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EXHIBIT 1.1
DORAL FINANCIAL CORPORATION
MEDIUM-TERM NOTES
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
DISTRIBUTION AGREEMENT
May [ ], 1999
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
World Financial Center
North Tower, 10th Floor
New York, New York 10281-1310
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Sirs:
DORAL FINANCIAL CORPORATION, a bank holding company organized under the
laws of the Commonwealth of Puerto Rico (the "Company"), confirms its agreement
with ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated and
Bear, ▇▇▇▇▇▇▇ & Co. Inc. (each, an "Agent," and collectively, the "Agents") with
respect to the issue and sale by the Company of its Senior Medium-Term Notes Due
Nine Months or More From Date of Issue (the "Senior Notes") and its Subordinated
Medium-Term Notes Due Nine Months or More From Date of Issue (the "Subordinated
Notes," and together with the Senior Notes, the "Notes"). The Senior Notes are
to be issued pursuant to a Senior Indenture, dated as of ___________, 1999, as
amended or modified from time to time (the "Senior Indenture"), between the
Company and Bankers Trust Company, as trustee (the "Senior Trustee"); the
Subordinated Notes are to be issued pursuant to a Subordinated Indenture, dated
as of ___________, 1999, as amended or modified from time to time (the
"Subordinated Indenture," and together with the Senior Indenture, the
"Indentures"), between the Company and Bankers Trust Company, as trustee (the
"Subordinated Trustee," and together with the Senior Trustee, the "Trustees").
As of the date hereof, the Company has authorized the issuance and sale of up to
U.S. $250,000,000 aggregate initial offering price of Notes (or its equivalent,
based upon the exchange rate on the applicable trade date in such foreign or
composite currencies as the Company shall designate at the time of issuance) to
or through the Agents pursuant to the terms of this Agreement. It is understood,
however, that the Company may from time to time authorize the issuance of
additional Notes and that such additional Notes may be sold to or through the
Agents pursuant to the terms of this Agreement, all as though the issuance of
such Notes were authorized as of the date hereof.
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This Agreement provides both for the sale of Notes by the Company to
one or more Agents as principal for resale to investors and other purchasers and
for the sale of Notes by the Company directly to investors (as may from time to
time be agreed to by the Company and the applicable Agent), in which case the
applicable Agent will act as an agent of the Company in soliciting offers for
the purchase of Notes.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-76259) [and
pre-effective amendment[s] no[s]. ___ thereto] for the registration of preferred
stock and debt securities, including the Notes, under the Securities Act of
1933, as amended (the "1933 Act"), and the offering thereof from time to time in
accordance with Rule 415 of the rules and regulations of the Commission under
the 1933 Act (the "1933 Act Regulations"). Such registration statement has been
declared effective by the Commission and the Indentures each have been duly
qualified under the Trust Indenture Act of 1939, as amended (the "1939 Act"),
and the Company has filed such post-effective amendments thereto as may be
required prior to its acceptance of any offer for the purchase of Notes and each
such post-effective amendment has been declared effective by the Commission.
Such registration statement (as so amended, if applicable) is referred to herein
as the "Registration Statement"; and the final prospectus and all applicable
amendments or supplements thereto (including the final prospectus supplement and
pricing supplement relating to the offering of Notes), in the form first
furnished to the applicable Agent(s) for use in confirming sales of Notes, are
collectively referred to herein as the "Prospectus"; provided, however, that all
references to the "Registration Statement" and the "Prospectus" shall also be
deemed to include all documents incorporated therein by reference pursuant to
the Securities Exchange Act of 1934, as amended (the "1934 Act"), prior to any
acceptance by the Company of an offer for the purchase of Notes; provided,
further, that if the Company files a registration statement with the Commission
pursuant to Rule 462(b) of the 1933 Act Regulations (the "Rule 462(b)
Registration Statement"), then, after such filing, all references to the
"Registration Statement" shall also be deemed to include the Rule 462(b)
Registration Statement. A "preliminary prospectus" shall be deemed to refer to
any prospectus used before the Registration Statement became effective and any
prospectus furnished by the Company after the Registration Statement became
effective and before any acceptance by the Company of an offer for the purchase
of Notes which omitted information to be included upon pricing in a form of
prospectus filed with the Commission pursuant to Rule 424(b) of the 1933 Act
Regulations. For purposes of this Agreement, all references to the Registration
Statement, Prospectus or preliminary prospectus or to 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
("▇▇▇▇▇").
All references in this Agreement to financial statements and schedules
and other information which is "disclosed," "contained," "included" or "stated"
(or other references of like import) in the Registration Statement, Prospectus
or preliminary prospectus shall be deemed to include all such financial
statements and schedules and other information which is incorporated by
reference in the Registration Statement, Prospectus or preliminary prospectus,
as the case may be; and all references in this Agreement to amendments or
supplements to the Registration Statement, Prospectus or preliminary prospectus
shall be deemed to include the filing of any document under the 1934 Act which
is incorporated by reference in the Registration Statement, Prospectus or
preliminary prospectus, as the case may be.
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SECTION 1. Appointment as Agent.
(a) Appointment. Subject to the terms and conditions stated herein and
subject to the reservation by the Company of the right to sell Notes directly on
its own behalf, the Company hereby appoints each Agent as its agent for purposes
of soliciting purchases of Notes from the Company by others. The Company agrees
that, during the period that the Agents are acting as agents hereunder, it will
not appoint any other agents to act on its behalf, or to assist it, in the
placement of the Notes.
(b) Sale of Notes. The Company shall not sell or approve the
solicitation of offers for the purchase of Notes in excess of the amount which
shall be authorized by the Company from time to time or in excess of the
aggregate initial offering price of Notes registered pursuant to the
Registration Statement. The Agents shall have no responsibility for maintaining
records with respect to the aggregate initial offering price of Notes sold, or
of otherwise monitoring the availability of Notes for sale, under the
Registration Statement.
(c) Purchases as Principal. The Agents shall not have any obligation to
purchase Notes from the Company as principal. However, absent an agreement
between an Agent and the Company that such Agent shall be acting solely as an
agent for the Company, such Agent shall be deemed to be acting as principal in
connection with any offering of Notes by the Company through such Agent.
Accordingly, the Agents, individually or in a syndicate, may agree from time to
time to purchase Notes from the Company as principal for resale to investors and
other purchasers determined by such Agents. Any purchase of Notes from the
Company by an Agent as principal shall be made in accordance with Section 3(a)
hereof.
(d) Solicitations as Agent. If agreed upon between an Agent and the
Company, such Agent, acting solely as an agent for the Company and not as
principal, will solicit offers for the purchase of Notes. Such Agent will
communicate to the Company, orally, each offer for the purchase of Notes
solicited by it on an agency basis other than those offers rejected by such
Agent. Such Agent shall have the right, in its discretion reasonably exercised,
to reject any offer for the purchase of Notes, in whole or in part, and any such
rejection shall not be deemed a breach of its agreement contained herein. The
Company may accept or reject any offer for the purchase of Notes, in whole or in
part and any such rejection shall not be deemed a rejection of its agreement
contained herein. Such Agent shall make reasonable efforts to assist the Company
in obtaining performance by each purchaser whose offer for the purchase of Notes
has been solicited by it on an agency basis and accepted by the Company. Such
Agent shall not have any liability to the Company in the event that any such
purchase is not consummated for any reason. If the Company shall default on its
obligation to deliver Notes to a purchaser whose offer has been solicited by
such Agent on an agency basis and accepted by the Company, the Company shall (i)
hold such Agent harmless against any loss, claim or damage arising from or as a
result of such default by the Company and (ii) pay to such Agent any commission
to which it would otherwise be entitled absent such default.
(e) Reliance. The Company and the Agents agree that any Notes purchased
from the Company by one or more Agents as principal shall be purchased, and any
Notes the placement of which an Agent arranges as an agent of the Company shall
be placed by such Agent, in reliance
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on the representations, warranties, covenants and agreements of the Company
contained herein and on the terms and conditions and in the manner provided
herein.
SECTION 2. Representations and Warranties.
(a) The Company represents and warrants to each Agent as of the date
hereof, as of the date of each acceptance by the Company of an offer for the
purchase of Notes (whether to such Agent as principal or through such Agent as
agent), as of the date of each delivery of Notes (whether to such Agent as
principal or through such Agent as agent) (the date of each such delivery to
such Agent as principal is referred to herein as a "Settlement Date"), and as of
any time that the Registration Statement or the Prospectus shall be amended or
supplemented (each of the times referenced above is referred to herein as a
"Representation Date"), as follows:
(i) Due Incorporation, Good Standing and Due Qualification of
the Company. The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the
Commonwealth of Puerto Rico with corporate power and authority to own,
lease and operate its properties and to conduct its business as
described in the Prospectus and to enter into this Agreement and
consummate the transactions contemplated in the Prospectus; the Company
is duly qualified as a foreign corporation to transact business and is
in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure to so qualify or be
in good standing would not result in a material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs
or business prospects of the Company and its subsidiaries considered as
one enterprise (a "Material Adverse Effect"); the Company is duly
registered as a bank holding company under the Bank Holding Company Act
of 1956, as amended (the "Bank Holding Company Act"); all of the issued
and outstanding shares of capital stock of the Company have been duly
authorized and are validly issued, fully paid and non-assessable; and
none of the outstanding shares of capital stock of the Company were
issued in violation of preemptive or other similar rights of any
securityholder of the Company.
(ii) Due Incorporation, Good Standing and Due Qualification of
Subsidiaries. Each subsidiary of the Company (each, a "Subsidiary") has
been duly organized and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has
corporate power and authority to own, lease and operate its properties
and conduct its business as described in the Prospectus and is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify or be in
good standing would not result in a Material Adverse Effect; except as
stated in the Prospectus, all of the issued and outstanding shares of
capital stock of each Subsidiary has been duly authorized and is
validly issued, fully paid and non-assessable and is owned by the
Company, directly or through subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or
equity; and none of the outstanding shares of capital stock of any
Subsidiary was issued in violation of preemptive or other similar
rights of any securityholder of such Subsidiary.
