Exhibit 10.1
EXECUTION COPY
 
 
STOCK PURCHASE AGREEMENT
by and among
DORAL FINANCIAL CORPORATION,
DORAL HOLDINGS DELAWARE, LLC
and
(solely for purposes of Section 5.15)
DORAL HOLDINGS, L.P.
dated as of May 16, 2007
 
 

 

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Table of Contents

                              Page  
 
                ARTICLE I AGREEMENT TO SELL AND PURCHASE COMMON STOCK     1  
 
  SECTION 1.1   Sale and Purchase     1  
 
                ARTICLE II CLOSING, DELIVERY AND PAYMENT     2  
 
  SECTION 2.1   Closing     2  
 
  SECTION 2.2   Closing Deliveries     2  
 
                ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY     3
 
 
  SECTION 3.1   Organization, Good Standing and Qualification of the Company and
the Company’s Subsidiaries     3  
 
  SECTION 3.2   Company Subsidiaries     4  
 
  SECTION 3.3   Capitalization     4  
 
  SECTION 3.4   Authority; No Conflict     6  
 
  SECTION 3.5   Consents     7  
 
  SECTION 3.6   SEC Documents; Other Reports; Internal Controls     8  
 
  SECTION 3.7   Financial Statements; Absence of Undisclosed Liabilities     9  
 
  SECTION 3.8   Absence of Certain Changes     10  
 
  SECTION 3.9   Title to Properties and Assets; Encumbrances; Condition     10  
 
  SECTION 3.10   Compliance with Law; Permits     11  
 
  SECTION 3.11   Agreements with Regulatory Agencies     12  
 
  SECTION 3.12   Litigation     12  
 
  SECTION 3.13   Certain Contracts     13  
 
  SECTION 3.14   Insurance     14  
 
  SECTION 3.15   Tax Matters     14  
 
  SECTION 3.16   Environmental and Safety Laws     17  
 
  SECTION 3.17   Intellectual Property     17  
 
  SECTION 3.18   Employee Matters     18  
 
  SECTION 3.19   Employee Benefit Plans     18  
 
  SECTION 3.20   Board Approval; Requisite Shareholder Approvals     20  
 
  SECTION 3.21   Opinion of Financial Advisor     20  
 
  SECTION 3.22   Broker’s Fees     20  
 
  SECTION 3.23   Loan Matters     21  
 
  SECTION 3.24   Interest Rate Risk Management Instruments     22  
 
  SECTION 3.25   Transactions with Affiliates     22  
 
  SECTION 3.26   Valid Offering     22  
 
  SECTION 3.27   Takeover Statutes; No Rights Plan     23  
 
                ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER    
23  
 
  SECTION 4.1   Organization; Authority; No Conflict     23  
 
  SECTION 4.2   Investment Representations     24  
 
  SECTION 4.3   Consents     24  
 
  SECTION 4.4   Litigation     25  
 
  SECTION 4.5   Financing     25  

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                              Page    
 
