herein to the terms "amend," "amendment" or
"supplement" with respect to the Registration Statement, the Base Prospectus,
any Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include the filing of any document under the Exchange Act after the Effective
Date, or the date of any Preliminary Prospectus or the Prospectus, as the case
may be, that is incorporated therein by reference. For purposes of this
Underwriting Agreement, all references to the Registration Statement, the
Prospectus, any preliminary prospectus or any amendment or supplement thereto
shall be deemed to include any copy filed with the Commission pursuant to its
Electronic Data Gathering Analysis and Retrieval System (EDGAR), and such copy
shall be identical (except to the extent permitted by Regulation S-T) to any
Prospectus delivered to the Representatives for use in connection with the
offering of the Shares by the Company.
(b) Each part of the Registration Statement (excluding
any prospectus supplement with respect to an offering of securities other than
the offering of the Shares contemplated hereby), when such part became or
becomes effective, each Preliminary Prospectus, on the date of filing thereof
with the Commission, and the Prospectus and any amendment or supplement thereto,
on the date of filing thereof with the Commission and at the Closing Date
conformed or will conform in all material respects with the requirements of the
Act and the Rules and Regulations; each part of the Registration Statement
(excluding any prospectus supplement with respect to an offering of securities
other than the offering of the Shares contemplated hereby), when such part
became or becomes effective, did not or will not contain an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; each Preliminary
Prospectus, on the date of filing thereof with the Commission, and the
Prospectus and any amendment or supplement thereto, on the date of filing
thereof with the Commission and at the Closing Date, did not or will not include
an untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; the foregoing shall not apply to the
statements in or omissions from any such document in reliance upon, and in
conformity with, written information relating to any Underwriter furnished to
the Company by the Representatives, or by any Underwriter through the
Representatives, specifically for use in the preparation thereof. The Company
has not distributed any offering material in connection with the offering or
sale of the Shares other than the Registration Statement, any Preliminary
Prospectus, the Prospectus or any other materials, if any, permitted by the Act.
(c) The documents incorporated by reference in the
Registration Statement, the Prospectus and any amendment or supplement to such
Registration Statement or such prospectus,
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when they became or become effective under the Act or were or are filed with the
Commission under the Exchange Act, as the case may be, conformed or will conform
in all material respects with the requirements of the Act, the Rules and
Regulations, the Exchange Act and the rules and regulations of the Commission
thereunder (the "Exchange Act Rules and Regulations"), as applicable.
(d) The only directly or indirectly controlled
subsidiaries of the Company (each, a "Subsidiary" and collectively, the
"Subsidiaries") are those listed on Exhibit A hereto. Except as set forth in the
Prospectus or as acquired in connection with the exercise of its rights as a
creditor, or pursuant to a bona fide collateral pledge arrangement, neither the
Company nor any Subsidiary owns, nor at the Closing Date and the Option Closing
Date, will own an interest in any corporation, partnership, trust, joint venture
or other business entity. The Company has been and, at the Closing Date and
Option Closing Date, will be duly organized and validly existing as a
corporation under the laws of the Commonwealth of Puerto Rico and is and, at the
Closing Date and Option Closing Date, will be in good standing with the
Commonwealth of Puerto Rico. The Company is and will be as of the Closing Date
and the Option Closing Date registered with the Board of Governors of the
Federal Reserve System (the "Federal Reserve") as a bank holding company under
the Bank Holding Company Act of 1956 (the "BHCA") and its election to be treated
as a financial holding company under the BHCA is and will remain in full force
and effect. Each of the Subsidiaries is and, at the Closing Date and Option
Closing Date, will be a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation. Each of
the Company and its Subsidiaries is and, at the Closing Date and the Option
Closing Date, will be duly qualified and in good standing as a foreign
corporation in each jurisdiction in which the character or location of its
properties (owned, leased or licensed) or the nature or conduct of its business
or use of its property and assets makes such qualification necessary, except
where the failure to so qualify would not have a material adverse effect on the
condition, financial or otherwise, or the earnings, prospects or business
affairs of the Company and its Subsidiaries taken as a whole.
(e) The outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable and are not subject to any preemptive or similar rights. The
Shares to be issued and sold by the Company will be, upon such issuance and
payment therefor, duly authorized, validly issued, fully paid and nonassessable
and will not be subject to any preemptive or similar rights. The Company has,
and, upon completion of the sale of the Shares, will have, an authorized, issued
and outstanding capitalization as set forth in the Registration Statement and
the Prospectus. The description of the securities of the Company in the
Registration Statement and the Prospectus is, and at the Closing Date and, if
later, the Option Closing Date, will be, complete and accurate in all respects.
No holders of securities of the Company are entitled to have such securities
registered under the Registration Statement, except where such rights have been
waived.
(f) The consolidated financial statements and the related
notes of the Company included in the Registration Statement or incorporated
therein by reference and the Prospectus present fairly the financial condition
of the Company and its Subsidiaries as of the dates indicated
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and the consolidated results of operations, and cash flows of the Company and
its Subsidiaries for the periods covered thereby, all in conformity with
generally accepted accounting principles ("GAAP") applied on a consistent basis
throughout the entire periods involved. PricewaterhouseCoopers LLP (the
"Accountants"), who have reported on those of such financial statements and
related notes which are audited, are independent accountants with respect to the
Company and its Subsidiaries within the meaning of the Act and the applicable
and published rules and regulations.
(g) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorization, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for assets,
(iii) access to assets is permitted only in accordance with management's general
or specific authorization, and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(h) Except as set forth in the Registration Statement and
Prospectus, subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus and prior to the Closing Date
and, if later, the Option Closing Date, (i) there has not been, and will not
have been, any material adverse change in the business, properties, financial
condition, net worth or results of operations of the Company and its
Subsidiaries considered as one enterprise, (ii) neither the Company nor any of
its Subsidiaries has entered into, or will have entered into any material
transactions other than pursuant to this Agreement, and (iii) the Company has
not, and will not have, paid or declared any dividends or other distributions of
any kind on any class of its capital stock, except for the payment or
declaration of quarterly dividends on the Company's common stock (the "Common
Stock") and the payment and declaration of monthly dividends on the Company's
outstanding preferred stock in the ordinary course of its business.
