-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EUeZ4gPe8HTzdHV+KsdhPGcKfxYNCt9s8JyHoNP4crStmQfw6AdzjdEWzglYLNKf zqjSa9zNpdce/hSrwa+yxg== 0000950144-00-004189.txt : 20000331 0000950144-00-004189.hdr.sgml : 20000331 ACCESSION NUMBER: 0000950144-00-004189 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000330 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DORAL PROPERTIES INC CENTRAL INDEX KEY: 0001091691 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 660572283 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 333-83877-01 FILM NUMBER: 586070 BUSINESS ADDRESS: STREET 1: 1159 FRANKLIN D ROOSEVELT AVENUE CITY: SAN JUAN STATE: PR ZIP: 00920 BUSINESS PHONE: 7877497108 MAIL ADDRESS: STREET 1: 1159 FRANKLIN D ROOSEVELT AVE CITY: SAN JUAN STATE: PR ZIP: 00920 10-K405 1 DORAL PROPERTIES, INC. 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF [X] THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF [ ] THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NO. 333-8387701 DORAL PROPERTIES, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) PUERTO RICO 66-0572283 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 1159 FRANKLIN D. ROOSEVELT AVENUE SAN JUAN, PUERTO RICO 00920 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (Zip Code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING ARE CODE: (787) 749-7100. -------------------- SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE. SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X]. No [ ]. Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to be best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] State the aggregate market value of the voting stock held by non-affiliates of the registrant. The aggregate market value shall be computed by reference to the price at which the stock was sold, or the average bid and asked prices of such stock, as of a specified date within 60 days prior to the date of filing. Not applicable. Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: Common Stock: 2,000 shares as of March 29, 2000. ================================================================================ 2 DORAL PROPERTIES, INC. 1999 ANNUAL REPORT ON FORM 10-K TABLE OF CONTENTS
PAGE ---- PART I Item 1. Business...............................................................................................1 Item 2. Properties.............................................................................................2 Item 3. Legal Proceedings......................................................................................2 Item 4. Submission of Matters to a Vote of Security Holders....................................................2 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters..................................2 Item 6. Selected Financial Data................................................................................2 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations..................3 Item 7A. Quantitative and Qualitative Disclosures About Market Risk............................................4 Item 8. Financial Statements and Supplementary Data............................................................4 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...................4 PART III Item 10. Directors and Executive Officers of the Registrant....................................................4 Item 11. Executive Compensation................................................................................5 Item 12. Security Ownership of Certain Beneficial Owners and Management........................................5 Item 13. Certain Relationships and Related Transactions........................................................5 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K......................................6
3 PART I ITEM 1. BUSINESS Doral Properties, Inc. ("Doral Properties" or the "Company"), is a wholly owned subsidiary of Doral Financial Corporation ("Doral Financial") organized on July 21, 1999 under the laws of the Commonwealth of Puerto Rico. The Company was organized for the purpose of owning, developing and operating the Doral Financial Center (the "Center"), a new commercial office building with adjacent structures currently under construction in San Juan, Puerto Rico. The Center is expected to be substantially complete by the fourth quarter of 2001. The Center will serve as Doral Financial's corporate headquarters, containing the principal offices of Doral Financial and its subsidiaries. It is expected that Doral Financial and its subsidiaries will initially occupy approximately 85% to 90% of the Center. The remaining space will be available for rent to independent third parties. Doral Properties will either lease the entire Center to Doral Financial, who would then sublease any available rent space, or lease to Doral Financial the portion of the Center it will occupy and enter into third party lease agreements for any available rent space. On October 22, 1999, Doral Properties purchased two existing buildings adjacent to the Center. In connection with such purchase Doral Properties assumed existing leases to third parties which expire on June 30, 2000. Upon expiration of such leases, Doral Properties will refurbish the buildings, which will be leased to Doral Financial and used for administrative and support services for Doral Financial and its subsidiaries. To finance the development, construction and equipping of the Center, as well as the purchase of the two existing buildings that are part of the Center, Doral Financial participated in an issuance of industrial revenue bonds, the interest on which, under certain circumstances, is tax-exempt to Puerto Rico residents. Under such transaction, the Puerto Rico Industrial, Tourist, Educational, Medical and Environmental Control Facilities Financing Authority ("AFICA"), a Puerto Rico government instrumentality, issued its Industrial Revenue Bonds, 1999 Series A (Doral Financial Center Project) (the "AFICA Bonds") in the principal amount of $44,765,000 on November 3, 1999. AFICA loaned the proceeds of the issuance to Doral Properties under a Loan and Guaranty Agreement, dated November 3, 1999, among AFICA, Doral Financial and Doral Properties (the "Loan Agreement"). The only source of repayment of the AFICA Bonds is the repayment of the loan by Doral Properties. Doral Financial unconditionally guaranteed the payments by Doral Properties under the Loan Agreement. Other that acting as lessor under said leases and performing certain duties with respect to the development and construction of the Center, Doral Properties will not have any operations until the Center is completed in 2001. Upon completion of the Center, Doral Properties will act as lessor of the Center and its only revenues will consist of the rent payments which, as described above, will be derived substantially or in full from Doral Financial. Doral Financial does not currently contemplate that Doral Properties will engage in other business activities. PUERTO RICO INCOME TAXES Doral Properties has elected to be treated as a special partnership under subchapter K of the Puerto Rico Internal Revenue Code of 1994, as amended (the "PR Code"), which generally means that Doral Properties will not be subject to Puerto Rico income taxation. However, Doral Financial, as Doral Properties' sole shareholder, is subject to income taxes under the PR Code on net income of Doral Properties, whether or not any actual distribution is made to Doral Financial during the taxable year. 4 UNITED STATES INCOME TAXES Doral Properties is a corporation organized under the laws of Puerto Rico. Accordingly, the Company is subject generally to United States income tax only on its income, if any, from sources within the United States (excluding Puerto Rico). In 1999, the Company did not earn any income that was subject to United States income tax. EMPLOYEES The Company has no employees, other than employees of Doral Financial and its affiliates which are not separately compensated for their services to the