  SECTION 4.6   No Brokers     25  
 
  SECTION 4.7   Parent Company; Subsidiaries     25  
 
  SECTION 4.8   Limited Guaranty     25  
 
  SECTION 4.9   No Other Operations     25  
 
                ARTICLE V COVENANTS     26  
 
  SECTION 5.1   Conduct of Business Prior to the Closing     26  
 
  SECTION 5.2   Company Forbearances     26  
 
  SECTION 5.3   Access     30  
 
  SECTION 5.4   Use of Proceeds     31  
 
  SECTION 5.5   Proxy Statement     31  
 
  SECTION 5.6   Company Shareholders Meeting     32  
 
  SECTION 5.7   No Solicitation of Competing Proposal     33  
 
  SECTION 5.8   Efforts     36  
 
  SECTION 5.9   Notification of Certain Matters     36  
 
  SECTION 5.10   Regulatory and Other Authorizations; Notices and Consents    
37  
 
  SECTION 5.11   Shareholder Litigation     37  
 
  SECTION 5.12   Appointment of Directors     38  
 
  SECTION 5.13   Termination of Company Stock Options; Employee Benefits     38
 
 
  SECTION 5.14   Directors’ and Officers’ Indemnification and Insurance     39  
 
  SECTION 5.15   Financing     40  
 
  SECTION 5.16   Takeover Statutes     41  
 
  SECTION 5.17   Deferred Tax Confirmation     41  
 
  SECTION 5.18   Stock Exchange Listing     41  
 
  SECTION 5.19   Public Announcements     41  
 
                ARTICLE VI CONDITIONS TO CLOSING     42  
 
  SECTION 6.1   Conditions to the Obligations of the Purchaser     42  
 
  SECTION 6.2   Conditions to Obligations of the Company     45  
 
                ARTICLE VII TERMINATION AND AMENDMENT     46  
 
  SECTION 7.1   Termination     46  
 
  SECTION 7.2   Effect of Termination     47  
 
                ARTICLE VIII MISCELLANEOUS     50  
 
  SECTION 8.1   Other Definitions; Terms Generally     50  
 
  SECTION 8.2   Representations and Warranties     51  
 
  SECTION 8.3   Governing Law; Jurisdiction; Waiver of Jury Trial     51  
 
  SECTION 8.4   Successors and Assigns; Assignment; No Third Party Beneficiaries
    52  
 
  SECTION 8.5   Entire Agreement     53  
 
  SECTION 8.6   Severability     53  
 
  SECTION 8.7   Amendment and Waiver     53  
 
  SECTION 8.8   Delays or Omissions     53  
 
  SECTION 8.9   Notices     54  
 
  SECTION 8.10   Expenses     55  
 
  SECTION 8.11   Titles and Subtitles     55  

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                              Page    
 
  SECTION 8.12   Remedies     55  
 
  SECTION 8.13   Counterparts; Execution by Facsimile Signature     56  

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Exhibits
Exhibit A — Form of Securityholders and Registration Rights Agreement
Exhibit B — Form of Advisory Agreement
Exhibit C — Form of Amendment to Certificate of Incorporation
Exhibit D — Form of Deferred Tax Confirmation

iv

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Index of Principal Terms

          Defined Term   Page(s)  
 
       
2007 Notes
    31  
Actions
    11  
Additional Equity Commitments
    41  
Additional Proceeds
    45  
Adjustment Factor
    1  
Advisory Agreement
    6  
Affiliate
    51  
Agreement
    1  
Bankruptcy Law
    51  
Bear Stearns
    44  
BHC Act
    4  
Business Day
    51  
Change in Recommendation
    34  
Charter Amendment
    20  
Closing
    2  
Closing Date
    2  
Commissioner
    7  
Common Stock
    1  
Company
    1  
Company Contract
    14  
Company Disclosure Schedule
    3  
Company Employees
    19  
Company Intellectual Property
    17  
Company Preferred Stock
    4  
Company Process Agent
    53  
Company Recommendation
    32  
Company Regulatory Agreement
    12  
Company Representatives
    30  
Company Shareholders Meeting
    32  
Company Stock Options
    5  
Company Stock Plans
    5  
Competing Proposal
    36  
Confidential Information
    30  
control
    51  
Convertible Preferred Stock
    4  
CRA
    12  
Current D&O Policies
    40  
Current Employees
    39  
Custodian
    51  
D&O Insurance
    40  
Deferred Tax Confirmation
    45  

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          Defined Term   Page(s)    
Encumbrance
    4  
Environmental Laws
    17  
Equity Commitments
    41  
ERISA
    19  
ERISA Affiliate
    19  
Exchange Act
    8  
Existing Equity Commitments
    25  
Fannie Mae
    22  
FDIC
    4  
Federal Reserve Board
    7  
Fee Agreements
    51  
FHLB
    4  
Freddie Mac
    22  
GAAP
    3  
Ginnie Mae
    22  
Governmental Entity
    8  
Guarantors
    26  
HSR Act
    7  
HUD
    22  
Indemnification Provisions
    39  
Indemnitees
    39  
Intellectual Property
    17  
Law
    7  
Limited Guaranty
    26  
Loans
    21  
Material Adverse Effect
    3  
NASD
    7  
Notice of Superior Proposal
    35  
NYSE
    7  
Offering Materials
    41  
Order
    7  
Outside Date
    50  
Parent
    1  
PBGC
    20  
Permits
    11  
Person
    51  
Plan
    18  
Pool
    22  
Pre-Closing Period
    26  
PRGCL
    7  
Proxy Statement
    32  
Purchase Price
    1  
Purchased Stock
    1  
Purchaser
    1  
Purchaser Disclosure Schedule
    23  
Purchaser Organizational Documents
    44  