(i) The Company and each of its Subsidiaries have good
and marketable title to all properties and assets described in the Registration
Statement, including the documents incorporated by reference therein, and
Prospectus, as owned by it, free and clear of all liens, security interests,
restrictions, pledges, encumbrances, charges, equities, claims, easements,
leases and tenancies (collectively, "Encumbrances") other than those described
in the Registration Statement, or in the documents incorporated by reference
therein, and Prospectus or those that will not materially affect the value of
such properties and assets or will not interfere with the use made and proposed
to be made of such properties and assets. The Company and each of its
Subsidiaries have valid, subsisting and enforceable leases for the properties
and assets described in the Registration Statement or in the documents
incorporated by reference therein, and Prospectus as leased by them, free and
clear of all Encumbrances, other than those described in the Registration
Statement or in the documents incorporated by reference therein, and Prospectus,
or those that will not materially affect the value of such properties and assets
or will not interfere with the use made and proposed to be made of such
properties and assets.
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(j) The Company is not required to be registered under
the Investment Company Act of 1940, as amended (the "Investment Company Act").
(k) Except as set forth in the Registration Statement, or
incorporated therein by reference, and Prospectus, there are no actions, suits,
arbitrations, claims, governmental or other proceedings (formal or informal), or
investigations pending or threatened against or affecting the Company or any of
its Subsidiaries, or any directors, officers or shareholders of the Company or
any of its Subsidiaries in their respective capacities as such, or any of the
properties or assets owned or leased by the Company or any of its Subsidiaries,
before or by any Federal, state or Commonwealth of Puerto Rico court,
commission, regulatory body, administrative agency or other governmental body,
domestic or foreign (collectively, a "Governmental Body"), wherein an
unfavorable ruling, decision or finding would adversely affect the business,
prospects, financial condition, net worth or results of operations of the
Company and its Subsidiaries taken as a whole and would be required to be
disclosed in the Registration Statement and Prospectus. Neither the Company nor
any Subsidiary is in violation of, or in default with respect to, any law, rule,
or regulation, or any order, judgment, or decree, except as described in the
Prospectus or such as in the aggregate do not now have and can reasonably be
expected in the future not to have a material adverse effect upon the
operations, business, properties, or assets of the Company and its Subsidiaries
taken as a whole; nor is the Company or any Subsidiary presently required under
any order, judgment or decree to take any action in order to avoid any such
violation or default.
(l) The Company and each of its Subsidiaries have and, at
the Closing Date and the Option Closing Date, will have all governmental
licenses, permits, consents, orders, approvals, franchises, certificates and
other authorizations (collectively, "Licenses") necessary to carry on their
respective businesses and own or lease their respective properties as
contemplated in the Registration Statement and Prospectus. The Company and each
of its Subsidiaries have and, at the Closing Date and the Option Closing Date,
will have complied in all material respects with all laws, regulations and
orders applicable to it or its business, assets and properties. Neither the
Company nor any of its Subsidiaries is, nor, at the Closing Date and the Option
Closing Date, will be in default (nor has any event occurred which, with notice
or lapse of time or both, would constitute a default) in the due performance and
observation of any term, covenant or condition of any indenture, mortgage, deed
of trust, voting trust agreement, loan agreement, bond, debenture, note
agreement or other evidence of indebtedness, lease, contract or other agreement
or instrument (collectively, a "contract or other agreement") to which they are
a party or by which their respective properties are bound or affected, the
violation of which would individually or in the aggregate have a material
adverse effect on the condition, financial or otherwise, or the earnings,
prospects or business affairs of the Company and its Subsidiaries taken as a
whole. There are no governmental proceedings or actions pending or threatened
for the purpose of suspending, modifying or revoking any License held by the
Company and its Subsidiaries.
(m) No consent, approval, authorization or order of, or
any filing or declaration with, any Governmental Body is required for the
consummation of the transactions contemplated
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by this Agreement or in connection with the issuance and sale of the Shares by
the Company, except such as have been obtained and such as may be required under
state or Commonwealth of Puerto Rico securities or blue sky laws or the bylaws
and rules of the National Association of Securities Dealers, Inc. (the "NASD")
in connection with the purchase and distribution by the Underwriters of the
Shares to be sold hereby.
(n) The Company has full power (corporate and other) and
authority to enter into this Agreement and to carry out all the terms and
provisions hereof to be carried out by it. This Agreement has been duly
authorized, executed and delivered by the Company and constitutes a valid and
binding agreement of the Company and is enforceable against the Company in
accordance with the terms hereof, except as rights to indemnity and contribution
may be limited by federal, state or Commonwealth of Puerto Rico securities laws
or the public policy underlying such laws. Except as disclosed in the
Registration Statement and the Prospectus, the execution, delivery and the
performance of this Agreement and the consummation of the transactions
contemplated hereby will not result in the creation or imposition of any
Encumbrance upon any of the properties or assets of the Company or any of the
Subsidiaries pursuant to the terms or provisions of, or result in a breach or
violation of or conflict with any of the terms or provisions of, or constitute a
default under, or give any other party a right to terminate any of its
obligations under, or result in the acceleration of any obligation under, (i)
the Certificate of Incorporation or By-laws of the Company, in each case as
amended, or (ii) any contract or other agreement to which the Company or any of
the Subsidiaries is a party or by which it or any of the respective assets or
properties are bound or affected, the violation of which would individually or
in the aggregate have a material adverse effect on the condition, financial or
otherwise, or the earnings, prospects or business affairs of the Company and its
Subsidiaries, or (iii) any judgment, ruling, decree, order, law, statute, rule
or regulation of any Governmental Body applicable to the Company or any of the
Subsidiaries or their respective businesses or properties, the violation of
which would individually or in the aggregate have a material adverse effect on
the financial condition, or the earnings, prospects or business affairs of the
Company and its Subsidiaries.