Company. ITEM 2. PROPERTIES Doral Properties executive and administrative offices are the same as Doral Financial's and are located at 1159 Franklin D. Roosevelt Avenue, Puerto Nuevo, San Juan, Puerto Rico. Doral Properties does not pay any rent on such offices. Doral Properties owns a parcel of property of approximately 7,426 square meters in the Puerto Nuevo ward of the Municipality of San Juan, Puerto Rico on which it is currently constructing the Center, a new nine-floor, 193,709 square feet commercial office building with an adjacent five-and-one-half floor parking structure. Doral Properties also owns two adjacent parcels of property aggregating approximately 3,143 square meters on which two buildings with approximately 27,305 square feet of space are located, which parcels it purchased for $2.2 million on October 22, 1999. Except for the properties previously described, Doral Financial does not own any real property. ITEM 3. LEGAL PROCEEDINGS None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Not applicable. ITEM 6. SELECTED FINANCIAL DATA The following table sets forth certain selected financial data for Doral Properties, Inc. for the period from July 21, 1999, the date of its incorporation, through December 31, 1999. Since the Company's current operations consist solely of the construction and development of the Center, the Company is capitalizing all construction disbursements, debt issue costs related to the AFICA Bonds and interest payments to the AFICA bondholders. Thus, the Company did not report any income from operations. The selected financial data should be read in 2 5 conjunction with Item 7 - "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Company's Consolidated Financial Statements. DORAL PROPERTIES, INC. SELECTED FINANCIAL DATA
PERIOD ENDED DECEMBER 31, 1999 ------------------------------ Balance Sheet Data: Cash $ 26,711 Investment contract 30,498,813 Total assets 46,516,553 Long-term debt 44,765,000 Stockholders' equity 500,000
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Doral Properties, Inc., a wholly-owned subsidiary of Doral Financial Corporation, is engaged in the development of the Doral Financial Center, a new commercial office building and adjacent structures that will primarily serve as the corporate headquarters of Doral Financial. Doral Properties was incorporated on July 21, 1999. On October 22, 1999, Doral Properties purchased from independent third parties two parcels of land containing two buildings in San Juan, Puerto Rico for $2.2 million. Those buildings will be refurbished and used for administrative and support services, including data storage and processing services, for Doral Financial and its subsidiaries. In connection with the purchase of those buildings, Doral Properties assumed existing leases that expire on June 30, 2000. For the period from October 22, 1999 through December 31, 1999, Doral Properties received rental payments of approximately $54,000. On November 3, 1999, Doral Properties entered into a loan agreement with AFICA in the amount of $44,765,000 providing for the issuance of the AFICA Bonds. The AFICA Bonds were issued under a trust agreement between AFICA and Citibank, N.A., as trustee, and are serial and term bonds with maturities ranging from June 1, 2003 through December 1, 2029. From the proceeds of the AFICA Bonds, approximately $2.1 million was used to repay the balance of a loan to Doral Financial used to purchase the real property on which the office building is being constructed, approximately $4.1 million is being used to pay interest on the AFICA Bonds during construction of the Center and approximately $37.0 million was deposited in a construction fund with Citibank, N.A., as trustee, to pay the costs of development, construction and equipping of the Center. Citibank, N.A., as trustee for the AFICA Bonds, upon the direction of Doral Properties, entered into an investment agreement with Doral Financial to invest approximately $30.6 million of the moneys in the construction fund until October 1, 2001. As part of the agreement, Doral Financial guaranteed a 5.60% annual return on the invested amount. Interest earned on the invested amount is compounded on a monthly basis. The principal amount of the investment is due on demand from the trustee, which requests repayments in accordance with requests for disbursements from the construction fund made by Doral Properties or to pay interest on the AFICA 3 6 Bonds. As of December 31, 1999, the principal balance of this investment was approximately $30.5 million. As of December 31, 1999, Doral Properties had total assets of $46,516,553, total liabilities of $46,016,553 and stockholder's equity of $500,000. Doral Properties deferred the costs related to the issuance of the AFICA Bonds and is capitalizing under a construction-in-progress account all construction disbursements related to the Center and monthly interest payments to the holders of the AFICA Bonds. Doral Properties records as a reduction of the construction-in-progress account the rental payments received from the assumed existing leases and interest generated by the investment of the AFICA Bond proceeds in the construction fund. As of December 31, 1999, Doral Properties had recorded $8,690,783 in construction-in-progress in its balance sheet. Since Doral Properties did not have any revenues or expenses, no statement of income was presented. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information called for by this Item 8 is hereby incorporated by reference from the Company's Consolidated Financial Statements and Auditor's Report beginning on page F-1 of this Form 10-K. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The following table sets forth certain information regarding the directors and executive officers of the Company as of March 29, 2000. The background and experience of these persons are summarized in the paragraphs following the table.
NAME (AGE AT MARCH 29, 2000) POSITIONS WITH THE COMPANY - ---------------------------- -------------------------- Salomon Levis (57) Chairman of the Board, Chief Executive Officer and Director Zoila Levis (52) President and Director Mario S. Levis (36) Executive Vice President and Director Ricardo Melendez (41) Vice President and Comptroller Francisco J. Rivero (40) Vice President
Each director of the Company holds office until the next annual meeting of shareholders and until his or her successor has been selected and qualified. Officers serve at the discretion of the Board of Directors. None of the executive officers devote their full time to the operations of the Company. 4 7 BACKGROUND OF DIRECTORS AND EXECUTIVE OFFICERS Set forth below is a summary of the background of each person who was a director or executive officer of the Company as of March 29, 2000.
PRINCIPAL OCCUPATION NAME DURING THE PAST FIVE YEARS ---- -------------------------- Salomon Levis Chairman of the Board and Chief Executive Officer of Doral Financial since February 1990; Chairman of the Board and Chief Executive Officer of Doral Bank, a wholly-owned subsidiary of Doral Financial; Chairman of the Board, Doral Bank, FSB, Doral Mortgage Corporation, Doral Securities, Inc., Sana Investment Mortgage Bankers, Inc. and Doral Money. Inc. each a wholly-owned subsidiary of Doral Financial. Zoila Levis President of Doral Financial since August 1991; Director of Doral Bank and Doral Securities, Inc. Mario S. Levis Executive Vice President of Doral Financial since September 1995: Treasurer of Doral Financial since December 1991; Director of Doral Securities, Inc.; Executive Vice President of Doral Mortgage Corporation. Ricardo Melendez Vice President and Chief Accounting Officer of Doral Financial since July 1995; Chief Financial Officer of Doral Bank, a wholly-owned subsidiary of Doral Financial from September 1993 to July 1995. Francisco J. Rivero Executive Vice President - Administration and New Business Development since 1998; Regional Vice President and Puerto Rico General Manager of Hamilton Bank, NA (commercial bank) from 1997 to 1998.