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          Defined Term   Page(s)    
Purchaser Related Parties
    57  
Purchaser Representatives
    30  
Qualifying Competing Proposal
    50  
Regulation O
    21  
Requisite Regulatory Approvals
    44  
Requisite Shareholder Approvals
    21  
Reverse Stock Split
    27  
SEC
    7  
SEC Reports
    8  
Securities Act
    8  
Securityholders Agreement
    6  
Series A Preferred Stock
    4  
Series B Preferred Stock
    4  
Series C Preferred Stock
    4  
Settlement Agreement
    13  
Shareholder Litigation
    13  
Short-Term Maturity Extension
    50  
Significant Subsidiary
    51  
Specified Percentage
    40  
Specified Regulatory Agreements
    12  
Subsidiary
    51  
Superior Proposal
    36  
Takeover Statute
    23  
Tax Authority
    17  
Tax Return
    16  
Taxes
    16  
Termination Fee
    49  
Transaction Agreements
    6  
Triggering Competing Proposal
    49  
VA
    22  
Voting Agreement
    37  
Voting Debt
    5  

7

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STOCK PURCHASE AGREEMENT
          THIS STOCK PURCHASE AGREEMENT (this “Agreement”) is entered into as of
May 16, 2007, by and among Doral Financial Corporation, a corporation organized
under the laws of the Commonwealth of Puerto Rico (the “Company”), Doral
Holdings Delaware, LLC, a Delaware limited liability company (the “Purchaser”),
and (solely for purposes of Section 5.15) Doral Holdings, L.P., a Cayman Islands
limited partnership (“Parent”).
RECITALS
          WHEREAS, subject to the terms and conditions set forth in this
Agreement, the Company has agreed to sell to the Purchaser and the Purchaser has
agreed to purchase from the Company 968,253,968 shares (the “Purchased Stock”)
of its common stock (the “Common Stock”), par value (upon the Closing) $0.01 per
share; and
          WHEREAS, the parties hereto are entering into this Agreement to
provide for the purchase and sale of the Purchased Stock.
          NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
AGREEMENT TO SELL AND PURCHASE
COMMON STOCK
          SECTION 1.1 Sale and Purchase. (a) Subject to the terms and conditions
hereof, the Company hereby agrees to issue and sell to the Purchaser, and the
Purchaser agrees to purchase from the Company, at the Closing (as defined
below), the Purchased Stock for a purchase price of $0.63 per share, or
$610,000,000 in the aggregate (such aggregate price, the “Purchase Price”).
          (b) In the event that, subsequent to the date of this Agreement but
prior to the Closing, the outstanding shares of Common Stock shall have been
increased, decreased, changed into or exchanged for a different number or kind
of shares or securities through any reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split, or other
like changes in the Company’s capitalization, (i) the number of shares of Common
Stock constituting the Purchased Stock shall be multiplied by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately after, and the denominator of which shall be the number of such
shares outstanding immediately before, the occurrence of such event (the
“Adjustment Factor”), and the resulting number shall from and after the date of
such event be the number of shares of Common Stock constituting the Purchased
Stock, subject to further adjustment in accordance with this sentence, and
(ii) the purchase price per share of Purchased Stock shall be divided by the
Adjustment Factor, and the resulting number shall from

 