(o) No statement, representation, or warranty made by the
Company in this Agreement or made in any certificate or document required by
this Agreement to be delivered to the Representatives 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 Representatives 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.
(p) Neither the Company nor any of its directors,
officers or affiliates has taken, nor will he, she or it take, directly or
indirectly, any action designed, or which might reasonably be expected in the
future, to cause or result in, under the Act or otherwise, or which has
constituted, stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares or otherwise.
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(q) The Shares have been approved for listing on the
Nasdaq National Market ("Nasdaq"), subject only to notice of issuance.
(r) Neither the Company nor any of its Subsidiaries is
involved in any collective labor dispute with its employees nor is any such
dispute threatened or imminent.
(s) Neither the Company nor any of its Subsidiaries nor,
to the Company's best knowledge, any employee or agent of the Company or any
Subsidiary has made any payment of funds of the Company or any Subsidiary or
received or retained any funds of the Company or any Subsidiary in violation of
any law, rule or regulation which payment, receipt or retention of funds is of a
character required to be disclosed in the Prospectus.
(t) The business, operations and facilities of the
Company and its Subsidiaries have been and are being conducted in compliance
with all applicable laws, ordinances, rules, regulations, licenses, permits,
approvals, plans, authorizations or requirements relating to occupational safety
and health, or pollution, or protection of health or the environment (including,
without limitation, those relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants or hazardous or toxic
substances, materials or wastes into ambient air, surface water, groundwater or
land, or relating to the manufacture, processing, distribution, use, treatment
storage, disposal, transport or handling of chemical substances, pollutants,
contaminants or hazardous or toxic substances, materials or wastes, whether
solid, gaseous or liquid in nature) of any governmental department, commission,
board, bureau, agency or instrumentality of the United States, any state, or the
Commonwealth of Puerto Rico or political subdivision thereof, and all applicable
judicial or administrative agency or regulatory decrees, awards, judgments and
orders relating thereto; and neither the Company nor any of its Subsidiaries has
received any notice from any governmental instrumentality or any third party
alleging any violation thereof or liability thereunder (including, without
limitation, liability for costs of investigating or remediating sites containing
hazardous substances and/or damages to natural resources), except where failure
to so comply would not have a material adverse effect on the financial
condition, or the earnings or business affairs of the Company and its
Subsidiaries taken as a whole. The intended use and occupancy of each of the
facilities owned or operated by the Company and its Subsidiaries complies in all
material respects with all applicable codes and zoning laws and regulations, and
there is no pending or threatened condemnation, zoning change, environmental or
other proceeding or action that will in any material respect adversely affect
the size of, use of, improvements on, construction on, or access to such
facilities.
(u) The Company has filed all foreign, federal, state and
local tax returns that are required to be filed or has requested extensions
thereof and has paid all taxes required to be paid by it and any other
assessment, fine or penalty levied against it, to the extent that any of the
foregoing is due and payable, except for any failure to file that would not have
a material adverse effect on the financial condition of the Company.
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(v) The Company meets the requirements for use of Form
S-3 under the Rules and Regulations and the use of Rule 415 under the Rules and
Regulations.
(w) The deposit accounts of Doral Bank, a Subsidiary of
the Company ("Doral Bank") and Doral Bank, FSB, a Subsidiary of the Company
("Doral FSB") are insured by the Savings Association Insurance Fund ("SAIF") of
the Federal Deposit Insurance Corporation ("FDIC") to the legal maximum, and no
proceeding for the termination or revocation of such insurance is pending or
threatened. Doral Bank and Doral FSB are members in good standing of the Federal
Home Loan Bank of New York.
(x) None of the Company, Doral Bank, Doral FSB and their
affiliates, or any of their respective directors or officers is subject to any
order or directive of, or party to any agreement with, any regulatory agency
having jurisdiction with respect to its business or operations except as
disclosed in the Prospectus.
4. Agreements of the Company. The Company covenants and agrees
with each of the several Underwriters as follows:
(a) The Company will cause the Prospectus Supplement to
be filed as contemplated by Section 3(a) hereof (but only if the Representatives
have not reasonably objected thereto by notice to the Company after having been
furnished a copy within a reasonable time prior to filing) and will notify the
Representatives promptly of such filing. The Company will not during such period
as the Prospectus is required by law to be delivered in connection with sales of
the Shares by any Underwriter or dealer (the "Prospectus Delivery Period"), file
any amendment or supplement to the Registration Statement or the Prospectus,
unless a copy thereof shall first have been submitted to the Representatives
within a reasonable period of time prior to the filing thereof and the
Representatives shall not have objected thereto in good faith.