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(iii) Registration Statement and Prospectus. The Company meets
the requirements for use of Form S-3 under the 1933 Act; the
Registration Statement (or any Rule 462(b) Registration Statement) has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement (or any Rule 462(b)
Registration Statement) has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Company, are contemplated by the Commission, and
any request on the part of the Commission for additional information
has been complied with; the Indentures have each been duly qualified
under the 1939 Act; at the respective times that the Registration
Statement (including any Rule 462(b) Registration Statement) and any
post-effective amendment thereto (including the filing of the Company's
most recent Annual Report on Form 10-K with the Commission (the "Annual
Report on Form 10-K")) became effective and at each Representation
Date, the Registration Statement (including any Rule 462(b)
Registration Statement) and any amendments thereto complied and will
comply in all material respects with the requirements of the 1933 Act
and the 1933 Act Regulations and the 1939 Act and the rules and
regulations of the Commission under the 1939 Act (the "1939 Act
Regulations") and did not and 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 and prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied
when so filed in all material respects with the 1933 Act Regulations;
each preliminary prospectus and the Prospectus delivered to the
applicable Agent(s) for use in connection with the offering of Notes
are identical to any electronically transmitted copies thereof filed
with the Commission pursuant to ▇▇▇▇▇, except to the extent permitted
by Regulation S-T; and at the date hereof, at the date of the
Prospectus and each amendment or supplement thereto and at each
Representation Date, neither the Prospectus nor any amendment or
supplement thereto included or will include an untrue statement of a
material fact or omitted or will 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; provided,
however, that the representations and warranties in this subsection
shall not apply to statements in or omissions from the Registration
Statement or the Prospectus made in reliance upon and in conformity
with information furnished to the Company in writing by the Agents
expressly for use in the Registration Statement or the Prospectus.
(iv) Incorporated Documents. The documents incorporated or
deemed to be incorporated by reference in the Prospectus, at the time
they were or hereafter are filed with the Commission, complied and will
comply in all material respects with the requirements of the 1934 Act
and the rules and regulations of the Commission under the 1934 Act (the
"1934 Act Regulations") and, when read together with the other
information in the Prospectus, at the date hereof, at the date of the
Prospectus and at each Representation Date, did not and will not
include an 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.
(v) Independent Accountants. The accountants who certified
the financial statements and any supporting schedules thereto included
in the Registration Statement
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and the Prospectus are independent public accountants as required by
the 1933 Act and the 1933 Act Regulations.
(vi) Financial Statements. The consolidated financial
statements of the Company included in the Registration Statement and
the Prospectus, together with the related schedules and notes, as well
as those financial statements, schedules and notes of any other entity
included in the Registration Statement and the Prospectus, present
fairly the consolidated financial position of the Company and its
subsidiaries, or such other entity, as the case may be, at the dates
indicated and the consolidated statement of operations, stockholders'
equity and cash flows of the Company and its subsidiaries, or such
other entity, as the case may be, for the periods specified; such
financial statements have been prepared in conformity with generally
accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved; the supporting schedules, if any,
included in the Registration Statement and the Prospectus present
fairly in accordance with GAAP the information required to be stated
therein; the selected financial data and the summary financial
information included in the Registration Statement and the Prospectus
present fairly the information shown therein and have been compiled on
a basis consistent with that of the audited financial statements
included in the Registration Statement and the Prospectus; and any pro
forma consolidated financial statements of the Company and its
subsidiaries and the related notes thereto included in the Registration
Statement and the Prospectus present fairly the information shown
therein, have been prepared in accordance with the Commission's rules
and guidelines with respect to pro forma financial statements and have
been properly compiled on the bases described therein, and the
assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the
transactions and circumstances referred to therein.
(vii) No Material Changes. Since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, (1) there has been no
event or occurrence that would result in a Material Adverse Effect and
(2) there have been no transactions entered into by the Company or any
of its subsidiaries, other than those in the ordinary course of
business, which are material with respect to the Company and its
subsidiaries considered as one enterprise.
(viii) Authorization, etc., of this Agreement, the Indentures
and the Notes. This Agreement has been duly authorized, executed and
delivered by the Company; each Indenture has been duly authorized,
executed and delivered by the Company and will be a valid and legally
binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as enforcement thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally or by
general equitable principles (regardless of whether enforcement is
considered in a proceeding in equity or at law), and except further as
enforcement thereof may be limited by requirements that a claim with
respect to any debt securities issued under the applicable Indenture
that are payable in a foreign or composite currency (or a foreign or
composite currency judgment in respect of such claim) be converted into
U.S. dollars at a rate of exchange prevailing on a date
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determined pursuant to applicable law or by governmental authority to
limit, delay or prohibit the making of payments outside the United
States; the Notes have been duly authorized by the Company for offer,
sale, issuance and delivery pursuant to this Agreement and, when
issued, authenticated and delivered in the manner provided for in the
applicable Indenture and delivered against payment of the consideration
therefor, will constitute valid and legally binding obligations of the
Company, enforceable against the Company in accordance with their
terms, except as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
the enforcement of creditors' rights generally or by general equitable
principles (regardless of whether enforcement is considered in a
proceeding in equity or at law), and except further as enforcement
thereof may be limited by requirements that a claim with respect to any
Notes payable in a foreign or composite currency (or a foreign or
composite currency judgment in respect of such claim) be converted into
U.S. dollars at a rate or exchange prevailing on a date determined
pursuant to applicable law or by governmental authority to limit, delay
or prohibit the making of payments outside the United States; the Notes
will be substantially in a form previously certified to the Agents and
contemplated by the applicable Indenture; and each holder of Notes will
be entitled to the benefits of the applicable Indenture.
(ix) Descriptions of the Indentures and the Notes. Each of the
Indentures and the Notes conform and will conform in all material
respects to the statements relating thereto contained in the Prospectus
and are substantially in the form filed or incorporated by reference,
as the case may be, as an exhibit to the Registration Statement.
(x) Accuracy of Exhibits. There are no contracts or documents
which are required to be described in the Registration Statement, the
Prospectus or the documents incorporated by reference therein or to be
filed as exhibits thereto which have not been so described and filed as
required.
(xi) Absence of Defaults and Conflicts. Neither the Company
nor any of its subsidiaries is in violation of the provisions of its
charter or by-laws or in default in the performance or observance of
any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, deed of trust, loan or credit agreement,
note, lease or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which it or any of them may be
bound or to which any of the property or assets of the Company or any
of its subsidiaries is subject (collectively, "Agreements and
Instruments"), except for such defaults that would not result in a
Material Adverse Effect; and the execution, delivery and performance of
this Agreement, the Indentures, the Notes and any other agreement or
instrument entered into or issued or to be entered into or issued by
the Company in connection with the transactions contemplated by the
Prospectus, the consummation of the transactions contemplated in the
Prospectus (including the issuance and sale of the Notes and the use of
proceeds therefrom as described in the Prospectus) and the compliance
by the Company with its obligations hereunder and under each of the
Indentures, the Notes and such other agreements or instruments have
been duly authorized by all necessary corporate action and do not and
will not, whether with or without the giving of notice or the passage
of time or both, conflict with or constitute a breach of, or default or
event or condition which gives the
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holder of any note, debenture or other evidence of indebtedness (or any
person acting on such holder's behalf) the right to require the
repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any of its subsidiaries (a "Repayment
Event") under, or result in the creation or imposition of any lien,
charge or encumbrance upon any assets, properties or operations of the
Company or any of its subsidiaries pursuant to, any Agreements and
Instruments, nor will such action result in any violation of the
provisions of the charter or by-laws of the Company or any of its
subsidiaries or any applicable law, statute, rule, regulation,
judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over
the Company or any of its subsidiaries or any of their assets,
properties or operations.
(xii) Absence of Labor Disputes. No labor dispute with the
employees of the Company or any of its subsidiaries exists or, to the
knowledge of the Company, is imminent, and the Company is not aware of
any existing or imminent labor disturbance by the employees of any of
its or any subsidiary's principal suppliers, manufacturers, customers
or contractors, which, in either case, may reasonably be expected to
result in a Material Adverse Effect.
(xiii) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or to
the knowledge of the Company threatened, against or affecting the
Company or any of its subsidiaries which is required to be disclosed in
the Registration Statement and the Prospectus (other than as stated
therein), or which may reasonably be expected to result in a Material
Adverse Effect, or which may reasonably be expected to materially and
adversely affect the assets, properties or operations thereof, the
performance by the Company of its obligations under this Agreement, the
Indentures and the Notes or the consummation of the transactions
contemplated in the Prospectus; and the aggregate of all pending legal
or governmental proceedings to which the Company or any of its
subsidiaries is a party or of which any of their respective assets,
properties or operations is the subject which are not described in the
Registration Statement and the Prospectus, including ordinary routine
litigation incidental to the business, may not reasonably be expected
to result in a Material Adverse Effect.
(xiv) Possession of Licenses and Permits. The Company and its
subsidiaries possess such permits, licenses, approvals, consents and
other authorizations (collectively, "Governmental Licenses") issued by
the appropriate federal, state, local or foreign regulatory agencies or
bodies necessary to conduct the business now operated by them; the
Company and its subsidiaries are in compliance with the terms and
conditions of all such Governmental Licenses, except where the failure
so to comply would not, singly or in the aggregate, result in a
Material Adverse Effect; all of the Governmental Licenses are valid and
in full force and effect, except where the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to
be in full force and effect would not result in a Material Adverse
Effect; and neither the Company nor any of its subsidiaries has
received any notice of proceedings relating to the revocation or
modification of any such Governmental Licenses which, singly or in the
aggregate, if the
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subject of an unfavorable decision, ruling or finding, would result in
a Material Adverse Effect.