There are no arrangements or understandings pursuant to which any of these directors and executive officers were selected as a director or an officer. None of the directors or executive officers shown below is related to any other director or executive officer of Doral Properties by blood, marriage or adoption, except that Salomon Levis and Zoila Levis are siblings and Mario S. Levis is the nephew of Salomon Levis and Zoila Levis. ITEM 11. EXECUTIVE COMPENSATION All of the officers of Doral Properties are officers and employees of Doral Financial and are not separately compensated for any services rendered to Doral Properties. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT As of March 29, 2000 all of the outstanding common stock of Doral Properties was owned by Doral Financial Corporation. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Doral Properties directed Citibank, N.A., as trustee for the AFICA Bonds, to enter into an investment agreement with Doral Financial for the investment of approximately $30.6 million of the moneys in the 5 8 construction fund. Doral Financial guarantees a fixed annual interest rate of 5.60% on the investment amount until the termination of the investment agreement on October 1, 2001. Doral Financial may invest the funds in its discretion. Doral Properties repaid the outstanding balance of approximately $2.1 million of a loan made to Doral Financial for the purchase of the real property in which the Doral Financial Center is being constructed. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) List of documents filed as part of this report. (1) Financial Statements. The information called for by this subsection of Item 14 is set forth in the Financial Statements and Auditors' Report beginning on page F-1 of this Form 10-K. (2) Financial Statement Schedules. All financial schedules have been omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. (3) Exhibits.
EXHIBIT NUMBER Description - ------ ----------- 3.1 Certificate of Incorporation 3.2 By-Laws 4.1 Loan and Guaranty Agreement among Puerto Rico Industrial, Tourist, Educational, Medical and Environmental Control Facilities Financing Authority ("AFICA"), Doral Properties, Inc. and Doral Financial. (Incorporated herein by reference to the same exhibit number of the Doral Financial Corporation's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999.) 4.2 Trust Agreement between AFICA and Citibank, N.A. (Incorporated herein by reference to the same exhibit number of Doral Financial Corporation's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999.) 4.3 Form of Serial and Term Bond (included in Exhibit 4.2 hereof). 4.4 Deed of Constitution of First Mortgage. (Incorporated herein by reference to the same exhibit number of Doral Financial Corporation's Quarterly Report on Form 10-Q for the quarter ended September 30, 1999.) 4.5 Mortgage Note (included in Exhibit 4.4 hereof). 27 Financial Data Schedule (Edgar Version Only.)
(b) Reports on Form 8-K. None. 6 9 SIGNATURES Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, Doral Properties, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DORAL PROPERTIES, INC. By: /s/ Salomon Levis ----------------------------------- Salomon Levis Chairman of the Board and Chief Executive Officer Date: March 29, 2000 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
Chairman of the Board, /s/ Salomon Levis Chief Executive Officer and Director March 29, 2000 --------------------------------- Salomon Levis /s/ Zoila Levis President and Director March 29, 2000 --------------------------------- Zoila Levis /s/ Mario S. Levis Executive Vice President and Director March 29, 2000 --------------------------------- Mario S. Levis Vice President and Comptroller (Principal Financial and /s/ Ricardo Melendez Accounting Officer March 29, 2000 --------------------------------- Ricardo Melendez
7 10 SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT. Doral Properties has not sent an annual report or proxy statement to security holders. 8 11 PRICEWATERHOUSECOOPERS [LOGO] - -------------------------------------------------------------------------------- PricewaterhouseCoopers LLP PO Box 363566 San Juan PR 00936-3566 Telephone (787) 754 9090 REPORT OF INDEPENDENT ACCOUNTANTS To the Stockholder and Board of Directors of Doral Properties, Inc. In our opinion, the accompanying statement of financial condition and the related statements of changes in stockholder's equity and cash flows present fairly, in all material respects, the financial position of Doral Properties, Inc. at December 31, 1999, and the changes in its stockholder's equity and its cash flows for the period from July 21, 1999 (the date of incorporation) to December 31, 1999, in conformity with accounting principles generally accepted in the United States. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with auditing standards generally accepted in the United States which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for the opinion expressed above. PricewaterhouseCoopers LLP February 25, 2000 CERTIFIED PUBLIC ACCOUNTANTS (OF PUERTO RICO) License No. 216 Expires Dec. 1, 2001 Stamp 1603335 of the P.R. Society of Certified Public Accountants has been affixed to the file copy of this report F-1 12 DORAL PROPERTIES, INC. (A WHOLLY-OWNED SUBSIDIARY OF DORAL FINANCIAL CORPORATION) STATEMENT OF FINANCIAL CONDITION DECEMBER 31, 1999
ASSETS Cash $ 26,711 Accrued interest receivable 136,632 Unamortized debt issue costs 2,043,337 Investment contract 30,498,813 Property 13,811,060 ----------- Total assets $46,516,553 ----------- LIABILITIES AND STOCKHOLDER'S EQUITY Accrued expenses and other liabilities $ 1,251,553 Bonds payable 44,765,000 ----------- Total liabilities 46,016,553 ----------- Stockholder's equity: Common stock $0.01 par value; 10,000 shares authorized; 2,000 shares issued and outstanding 20 Additional paid in capital 499,980 ----------- Total stockholder's equity 500,000 ----------- Total liabilities and stockholder's equity $46,516,553 ===========
The accompanying notes are an integral part of these financial statements. F-2 13 DORAL PROPERTIES, INC. (A WHOLLY-OWNED SUBSIDIARY OF DORAL FINANCIAL CORPORATION) STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY FOR THE PERIOD FROM JULY 21, 1999 TO DECEMBER 31, 1999 COMMON STOCK: Balance at beginning of period $ -- Common stock issued 20 ----------- Balance at end of period 20 ----------- PAID IN CAPITAL: Balance at beginning of period -- Shares issued 499,980 ----------- Balance at end of period 499,980 ----------- Total stockholder's equity $ 500,000 -----------
The accompanying notes are an integral part of these financial statements. F-3 14 DORAL PROPERTIES, INC. (A WHOLLY-OWNED SUBSIDIARY OF DORAL FINANCIAL CORPORATION) STATEMENT OF CASH FLOWS FOR THE PERIOD FROM JULY 21, 1999 TO DECEMBER 31, 1999 Cash flows from operating activities: Net income $ -- Adjustments to reconcile net income to net cash provided by operating activities Increase in accrued interest receivable (136,632) Increase in accrued expenses and other liabilities 1,251,553 ----------- Net cash provided by operating activities 1,114,921 ----------- Cash flows from investing activities: Purchase of property (13,811,060) Purchase of investment contract (30,498,813) ----------- Net cash used by operating activities (44,309,873) ----------- Cash flows from financing activities: Issuance of common stock 500,000 Proceeds from the issuance of bonds payable 42,721,663 ----------- Net cash provided by financing activities 43,221,663 ----------- Net increase in cash 26,711 Cash and cash equivalents at the beginning period -- ----------- Cash and cash equivalents at the end period $ 26,711 ===========