(b) The Company will use its best efforts to cause the
Registration Statement to remain effective through the completion of the
Underwriters' distribution of the Shares, and will notify the Representatives
promptly, and will confirm such advice in writing, (i) of the preparation and
filing (subject to Section 4(a)) of any post-effective amendment and when any
such post-effective amendment to the Registration Statement becomes effective,
(ii) of any request by the Commission for amendments or supplements to the
Registration Statement or the Prospectus or for additional information, (iii) of
the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any proceedings for that purpose
or the threat thereof, (iv) of the suspension of the qualification or
registration of the Shares for offering or sale in any jurisdiction, or of the
initiation or threat of any proceeding for any such purpose; (v) of the
happening of any event during the Prospectus Delivery Period that in the
judgment of the Company makes any statement made in the Registration Statement
or the Prospectus untrue or that requires the making of any changes in the
Registration Statement or the Prospectus in order to make the statements
therein, in light of the circumstances in which they are made, not misleading
and (vi)
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of receipt by the Company or any representative or attorney of the Company of
any other communication from the Commission relating to the Company, the
Registration Statement, any preliminary prospectus or the Prospectus. If at any
time the Commission or any jurisdiction shall threaten to issue, or shall issue,
any order suspending the effectiveness of the Registration Statement or
suspending the qualification or registration of the Shares for sale in any
jurisdiction, the Company will make every reasonable effort to prevent the
issuance of such order and, if such an order should be issued, to obtain the
withdrawal of such order at the earliest possible moment. The Company will use
its best efforts to comply with the provisions of and make all requisite filings
with the Commission pursuant to Rule 430A and to notify the Representatives
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
Representatives 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 Representatives,
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 Representatives, 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) During the Prospectus Delivery Period, the Company
will promptly furnish to the Underwriters, without charge, as many copies of
each preliminary prospectus, the Prospectus (containing the Prospectus
Supplement) and any amendment or supplement thereto as the Underwriters may from
time to time reasonably request. The Company consents to the use of the
Prospectus, as amended or supplemented from time to time, by the Underwriters
and by all dealers to whom the Shares may be sold, both in connection with the
offering or sale of the Shares and, thereafter, during the Prospectus Delivery
Period. If during the Prospectus Delivery Period any event shall occur which in
the judgment of the Company or counsel to the Underwriters should be set forth
<PAGE> 12
12
in the Prospectus in order to make any statement therein, in the light of the
circumstances under which it was made, not misleading, or if, in the reasonable
opinion of counsel to the Underwriters, it is necessary to supplement or amend
the Prospectus to comply with law, the Company will forthwith prepare and duly
file with the Commission an appropriate supplement or amendment thereto. Except
as required by the Exchange Act or the Exchange Act Rules and Regulations, the
Company shall not file any document under the Exchange Act before the
termination of the Prospectus Delivery Period if such document would be deemed
to be incorporated by reference into the Prospectus to which the Representatives
reasonably object.
(g) Prior to any public offering of the Shares by the
Underwriters, the Company will cooperate with the Representatives 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 Representatives may reasonably request; provided, that in no event shall the
Company be obligated to qualify to do business in any jurisdiction where it is
not now so qualified or to take any action which would subject it to general
service of process in any jurisdiction where it is not now so subject.
(h) During the period of five years commencing on the
Closing Date, the Company will furnish to the Representatives 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 Representatives and each other Underwriter who may so request a copy of each
annual or other report it shall be required to file with the Commission.
(i) The Company will make generally available to its
security holders as soon as practicable, but not later than ninety (90) days
after the close of the period covered thereby, an earnings statement (in form
complying with the provisions of Section 11(a) of the Act and Rule 158 of the
Rules and Regulations) covering a twelve-month period beginning not later than
the first day of the Company's fiscal quarter next following the "effective
date" (as defined in said Rule 158) of the Registration Statement.
(j) The Company will apply the net proceeds from the
offering and sale of the Shares in the manner set forth in the Prospectus under
"Use of Proceeds."
(k) The Company will not at any time, directly or
indirectly, take any action intended, or which might reasonably be expected, to
cause or result in, or which will constitute, stabilization of the price of the
shares of Preferred Stock to facilitate the sale or resale of any of the Shares.
5. Expenses.
<PAGE> 13
13
(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 Representatives, all costs and expenses incidental
to the performance of the obligations of the Company under this Agreement,
including, but not limited to, costs and expenses of or relating to (i) the
preparation, printing and filing by the Company of the Registration Statement
and exhibits thereto, each Preliminary Prospectus prior to or during the period
specified in the first sentence of Section 4(f) but not exceeding nine (9)
months after the Effective Date, the Prospectus and any amendment or supplement
to the Registration Statement or the Prospectus, (ii) the preparation and
delivery of certificates representing the Shares, (iii) furnishing (including
costs of shipping and mailing) such copies of the Registration Statement, the
Prospectus and any Preliminary Prospectus, and all amendments and supplements
thereto, as may be requested for use in connection with the offering and sale of
the Shares by the Underwriters or by dealers to whom Shares may be sold, (iv)
the listing of the Shares on the Nasdaq, (v) any filings required to be made by
the Underwriters with the NASD, (vi) the registration or qualification of the
Shares for offer and sale under the securities or blue sky laws of such
jurisdictions designated pursuant to Section 4(g) and the preparation and
printing of preliminary, supplemental and final blue sky memoranda, (vii)
counsel and accountants to the Company, and (viii) the transfer agent for the
Shares.
(b) If the transactions contemplated by this Agreement
are not consummated or if this Agreement is terminated by the Company pursuant
to any of the provisions hereof, the Company will reimburse the Representatives
for all of their accountable out-of-pocket fees and expenses (including the
fees, disbursements and other charges of their counsel) incurred by them in
connection herewith.
6. Conditions of the Obligations of the Underwriters. The
obligations of each Underwriter hereunder are subject to the following
conditions:
(a) All filings required under Rule 424 and 430A of the
Rules and Regulations to be made by the Company prior to the Closing shall have
been made by the Company.
(b) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall be pending or threatened by the Commission, (ii) no order
suspending the effectiveness of the Registration Statement or the qualification
or registration of the Shares under the securities or blue sky laws of any
jurisdiction shall be in effect, and no proceeding for such purpose shall be
pending before or threatened or contemplated by the Commission or the
authorities of any such jurisdiction, (iii) any request for additional
information on the part of the staff of the Commission or any such authorities
shall have been complied with to the satisfaction of the staff of the Commission
or such authorities, and (iv) after the date hereof no amendment or supplement
to the Registration Statement or the Prospectus shall have been filed unless a
copy thereof was first submitted to the Representatives and the Representatives
did not object thereto in good faith, and the Representatives shall have
received certificates, dated the Closing Date and the Option Closing Date and
signed by the Chief Executive
<PAGE> 14
14
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 Representatives shall have received an opinion,
dated the Closing Date and the Option Closing Date, from Pietrantoni Mendez &
Alvarez, LLP, Puerto Rico counsel for the Company to the following effect:
(i) The Company has been duly organized and validly
existing as a corporation under the laws of the Commonwealth of Puerto
Rico and is in good standing with the Commonwealth of Puerto Rico. Each
of Doral Mortgage Corporation ("Doral Mortgage"), Doral Securities,
Inc. ("Doral Securities"), Doral FSB, Centro Hipotecario, Inc. ("Centro
Hipotecario"), Doral Money, Inc. ("Doral Money"), Doral Properties,
Inc. ("Doral Properties"), SANA Investment Mortgage Bankers, Inc.