(xv) Title to Property. The Company and its subsidiaries
have good and marketable title to all real property owned by the
Company and its subsidiaries and good title to all other properties
owned by them, in each case, free and clear of all mortgages, pledges,
liens, security interests, claims, restrictions or encumbrances of any
kind, except (A) as otherwise stated in the Registration Statement and
the Prospectus or (B) those which do not, singly or in the aggregate,
materially affect the value of such property and do not interfere with
the use made and proposed to be made of such property by the Company or
any of its subsidiaries; and all of the leases and subleases material
to the business of the Company and its subsidiaries considered as one
enterprise, and under which the Company or any of its subsidiaries
holds properties described in the Prospectus, are in full force and
effect, and neither the Company nor any of its subsidiaries has
received any notice of any material claim of any sort that has been
asserted by anyone adverse to the rights of the Company or any of its
subsidiaries under any of such leases or subleases, or affecting or
questioning the rights of the Company or such subsidiary of the
continued possession of the leased or subleased premises under any such
lease or sublease.
(xvi) No Filings, Regulatory Approvals, etc. No filing with,
or approval, authorization, consent, license, registration,
qualification, order or decree of, any court or governmental authority
or agency, domestic or foreign, is necessary or required for the due
authorization, execution and delivery by the Company of this Agreement,
the Indentures and the Notes or for the performance by the Company of
the transactions contemplated in this Agreement, the Indentures or the
Prospectus, except such as have been previously made, obtained or
rendered, as applicable.
(xvii) Investment Company Act. The Company is not, and upon
the issuance and sale of the Notes as herein contemplated and the
application of the net proceeds therefrom as described in the
Prospectus will not be, an "investment company" within the meaning of
the Investment Company Act of 1940, as amended (the "1940 Act").
(xviii) Commodity Exchange Act. The Notes, upon issuance, will
be excluded or exempted under, or beyond the purview of, the Commodity
Exchange Act, as amended (the "Commodity Exchange Act"), and the rules
and regulations of the Commodity Futures Trading Commission under the
Commodity Exchange Act (the "Commodity Exchange Act Regulations").
(xix) Ratings. The Medium-Term Note Program under which the
Notes are issued (the "Program"), as well as the Notes, are rated Baa3
by ▇▇▇▇▇'▇ Investors Service, Inc., BBB- by Standard & Poor's Ratings
Services and BBB by ▇▇▇▇ & ▇▇▇▇▇▇ Credit Rating Co., or such other
rating as to which the Company shall have most recently notified the
Agents pursuant to Section 4(a) hereof.
(xx) Taxes. No taxes, withholdings or other charges are
required to be withheld or deducted under the laws of the Commonwealth
of Puerto Rico or any
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political subdivision thereof from any payment made by the Company on
the Notes and the Notes are not subject to any registration tax, stamp
duty or similar tax or duty imposed by the Commonwealth of Puerto Rico
or any political subdivision thereof.
(b) Additional Certifications. Any certificate signed by any officer of
the Company or any of its subsidiaries and delivered to one or more Agents or to
counsel for the Agents in connection with an offering of Notes to one or more
Agents as principal or through an Agent as agent shall be deemed a
representation and warranty by the Company to such Agent or Agents as to the
matters covered thereby on the date of such certificate and, unless subsequently
amended or supplemented, at each Representation Date subsequent thereto.
SECTION 3. Purchases as Principal; Solicitations as Agent.
(a) Purchases as Principal. Notes purchased from the Company by the
Agents, individually or in a syndicate, as principal shall be made in accordance
with terms agreed upon between such Agent or Agents and the Company (which
terms, unless otherwise agreed, shall, to the extent applicable, include those
terms specified in Exhibit A hereto and shall be agreed upon orally, with
written confirmation prepared by such Agent or Agents and mailed to the
Company). An Agent's commitment to purchase Notes as principal shall be deemed
to have been made on the basis of the representations and warranties of the
Company herein contained and shall be subject to the terms and conditions herein
set forth. Unless the context otherwise requires, references herein to "this
Agreement" shall include the applicable agreement of one or more Agents to
purchase Notes from the Company as principal. Each purchase of Notes, unless
otherwise agreed, shall be at a discount from the principal amount of each such
Note equivalent to the applicable commission set forth in Schedule A hereto. The
Agents may engage the services of any broker or dealer in connection with the
resale of the Notes purchased by them as principal and may allow all or any
portion of the discount received from the Company in connection with such
purchases to such brokers or dealers. At the time of each purchase of Notes from
the Company by one or more Agents as principal, such Agent or Agents shall
specify the requirements for the officers' certificate, opinion of counsel and
comfort letter pursuant to Sections 7(b), 7(c) and 7(d) hereof.
If the Company and two or more Agents enter into an agreement pursuant
to which such Agents agree to purchase Notes from the Company as principal and
one or more of such Agents shall fail at the Settlement Date to purchase the
Notes which it or they are obligated to purchase (the "Defaulted Notes"), then
the nondefaulting Agents shall have the right, within 24 hours thereafter, to
make arrangements for one of them or one or more other Agents or underwriters to
purchase all, but not less than all, of the Defaulted Notes in such amounts as
may be agreed upon and upon the terms herein set forth; provided, however, that
if such arrangements shall not have been completed within such 24-hour period,
then:
(i) if the aggregate principal amount of Defaulted Notes
does not exceed 10% of the aggregate principal amount of Notes to be so
purchased by all of such Agents on the Settlement Date, the
nondefaulting Agents shall be obligated, severally and not jointly, to
purchase the full amount thereof in the proportions that their
respective initial underwriting obligations bear to the underwriting
obligations of all nondefaulting Agents; or
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(ii) if the aggregate principal amount of Defaulted Notes
exceeds 10% of the aggregate principal amount of Notes to be so
purchased by all of such Agents on the Settlement Date, such agreement
shall terminate without liability on the part of any nondefaulting
Agent.
No action taken pursuant to this paragraph shall relieve any defaulting Agent
from liability in respect of its default. In the event of any such default which
does not result in a termination of such agreement, either the nondefaulting
Agents or the Company shall have the right to postpone the Settlement Date for a
period not exceeding seven days in order to effect any required changes in the
Registration Statement or the Prospectus or in any other documents or
arrangements.
(b) Solicitations as Agent. On the basis of the representations and
warranties herein contained, but subject to the terms and conditions herein set
forth, when agreed by the Company and an Agent, such Agent, as an agent of the
Company, will use its reasonable efforts to solicit offers for the purchase of
Notes upon the terms set forth in the Prospectus. The Agents are not authorized
to appoint sub-agents with respect to Notes sold through them as agent. All
Notes sold through an Agent as agent will be sold at 100% of their principal
amount unless otherwise agreed upon between the Company and such Agent.
The Company reserves the right, in its sole discretion, to suspend
solicitation of offers for the purchase of Notes through an Agent, as an agent
of the Company, commencing at any time for any period of time or permanently. As
soon as practicable after receipt of instructions from the Company, such Agent
will suspend solicitation of offers for the purchase of Notes from the Company
until such time as the Company has advised such Agent that such solicitation may
be resumed.
The Company agrees to pay each Agent a commission, in the form of a
discount, equal to the applicable percentage of the principal amount of each
Note sold by the Company as a result of a solicitation made by such Agent, as an
agent of the Company, as set forth in Schedule A hereto.
(c) Administrative Procedures. The purchase price, interest rate or
formula, maturity date and other terms of the Notes specified in Exhibit A
hereto (as applicable) shall be agreed upon between the Company and the
applicable Agent(s) and specified in a pricing supplement to the Prospectus
(each, a "Pricing Supplement") to be prepared by the Company in connection with
each sale of Notes. Except as otherwise specified in the applicable Pricing
Supplement, the Notes will be issued in denominations of U.S. $1,000 or any
larger amount that is an integral multiple of U.S. $1,000. Administrative
procedures with respect to the issuance and sale of the Notes (the "Procedures")
shall be agreed upon from time to time among the Company, the Agents and each of
the Trustees. The Agents and the Company agree to perform, and the Company
agrees to cause each of the Trustees to agree to perform, their respective
duties and obligations specifically provided to be performed by them in the
Procedures.
SECTION 4. Covenants of the Company.
The Company covenants and agrees with each Agent as follows:
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(a) Notice of Certain Events. The Company will notify the Agents
immediately, and confirm such notice in writing, of (i) the effectiveness of any
post-effective amendment to the Registration Statement or the filing of any
amendment or supplement to the Prospectus (other than any amendment or
supplement thereto providing solely for the determination of the variable terms
of the Notes or relating solely to the offering of securities other than the
Notes), (ii) the receipt of any comments from the Commission, (iii) any request
by the Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectus or for additional information, (iv)
the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement, or of any order preventing or suspending the use of
any preliminary prospectus, or of the initiation of any proceedings for that
purpose or (v) any change in the rating assigned by any nationally recognized
statistical rating organization to the Program or any debt securities (including
the Notes) of the Company, or the public announcement by any nationally
recognized statistical rating organization that it has under surveillance or
review, with possible negative implications, its rating of the Program or any
such debt securities, or the withdrawal by any nationally recognized statistical
rating organization of its rating of the Program or any such debt securities.
The Company will make every reasonable effort to prevent the issuance of any
stop order and, if any stop order is issued, to obtain the lifting thereof at
the earliest possible moment.
(b) Filing or Use of Amendments. The Company will give the Agents
advance notice of its intention to file or prepare any additional registration
statement with respect to the registration of additional Notes, any amendment to
the Registration Statement (including any filing under Rule 462(b) of the 1933
Act Regulations) or any amendment or supplement to the prospectus included in
the Registration Statement at the time it became effective or to the Prospectus
(other than an amendment or supplement thereto providing solely for the
determination of the variable terms of the Notes or relating solely to the
offering of securities other than the Notes), whether pursuant to the 1933 Act,
the 1934 Act or otherwise, will furnish to the Agents copies of any such
document a reasonable amount of time prior to such proposed filing or use, as
the case may be, and will not file any such document to which the Agents or
counsel for the Agents shall object.
(c) Delivery of the Registration Statement. The Company has furnished
to each Agent and to counsel for the Agents, without charge, signed and
conformed copies of the Registration Statement as originally filed and of each
amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated or deemed to be incorporated by
reference therein) and signed and conformed copies of all consents and
certificates of experts. The Registration Statement and each amendment thereto
furnished to the Agents will be identical to any electronically transmitted
copies thereof filed with the Commission pursuant to ▇▇▇▇▇, except to the extent
permitted by Regulation S-T.