The accompanying notes are an integral part of these financial statements. F-4 15 DORAL PROPERTIES, INC. (A WHOLLY-OWNED SUBSIDIARY OF DORAL FINANCIAL CORPORATION) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999 1. REPORTING ENTITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Doral Properties, Inc. (the "Company") is a wholly - owned subsidiary of Doral Financial Corporation. The Company was incorporated on July 21, 1999, under the laws of the Commonwealth of Puerto Rico for the purpose of owning, developing and operating the Doral Financial Center (the "Center"), which will become the new headquarters of Doral Financial Corporation and its subsidiaries. The Center is under construction and should be completed during the third quarter of 2001. On November 3, 1999, the Company, through the Puerto Rico Industrial, Medical, Higher Education and Environmental Pollution Control Facilities Financing Authority ("AFICA"), issued $44,765,000 (gross of bond issue costs) in Industrial Revenue Bonds, Class A (the "exempt bonds"), for financing the construction of the Center. The accounting and reporting policies of the Company conform with generally accepted accounting principles. The following is a description of the more significant accounting policies followed by the Company: Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. Income Recognition Policy/Capitalization of Interest Doral Properties' current operations consist solely of the construction and development of the Center. As such, all disbursements are being capitalized as construction in progress. Amounts capitalized will be recorded as a fixed asset subject to periodic depreciation upon final completion of the construction activities. There are no activities recorded that need to be reported in a separate statement of income. In accordance with Statement of Financial Accounting Standard No. 62: "Capitalization of Interest Cost in Situations Involving Certain Tax-Exempt Borrowings and Certain Gifts and Grants", the Company is capitalizing interest cost of tax-exempt borrowings, less any interest earned on temporary investment of the proceeds of those borrowings, from the date of borrowing until the specified qualifying assets acquired with those borrowings are ready for their intended use. Bond Issue Costs Bond issue costs include all costs related to the issuance of the bonds described in Note 4. Amortization of bond issue costs will start upon completion of the project and will be amortized over the remaining life of the bonds. F-5 16 2. PROPERTY At December 31, 1999, property consisted of land, an existing building acquired for the construction of the Center and construction-in-progress. A new building is being constructed on the land acquired while the existing building will be subsequently renovated. The cost of the land and building acquired, and the amount capitalized as construction in progress as of December 31, 1999 were as follows: Land $ 4,073,288 Building 1,046,989 Construction in progress 8,690,783 ----------- $13,811,060 ===========
As part of the purchase transaction, Doral Properties acquired an existing building. As lessor, Doral Properties assumed an existing lease agreement with a third party for space occupancy at the building, which will expire on June 30, 2000. Management has no intention of renewing the agreement, to allow for the commencement of the renovation activities. During the period from October 22, 1999 to December 31, 1999, Doral Properties received rental payments of approximately $54,000. The Company's policy is to record such collections as a reduction of costs capitalized under construction in progress. Construction in progress includes approximately $927,000 of capitalized interest costs; net of approximately $276,000 of interest generated by the investment contract described on Note 3. 3. INVESTMENT CONTRACT Pursuant to a Construction Fund Investment Agreement (the "Agreement") dated November 3, 1999, Doral Properties agreed to deposit the proceeds of the AFICA bonds in an investment fund at Doral Financial Corporation, the parent company. As part of the agreement, Doral Financial Corporation guaranteed the Company a 5.60% annual return on the fund, which may be invested at the discretion of Doral Financial Corporation. The principal invested by Doral Properties is due on demand. Interest earned on the investment is accrued on a monthly basis as an increase in the fund's balance. Payments related to the construction in progress are drawn from the fund. 4. BONDS PAYABLE On November 3, 1999, the Company issued $44,765,000 in AFICA bonds at an interest ranging from 6.10% to 6.90% and maturities ranging from June 2003 to December 2029. The bonds are secured by a mortgage on the property and building under construction. Repayment of principal plus monthly interest to bondholders is fully guaranteed by the parent company, Doral Financial Corporation. F-6 17 DORAL PROPERTIES, INC. (A WHOLLY-OWNED SUBSIDIARY OF DORAL FINANCIAL CORPORATION) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999 The bonds issued were structured into serial and term maturities, as listed below:
Interest Maturity Principal Rate Date Amount ---------- ---------------------- ----------------- Serial Bonds: 6.10% June 1, 2003 $ 310,000 6.10% December 1, 2003 320,000 6.15% June 1, 2004 330,000 6.15% December 1, 2004 340,000 6.20% June 1, 2005 350,000 6.20% December 1, 2005 360,000 6.25% June 1, 2006 375,000 6.25% December 1, 2006 385,000 6.30% June 1, 2007 395,000 6.30% December 1, 2007 410,000 6.35% June 1, 2008 420,000 6.35% December 1, 2008 435,000 6.40% June 1, 2009 450,000 6.40% December 1, 2009 465,000 Term Bonds: 6.75% December 1, 2014 5,585,000 6.90% June 1, 2026 22,835,000 6.90% December 1, 2029 11,000,000 ------------ $44,765,000 ------------
The weighted average interest rate on the aggregate amount of the bonds was 6.81%. 5. TRUSTEE AGREEMENT Pursuant to a Trustee Agreement dated November 3, 1999, Doral Properties designated Citibank, Puerto Rico as the trustee for the collection of principal and interest from Doral Properties, the subsequent remittances of principal and interest to the bondholders and the collection of interest from Doral Financial on the investment contract. As part of the agreement, Citibank will also oversee the transactions under the Agreement described in Note 3. 6. RELATED PARTY TRANSACTIONS Doral Properties maintains its cash accounts at Doral Bank, a related party and a wholly-owned subsidiary of Doral Financial Corporation. F-7 EX-3.1 2 CERTIFICATE OF INCORPORATION 1 EXHIBIT 3.1 COMMONWEALTH OF PUERTO RICO CERTIFICATE OF INCORPORATION OF DORAL PROPERTIES, INC. The undersigned, for the purpose of organizing a corporation under the General Corporations Law of 1995 of the Commonwealth of Puerto Rico (the "General Corporations Law"), does execute this Certificate of Incorporation and does hereby certify as follows: FIRST: The name of this corporation is: Doral Properties, Inc. (hereinafter referred to as the "Corporation"). SECOND: The physical and mailing address of the corporation's designated office in the Commonwealth of Puerto Rico is: 1159 Franklin D. Roosevelt Avenue, San Juan, Puerto Rico 00920. The Resident Agent at such office is Zoila Levis. THIRD: The Corporation is organized for the purpose of transacting any and all lawful business and engaging in any lawful act or activity for which corporations may be organized under the General Corporations Law. The Corporation is to be carried on for pecuniary profit. FOURTH: The total number of shares of capital stock which the Corporation is authorized to issue is 10,000 shares of common stock and the par value of each such share is $0.01. FIFTH: The name and mailing and physical address of the sole incorporator of the Corporation is: Amneriz E. Veloso Banco Popular Center 209 Munoz Rivera Avenue Suite 1901 San Juan, Puerto Rico 00918 SIXTH: The following provisions are included for the further definition, and not in limitation, of the powers of the Corporation and of its directors and stockholders: 1. The number of directors of the Corporation shall be such as from time to time shall be fixed by, or in the manner 2 2 provided in, the by-laws. Election of directors need not be by written ballot unless the by-laws so require. 