("SANA"), Doral International, Inc. ("Doral International") and Doral
Bank, each a Subsidiary, is a corporation duly organized, validly
existing and in good standing under the laws of its respective
jurisdiction of incorporation. Each of the Company, Doral Mortgage,
Doral Securities, Doral FSB, Centro Hipotecario, Doral Money, Doral
Properties, SANA, Doral International and Doral Bank is duly qualified
and in good standing as a foreign corporation in each jurisdiction in
which the
<PAGE> 15
15
character or location of its properties (owned, leased or licensed) or
the nature or conduct of its business or use of its property and assets
makes such qualification necessary, except where the failure to so
qualify would not have a material adverse effect on the financial
condition, or the earnings or business affairs of the Company and its
Subsidiaries taken as a whole;
(ii) The Company has an authorized capitalization as set
forth in the Prospectus; the Company has duly authorized the issuance
and sale of the Shares to be sold by it hereunder; such Shares, when
issued by the Company and paid for in accordance with the terms hereof,
will be validly issued, fully paid and nonassessable and will conform
in all material respects to the description thereof contained in the
Prospectus and will not be subject to any preemptive, subscription or
other similar rights; the Shares have been duly authorized for listing
on the Nasdaq, subject only to official notice of issuance; and no
holders of securities of the Company are entitled to have such
securities registered under the Registration Statement, except for
holders who have waived any such registration rights;
(iii) The Registration Statement is effective under the
Act; any required filing of the Prospectus Supplement pursuant to Rule
424(b) has been made in the manner and within the time period required
by Rule 424(b); and to the best knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement or any
amendment thereto and no order directed at any document incorporated by
reference in the Registration Statement or of the Rule 462(b)
Registration Statement or any amendment thereto has been issued, and,
no proceedings for that purpose have been instituted or are pending or
are threatened or contemplated under the Act;
(iv) The Registration Statement and the Prospectus as of
its date, appeared on their face to be appropriately responsive, in all
material respects (other than the documents incorporated therein by
reference and not including the financial statements, schedules and
other financial data contained therein, as to which such counsel need
not express any opinion), with the requirements of the Act and the
related rules and regulations thereunder;
(v) The descriptions contained and summarized in the
Registration Statement, or incorporated therein by reference, and the
Prospectus are accurate and fairly represent in all material respects
the information required to be shown in the Registration Statement and
Prospectus by the Act and the Rules and Regulations; and the statements
set forth under the headings "Risk Factors - Payment of Dividends May
Be Restricted by Doral Financial's Contracts," "Description of Capital
Stock," and "Taxation" in the Prospectus, insofar as such statements
constitute a summary of the legal matters, documents or proceedings
referred to therein, provide an accurate summary of such legal matters,
documents and proceedings;
(vi) To the knowledge of such counsel, there are no
contracts or documents which are required by the Act to be described in
the Registration Statement or the Prospectus or to
<PAGE> 16
16
be filed as exhibits to the Registration Statement which are not filed
or incorporated therein by reference as required by the Act and the
Rules and Regulations;
(vii) To the knowledge of such counsel after reasonable
investigation, there is not pending or threatened against the Company
or any of the Subsidiaries any legal action or proceeding, suit,
arbitration, claim, or governmental or other proceeding (informal or
formal) or investigation before or by any Governmental Body, of a
character required to be disclosed in the Registration Statement or the
Prospectus which is not so disclosed therein or in the materials
incorporated by reference therein, and to the knowledge of such
counsel, no such proceedings have been threatened against the Company
or any of its Subsidiaries or any of their respective assets or
properties. To the knowledge of such counsel after reasonable
investigation, neither the Company nor any Subsidiary is in violation
of, or in default with respect to, any law, rule, or regulation, or any
order, judgment or decree, except as described in the Registration
Statement or Prospectus or in the materials incorporated by reference
therein, or such as in the aggregate do not now have and can reasonably
be expected in the future not to have a material adverse effect upon
the operations, business, properties, or assets of the Company and its
Subsidiaries taken as a whole; nor is the Company or any Subsidiary
presently required under any order, judgment or decree to take any
action in order to avoid any such violation or default;
(viii) The Company has full legal right, power, and
authority to enter into this Agreement and to consummate the
transactions provided for herein; 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 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, state, or
Commonwealth of Puerto Rico 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
<PAGE> 17
17
Governmental Body having such jurisdiction and of which such counsel
has knowledge; and no consent, approval, authorization or order of any
Governmental Body has been or is required for the Company's performance
of this Agreement or the consummation of the transactions contemplated
hereby, except such as have been obtained under the Act or may be
required under state or Commonwealth of Puerto Rico securities or blue
sky laws in connection with the purchase and distribution by the
Underwriters of the Shares;
(x) To such counsel's knowledge, the conduct of the
respective businesses of the Company and its Subsidiaries is not in
violation of any federal, state or local statute, administrative
regulation or other law, which violation is likely to have a material
adverse effect on the Company and its Subsidiaries taken as a whole;
and the Company and its Subsidiaries have obtained all material
licenses as are necessary or required for the conduct of their
businesses as presently conducted;
(xi) The Company is not required to be registered as an
investment company under the Investment Company Act;
(xii) To the knowledge of such counsel, the Company is not
in any breach or violation of any of the terms or provisions of, or in
default under (nor has an event occurred which with notice or lapse of
time or both would constitute a default or acceleration under), (A) the
terms of its Certificate of Incorporation or By-laws, in each case as
amended; (B) the terms of any contract or other agreement known to such
counsel after reasonable investigation to which the Company is a party
or by which the Company is or may be bound or to which any of its
properties or assets is or may be subject, which breach, violation or
default could have a material adverse effect on the Company and its
Subsidiaries taken as a whole; (C) any statute, rule or regulation of
any Governmental Body having jurisdiction over the Company or any of
its activities, assets or properties, which breach, violation or
default could have a material adverse effect on the Company and its
Subsidiaries taken as a whole; or (D) the terms of any judgment, decree
or order, known to such counsel after reasonable investigation, of any
arbitrator or Governmental Body having such jurisdiction, which breach,
violation or default could have a material adverse effect on the
Company and its Subsidiaries taken as a whole;
(xiii) The deposit accounts of Doral Bank 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
(xiv) To the knowledge of such counsel, none of the Company
or any of its Subsidiaries, or any of their respective directors or
officers is subject to any order or directive of, or party to any
agreement with, any regulatory agency having jurisdiction with respect
to the business or operations of the Company or any of its
Subsidiaries, except as disclosed
<PAGE> 18
18
in the Registration Statement or the Prospectus or in the materials
incorporated by reference therein.