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2
and after the date of such event be the purchase price per share of Purchased
Stock, subject to further adjustment in accordance with this sentence.
ARTICLE II
CLOSING, DELIVERY AND PAYMENT
          SECTION 2.1 Closing. The closing (the “Closing”) of the sale and
purchase of the Purchased Stock under this Agreement shall take place on the
second Business Day after the satisfaction or waiver of the conditions set forth
in Article VI (other than those conditions which by their terms are to be
satisfied at the Closing, but subject to the satisfaction or waiver of those
conditions at the Closing), at the offices of Simpson Thacher & Bartlett LLP,
425 Lexington Avenue, New York, New York 10017, or at such other time or place
within the United States as the Company and the Purchaser may mutually agree
(such date, the “Closing Date”). All right, title and interest in or to the
Purchased Stock and the Purchase Price shall be transferred from the Company to
the Purchaser and from the Purchaser to the Company, respectively, at the place
of the Closing.
          SECTION 2.2 Closing Deliveries. (a) At the Closing, subject to the
terms and conditions hereof, the Company will deliver to the Purchaser:
     (i) stock certificates evidencing the Purchased Stock, or evidence of
issuance of the Purchased Stock in book entry form, in either case free and
clear of any Encumbrances (as defined below) (other than those created by the
Purchaser), registered in the name of the Purchaser or one or more of its
nominees, in form reasonably satisfactory to the Purchaser;
     (ii) a receipt for the Purchase Price; and
     (iii) the duly executed Transaction Agreements, certificates and other
documents required to be delivered pursuant to Section 6.1.
          (b) At the Closing, subject to the terms and conditions hereof, the
Purchaser shall deliver to the Company:
     (i) the Purchase Price by wire transfer of immediately available funds to
an account designated by the Company at least two Business Days prior to the
Closing Date;
     (ii) a receipt for the Purchased Stock; and
     (iii) the duly executed Transaction Agreements, certificates and other
documents required to be delivered pursuant to Section 6.2.

 

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3
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
          Except (i) as disclosed in (x) the Company’s Annual Report on Form
10-K for the year ended December 31, 2004, as filed on March 15, 2005, and as
amended by Amendment No. 1 thereto filed on February 27, 2006, and (y) the SEC
Reports filed since June 30, 2006 and prior to the date of this Agreement (other
than any such disclosures (x) made solely in the exhibits and schedules thereto,
documents incorporated by reference therein, the “Risk Factors” sections thereof
or in any section relating to forward-looking statements or (y) included in such
filings that are cautionary, predictive or forward-looking in nature) or (ii) as
disclosed in the corresponding section of the disclosure schedule provided by
the Company to the Purchaser on the date hereof (the “Company Disclosure
Schedule”) (it being agreed that, except as otherwise expressly provided in the
Company Disclosure Schedule, disclosure of any item in any section of the
Company Disclosure Schedule shall be deemed disclosure with respect to any other
section to which the relevance of such item is reasonably apparent on its face),
the Company represents and warrants to the Purchaser as follows:
          SECTION 3.1 Organization, Good Standing and Qualification of the
Company and the Company’s Subsidiaries. The Company and each Subsidiary of the
Company is a corporation or other entity duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
formation, as the case may be, and has all requisite corporate or other power
and authority to own, lease and operate its properties and assets and to carry
on its business as currently conducted. The Company and each Subsidiary of the
Company is duly qualified and is authorized to do business and is in good
standing as a foreign corporation or other entity in all jurisdictions in which
the character or location of its activities or of the properties owned or
operated by it makes such qualification necessary, except for any such failures
to be so qualified, authorized or in good standing, individually or in the
aggregate, as would not reasonably be expected to have a Material Adverse
Effect. The Company has made available to the Purchaser true, complete and
correct copies of its certificate of incorporation and by-laws and the
certificate of incorporation and by-laws (or other equivalent organizational
documents) of each Subsidiary of the Company, in each case as amended to, and as
in effect as of, the date of this Agreement. For purposes of this Agreement,
“Material Adverse Effect” shall mean a material adverse effect on (x) the
business, operations, properties, assets, liabilities, financial condition or
results of operations of the Company and its Subsidiaries, taken as a whole, or
(y) the ability of the Company to perform its obligations under this Agreement
and the other Transaction Agreements and to consummate the transactions
contemplated hereby and thereby on a timely basis; provided, however, that in
determining whether a Material Adverse Effect has occurred pursuant to clause
(x) above, there shall be excluded any effect the cause of which is (i) any
change after the date of this Agreement in laws, rules or regulations of general
applicability or published interpretations thereof by Governmental Entities or
in U.S. generally accepted accounting principles (“GAAP”) or regulatory
accounting requirements, in any such case applicable to banks, savings
associations or their holding companies generally, (ii) the pendency or the
announcement of the transactions contemplated by this Agreement (including, for
the avoidance of doubt, any halt in trading of shares of Common Stock on the
NYSE under NYSE Rule 123D(3)), (iii) the performance of obligations required by
this Agreement or consented to in writing by the Purchaser, (iv) factors
generally affecting the banking industry as