(d) Delivery of the Prospectus. The Company will deliver to each Agent,
without charge, as many copies of each preliminary prospectus as such Agent may
reasonably request, and the Company hereby consents to the use of such copies
for purposes permitted by the 1933 Act. The Company will furnish to each Agent,
without charge, such number of copies of the Prospectus (as amended or
supplemented) as such Agent may reasonably request. The Prospectus and any
amendments or supplements thereto furnished to the Agents will be identical
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to any electronically transmitted copies thereof filed with the Commission
pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(e) Preparation of Pricing Supplements. The Company will prepare, with
respect to any Notes to be sold to or through one or more Agents pursuant to
this Agreement, a Pricing Supplement with respect to such Notes in a form
previously approved by the Agents. The Company will deliver such Pricing
Supplement no later than 11:00 a.m., New York City time, on the business day
following the date of the Company's acceptance of the offer for the purchase of
such Notes and will file such Pricing Supplement pursuant to Rule 424(b)(3)
under the 1933 Act not later than the close of business of the Commission on the
fifth business day after the date on which such Pricing Supplement is first
used.
(f) Revisions of Prospectus -- Material Changes. Except as otherwise
provided in subsection (m) of this Section 4, if at any time during the term of
this Agreement any event shall occur or condition shall exist as a result of
which it is necessary, in the opinion of counsel for the Agents or counsel for
the Company, to amend the Registration Statement in order that the Registration
Statement 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 or to amend or supplement the Prospectus in
order that the Prospectus will not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein not misleading in the light of the circumstances existing at the time
the Prospectus is delivered to a purchaser, or if it shall be necessary, in the
opinion of either such counsel, to amend the Registration Statement or amend or
supplement the Prospectus in order to comply with the requirements of the 1933
Act or the 1933 Act Regulations, the Company shall give immediate notice,
confirmed in writing, to the Agents to cease the solicitation of offers for the
purchase of Notes in their capacity as agents and to cease sales of any Notes
they may then own as principal, and the Company will promptly prepare and file
with the Commission, subject to Section 4(b) hereof, such amendment or
supplement as may be necessary to correct such statement or omission or to make
the Registration Statement and Prospectus comply with such requirements, and the
Company will furnish to the Agents, without charge, such number of copies of
such amendment or supplement as the Agents may reasonably request. In addition,
the Company will comply with the 1933 Act, the 1933 Act Regulations, the 1934
Act and the 1934 Act Regulations so as to permit the completion of the
distribution of each offering of Notes.
(g) Prospectus Revisions -- Periodic Financial Information. Except as
otherwise provided in subsection (m) of this Section 4, on or prior to the date
on which there shall be released to the general public interim financial
statement information related to the Company with respect to each of the first
three quarters of any fiscal year or preliminary financial statement information
with respect to any fiscal year, the Company shall furnish such information to
the Agents, confirmed in writing, and shall cause the Prospectus to be amended
or supplemented to include financial information with respect thereto and
corresponding information for the comparable period of the preceding fiscal
year, as well as such other information and explanations as shall be necessary
for an understanding thereof or as shall be required by the 1933 Act or the 1933
Act Regulations.
(h) Prospectus Revisions -- Audited Financial Information. Except as
otherwise provided in subsection (m) of this Section 4, on or prior to the date
on which there shall be
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released to the general public financial information included in or derived from
the audited consolidated financial statements of the Company for the preceding
fiscal year, the Company shall furnish such information to the Agents, confirmed
in writing, and shall cause the Prospectus to be amended or supplemented to
include such audited consolidated financial statements and the report or
reports, and consent or consents to such inclusion, of the independent
accountants with respect thereto, as well as such other information and
explanations as shall be necessary for an understanding of such consolidated
financial statements or as shall be required by the 1933 Act or the 1933 Act
Regulations.
(i) Earnings Statements. The Company will timely file such reports
pursuant to the 1934 Act as are necessary in order to make generally available
to its securityholders as soon as practicable an earnings statement for the
purposes of, and to provide the benefits contemplated by, the last paragraph of
Section 11(a) of the 1933 Act.
(j) Reporting Requirements. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will
file all documents required to be filed with the Commission pursuant to the 1934
Act within the time periods prescribed by the 1934 Act and the 1934 Act
Regulations.
(k) Restriction on Offers and Sales of Securities. Unless otherwise
agreed upon between one or more Agents acting as principal and the Company,
between the date of the agreement by such Agent(s) to purchase the related Notes
from the Company and the Settlement Date with respect thereto, the Company will
not, without the prior written consent of such Agent(s), issue, sell, offer or
contract to sell, grant any option for the sale of, or otherwise dispose of, any
debt securities of the Company (other than the Notes that are to be sold
pursuant to such agreement, deposits or commercial paper in the ordinary course
of business).
(l) Use of Proceeds. The Company will use the net proceeds received by
it from the issuance and sale of the Notes in the manner specified in the
Prospectus.
(m) Suspension of Certain Obligations. The Company shall not be
required to comply with the provisions of subsections (f), (g) or (h) of this
Section 4 during any period from the time (i) the Agents shall have suspended
solicitation of offers for the purchase of Notes in their capacity as agents
pursuant to a request from the Company and (ii) no Agent shall then hold any
Notes purchased from the Company as principal, as the case may be, until the
time the Company shall determine that solicitation of offers for the purchase of
Notes should be resumed or an Agent shall subsequently purchase Notes from the
Company as principal.
SECTION 5. Conditions of Agents' Obligations.
The obligations of one or more Agents to purchase Notes from the
Company as principal and to solicit offers for the purchase of Notes as an agent
of the Company, and the obligations of any purchasers of Notes sold through an
Agent as an agent of the Company, will be subject to the accuracy of the
representations and warranties on the part of the Company herein contained or
contained in any certificate of an officer of the Company or any of its
subsidiaries delivered pursuant to the provisions hereof, to the performance and
observance by the Company of its covenants and other obligations hereunder, and
to the following additional conditions precedent:
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(a) Effectiveness of Registration Statement. The Registration Statement
(including any Rule 462(b) Registration Statement) has become effective under
the 1933 Act and no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act and no proceedings for that
purpose shall have been instituted or shall be pending or threatened by the
Commission, and any request on the part of the Commission for additional
information shall have been complied with to the reasonable satisfaction of
counsel to the Agents.
(b) Legal Opinions. On the date hereof, the Agents shall have received
the following legal opinions, dated as of the date hereof and in form and
substance satisfactory to the Agents:
(i) Opinion of Counsel for the Company. The favorable opinion
of ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel for the Company, to the
effect set forth in Exhibit B hereto and to such further effect as the
Agents may reasonably request.
(ii) Opinion of Counsel for the Agents. The favorable opinion
of ▇▇▇▇▇ & Wood LLP, counsel for the Agents, with respect to the
matters set forth in paragraphs 1, 2, 7, 8, 9, 16, 17, and 19 and the
penultimate paragraph of Exhibit B hereto.
(c) Officer's Certificate. On the date hereof, there shall not have
been, since the respective dates as of which information is given in the
Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and the Agents shall have received a
certificate of the President or a Vice President of the Company and of the chief
financial officer or chief accounting officer of the Company, dated as of the
date hereof, to the effect that (i) there has been no such material adverse
change, (ii) the representations and warranties of the Company herein contained
are true and correct with the same force and effect as though expressly made at
and as of the date of such certificate, (iii) the Company has complied with all
agreements and satisfied all conditions on its part to be performed or satisfied
at or prior to the date of such certificate, and (iv) no stop order suspending
the effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted, are pending or, to the best
of such officer's knowledge, are threatened by the Commission.
(d) Comfort Letter of PricewaterhouseCoopers LLP. On the date hereof,
the Agents shall have received a letter from PricewaterhouseCoopers LLP, dated
as of the date hereof and in form and substance satisfactory to the Agents, to
the effect set forth in Exhibit C hereto.
(e) Additional Documents. On the date hereof, counsel to the Agents
shall have been furnished with such documents and opinions as such counsel may
require for the purpose of enabling such counsel to pass upon the issuance and
sale of Notes as herein contemplated and related proceedings, or in order to
evidence the accuracy of any of the representations and warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of Notes as herein
contemplated shall be satisfactory in form and substance to the Agents and to
counsel to the Agents.
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If any condition specified in this Section 5 shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the applicable Agent or Agents by notice to the Company at any time and any
such termination shall be without liability of any party to any other party
except as provided in Section 10 hereof and except that Sections 8, 9, 11, 14
and 15 hereof shall survive any such termination and remain in full force and
effect.
SECTION 6. Delivery of and Payment for Notes Sold through an Agent as
Agent.
Delivery of Notes sold through an Agent as an agent of the Company
shall be made by the Company to such Agent for the account of any purchaser only
against payment therefor in immediately available funds. In the event that a
purchaser shall fail either to accept delivery of or to make payment for a Note
on the date fixed for settlement, such Agent shall promptly notify the Company
and deliver such Note to the Company and, if such Agent has theretofore paid the
Company for such Note, the Company will promptly return such funds to such
Agent. If such failure has occurred for any reason other than default by such
Agent in the performance of its obligations hereunder, the Company will
reimburse such Agent on an equitable basis for its loss of the use of the funds
for the period such funds were credited to the Company's account.
SECTION 7. Additional Covenants of the Company.
The Company further covenants and agrees with each Agent as follows:
(a) Reaffirmation of Representations and Warranties. Each acceptance by
the Company of an offer for the purchase of Notes (whether to one or more Agents
as principal or through an Agent as agent), and each delivery of Notes (whether
to one or more Agents as principal or through an Agent as agent), shall be
deemed to be an affirmation that the representations and warranties of the
Company herein contained and contained in any certificate theretofore delivered
to the Agents pursuant hereto are true and correct at the time of such
acceptance or sale, as the case may be, and an undertaking that such
representations and warranties will be true and correct at the time of delivery
to such Agent(s) or to the purchaser or its agent, as the case may be, of the
Notes relating to such acceptance or sale, as the case may be, as though made at
and as of each such time (it being understood that such representations and
warranties shall relate to the Registration Statement and Prospectus as amended
and supplemented to each such time).