In addition, such counsel shall state that in the course of the
preparation of the Prospectus, such counsel has participated in conferences with
officers and representatives of the Company and with the Accountants, at which
conferences such counsel made inquiries of such officers, representatives and
Accountants and discussed the contents of the Prospectus and, on the basis of
the foregoing nothing has come to such counsel's attention that causes such
counsel to believe that the Prospectus Supplement as of the date it became
effective and as of the Closing Date contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or that the
Prospectus as of the date thereof and as of the Closing Date, contained any
untrue statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading (it
being understood that such counsel need not express any opinion with respect to
the financial statements, schedules and other financial data included in the
Prospectus). Such counsel may state that they make no representation that they
have independently verified the accuracy or completeness of the statements
contained in the Registration Statement and Prospectus.
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 Representatives 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 Representatives shall have received an opinion, dated the
Closing Date and the Option Closing Date, from Fiddler Gonzalez & Rodriguez,
LLP, counsel to the Underwriters, which opinion shall be satisfactory in all
respects to the Representatives.
(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 Representatives a
letter, dated the date of its delivery (the "Original Letter"), addressed to the
Representatives and in form and substance satisfactory to the Representatives,
to the effect that:
(i) they are independent accountants within the meaning
of the Act and the applicable published rules and regulations
thereunder;
<PAGE> 19
19
(ii) in their opinion, the consolidated financial
statements of the Company and its Subsidiaries audited by them and
incorporated by reference in the Prospectus comply as to form in all
material respects with the applicable accounting requirements of the
Act, the Exchange Act and the published rules and regulations
thereunder with respect to registration statements on Form S-3;
(iii) on the basis of procedures (but not an audit in
accordance with generally accepted auditing standards) consisting of
(a) reading the minutes of meetings of the stockholders and the Board
of Directors of the Company and its Subsidiaries since December 31,
1999 as set forth in the minute books through a specified date not more
than five business days prior to the date of delivery of the Original
Letter; (b) performing the procedures specified by the American
Institute of Certified Public Accountants for a review of interim
financial information as described in SAS No. 71, "Interim Financial
Information," on the unaudited consolidated interim financial
statements of the Company and its Subsidiaries included in the
Prospectus and reading the unaudited interim financial data for the
period from the date of the latest balance sheet incorporated by
reference in the Prospectus to the date of the latest available interim
financial data; and (c) making inquiries of certain officials of the
Company who have responsibility for financial and accounting matters
regarding the specific items for which representations are requested
below; nothing has come to their attention (as of a date not more than
five business days prior to the date of the delivery of such letter) as
a result of the foregoing procedures that caused them to believe that:
(1) the unaudited consolidated interim financial statements, if any,
incorporated by reference in the Registration Statement and/or in the
Prospectus, do not comply as to form in all material respects with the
applicable accounting requirements of the Exchange Act and the
published rules and regulations thereunder; (2) any material
modifications should be made to the unaudited consolidated interim
financial statements, if any, incorporated by reference in the
Registration Statement and/or in the Prospectus, for them to be in
conformity with generally accepted accounting principles; (3) (i) at
the date of the latest available interim financial data and at a
specified date not more than five business days prior to the date of
delivery of the Original Letter there was any change in the capital
stock, deposits, federal funds purchased or securities sold under
agreements to repurchase or any decreases in the consolidated
stockholders' equity (only as to the latest interim financial data) of
the Company and its Subsidiaries as compared with amounts shown in the
December 31, 1999 balance sheet incorporated by reference in the
Prospectus and (ii) for the period from January 1, 2000, to the latest
interim financial data available which should be no later than forty
(40) days prior to the date of delivery of the Original Letter, there
were any decreases, as compared with the corresponding period in the
preceding year, in consolidated net interest income, other income,
income before taxes or in the total or per share amounts of net income,
except in all instances for changes or decreases which the Registration
Statement discloses have occurred or may occur, or they shall state any
specific changes or decreases; and
<PAGE> 20
20
(iv) the information set forth under the captions
"Prospectus Summary - Summary Financial and Other Data," "Prospectus
Summary - Consolidated Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends," "Recent Developments," "Capitalization,"
"Selected Financial Data," and "Description of Capital Stock," which is
expressed in dollars (or percentages derived from such dollar amounts)
and has been obtained from accounting records which are subject to the
internal controls of the Company's accounting system or which has been
derived directly from such accounting records and analysis or
computations, is in agreement with such records or computations made
therefrom.
At the Closing Date and, as to the Option Shares, the Option
Closing Date, the Accountants shall have furnished to the Representatives a
letter, dated the date of its delivery, which shall confirm, on the basis of a
review in accordance with the procedures set forth in the Original Letter, that
nothing has come to their attention during the period from the date of the
Original Letter referred to in the prior sentence to a date (specified in the
letter) not more than five business days prior to the Closing Date or the Option
Closing Date, as the case may be, which would require any change in the Original
Letter if it were required to be dated and delivered at the Closing Date or the
Option Closing Date, as the case may be.