 

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a whole, (v) any changes in general economic or political conditions or changes
affecting the securities, credit or financial markets in general (including any
disruptions thereof and any changes in interest rates in general) in the United
States and Puerto Rico, and (vi) acts of war or terrorism (other than any such
acts that cause any damage or destruction to or render unusable any facility or
property of the Company or any of its Subsidiaries or that render any such
facilities or properties inaccessible), provided that the effect of such
changes, effects, circumstances or developments described in clauses (iv),
(v) or (vi) shall not be excluded to the extent of the disproportionate impact,
if any, they have on the Company and its Subsidiaries (relative to other banks,
savings associations or their holding companies in the United States and Puerto
Rico). The Company is a bank holding company and, as of the date of this
Agreement, a financial holding company duly registered under the Bank Holding
Company Act of 1956, as amended (the “BHC Act”).
          SECTION 3.2 Company Subsidiaries. (a) The only direct or indirect
Subsidiaries of the Company are those listed in Section 3.2 of the Company
Disclosure Schedule. All the outstanding shares of capital stock of each
Subsidiary have been duly authorized and validly issued and are fully paid and
nonassessable and not subject to any preemptive or similar rights and (other
than directors’ qualifying shares, if any) are owned, either directly or
indirectly through a wholly-owned Subsidiary, by the Company, free and clear of
all Encumbrances. For purposes of this Agreement, “Encumbrance” means any
security interest, pledge, mortgage, lien (statutory or other), charge, option
to purchase, lease, claim, restriction, covenant, title defect, hypothecation,
assignment, deposit arrangement or other encumbrance of any kind or any
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever (including any conditional sale or other title
retention agreement).
          (b) Except for its ownership of Doral Bank and Doral Bank, FSB, the
Company does not own, beneficially or of record, either directly or through its
Subsidiaries, any stock or other equity interest in any depository institution
(as defined in 12 U.S.C. Section 1813(c)(1)). The deposits of each of Doral Bank
and Doral Bank, FSB are insured by the Federal Deposit Insurance Corporation
(the “FDIC”) to the fullest extent permitted by law. Each of Doral Bank and
Doral Bank, FSB is a member of the Federal Home Loan Bank (“FHLB”) of New York.
          SECTION 3.3 Capitalization. (a) The authorized capital stock of the
Company consists of (i) as of the date of this Agreement, 500,000,000 shares of
Common Stock, par value $1.00 per share, and as of the Closing Date,
1,950,000,000 shares of Common Stock, par value $0.01 per share, and
(ii) 40,000,000 shares of preferred stock, par value $1.00 per share (the
“Company Preferred Stock”), of which 1,495,000 have been designated as 7%
Noncumulative Monthly Income Preferred Stock, Series A, liquidation preference
$50.00 per share (the “Series A Preferred Stock”), 2,000,000 have been
designated as 8.35% Noncumulative Monthly Income Preferred Stock, Series B,
liquidation preference $25.00 per share (the “Series B Preferred Stock”),
4,140,000 have been designated as 7.25% Noncumulative Monthly Income Preferred
Stock, Series C, liquidation preference $25.00 per share (the “Series C
Preferred Stock”) and 1,380,000 have been designated as 4.75% Perpetual
Cumulative Convertible Preferred Stock, liquidation value $250.00 per share (the
“Convertible Preferred Stock”), of which there are, as of the date of this
Agreement, 107,948,236 shares of Common Stock outstanding, 1,495,000 shares of
Series A Preferred Stock outstanding, 2,000,000 shares of Series B Preferred
Stock outstanding, 4,140,000 shares of Series C Preferred Stock outstanding

 