(b) Subsequent Delivery of Certificates. Each time that (i) the
Registration Statement or the Prospectus shall be amended or supplemented (other
than by an amendment or supplement providing solely for the determination of the
variable terms of the Notes or relating solely to the offering of securities
other than the Notes), (ii) (if required in connection with the purchase of
Notes from the Company by one or more Agents as principal) the Company sells
Notes to one or more Agents as principal or (iii) the Company sells Notes in a
form not previously certified to the Agents by the Company, the Company shall
furnish or cause to be furnished to the Agent(s), forthwith a certificate dated
the date of filing with the Commission or the date of effectiveness of such
amendment or supplement, as applicable, or the date of such sale, as the case
may be, in form satisfactory to the Agent(s) to the effect that the statements
contained in the certificate referred to in Section 5(c) hereof which were last
furnished to the Agents are true and correct at the time of the filing or
effectiveness of such amendment or supplement, as applicable, or the
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time of such sale, as the case may be, as though made at and as of such time
(except that such statements shall be deemed to relate to the Registration
Statement and the Prospectus as amended and supplemented to such time) or, in
lieu of such certificate, a certificate of the same tenor as the certificate
referred to in Section 5(c) hereof, modified as necessary to relate to the
Registration Statement and the Prospectus as amended and supplemented to the
time of delivery of such certificate (it being understood that, in the case of
clause (ii) above, any such certificate shall also include a certification that
there has been no material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise since the date of the
agreement by such Agent(s) to purchase Notes from the Company as principal).
(c) Subsequent Delivery of Legal Opinions. Each time that (i) the
Registration Statement or the Prospectus shall be amended or supplemented (other
than by an amendment or supplement providing solely for the determination of the
variable terms of the Notes or relating solely to the offering of securities
other than the Notes), (ii) (if required in connection with the purchase of
Notes from the Company by one or more Agents as principal) the Company sells
Notes to one or more Agents as principal or (iii) the Company sells Notes in a
form not previously certified to the Agents by the Company, the Company shall
furnish or cause to be furnished forthwith to the Agent(s) and to counsel to the
Agents the written opinion of ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel to the
Company, or other counsel satisfactory to the Agent(s), dated the date of filing
with the Commission or the date of effectiveness of such amendment or
supplement, as applicable, or the date of such sale, as the case may be, in form
and substance satisfactory to the Agent(s), of the same tenor as the opinion
referred to in Section 5(b)(1) hereof, but modified, as necessary, to relate to
the Registration Statement and the Prospectus as amended and supplemented to the
time of delivery of such opinion or, in lieu of such opinion, counsel last
furnishing such opinion to the Agents shall furnish the Agent(s) with a letter
substantially to the effect that the Agent(s) may rely on such last opinion to
the same extent as though it was dated the date of such letter authorizing
reliance (except that statements in such last opinion shall be deemed to relate
to the Registration Statement and the Prospectus as amended and supplemented to
the time of delivery of such letter authorizing reliance).
(d) Subsequent Delivery of Comfort Letters. Each time that (i) the
Registration Statement or the Prospectus shall be amended or supplemented to
include additional financial information (other than by an amendment or
supplement relating solely to the issuance and/or offering of securities other
than the Notes) or (ii) (if required in connection with the purchase of Notes
from the Company by one or more Agents as principal) the Company sells Notes to
one or more Agents as principal, the Company shall cause PricewaterhouseCoopers
LLP forthwith to furnish to the Agent(s) a letter, dated the date of filing with
the Commission or the date of effectiveness of such amendment or supplement, as
applicable, or the date of such sale, as the case may be, in form satisfactory
to the Agent(s), of the same tenor as the letter referred to in Section 5(d)
hereof but modified to relate to the Registration Statement and Prospectus as
amended and supplemented to the date of such letter.
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SECTION 8. Indemnification.
(a) Indemnification of the Agents. The Company agrees to
indemnify and hold harmless each Agent and each person, if any, who controls
such Agent within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of an untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), or the omission or
alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading, or
arising out of an untrue statement or alleged untrue statement of a
material fact included in any preliminary prospectus or the Prospectus
(or any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, provided
that (subject to Section 8(d) hereof) any such settlement is effected
with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the reasonable fees and disbursements of counsel chosen by
such Agent), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under subparagraph (i) or (ii) above;
provided, however, that this indemnity does not apply to any loss, liability,
claim, damage or expense to the extent arising out of an untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with written information furnished to the Company by the Agents
expressly for use in the Registration Statement (or any amendment thereto) or
any preliminary prospectus or the Prospectus (or any amendment or supplement
thereto); provided further, that as to any preliminary prospectus, this
indemnity agreement shall not inure to the benefit of any Agent or any person
controlling that Agent on account of any loss, claim, damage, liability or
action arising from the sale of Notes to any person by that Agent if (i) that
Agent failed to send or give a copy of the Prospectus (excluding the documents
incorporated by reference therein), as the same may be amended or supplemented,
to that person within the time required by the 1933 Act and (ii) the Company
delivered to that Agent a sufficient number of copies of the Prospectus pursuant
to Section 3(d) hereof, and the untrue statement or alleged untrue statement of
a material fact or omission or alleged omission to state a material fact in such
preliminary prospectus was corrected in the Prospectus.
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(b) Indemnification of Company, Directors and Officers. Each Agent
severally agrees to indemnify and hold harmless the Company, its directors, each
of its officers who signed the Registration Statement and each person, if any,
who controls the Company within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in Section 8(a) hereof, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto) or any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to the Company by the Agents expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary prospectus
or the Prospectus (or any amendment or supplement thereto).
(c) Actions Against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 8(a) hereof,
counsel to the indemnified parties shall be selected by the applicable Agent(s)
and, in the case of parties indemnified pursuant to Section 8(b) hereof, counsel
to the indemnified shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances.
No indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 8 or 9 hereof (whether or not the indemnified parties are
actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for reasonable fees and expenses of counsel, such indemnifying
party agrees that it shall be liable for any settlement of the nature
contemplated by Section 8(a)(ii) effected without its written consent if (i)
such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into
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and (iii) such indemnifying party shall not have reimbursed such indemnified
party in accordance with such request prior to the date of such settlement.
SECTION 9. Contribution.
If the indemnification provided for in Section 8 hereof is for any
reason unavailable to or insufficient to hold harmless an indemnified party in
respect of any losses, liabilities, claims, damages or expenses referred to
therein, then each indemnifying party shall contribute to the aggregate amount
of such losses, liabilities, claims, damages and expenses incurred by such
indemnified party, as incurred, (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company, on the one hand, and the
applicable Agent(s), on the other hand, from the offering of the Notes that were
the subject of the claim for indemnification or (ii) if the allocation provided
by 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 Company, on the one hand, and the
applicable Agent(s), on the other hand, in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company, on the one hand, and the
applicable Agent(s), on the other hand, in connection with the offering of the
Notes that were the subject of the claim for indemnification shall be deemed to
be in the same respective proportions as the total net proceeds from the
offering of such Notes (before deducting expenses) received by the Company and
the total discount or commission received by each applicable Agent, as the case
may be, bears to the aggregate initial offering price of such Notes.
The relative fault of the Company, on the one hand, and the applicable
Agent(s), on the other hand, shall be determined by reference to, among other
things, whether any untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the applicable Agent(s) and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Agents agree that it would not be just and
equitable if contribution pursuant to this Section 9 were determined by pro rata
allocation (even if the applicable Agent(s) were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 9. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 9 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any applicable untrue or alleged
untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 9, (i) no Agent shall be
required to contribute any amount in excess of the amount by which the total
discount or commission received by such Agent in connection with the offering of
the Notes that were the subject of the claim for indemnification exceeds the
amount of any damages which such Agent has otherwise
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been required to pay by reason of any applicable untrue or alleged untrue
statement or omission or alleged omission and (ii) no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. In addition, in connection with an offering
of Notes purchased from the Company by two or more Agents as principal, the
respective obligations of such Agents to contribute pursuant to this Section 9
are several, and not joint, in proportion to the aggregate principal amount of
Notes that each such Agent has agreed to purchase from the Company.
For purposes of this Section 9, each person, if any, who controls an
Agent within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934
Act shall have the same rights to contribution as such Agent, and each director
of the Company, each officer of the Company and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act shall have the same rights to contribution as the Company.
SECTION 10. Payment of Expenses.
The Company will pay all expenses incident to the performance of its
obligations under this Agreement, including:
(a) The preparation, filing, printing and delivery of the Registration
Statement as originally filed and all amendments thereto and any preliminary
prospectus, the Prospectus and any amendments or supplements thereto;
(b) The preparation, printing and delivery of this Agreement and the
Indentures;
(c) The preparation, issuance and delivery of the Notes, including any
fees and expenses relating to the eligibility and issuance of Notes in
book-entry form and the cost of obtaining CUSIP or other identification numbers
for the Notes;
(d) The fees and disbursements of the Company's accountants, counsel
and other advisors or agents (including any calculation agent or exchange rate
agent) and of each of the Trustees and their respective counsel;
(e) The reasonable fees and disbursements of counsel to the Agents
incurred in connection with the establishment of the Program and incurred from
time to time in connection with the transactions contemplated hereby;
(f) The fees charged by nationally recognized statistical rating
organizations for the rating of the Program and the Notes;
(g) The fees and expenses incurred in connection with any listing of
Notes on a securities exchange;
(h) The filing fees incident to, and the reasonable fees and
disbursements of counsel to the Agents in connection with, the review, if any,
by the National Association of Securities Dealers, Inc. (the "NASD"); and
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(i) Any advertising and other out-of-pocket expenses of the Agents
incurred with the approval of the Company.
SECTION 11. Representations, Warranties and Agreements to Survive
Delivery.
All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
subsidiaries submitted pursuant hereto or thereto shall remain operative and in
full force and effect, regardless of any investigation made by or on behalf of
the Agents or any controlling person of an Agent, or by or on behalf of the
Company, and shall survive each delivery of and payment for the Notes.
SECTION 12. Termination.