In the event that the letters referred to above set forth any
such changes, decreases or increases, it shall be a further condition to the
obligations of the Underwriters that (A) such letters shall be accompanied by a
written explanation of the Company as to the significance thereof, unless the
Representatives deems such explanation unnecessary, and (B) such changes,
decreases or increases do not, in the sole judgment of the Representatives, make
it impractical or inadvisable to proceed with the purchase and delivery of the
Shares as contemplated by the Registration Statement and the Prospectus, as
amended as of the date hereof.
(i) At the Closing Date and, as to the Option Shares, the
Option Closing Date, there shall be furnished to the Representatives 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 Representatives, to the effect that to the best of
their knowledge:
(i) Each signer of such certificate has carefully
examined the Registration Statement and the Prospectus and (A) as of
the date of such certificate, (x) the Registration Statement does not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein not misleading and (y) the Prospectus does
not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading and (B) since the Effective Date no
event has occurred as a result of which it
<PAGE> 21
21
is necessary to amend or supplement the Prospectus in order to make the
statements therein not untrue or misleading in any material respect;
(ii) Each of the representations and warranties of the
Company contained in this Agreement were, when originally made, and
are, at the time such certificate is delivered, true and correct in all
respects; each of the covenants required herein to be performed by the
Company on or prior to the date of such certificate has been duly,
timely and fully performed and each condition herein required to be
complied with by the Company on or prior to the delivery of such
certificate has been duly, timely and fully complied with.
(iii) No stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereto and no
order directed at any document incorporated by reference in the
Registration Statement or any amendment thereto or the Prospectus has
been issued, and no proceedings for that purpose have been instituted
or threatened or, to the best of the Company's knowledge, are
contemplated by the Commission.
(j) The Shares shall be qualified for sale in such states and
possessions as the Representatives may reasonably request, each such
qualification shall be in effect and not subject to any stop order or other
proceeding on the Closing Date and the Option Closing Date.
(k) Prior to the Closing Date, the Shares shall have been accepted
for listing on the Nasdaq, subject only to official notice of issuance.
(l) The Company shall have furnished to the Representatives such
certificates, letters and other documents, in addition to those specifically
mentioned herein, as the Representatives 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
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
<PAGE> 22
22
Exchange Act, from and against any and all losses, claims, damages or
liabilities, joint or several (and actions in respect thereof), to which they,
or any of them, may become subject under the Act or other Federal, state or
Commonwealth of Puerto Rico statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement made by the Company in Section 3 of this Agreement,
(ii) any untrue statement or alleged untrue statement of any material fact
contained in (A) any Preliminary Prospectus, the Registration Statement or the
Prospectus or any amendment or supplement to the Registration Statement or the
Prospectus or (B) any application or other document, or any amendment or
supplement thereto, executed by the Company or based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify the Shares under the securities or blue sky laws thereof or filed with
the Commission or any securities association or securities exchange (each, an
"Application"), or (iii) the omission or alleged omission to state in any
Preliminary Prospectus, the Registration Statement or the Prospectus or any
amendment or supplement to the Registration Statement or the Prospectus or any
Application a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse, as incurred, each
Underwriter and each such other person for any legal or other expenses
reasonably incurred by such Underwriter or such other person in connection with
investigating defending or appearing as a third-party witness in connection with
any such loss, claim, damage, liability or action; provided, however, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability 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 Representatives on behalf of any Underwriter
expressly for inclusion therein; Provided, further, that such indemnity with
respect to any Preliminary Prospectus shall not inure to the benefit of any
Underwriter (or any such other person) from whom the person asserting any such
loss, claim, damage, liability or action purchased Shares which are the subject
thereof to the extent that any such loss, claim, damage or liability (i) results
from the fact that such Underwriter failed to send or give a copy of the
Prospectus (as amended or supplemented) to such person at or prior to the
confirmation of the sale of such Shares to such person in any case where such
delivery is required by the Act and (ii) arises out of or is based upon an
untrue statement or omission of a material fact contained in such Preliminary
Prospectus that was corrected in the Prospectus (or any amendment or supplement
thereto), unless such failure to deliver the Prospectus (as amended or
supplemented) was the result 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
<PAGE> 23
23
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, state or Commonwealth of Puerto
Rico statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus or any amendment or supplement to the Registration
Statement or the Prospectus or any Application, or material fact required to be
stated therein or (ii) the omission or the alleged omission to state in the
Registration Statement, any Preliminary Prospectus or the Prospectus or any
amendment or supplement to the Registration Statement or the Prospectus, or any
Application, a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through the
Representatives expressly for use therein; and, subject to the limitation set
forth immediately preceding this clause, will reimburse, as incurred, any legal
or other expenses reasonably incurred by the Company and any such director,
officer or controlling person in connection with investigating or defending any
such loss, claim, damage, liability or any action in respect thereof. The
Company acknowledges that, for all purposes under this Agreement, the statements
set forth under the heading "Underwriting" constitute the only information
relating to any Underwriter furnished in writing to the Company by the
Representatives 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 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,
<PAGE> 24
24
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 Representatives in the case of
paragraph (a) of this Section 7, representing the indemnified parties under
paragraph (a) who are parties to such action or actions), or (ii) the
indemnifying party has authorized in writing the employment of counsel for the
indemnified party at the expense of the indemnifying party. After such notice
from the indemnifying party to such indemnified party, the indemnifying party
will not be liable for the costs and expenses of any settlement of such action
effected by such indemnified party without the written consent of the
indemnifying party, unless such indemnified party waived its rights under this
Section 7 in which case the indemnified party may effect such a settlement
without such consent.