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5
and 1,380,000 shares of Convertible Preferred Stock outstanding. No other shares
of Common Stock or Company Preferred Stock are issued or outstanding. As of the
date of this Agreement, no shares of Common Stock or Company Preferred Stock
were reserved for issuances, except for (i) an aggregate of 20,700 shares of
Common Stock reserved for issuance upon exercise of options to purchase shares
of Common Stock (the “Company Stock Options”) under the 1997 Employee Option
Plan, (ii) an aggregate of 4,000,000 shares of Common Stock reserved for
issuance under the Omnibus Incentive Plan (together with the 1997 Employee
Option Plan, the “Company Stock Plans”), including (x) an aggregate of 1,650,000
shares of Common Stock reserved for issuance upon exercise of Company Stock
Options granted pursuant to the Omnibus Incentive Plan and (y) 200,000 shares of
Common Stock reserved for issuance pursuant to restricted stock unit awards
granted pursuant to the Omnibus Incentive Plan and (iii) an aggregate of
8,674,128 shares of Common Stock reserved for issuance upon conversion of the
Convertible Preferred Stock. All of the issued and outstanding shares of Common
Stock and Company Preferred Stock have been duly authorized and validly issued
and are fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. Section 3.3(a) of the
Company Disclosure Schedule contains a list setting forth as of the date of this
Agreement all outstanding Company Stock Options and restricted stock units
granted pursuant to the Company Stock Plans, the names of the optionees or
grantees, the date each such option or grant was granted, the number of shares
subject to each such option or restricted stock unit grant, the expiration date
of each such option or grant, any vesting schedule with respect to an option or
grant which is not yet fully vested, and the price at which each such option or
grant may be exercised.
          (b) There are no outstanding bonds, debentures, notes, debt securities
or other indebtedness for borrowed money of the Company or any of its
Subsidiaries having the right to vote (or convertible into or exercisable or
exchangeable for securities having the right to vote) on any matters on which
the shareholders of the Company or any of its Subsidiaries may vote (“Voting
Debt”). Section 3.3(b) of the Company Disclosure Schedule sets forth a true and
complete list of all indebtedness for borrowed money (other than deposit
liabilities, advances and loans from the FHLB of New York and sales of
securities subject to repurchase, in each case incurred in the ordinary course
of business consistent with past practice) of the Company and its Subsidiaries
with an unpaid principal amount in excess of $1 million on the date of this
Agreement.
          (c) Except as set forth in paragraph (a) above, there are no issued,
outstanding or authorized securities (including securities convertible into or
exercisable or exchangeable for shares of capital stock or other equity or
voting securities) of the Company and (except for the issuance and sale of the
Purchased Stock contemplated by this Agreement) there are no options, warrants,
calls, rights (including “phantom” stock or stock appreciation rights),
commitments, agreements, arrangements or undertakings of any kind to which the
Company or any of its Subsidiaries is a party or by which any of them is bound
obligating the Company or any of its Subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock or
other equity or voting securities of the Company or of any of its Subsidiaries
(or securities convertible into or exercisable or exchangeable for shares of
capital stock or other equity or voting securities) or obligating the Company or
any of its Subsidiaries to issue, grant, extend or enter into any such option,
warrant, call, right, commitment, agreement, arrangement or undertaking. Except
as set forth in the terms of the Company Preferred Stock as in effect on

 