(a) Termination of this Agreement. This Agreement (excluding any
agreement by one or more Agents to purchase Notes from the Company as principal)
may be terminated for any reason, at any time by either the Company or an Agent,
as to itself, upon the giving of 15 days' prior written notice of such
termination to the other party hereto.
(b) Termination of Agreement to Purchase Notes as Principal. The
applicable Agent(s) may terminate any agreement by such Agent(s) to purchase
Notes from the Company as principal, immediately upon notice to the Company, at
any time prior to the Settlement Date relating thereto, if (i) there has been,
since the date of such agreement or since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, or (ii)
there has occurred any material adverse change in the financial markets in the
United States or, if such Notes are denominated and/or payable in, or indexed
to, one or more foreign or composite currencies, in the international financial
markets, or any outbreak of hostilities or escalation thereof or other calamity
or crisis or any change or development or event involving a prospective change
in national or international political, financial or economic conditions, in
each case the effect of which is such as to make it, in the judgment of such
Agent(s), impracticable to market such Notes or enforce contracts for the sale
of such Notes, or (iii) trading in any securities of the Company has been
suspended or materially limited by the Commission or a national securities
exchange, or if trading generally on the New York Stock Exchange or the American
Stock Exchange or in the Nasdaq National Market has been suspended or materially
limited, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices have been required, by either of said exchanges or by such
system or by order of the Commission, the NASD or any other governmental
authority, or (iv) a banking moratorium has been declared by either Federal,
Puerto Rico or New York authorities or by the relevant authorities in the
country or countries of origin of any foreign or composite currency in which
such Notes are denominated and/or payable, or (v) the rating assigned by any
nationally recognized statistical rating organization to the Program or any debt
securities (including the Notes) of the Company as of the date of such agreement
shall have been lowered or withdrawn since that date or if any such rating
organization shall have publicly announced that it has under surveillance or
review its rating of the Program or any such debt securities, or (vi) there
shall have come to the attention of such Agent(s) any facts that would cause
such Agent(s) to believe that the Prospectus, at the time it was required to be
delivered to a purchaser of such Notes,
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included an untrue statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances existing at the time of such delivery, not misleading.
(c) General. In the event of any such termination, neither party will
have any liability to the other party hereto, except that (i) the Agents shall
be entitled to any commissions earned in accordance with the third paragraph of
Section 3(b) hereof, (ii) if at the time of termination (a) any Agent shall own
any Notes purchased by it from the Company as principal or (b) an offer to
purchase any of the Notes has been accepted by the Company but the time of
delivery to the purchaser or his agent of such Notes relating thereto has not
occurred, the covenants set forth in Sections 4 and 7 hereof shall remain in
effect until such Notes are so resold or delivered, as the case may be, and
(iii) the covenant set forth in Section 4(i) hereof, the provisions of Section
10 hereof, the indemnity and contribution agreements set forth in Sections 8 and
9 hereof, and the provisions of Sections 11, 14 and 15 hereof shall remain in
effect.
SECTION 13. Notices.
Unless otherwise provided herein, all notices required under the terms
and provisions hereof shall be in writing, either delivered by hand, by mail or
by telex, telecopier or telegram, and any such notice shall be effective when
received at the address specified below.
If to the Company:
Doral Financial Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇,
Executive Vice President & Treasurer
Telecopy No.: (787) 749-7____
If to the Agents:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co.
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
World Financial Center
North Tower - 10th Floor
New York, New York 10281-1310
Attention: MTN Product Management
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Medium-Term Note Desk
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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or at such other address as such party may designate from time to time by notice
duly given in accordance with the terms of this Section 13.
SECTION 14. Parties.
This Agreement shall inure to the benefit of and be binding upon the
Agents and the Company and their respective successors. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
person, firm or corporation, other than the parties hereto and their respective
successors and the controlling persons, officers and directors referred to in
Sections 8 and 9 hereof and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the parties
hereto and their respective successors, and said controlling persons, officers
and directors and their heirs and legal representatives, and for the benefit of
no other person, firm or corporation. No purchaser of Notes shall be deemed to
be a successor by reason merely of such purchase.
SECTION 15. GOVERNING LAW; FORUM.
THIS AGREEMENT AND ALL THE RIGHTS AND OBLIGATIONS OF THE PARTIES SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES. ANY SUIT, ACTION OR
PROCEEDING BROUGHT BY THE COMPANY AGAINST ANY AGENT IN CONNECTION WITH OR
ARISING UNDER THIS AGREEMENT SHALL BE BROUGHT SOLELY IN THE STATE OR FEDERAL
COURT OF APPROPRIATE JURISDICTION LOCATED IN THE BOROUGH OF MANHATTAN, THE CITY
OF NEW YORK.
SECTION 16. Effect of Headings.
The Article and Section headings herein are for convenience only and
shall not affect the construction hereof.
SECTION 17. Counterparts.
This Agreement may be executed in one or more counterparts and, if
executed in more than one counterpart, the executed counterparts hereof shall
constitute a single instrument.
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If the foregoing is in accordance with the Agents' understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this Distribution Agreement, along with all counterparts, will become a binding
agreement among the Agents and the Company in accordance with its terms.
Very truly yours,
DORAL FINANCIAL CORPORATION
By:
--------------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ LYNCH, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By:
-----------------------------------------
Authorized Signatory
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
[By: ]
----------------------------
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SCHEDULE A
As compensation for the services of the Agents hereunder, the Company
shall pay the applicable Agent, on a discount basis, a commission for the sale
of each Note equal to the principal amount of such Note multiplied by the
appropriate percentage set forth below:
PERCENT OF
MATURITY RANGES PRINCIPAL AMOUNT
--------------- ----------------
From 9 months to less than 1 year...................................... .125%
From 1 year to less than 18 months..................................... .150
From 18 months to less than 2 years.................................... .200
From 2 years to less than 3 years...................................... .250
From 3 years to less than 4 years...................................... .350
From 4 years to less than 5 years...................................... .450
From 5 years to less than 6 years...................................... .500
From 6 years to less than 7 years...................................... .550
From 7 years to less than 10 years..................................... .600
From 10 years to less than 15 years.................................... .625
From 15 years to less than 20 years.................................... .700
From 20 years to 30 years.............................................. .750
Greater than 30 years.................................................. *
-------------
* As agreed to by the Company and the applicable Agent at the time of sale.
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EXHIBIT A
PRICING TERMS
Principal Amount:
(or principal amount of foreign or composite currency)
Interest Rate or Formula:
If Fixed Rate Note,
Interest Rate:
Interest Payment Dates:
If Floating Rate Note,
Interest Rate Basis(es):
If LIBOR,
LIBOR Reuters Page:
LIBOR Telerate Page:
Designated LIBOR Currency:
If CMT Rate,
Designated CMT Telerate Page:
If Telerate Page 7052:
Weekly Average
Monthly Average
Designated CMT Maturity Index:
Index Maturity:
Spread and/or Spread Multiplier, if any:
Initial Interest Rate, if any:
Initial Interest Reset Date:
Interest Reset Dates:
Interest Payment Dates:
Maximum Interest Rate, if any:
Minimum Interest Rate, if any:
Fixed Rate Commencement Date, if any:
Fixed Interest Rate, if any:
Day Count Convention:
Calculation Agent:
Redemption Provisions:
Initial Redemption Date:
Initial Redemption Percentage:
Annual Redemption Percentage Reduction, if any:
Repayment Provisions:
Optional Repayment Date(s):
Original Issue Date:
Stated Maturity Date:
Specified Currency:
Exchange Rate Agent:
Authorized Denomination:
Purchase Price: ___%, plus accrued interest, if any, from ___________
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Price to Public: ___%, plus accrued interest, if any, from __________
Issue Price:
Settlement Date and Time:
Additional/Other Terms:
Also, in connection with the purchase of Notes from the Company by one or more
Agents as principal, agreement as to whether the following will be required:
Officers' Certificate pursuant to Section 7(b) of the Distribution
Agreement.
Legal Opinion pursuant to Section 7(c) of the Distribution Agreement.
Comfort Letter pursuant to Section 7(d) of the Distribution Agreement.
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EXHIBIT B
FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO SECTION 5(b)(1)
(1) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the Commonwealth of Puerto
Rico.
(2) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into the Distribution Agreement and consummate the
transactions contemplated in the Prospectus.
(3) The Company is duly registered as a bank holding company under the
Bank Holding Company Act and is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to so qualify or
be in good standing would not result in a Material Adverse Effect.
(4) All of the issued and outstanding shares of capital stock of the
Company have been duly authorized and are validly issued, fully paid and
non-assessable; and none of the outstanding shares of capital stock of the
Company were issued in violation of preemptive or other similar rights of any
securityholder of the Company.
(5) Each Subsidiary has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus and is
duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of business,
except where the failure to so qualify or be in good standing would not result
in a Material Adverse Effect; except as stated in the Prospectus, all of the
issued and outstanding shares of capital stock of each Subsidiary has been duly
authorized and are validly issued, fully paid and non-assessable and are owned
by the Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity; and none of the
outstanding shares of capital stock of any Subsidiary were issued in violation
of preemptive or other similar rights of any securityholder of such Subsidiary.
(6) The Distribution Agreement has been duly authorized, executed and
delivered by the Company.
(7) Each Indenture has been duly authorized, executed and delivered by
the Company and (assuming due authorization, execution and delivery thereof by
the applicable Trustee) constitutes a valid and legally binding agreement of the
Company, enforceable against the Company in accordance with its terms, except as
the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally or by general equitable principles (regardless of
whether enforcement is considered in a proceeding in equity or at law), and
except further as enforcement thereof may be limited by requirements that a
claim with respect to any debt
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securities issued under the applicable Indenture that are payable in a foreign
or composite currency (or a foreign or composite currency judgment in respect of
such claim) be converted into U.S. dollars at a rate of exchange prevailing on a
date determined pursuant to applicable law or by governmental authority to
limit, delay or prohibit the making of payments outside the United States.