(d) If the indemnification provided for in the foregoing
paragraphs of this Section 7 is unavailable or insufficient to hold harmless an
indemnified party under paragraph (a) or (b) above in respect of any losses,
claims, damages or liabilities (or actions in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) (i) in such proportion as is
appropriate to reflect the relative benefits received by the indemnifying party
or parties, on the one hand, and the indemnified party, on the other, from the
offering of the Shares or (ii) if, but only if, the allocation provided by the
foregoing clause (i) is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the indemnifying party or parties on
the one hand, and the indemnified party, on the other, in connection with the
statements or 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
<PAGE> 25
25
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 Representatives 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 (d). Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made under this Section 7(d), notify any such party or
parties from whom contribution may be sought, but the omission so to notify will
not relieve the party or parties from whom contribution may be sought from any
other obligation(s) it or they may have hereunder or otherwise than under this
paragraph (d) or to the extent that such party or parties were not adversely
affected by such omission. The contribution agreement set forth above shall be
in addition to any liabilities which any indemnifying party may otherwise have.
No party will be liable for contribution with respect to any action or claim
settled without its written consent (which consent will not be unreasonably
withheld).
(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
<PAGE> 26
26
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 Representatives, 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
Representatives, (i) trading in the Common Stock or the Preferred Stock or
securities generally shall have been suspended by the Commission or by the
Nasdaq, (ii) minimum or maximum prices shall have been established for the
Common Stock or the Preferred Stock or securities generally on either the Nasdaq
or the NYSE, or additional material governmental restrictions, not in force on
the date of this Agreement, shall have been imposed upon trading in securities
generally by any of such market or exchange or by order of the Commission or any
court or other Governmental Authority, (iii) a general banking moratorium shall
have been declared by the United States, New York State, or Commonwealth of
Puerto Rico authorities, or (iv) any material adverse change in the financial or
securities markets in the United States or any outbreak or material escalation
of hostilities or declaration by the United States of a national emergency or
war or other calamity or crisis shall have occurred, the effect of any of which
is such as to make it, in the sole judgment of the Representatives,
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
Representatives for the purchase of such Shares by other persons (who may
include one or more of the nondefaulting Underwriters, including the
Representatives), but if no such arrangements are made by the Closing Date or
the related Option Closing Date, as the case may be, the other Underwriters
shall be obligated severally in proportion to their respective commitments
hereunder to purchase the Firm Shares or Option Shares that such defaulting
Underwriter or Underwriters agreed but failed to purchase. If one or more
Underwriters so default with respect to an aggregate number of Shares that is
more than ten percent of the aggregate number of Firm Shares or Option Shares,
as the case may be, to be purchased by all of the Underwriters at such time
hereunder, and if arrangements satisfactory to the Representatives 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
Representatives) of the Shares with respect to which such default occurs, this
Agreement will terminate without liability on the part of any nondefaulting
Underwriter and the Company other than as provided in Section 10 hereof. In the
event of any default by one or more Underwriters as described in this
<PAGE> 27
27
Section 9, the Representatives shall have the right to postpone the Closing Date
or the Option Closing Date, as the case may be, established as provided in
Section 9 hereof for not more than seven business days in order that any
necessary changes may be made in the arrangements or documents for the purchase
and delivery of the Firm Shares or Option Shares, as the case may be. As used in
this Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 9. Nothing herein shall relieve any defaulting
Underwriter from liability for its default.
10. Survival. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Company, its
officers, and the several Underwriters set forth in this Agreement or made by or
on behalf of them, respectively, pursuant to this Agreement shall remain in full
force and effect, regardless of (i) any investigation made by or on behalf of
the Company, any of its officers or directors, any Underwriter or any
controlling person referred to in Section 7 hereof and (ii) delivery of and
payment for the Shares. The respective agreements, covenants, indemnities and
other statements set forth in Sections 6 and 8 hereof shall remain in full force
and effect, regardless of any termination or cancellation of this Agreement.
11. Notices. Notice given pursuant to any of the provisions of
this Agreement shall be in writing and, unless otherwise specified, shall be
mailed or delivered (a) if to the Company, at the office of the Company, 1159
Franklin D. Roosevelt Avenue, San Juan, Puerto Rico 00920, Attention: Mario S.
Levis, Executive Vice President and Treasurer, or (b) if to the Underwriters, to
the office of the Representatives, American International Plaza, PH, Hato Rey,
Puerto Rico 00918, Attention: Jose G. Arias, First Vice President. 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.
<PAGE> 28
28
13. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF PUERTO RICO,
WITHOUT GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS.
14. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the agreement
among the Company and the several Underwriters.
Very truly yours,
DORAL FINANCIAL CORPORATION
By: /s/ Mario S. Levis
-------------------------------
Name: Mario S. Levis
Title: Executive Vice President
Confirmed as of the date first above mentioned:
<PAGE> 29
29
PAINEWEBBER INCORPORATED OF
PUERTO RICO
By: /s/ Jose Arias
------------------------------------
Name: Jose Arias
Title: First Vice President
POPULAR SECURITIES, INC.
By: /s/ Carlos J. Ortiz
------------------------------------
Name: Carlos J. Ortiz
Title: Executive Vice President
Acting on its behalf and as lead underwriter
of the several Underwriters named in
Schedule 1 hereof.
<PAGE> 30
30
SCHEDULE 1
UNDERWRITERS
<TABLE>
<CAPTION>
Aggregate Number
of Shares to be
Purchased
----------------
<S> <C> <C>
PaineWebber Incorporated of Puerto Rico ............... 1,044,000
Popular Securities, Inc. .............................. 348,000
Doral Securities, Inc. ................................ 174,000
Santander Securities Corporation of Puerto Rico ....... 87,000
Salomon Smith Barney Inc. ............................. 87,000
Total: 1,740,000
=========
</TABLE>
<PAGE> 31
31
EXHIBIT A
LIST OF SUBSIDIARIES
1. Doral Mortgage Corporation
2. Doral Securities, Inc.
3. Centro Hipotecario, Inc.
4. Doral Bank
5. Doral Bank, FSB
6. Doral Money, Inc.
7. SANA Investment Mortgage Bankers, Inc.
8. Doral Properties, Inc.
9. Doral International, Inc.