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6
the date hereof, there are no outstanding contractual obligations, commitments,
understandings or arrangements of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire or make any payment in respect of any
shares of capital stock or other equity or voting securities of the Company or
any of its Subsidiaries or other agreements or arrangements with or among any
securityholders of the Company or any of its Subsidiaries with respect to
securities of the Company or any of its Subsidiaries. Except as set forth above,
there are no agreements or arrangements pursuant to which the Company is or
could be required to register shares of Common Stock or other securities of the
Company or any of its Subsidiaries under the Securities Act.
          SECTION 3.4 Authority; No Conflict. (a) The Company has all requisite
corporate power and authority to execute and deliver this Agreement, the
Securityholders and Registration Rights Agreement between the Company and the
Purchaser, in substantially the form attached as Exhibit A hereto (the
“Securityholders Agreement”), the Advisory Agreement between the Company and
Bear Stearns Merchant Manager III (Cayman), L.P. (“BSMM”), substantially in the
form attached as Exhibit B hereto (the “Advisory Agreement” and, together with
this Agreement and the Securityholders Agreement, the “Transaction Agreements”)
and, subject to the receipt of the Requisite Shareholder Approvals in the case
of the approval of the Charter Amendment and the issuance of the Purchased Stock
pursuant to this Agreement, to consummate the transactions contemplated hereby
and thereby and to perform its obligations hereunder and thereunder. The
execution and delivery of this Agreement and the other Transaction Agreements
and the consummation of the transactions contemplated hereby and thereby have
been duly and validly approved by all necessary corporate and shareholder action
of the Company, subject to the receipt of the Requisite Shareholder Approvals in
the case of the approval of the Charter Amendment and the issuance of the
Purchased Stock pursuant to this Agreement, and no other corporate or
shareholder proceedings on the part of the Company are necessary to approve this
Agreement or the other Transaction Agreements or to consummate the transactions
contemplated hereby or thereby. This Agreement has been, and the other
Transaction Agreements when executed will be, duly and validly executed and
delivered by the Company and (assuming due authorization, execution and delivery
by the Purchaser or BSMM, as applicable) constitute (or, in the case of the
other Transaction Agreements, will constitute when executed and delivered) valid
and binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or a court of equity and
by bankruptcy, insolvency, reorganization, moratorium, or other similar laws
relating to creditors’ rights and remedies generally.
          (b) The issuance and sale of the Purchased Stock pursuant to this
Agreement is not and will not be subject to any preemptive rights, rights of
first refusal, subscription or similar rights. The Purchased Stock, when issued
in accordance with the terms of this Agreement, will be duly authorized, validly
issued, fully paid and nonassessable, and upon delivery to the Purchaser will be
free and clear of all Encumbrances (other than those created by the Purchaser).
          (c) Neither the execution and delivery of this Agreement or the other
Transaction Agreements by the Company nor the consummation by the Company of the
transactions contemplated hereby or thereby, nor compliance by the Company with
any of the terms or provisions hereof or thereof, will (i) subject to the
receipt of the Requisite Shareholder

 

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Approvals in the case of the approval of the Charter Amendment, violate any
provision of the certificate of incorporation or by-laws of the Company or any
of the similar governing documents of any of its Subsidiaries or (ii) assuming
that the consents and approvals referred to in Section 3.5 are duly obtained,
(x) violate any statute, law, code, ordinance, rule or regulation of any
Governmental Entity (“Law”), or any judgment, order, writ, decision, settlement,
stipulation, decree or injunction (an “Order”) applicable to the Company or any
of its Subsidiaries or any of their respective properties or assets, or
(y) violate, conflict with, result in a breach of any provision of or the loss
of any benefit under, constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, result in the
termination of or a right of termination or cancellation under, accelerate the
performance required by, or result in the creation of any Encumbrance upon any
of the respective properties or assets of the Company or any of its Subsidiaries
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease or other agreement, instrument or
obligation to which the Company or any of its Subsidiaries is a party, or by
which they or any of their respective properties or assets may be bound or
affected, except (in the case of clause (y) above) for such violations,
conflicts, breaches, defaults or other events which would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
          SECTION 3.5 Consents. Except for (i) the filing of applications and
notices, as applicable, with the Board of Governors of the Federal Reserve
System (the “Federal Reserve Board”) under the BHC Act and the Office of the
Commissioner of Financial Institutions of Puerto Rico (the “Commissioner”) under
the Puerto Rico Banking Law and the Puerto Rico Mortgage Institutions Act and
the approval of such applications and notices, (ii) approval of the listing of
the Purchased Stock on the New York Stock Exchange (“NYSE”), (iii) the filing
with the Securities and Exchange Commission (the “SEC”) of a proxy statement in
definitive form relating to the meeting of the shareholders of the Company to be
held to vote on, among other things, the Charter Amendment and the issuance of
the Purchased Stock (the “Proxy Statement”), (iv) the filing of the restated
certificate of incorporation of the Company, reflecting the Charter Amendment,
with the Secretary of State of the Commonwealth of Puerto Rico pursuant to the
Puerto Rico General Corporations Law (the “PRGCL”), (v) the approval of the
Charter Amendment and the issuance of the Purchased Stock by the Requisite
Shareholder Approvals, (vi) notice to and approval of the National Association
of Securities Dealers, Inc., (“NASD”), notice to and approval of the
Commissioner under the Mortgage Institutions Act and notice to the Office of the
Commissioner of Insurance of Puerto Rico, in each case relating to the indirect
change of control of the Subsidiaries of the Company set forth in Section 3.5
(vi) of the Company Disclosure Schedule, (vii) any notices or filings under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”)
and the expiration or termination of any applicable waiting periods thereunder,
and (viii) the consents and approvals of third parties which are not
Governmental Entities, the failure of which to be obtained would not be
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect, no consents or approvals of, or filings or registrations with,
any court, administrative agency or commission or other federal, state, local
(which, for all purposes of this Agreement, shall include the Commonwealth of
Puerto Rico and any subdivision thereof) or foreign governmental authority or
instrumentality or self-regulatory organization (each, a “Governmental Entity”)
or with any other third party are necessary in connection with (A) the execution
and delivery by the Company of this Agreement or the other Transaction
Agreements and (B) the consummation by