(8) The Notes have been duly authorized by the Company for offer,
sale, issuance and delivery pursuant to the Distribution Agreement and, when
issued, authenticated and delivered in the manner provided for in the applicable
Indenture and delivered against payment of the consideration therefor, will
constitute valid and legally binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally or
by general equitable principles (regardless of whether enforcement is considered
in a proceeding in equity or at law), and except further as enforcement thereof
may be limited by requirements that a claim with respect to any Notes payable in
a foreign or composite currency (or a foreign or composite currency judgment in
respect of such claim) be converted into U.S. dollars at a rate of exchange
prevailing on a date determined pursuant to applicable law or by governmental
authority to limit, delay or prohibit the making of payments outside the United
States; and the Notes, in the forms certified on the date hereof, are in the
form contemplated by, and each registered holder thereof is entitled to the
benefits of, the applicable Indenture.
(9) The Indentures and the Notes, in the forms certified on the date
hereof, conform in all material respects to the statements relating thereto
contained in the Prospectus and are in substantially the form filed or
incorporated by reference, as the case may be, as an exhibit to the Registration
Statement.
(10) The information in the Prospectus under "Description of Debt
Securities," "Description of Notes," "Special Provisions Relating to Foreign
Currency Notes" and "Certain Federal Income Tax Considerations," or any caption
purporting to cover such matters, the information in the Annual Report on Form
10-K under ["Business-Mortgage Banking Business," "Business-Commercial Banking
Activities," and "Business-Regulation-Puerto Rico Regulation"] and the
information in the Registration Statement under Item 15, to the extent that such
information constitutes matters of law, summaries of legal matters, the
Company's charter and bylaws or legal proceedings, or legal conclusions, has
been reviewed by us and is correct in all material respects.
(11) To the best of such counsel's knowledge, neither the Company nor
any of its subsidiaries is in violation of its charter or by-laws and no default
by the Company or any of its subsidiaries exists in the due performance or
observance of any material obligation, agreement, covenant or condition
contained in any Agreement and Instrument that is described or referred to in
the Registration Statement or the Prospectus or filed or incorporated by
reference as an exhibit to the Registration Statement.
(12) The execution, delivery and performance of the Distribution
Agreement, the Indentures and the Notes and any other agreement or instrument
entered into or issued or to be entered into or issued by the Company in
connection with the transactions contemplated in the Prospectus, the
consummation of the transactions contemplated in the Prospectus (including the
issuance and sale of the Notes and the use of the proceeds therefrom as
described in the
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Prospectus) and the compliance by the Company with its obligations thereunder
have been duly authorized by all necessary corporate action and do not and will
not, whether with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default or Repayment Event under, or
result in the creation or imposition of any lien, charge or encumbrance upon any
assets, properties or operations of the Company or any of its subsidiaries
pursuant to, any Agreement and Instrument known to us, nor will such action
result in any violation of the provisions of the charter or by-laws of the
Company or any of its subsidiaries or any applicable law, statute, rule,
regulation, judgment, order, writ or decree, known to us, of any government,
government instrumentality or court, domestic or foreign, having jurisdiction
over the Company or any of its subsidiaries or any of their assets, properties
or operations.
(13) To the best of such counsel's knowledge, there is not pending or
threatened any action, suit, proceeding, inquiry or investigation to which the
Company or any of its subsidiaries thereof is a party or to which the assets,
properties or operations of the Company or any of its subsidiaries thereof is
subject, before or brought by any court or governmental agency or body, domestic
or foreign, which might reasonably be expected to result in a Material Adverse
Effect or which might reasonably be expected to materially and adversely affect
the assets, properties or operations of the Company or any of its subsidiaries,
the performance by the Company of its obligations under the Distribution
Agreement, the Indentures or the Notes or the consummation of the transactions
contemplated in the Prospectus.
(14) All descriptions in the Prospectus of contracts and other
documents to which the Company or any of its subsidiaries are a party are
accurate in all material respects; to the best of such counsel's knowledge,
there are no franchises, contracts, indentures, mortgages, loan agreements,
notes, leases or other instruments required to be described or referred to in
the Registration Statement or to be filed as exhibits to the Registration
Statement other than those described or referred to therein or filed or
incorporated by reference as exhibits thereto, and the descriptions thereof or
references thereto are correct in all material respects.
(15) There are no statutes or regulations that are required to be
described in the Prospectus that are not described as required.
(16) The Registration Statement has been declared effective under the
1933 Act; any required filing of the Prospectus pursuant to Rule 424(b) has been
made in the manner and within the time period required by Rule 424(b); to the
best of such counsel's knowledge, no stop order suspending the effectiveness of
the Registration Statement has been issued under the 1933 Act and no proceedings
for that purpose have been initiated or are pending or threatened by the
Commission.
(17) The Registration Statement and the Prospectus, excluding the
documents incorporated by reference therein, and each amendment or supplement to
the Registration Statement and Prospectus, excluding the documents incorporated
by reference therein, as of their respective effective or issue dates (other
than the financial statements and supporting schedules included therein or
omitted therefrom and the applicable Trustee's Statement of Eligibility on Form
T-1 (the "Form T-1"), as to which we express no opinion), complied as to form in
all material respects with the requirements of the 1933 Act and the 1933 Act
Regulations.
(18) The documents incorporated by reference in the Prospectus (other
than the financial statements and supporting schedules included therein or
omitted therefrom, as to which
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we express no opinion), when they were filed with the Commission, complied as to
form in all material respects with the requirements of the 1934 Act and the 1934
Act Regulations.
(19) Each of the Indentures has been duly qualified under the 1939 Act.
(20) The Company is not, and upon the issuance and sale of the Notes
and the application of the net proceeds therefrom as described in the Prospectus
will not be, an "investment company" within the meaning of the 1940 Act.
(21) The Notes, in the forms certified on the date hereof, will be
excluded or exempted under, or beyond the purview of, the Commodity Exchange Act
and the Commodity Exchange Act Regulations.
(22) No filing with, or approval, authorization, consent, license,
registration, qualification, order or decree of, any court or governmental
authority or agency, domestic or foreign, is necessary or required for the due
authorization, execution and delivery by the Company of the Distribution
Agreement, the Indentures and the Notes or for the performance by the Company of
the transactions contemplated in the Distribution Agreement, the Indentures or
the Prospectus, except such as have been previously made, obtained or rendered,
as applicable.
(23) To the extent the holders of the Notes are not affiliates of the
Company, no taxes, withholdings or other charges are required to be withheld or
deducted under the laws of the Commonwealth of Puerto Rico or any political
subdivision thereof from any payment made by the Company on the Notes and the
Notes are not subject to any registration tax, stamp duty or similar tax or duty
imposed by the Commonwealth of Puerto Rico or any political subdivision thereof.
Nothing has come to our attention that would lead us to believe that
the Registration Statement or any post-effective amendment thereto (except for
financial statements, supporting schedules and other financial data included
therein or omitted therefrom and for the Form T-1, as to which we make no
statement), at the time the Registration Statement or any post-effective
amendment thereto (including the filing of the Company's Annual Report on Form
10-K with the Commission) became effective [or at the date of any agreement of
the applicable Agent(s) to purchase Notes from the Company as principal],
contained an 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 or any amendment or supplement thereto
(except for financial statements, supporting schedules and other financial data
included therein or omitted therefrom, as to which we make no statement), at the
time the Prospectus was issued, at the time any such amended or supplemented
prospectus was issued or at the date hereof, included or includes an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In rendering our opinion, we may rely as to matters of fact (but not as
to legal conclusions), to the extent they deem proper, on certificates of
responsible officers of the Company and public officials.
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EXHIBIT C
FORM OF ACCOUNTANT'S COMFORT LETTER
PURSUANT TO SECTION 5(d)
We are independent public accountants with respect to the Company and its
subsidiaries within the meaning of the 1933 Act and the 1933 Act Regulations
and:
(i) in our opinion, the audited consolidated financial
statements and the related financial statement schedules
included or incorporated by reference in the Registration
Statement and the Prospectus comply as to form in all material
respects with the applicable accounting requirements of the
1933 Act and the 1933 Act Regulations;
(ii) on the basis of procedures (but not an examination in
accordance with generally accepted auditing standards)
consisting of a reading of the unaudited interim consolidated
financial statements of the Company for the [three- month
periods ended _________, 19__ and _________, 19__, the three-
and six-month periods ended _________, 19__ and _________,
19__ and the three- and nine-month periods ended _________,
19__ and _________, 19__, included or incorporated by
reference in the Registration Statement and the Prospectus
(collectively, the "10-Q Financials")](1) [, a reading of the
unaudited interim consolidated financial statements of the
Company for the _____-month periods ended _________, 19___ and
_________, 19___, included or incorporated by reference in the
Registration Statement and the Prospectus (the "_____-month
financials")](2) [, a reading of the latest available
unaudited interim consolidated financial statements of the
Company],(3) a reading of the minutes of all meetings of the
stockholders and directors of the Company and its subsidiaries
and committees thereof since [day after end of last audited
period], inquiries of certain officials of the Company and its
subsidiaries responsible for financial and accounting matters,
a review of interim financial information in accordance with
standards established by the American Institute of Certified
Public Accountants in Statement on Auditing Standards No. 71,
Interim Financial Information ("SAS 71"),(4) with respect to
the [description of relevant periods](5) and such other
----------------------
(1) Include the appropriate dates of the 10-Q Financials.
(2) Include if non-10-Q Financials are included or incorporated by
reference in the Registration Statement and the Prospectus.
(3) Include if the latest available unaudited financial statements are more
recent than the unaudited financial statements included or incorporated
by reference in the Registration Statement and the Prospectus.
(4) Note that a review in accordance with SAS 71 is required for an
accountant to give negative assurance on interim financial information.