2. The Board of Directors shall have the power, without the assent or vote of the stockholders, to make, alter, amend, change, add to or repeal the by-laws of the Corporation; to fix and vary the amount to be reserved for any proper purpose; to authorize and cause to be executed mortgages and liens upon all or any part of the property of the Corporation; to determine the use and disposition of its surplus or net profits; and to fix the times for the declaration and payment of dividends. 3. The directors in their discretion may submit any contract or act for approval or ratification at any annual meeting of the stockholders or at any meeting of the stockholders called for the purpose of considering any such act or contract, and any contract or act that shall be approved or ratified by the vote of the holders of a majority of the stock of the Corporation which is represented in person or by proxy at such meeting and entitled to vote thereat (provided that a lawful quorum of stockholders be there represented in person or by proxy) shall be as valid and as binding upon the Corporation and upon all the stockholders as though it had been approved or ratified by every stockholder of the Corporation, whether or not the contract or act would otherwise be open to legal attack because of a director's interest, or for any other reason. 4. In addition to the powers and authorities hereinbefore or by law expressly conferred upon the directors of the Corporation, the directors are hereby empowered to exercise all such powers and do all such acts and deeds as may be exercised or done by the Corporation; subject, nevertheless, to the provisions of the statutes of the Commonwealth of Puerto Rico, this certificate, and any by-laws from time to time adopted by the stockholders; provided, however, that no by-laws so adopted shall invalidate any prior act of the directors which would have been valid if such by-laws had not been adopted. SEVENTH: A director of this Corporation shall not be personally liable to the Corporation or its stockholders for 3 3 monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the General Corporations Law, as the same exists or may hereafter be amended. Any amendment, modification or repeal of the foregoing sentence shall not adversely affect any right or protection of a director of the Corporation existing hereunder with respect to any act or omission occurring prior to or at the time of such amendment, modification or repeal. EIGHTH: The Corporation shall, to the full extent permitted by Article 4.08 of the General Corporations Law, as amended from time to time, indemnify all persons whom it may indemnify pursuant thereto under the circumstances and in the manner provided therein. NINTH: The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation in the manner now or hereafter prescribed by law, and all rights and powers conferred herein on stockholders, directors and officers are subject to this reserved power. TENTH: The existence of the Corporation shall commence on the date in which this Certificate of Incorporation is filed with the Department of State of the Commonwealth of Puerto Rico. The undersigned, being the sole incorporator hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporations Law, hereby swears that the facts herein stated are true, this 21st day of July, 1999. /s/ Amneriz E. Veloso ------------------------------ Amneriz E. Veloso EX-3.2 3 BY-LAWS 1 EXHIBIT 3.2 BY-LAWS OF DORAL PROPERTIES, INC. ARTICLE I REGISTERED OFFICES Section 1. Registered Office and Registered Agent. The location of the registered office of DORAL PROPERTIES, INC. (hereinafter referred to as the "Corporation") and the name of the registered agent of the Corporation within the Commonwealth of Puerto Rico shall be such as shall be determined from time to time by the Board of Directors and on file in the appropriate public offices of the Commonwealth of Puerto Rico pursuant to applicable provisions of law. Section 2. Corporate Offices. The Corporation may have such other offices, either within or without the Commonwealth of Puerto Rico, as the Board of Directors may designate or as the business of the Corporation may require, from time to time. ARTICLE II MEETING OF THE SHAREHOLDERS Section 1. Annual Meeting. The annual meeting of the shareholders for the election of the directors and for such other business as may come before the meeting shall be held at such place, either within or without of the Commonwealth of Puerto Rico, and at such time and date as the Board of Directors, by resolution, shall determine and set forth in the notice of meeting. In the event the Board of Directors fails to determine the time, date and place of the meeting, the annual meeting of shareholders shall be held on the last Friday of March of each year at the place and time fixed by the Board of Directors. Section 2. Special Meeting. Special meetings of the shareholders, for any purposes, unless otherwise prescribed by statute, may be called by the President or upon the request of the majority of the Board of Directors. Section 3. Place of Meeting. Any meeting of the shareholders may be held at such place, either within or without the Commonwealth of Puerto Rico, as may be specified in the call and notice thereof or in the waiver of notice thereof signed by all the shareholders. 2 2 Section 4. Notice of Meeting. Written or printed notice of each meeting of shareholders, whether annual or special, stating the place, date and time of the meeting and in the case of a special meeting, the purpose or purposes thereof, shall be given to each shareholder of record entitled to vote at such meeting either personally or by mail, not less than ten (10) days nor more than sixty (60) days prior to the meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the shareholder at his address as it appears on the stock transfer books of the Corporation, with postage thereon prepaid. Notice of any meeting of shareholders shall not be required to be given to any shareholder who shall have waived such notice either before or after the time fixed for holding such meeting, and such notice shall be deemed waived by any shareholder who shall attend such meeting in person or by proxy, except a shareholder who shall attend such meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Notice of any adjourned meeting of the shareholders shall not be required to be given. Section 5. Voting. Each shareholder entitled to vote in accordance with the terms of the Certificate of Incorporation and in accordance with the provisions of these By-Laws shall be entitled to one vote, in person or by proxy, for each share of stock entitled to vote held by such shareholder, but no proxy shall be voted after three (3) years from its date unless such proxy provides for a longer period. At all meetings of shareholders the voting may be viva voce, except that, unless otherwise provided by the Certificate of Incorporation, voting for the election of directors will be by ballot and except that any qualified voter may demand a vote by ballot on any other matter, in which case vote shall be by ballot. A complete list of the shareholders entitled to vote at the ensuing election, arranged in alphabetical order, with the address of each, and the number of shares held by each, shall be open to the examination of any shareholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the meeting and place of the meeting during the whole time thereof, and may be inspected by any shareholder who is present. Section 6. Quorum. Except as otherwise required by statute, by the Certificate of Incorporation or by these By-Laws, the 3 3 holders of a majority of the outstanding shares of the Corporation entitled to vote, present in person or represented by proxy, shall constitute a quorum at any meeting of the shareholders. In the absence of a quorum at any meeting, or any adjournment thereof, a majority in interest of the shareholders present in person or represented by proxy may adjourn the meeting from time to time without further notice other than announcement at the meeting until a quorum is present. At any such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally noticed; but only those shareholders entitled to vote at the meeting originally noticed shall be entitled to vote at any adjournment or adjournments thereof. The shareholders present at a duly held meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum. If the adjournment is for more than thirty (30) days, or if after such adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting. Section 7. Proxies. At all meetings of shareholders, the vote of any shareholder may be cast in person or by his proxy or proxies (who need not be shareholders) appointed by an instrument in writing subscribed by such shareholder or by his duly authorized attorney-in-fact and delivered to the secretary of the meeting. No appointment of proxy shall be valid after three years from the date thereof, unless otherwise provided. Section 8. Voting of Shares by Certain Holders. Shares outstanding in the name of another corporation may be voted by such officer, agent or proxy as the by-laws of such corporation may prescribe, or, in the absence of such provision, as the Board of Directors of such corporation may determine. Shares held by an administrator, executor, guardian or conservator may be voted by him, either in person or by proxy, without a transfer of such shares into his name. Shares standing in the name of a trustee may be voted by him, either in person or by proxy, but no trustee shall be entitled to vote shares held by him/her without a transfer of such shares to his name or to the name of his nominee. Shares standing in the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his name if authority so to do be contained in an appropriate order of the court by which such receiver was appointed. 4 4 A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred. Shares of its own stock belonging to the Corporation or held by it in a fiduciary capacity shall not be voted, directly or indirectly, at any meeting, and shall not be counted in determining the total number of outstanding shares at any given time. Section 9. Action without Meeting. Unless otherwise provided by the Certificate of Incorporation, any action required to be taken at any annual or special meeting of shareholders, or any action which may be taken at any annual or special meeting, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those shareholders who have not consented in writing. ARTICLE III BOARD OF DIRECTORS Section 1. General Powers. The business and affairs of the Corporation shall be under the direction of its Board of Directors. The Board of Directors may exercise all such powers of the Corporation, and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or these By-laws directed or required to be exercised by the shareholders. Section 2. Number, Tenure and Qualifications. The number of directors shall be three. Each director shall hold office until the next annual election of directors and until his successor shall be duly elected and qualified, or until his death, resignation or removal. No director need be a shareholder of the Corporation. Section 3. Meetings. The first meeting of each newly elected Board of Directors shall be held immediately after, and at the same place as the annual election of directors, if a quorum shall be then present, in which case notice of such meeting need not be given. The Board of Directors may provide, by resolution, the time and place, either within or without the Commonwealth of Puerto Rico, for the holding of other regular meetings without other notice than such resolution. 5 5 Special meetings of the Board of Directors may be called by or at the request of the President, the Secretary or any two directors. The person or persons authorized to call special meetings of the Board of Directors may fix any place, either within or without the Commonwealth of Puerto Rico, as the place for holding any special meeting of the Board of Directors called by them. Section 4. Participation in Meeting by Telephone or Similar Communication Equipment. Unless otherwise restricted by the Certificate of Incorporation or by these By-Laws, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. Section 5. Notice. Notice of any special meeting shall be given at least three (3) days prior thereto by written notice delivered personally or mailed to each director at his/her business address, by telegram, by facsimile transmission or other electronic communication, unless the special meeting is called for an emergency, in which case such notice shall be given at least one (1) day prior to the special meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage thereon prepaid. If notice be given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company. If notice is given by facsimile transmission, such notice shall be deemed to be delivered on the date of transmission with confirmed receipt. Each such notice shall state the time, place and purposes thereof, except as otherwise in these By-laws expressly provided. Unless required by the laws of the Commonwealth of Puerto Rico or by these By-laws, such notice shall not be required to be given to any director who shall be present at such meeting, or who shall waive such notice in writing or by telegraph, cable or radio, whether before or after the meeting, and any meeting of the Board of Directors shall be a legal meeting without any notice thereof having been given if all of the directors shall be present thereat. Whenever the provisions of the laws of the Commonwealth of Puerto Rico or the Certificate of Incorporation of the Corporation or these By-laws require that a meeting of the directors shall be duly called for a specific purpose, or that a certain notice of the time, place and purposes of any such meeting shall be given, in order that certain action may be taken at such meeting, a written waiver of notice of the time, place and purposes of such meeting, whether regular or special, signed by every director not present in person, either before or after the time fixed for holding said meeting, shall be deemed equivalent to such call and notice, and 6 6 such action if taken at any such meeting shall be as valid as if call and notice had been duly given. Section 6. Quorum. Two (2) directors shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, but if less than such a quorum is present at a meeting, a majority of the directors present may adjourn the meeting from time to time without further notice. Section 7. Manner of Acting. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. Section 8. Removal of Directors. Any director may be removed, either with or without cause, at any time, by the affirmative vote of the holders of a majority of the outstanding stock entitled to vote for the election of directors of the Corporation, at a special meeting of the shareholders called and held for such purpose. Section 9. Vacancies. Any vacancy or vacancies in the Board of Directors resulting from death, resignation, removal, an increase in the authorized number of directors, or any other cause, may be filled by a majority vote of the remaining directors, though less than a quorum, or by the shareholders of the Corporation at the next annual meeting or any special meeting called for such purpose, and each director so elected shall hold office until the next annual election of directors and until his successor shall be duly elected and qualified, or until his death, resignation or removal. Section 10. Compensation. By resolution of the Board of Directors, the directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors or any committee thereof, and may be paid such fee for attendance at each meeting of the Board of Directors or such stated salary as director as shall be fixed by the Board of Directors; provided, however, that directors who are also employees of the Corporation shall not be paid any additional fees or salary besides what they are entitled to receive as employees of the Corporation. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Section 11. Committees. (a) The Board of Directors may, by resolution or resolutions passed by a majority of the whole Board, designate one or more committees to consist of one or more of the directors of the Corporation. Any such committee, to the extent provided in the 7 7 resolution or resolutions or in these By-laws, shall have and may exercise the powers of the Board of Directors (to the extent permitted by the laws of the Commonwealth of Puerto Rico) in the management of the business and the affairs of the Corporation and may have power to authorize the seal of the Corporation to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. (b) Committees shall meet at such times and at such place or places as may be provided by such rules of procedure as the committee may adopt, or by resolution of the Board of Directors. At every meeting of the committee the presence of a majority of all the members shall be necessary to constitute a quorum and the affirmative vote of a majority of the members present shall be necessary for the adoption by it of any resolution. Section 12. Action without a Meeting. Any action required to be taken at a meeting of the Board of Directors, or any action which may be taken at a meeting of the Board of Directors or a committee thereof, may be taken without a meeting if a consent in writing, setting forth the action so to be taken, is signed by all the directors or all the members of the committee, as the case may be, and filed in the minutes of the proceedings of the Board or of the committee. Such consent shall have the same effect as a unanimous vote. ARTICLE IV OFFICERS Section 1. Officers. The officers of the Corporation shall be a president, one or more vice presidents (the number thereof to be determined by the Board of Directors), a secretary and a treasurer. In addition, the Board of Directors may elect one or more assistant treasurers, assistant secretaries and such other officers, assistant officers and agents as it may deem advisable. More than two offices may be held by the same person. Section 2. Election and Term of Office. The officers of the Corporation to be elected by the Board of Directors shall be elected annually at the first meeting of the Board of Directors following the annual election of directors. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as may be convenient. Each officer shall hold office until his successor shall be duly elected and qualified or until his death or until he/she shall resign or shall have been removed in the manner hereinafter provided. 8 8 Section 3. Removal of Officers. Any officer may be removed, either with or without cause, by the vote of a majority of the whole Board of Directors or, except in case of any officer elected by the Board of Directors, by any superior officer upon whom the power of removal may be conferred by the Board of Directors or by these By-laws. Section 4. Vacancies. A vacancy in any office resulting from death, resignation, removal, or any other cause, may be filled by the Board of Directors for the unexpired portion of the term. Section 5. The President. The President shall be the chief executive officer of the Corporation and shall have responsibility for the general and active management and supervision of the business of the Corporation, and shall see that all orders and resolutions of the Board of Directors are carried into effect. He/she shall have the authority to execute all conveyances, contracts, or other obligations in the name of the Corporation except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the Corporation. He/she shall preside at all meetings of the shareholders and directors and shall be ex-officio a member of all standing committees of the Board. Section 6. The Vice Presidents. Each Vice President shall have such powers and perform such duties as the Board of Directors may determine or as may be assigned to him/her by the President. In the absence of the President or in the event of his death, or inability or refusal to act, the Vice President (or in the event there be more than one Vice President, the vice presidents in the order designated at the time of their election, or in the absence of any designation, then in the order of their election) shall perform the duties of the President, and when so acting, shall have all the powers and be subject to all the restrictions upon the President. Section 7. The Secretary. The Secretary shall (a) keep the minutes of the meetings of the shareholders, the Board of Directors and all other committees, if any, for which a secretary shall not have been appointed, in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these By-laws and as required by law; (c) be custodian of the corporate records and of the seal of the Corporation and see that the seal of the Corporation is affixed to all documents, the execution of which on behalf of the Corporation under its seal is duly authorized; and (d) in general perform all duties incident to the office of secretary and such other duties as from time to time may be assigned to him/her by the President or by the Board of Directors. 9 9 Section 8. The Treasurer. The Treasurer shall (a) have charge and custody of and be responsible for all funds and securities of the Corporation; (b) in general perform all duties incident to the office of treasurer and such other duties as from time to time may be assigned to him/her by the President or by the Board of Directors. He/she shall, if required by the Board of Directors, give a bond for the faithful discharge of his duties in such sum and with such surety or sureties as the Board of Directors shall determine. Section 9. Assistant Secretaries and Assistant Treasurers. At the request of the Secretary or in his absence or disability, one or more assistant secretaries designated by him/her or by the Board of Directors shall have all the powers of the Secretary. At the request of the Treasurer or in his absence or disability, one or more assistant treasurers designated by him/her or by the Board of Directors shall have all the powers of the treasurer. The assistant secretaries and assistant treasurers, in general, shall perform such duties as shall be assigned to them by the Secretary or the Treasurer, respectively, or by the President or the Board of Directors. Section 10. Action with Respect to Securities of Other Corporations. Unless otherwise directed by the Board of Directors, the President or its designees shall have power to vote and otherwise act on behalf of the Corporation, in person or by proxy, at any meeting of shareholders of or with respect to any action of shareholders of any other corporation in which this Corporation may hold securities and to otherwise exercise any and all rights and powers which this Corporation may possess by reason of its ownership of securities in such other corporation. ARTICLE V CONTRACTS, CHECKS AND DEPOSITS Section 1. Contracts. Except as otherwise provided by law, these By-laws or resolutions of the Board of Directors, any contract or other instrument shall be valid and binding on the Corporation if executed and delivered in its name and on its behalf by the President or in the President's absence or disability by any Vice President. The Board of Directors may, however, authorize any other officer or officers or other agent or agents to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances. Section 2. Checks, Drafts, etc. All checks, drafts or other orders for the payment of money, notes, or other evidences of 10 10 indebtedness issued in the name of the Corporation shall be signed by such officer or officers or other agent or agents of the Corporation and in such manner as shall from time to time be determined by resolution of the Board of Directors. Each of such officers and agents shall give such bond, if any, as the Board of Directors may require. Section 3. Deposits. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies, or other depositaries as the Board of Directors may select or as may be designated by any officer or officers of the Corporation. ARTICLE VI CERTIFICATES FOR SHARES AND THEIR TRANSFER Section 1. Certificates for Shares. Every holder of shares of the Corporation shall be entitled to have a certificate representing all shares to which he/she is entitled. The certificates shall be signed by the President or any Vice President and the Secretary or an Assistant Secretary. Such signatures may be facsimiles if the certificate is manually signed on behalf of a transfer agent or registrar other than the Corporation itself or an employee of the Corporation. In case any officer who signed, or whose facsimile signature has been placed upon, such certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the Corporation with the same effect as if he/she were such officer at the date of its issuance. No certificate shall be issued for any share until the share is fully paid. The person in whose name any shares shall stand on the books of the Corporation shall be deemed by the Corporation to be the owner thereof for all purposes. All certificates surrendered to the Corporation for transfer shall be cancelled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and cancelled, except as otherwise provided in the Certificate of Incorporation and except that in case of a lost, destroyed or mutilated certificate a new one may be issued therefor upon such terms and indemnity to the Corporation as the Board of Directors may prescribe. Section 2. Transfer of Shares. Transfer of shares of the Corporation shall be made only on the stock transfer books of the Corporation by the holder of record thereof or by his legal representative who shall furnish proper evidence of authority to transfer, or by his attorney thereunto authorized by power of attorney duly executed, and on surrender for cancellation of the certificate for such shares. 11 11 Section 3. Shareholders Record Date. In order that the Corporation may determine the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than sixty days prior to any other action. A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. ARTICLE VII FISCAL YEAR The fiscal year of the Corporation shall be the period from January 1 to December 31, unless otherwise determined by the Board of Directors. ARTICLE VIII SEAL The corporate seal of the Corporation shall be in the form of a circle and shall include the name of the Corporation and reference to the year and place of its incorporation. ARTICLE IX INDEMNIFICATION Section 1. Actions Other Than Those by or in the Right of the Corporation. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he/she is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him/her in connection with such action, suit or proceeding if he/she acted in good faith and in a manner he/she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with 12 12 respect to any criminal action or proceeding, had no reasonable cause to believe his/her conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not of itself, create a presumption that the person did not act in good faith and in a manner which he/she reasonably believed to be in or not opposed to the best interests of the Corporation, and with respect to any criminal action or proceeding, has reasonable cause to believe that his/her conduct is unlawful. Section 2. Actions by or in the Right of the Corporation. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he/she is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him/her in connection with the defense or settlement of such action or suit if he/she acted in good faith and in a manner he/she reasonably believed to be in or not opposed to the best interests of the Corporation and except that no indemnification shall be made in respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper. Section 3. Actual Expenses. To the extent that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Sections 1 and 2 of this Article, or in defense of any claim, issue or matter therein, he/she shall be indemnified against expenses (including attorneys' fees) actually reasonably incurred by him/her in connection therewith. Section 4. Authorization. Any indemnification under Sections 1 and 2 of this Article (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he/she has met the applicable standard of conduct set forth in Sections 1 and 2 of this Article. Such determination shall be made (a) by the Board of Directors by a majority vote of a quorum consisting of 13 13 directors who were not parties to such action, suit or proceedings, or (b) if such a quorum is not obtainable, or even if obtainable a quorum of disinterested directors so directs, by independent legal counsel (who may be general counsel to the Corporation) in a written opinion, or (c) by the shareholders if submitted to them by the Board of Directors. Section 5. Payment of Expenses in Advance. Expenses incurred in defending a civil or criminal action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay such amount if, it shall ultimately be determined that he/she is not entitled to be indemnified by the Corporation as authorized in this Article. Section 6. Indemnification Non-Exclusive. The indemnification provided by this Article shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any law, agreement, vote of shareholders or disinterested directors or otherwise, both as to action in his/her official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. Notwithstanding any other provisions set forth in this Section, the indemnification authorized and provided hereby shall be applicable only to the extent that any such indemnification shall not duplicate indemnity or reimbursement which such person has received or shall receive otherwise than under this Article. Section 7. Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him/her and incurred by him/her in any such capacity, or arising out of his/her status as such, whether or not the Corporation would have the powers to indemnify him/her against such liability under the provisions of this Article or otherwise. Section 8. Separability. This Article shall be interpreted to provide indemnification to the fullest extent permitted by law. If any part of this Article shall be found to be invalid or ineffective in any action, suit or proceeding, the validity and the effect of the remaining parts shall not be affected. The provisions of this Article shall be applicable to all actions, claims, suits or proceedings, whether made or commenced before or after the 14 14 adoption hereof and whether arising from acts or omissions to act occurring before or after its adoption. ARTICLE X AMENDMENTS These By-Laws may be altered, amended or repealed, and new By-Laws may be adopted, by the Board of Directors or by the affirmative vote of the majority of the shares of outstanding capital stock having voting rights. EX-27 4 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF DORAL PROPERTIES, INC. FOR THE PERIOD FROM JULY 21, 1999 TO DECEMBER 31, 1999 AND IT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1 YEAR DEC-31-1999 JUL-21-1999 DEC-31-1999 30,525,524 0 136,632 0 0 30,662,156 13,811,060 0 46,516,553 1,251,553 44,765,000 0 0 20 499,980 46,516,553 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
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