A review in accordance with SAS 71 will only be performed at the
request of the Company and the accountant's report, if any, related to
that review will be addressed only to the Company. Many companies have
a SAS 71 review performed in connection with the preparation of their
10-Q Financials. See Codification of Statements on Auditing Standards,
AUss.722 for a description of the procedures that constitute such a
review. The comfort letter itself should recite that the review was
...(continued)
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inquiries and procedures as may be specified in such letter,
nothing came to our attention that caused us to believe that:
(A) the 10-Q Financials included or incorporated by
reference in the Registration Statement and the Prospectus do
not comply as to form in all material respects with the
applicable accounting requirements of the 1934 Act and the 1934
Act Regulations applicable to unaudited financial statements
included in Form 10-Q or any material modifications should be
made to the 10-Q Financials included or incorporated by
reference in the Registration Statement and the Prospectus for
them to be in conformity with generally accepted accounting
principles;
[(B) the _____-month financials included or
incorporated by reference in the Registration Statement and the
Prospectus do not comply as to form in all material respects
with the applicable accounting requirements of the 1933 Act and
the 1933 Act Regulations applicable to unaudited interim
financial statements included in registration statements or any
material modifications should be made to the _____-month
financials included in the Registration Statement and the
Prospectus for them to be in conformity with generally accepted
accounting principles;](6)
(C) at [_________, 19___ and at](7) a specified date
not more than five days(8) prior to the date hereof, there was
any change in the ___________ of the Company and its
subsidiaries, any decrease in the __________ of the Company and
its subsidiaries or any increase in the __________ of the
Company and its subsidiaries(9), in each case as
----------------------
...(continued)
performed and a copy of the report, if any, should be attached to the
comfort letter. Any report issued pursuant to SAS 71 that is mentioned
in the Registration Statement should also be included in the
Registration Statement as an exhibit. If a review in accordance with
SAS 71 has not and will not be performed by the accountants, they
should be prepared to perform certain agreed-upon procedures on the
interim financial information and to report their findings thereon in
the comfort letter. See Codification of Statements on Auditing
Standards, AUss.622 for a discussion of reports related to the
accountant's performance of agreed-upon procedures. Any question as to
whether a review in accordance with SAS 71 will be performed by the
accountants should be resolved early.
(5) The relevant periods include all interim unaudited consolidated
financial statements included or incorporated by reference in the
Registration Statement and the Prospectus.
(6) Include if unaudited financial statements, not just selected unaudited
data, are included or incorporated by reference in the Registration
Statement and the Prospectus.
(7) If the latest available unaudited financial statements are more recent
than the unaudited financial statements included or incorporated by
reference in the Registration Statement and the Prospectus, include and
insert the date of the latest available financial statements of the
Company.
(8) According to Example A of SAS No. 72, the specified date should be five
calendar days prior to the date of the comfort letter. However, in
unusual circumstances, five business days may be used.
(9) The blanks should be filled in with significant balance sheet items,
selected by the banker and tailored to the issuer's industry in general
and operations in particular. While the ultimate decision of which
items should be included rests with the banker, comfort is routinely
requested for certain balance sheet items,
...(continued)
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compared with amounts shown in the latest balance sheet
included or incorporated by reference in the Registration
Statement and the Prospectus, except in each case for any
changes, decreases or increases that the Registration
Statement and the Prospectus disclose have occurred or may
occur; or
(D) for the period from [_________, 19__ to
_________, 19__ and for the period from]10 _________, 19__ to
a specified date not more than five days prior to the date
hereof, there was any decrease in _________, __________ or
___________,(11) in each case as compared with the comparable
period in the preceding year, except in each case for any
decreases that the Registration Statement and the Prospectus
discloses have occurred or may occur;
[(iii) based upon the procedures set forth in clause (ii) above and
a reading of the Selected Financial Data included or incorporated by
reference in the Registration Statement and the Prospectus [and a
reading of the financial statements from which such data were
derived],(12) nothing came to our attention that caused us to
believe that the Selected Financial Data included or incorporated by
reference in the Registration Statement and the Prospectus do not
comply as to form in all material respects with the disclosure
requirements of Item 301 of Regulation S-K of the 1933 Act [, that
the amounts included in the Selected Financial Data are not in
agreement with the corresponding amounts in the audited consolidated
financial statements for the respective periods or that the
financial statements not included or incorporated by reference in
the Registration Statement and the Prospectus from which certain of
such data were derived are not in conformity with generally accepted
accounting principles;](13)
------------------
...(continued)
including long-term debt, stockholders' equity, capital stock and net
current assets.
10 If the latest available unaudited financial statements are more recent
than the unaudited financial statements included or incorporated by
reference in the Registration Statement and the Prospectus, include and
insert the period from the end of the period of the unaudited financial
statements included or incorporated by reference in the Registration
Statement and the Prospectus to the date of the latest available
financial statements of the Company. Even if this first period is
applicable, the second period should run from the date of the most
recent financial statements included or incorporated by reference in
the Registration Statement and the Prospectus, not from the latest
available financial statements of the Company.
11 The blanks should be filled in with significant income statement items,
selected by the banker and tailored to the issuer's industry in general
and operations in particular. While the ultimate decision of which
items should be included rests with the banker, comfort is routinely
requested for certain income statement items, including net sales,
total and per share amounts of income before extraordinary items and of
net income.
12 Include only if there are selected financial data that have been
derived from financial statements not included or incorporated by
reference in the Registration Statement and the Prospectus.
13 In unusual circumstances, the accountants may report on "Selected
Financial Data" as described in SAS No. 42, Reporting on Condensed
Financial Statements and Selected Financial Data, and include in their
report in the Registration Statement and the Prospectus the paragraph
contemplated by SAS No. 42.9. This situation may arise only if the
Selected Financial Data do not include interim period data and the
five-year
...(continued)
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(iv) we have compared the information included or incorporated by
reference in the Registration Statement and the Prospectus under
selected captions with the disclosure requirements of Regulation S-K of
the 1933 Act and on the basis of limited procedures specified herein,
nothing came to our attention that caused us to believe that such
information does not comply as to form in all material respects with
the disclosure requirements of Items 302, 402 and 503(d), respectively,
of Regulation S-K;
[(v) based upon the procedures set forth in clause (ii) above, a
reading of the latest available unaudited financial statements of the
Company that have not been included or incorporated by reference in the
Registration Statement and the Prospectus and a review of such
financial statements in accordance with SAS 71, nothing came to our
attention that caused us to believe that the unaudited amounts for
________ for the [most recent period] do not agree with the amounts set
forth in the unaudited consolidated financial statements for those
periods or that such unaudited amounts were not determined on a basis
substantially consistent with that of the corresponding amounts in the
audited consolidated financial statements;](14)
[(vi) we are unable to and do not express any opinion on the [Pro Forma
Combined Balance Sheet and Statement of Operations] (collectively, the
"Pro Forma Statements") included or incorporated by reference in the
Registration Statement and the Prospectus or on the pro forma
adjustments applied to the historical amounts included in the Pro Forma
Statements; however, for purposes of this letter we have:
(A) read the Pro Forma Statements;
(B) performed [an audit] [a review in accordance with
SAS 71] of the financial statements to which the pro forma
adjustments were applied;
(C) made inquiries of certain officials of the
Company who have responsibility for financial and accounting
matters about the basis for their determination of the pro
forma adjustments and whether the Pro Forma Statements comply
as to form in all material respects with the applicable
accounting requirements of Rule 11-02 of Regulation S-X; and
-------------
...(continued)
selected data are derived entirely from financial statements audited by
the auditors whose report is included in the Registration Statement and
the Prospectus. If the guidelines set forth in SAS No. 42 are followed
and the accountant's report as included in the Registration Statement
and the Prospectus includes the additional language prescribed by SAS
No. 42.9, the bracketed language may be eliminated.
14 This language should be included when the Registration Statement and
the Prospectus include earnings or other data for a period after the
date of the most recent financial statements included or incorporated
by reference in the Registration Statement and the Prospectus. The
blank should be filled in with a description of the financial statement
item(s) included.
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(D) proved the arithmetic accuracy of the application
of the pro forma adjustments to the historical amounts in the
Pro Forma Statements; and
on the basis of such procedures and such other inquiries and procedures
as specified herein, nothing came to our attention that caused us to
believe that the Pro Forma Statements included or incorporated by
reference in the Registration Statement and the Prospectus do not
comply as to form in all material respects with the applicable
requirements of Rule 11-02 of Regulation S-X or that the pro forma
adjustments have not been properly applied to the historical amounts in
the compilation of those statements;](15)
(vii) in addition to the procedures referred to in clause (ii)
above, we have performed other procedures, not constituting an
audit, with respect to certain amounts, percentages, numerical
data and financial information included or incorporated by
reference in the Registration Statement and the Prospectus,
which are specified herein, and have compared certain of such
items with, and have found such items to be in agreement with,
the accounting and financial records of the Company;(16) and
[(viii) in addition, we [add comfort on a financial forecast
that is included or incorporated by reference in the
Registration Statement and the Prospectus](17).
--------------------
15 If an audit or a review in accordance with SAS 71 has not been
performed by the accountants with respect to the underlying historical
financial statements, or if negative assurance on the Company's pro
forma financial statements is not otherwise available, the accountants
should be requested to perform certain other procedures with respect to
such pro forma financial statements. See Example O of SAS No. 72.
16 This language is intended to encompass all other financial/numerical
information included or incorporated by reference in the Registration
Statement and the Prospectus for which comfort may be given, including
(but not limited to) narrative and other summary financial data
appearing in tabular form (e.g. the capitalization table).
17 Accountants' services with respect to a financial forecast may take one
of three forms: an examination of the forecast, a compilation of the
forecast or the application of agreed-upon procedures to the forecast.
If the accountant is to perform an examination of the forecast included
or incorporated by reference in the Registration Statement and the
Prospectus, text should state that, in their opinion, the forecasted
financial statements for the [relevant period or periods] included or
incorporated by reference in the Registration Statement and the
Prospectus are presented in conformity with guidelines for presentation
of a forecast established by the AICPA, and that the underlying
assumptions provide a reasonable basis for management's forecast. If
the accountant is to perform a compilation of the forecasted financial
statements included or incorporated by reference in the Registration
Statement and the Prospectus, text should state that they have compiled
the forecasted financial statements for the [relevant period or
periods] included or incorporated by reference in the Registration
Statement and the Prospectus in accordance with the guidelines
established by the AICPA. Finally, if the accountant is to perform
agreed-upon procedures on a forecast included or incorporated by
reference in the Registration Statement and the Prospectus, SAS No. 72
requires that the accountant first prepare a compilation report with
respect to the forecast and attach such report to the comfort letter,
after which the accountant may report on specific procedures performed
and findings obtained.
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