 

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the Company of the transactions contemplated hereby and thereby and the
performance by the Company of its obligations hereunder and thereunder. As of
the date of this Agreement, the Company does not know of any reason why the
approvals and authorizations required by Section 6.1(d)(i) should not be
obtained.
          SECTION 3.6 SEC Documents; Other Reports; Internal Controls. (a) The
Company has filed with the SEC and made available to the Purchaser (through the
SEC’s Electronic Data Gathering Analysis and Retrieval System or otherwise) all
forms, reports, schedules, registration statements and other documents required
to be filed by the Company with the SEC since January 1, 2004 (collectively, and
in each case including all exhibits and schedules thereto and documents
incorporated by reference therein, the “SEC Reports”). As of their respective
dates of filing with the SEC (or, if amended or superseded by a subsequent
filing prior to the date hereof, as of the date of such subsequent filing), the
SEC Reports complied in all material respects with the requirements of the
Securities Act of 1933, as amended (the “Securities Act”), or the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), as the case may be, and
the rules and regulations of the SEC thereunder applicable to such SEC Reports,
and none of the SEC Reports when filed (or, if amended or superseded by a
subsequent filing prior to the date hereof, as of the date of such subsequent
filing) contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and there are no outstanding comments from the SEC with respect to
any of the SEC Reports. None of the Company’s Subsidiaries is required to file
periodic reports with the SEC pursuant to Section 13 or 15(d) of the Exchange
Act.
          (b) The Company and each of its Subsidiaries have filed all material
forms, reports, schedules and other documents, together with any amendments
required to be made with respect thereto, that they were required to file since
January 1, 2004 with any Governmental Entity (other than SEC Reports) and have
paid all material fees and assessments due and payable in connection therewith.
Except in connection with the Specified Regulatory Agreements and except for
normal examinations conducted by a Governmental Entity in the regular course of
the business of the Company and its Subsidiaries, no Governmental Entity has
initiated any Action or, to the knowledge of the Company, threatened in writing
an investigation into the business or operations of the Company or any of its
Subsidiaries since January 1, 2004. Except in connection with the Specified
Regulatory Agreements, there is no material unresolved violation or exception by
any Governmental Entity (other than the SEC) with respect to any report, form,
schedule or other document filed by, or relating to any examinations by any such
Governmental Entity of, the Company or any of its Subsidiaries.
          (c) The records, systems, controls, data and information of the
Company and its Subsidiaries are recorded, stored, maintained and operated under
means (including any electronic, mechanical or photographic process, whether
computerized or not) that are under the exclusive ownership and direct control
of the Company or its Subsidiaries or accountants (including all means of access
thereto and therefrom), except for any non-exclusive ownership and non-direct
control that would not reasonably be expected to have a material adverse effect
on the system of internal accounting controls described in the following
sentence. As and to the extent described in the SEC Reports (or, if amended or
superseded by a subsequent filing prior to the date hereof, as and to the extent
described in such subsequent filing), the Company and its

 

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Subsidiaries have devised and maintain a system of internal accounting controls
sufficient to provide reasonable assurances regarding the reliability of
financial reporting and the preparation of financial statements in accordance
with GAAP, including that (i) transactions are executed only in accordance with
management’s authorization; (ii) transactions are recorded as necessary to
permit preparation of the financial statements of the Company and to maintain
accountability for the Company’s assets; (iii) access to the Company’s assets is
permitted only in accordance with management’s authorization; (iv) the reporting
of the Company’s assets is compared with existing assets at regular intervals;
and (v) accounts, notes and other receivables and inventory are recorded
accurately, and proper and adequate procedures are implemented to effect the
collection thereof on a current and timely basis. The Company (A) has designed
disclosure controls and procedures (within the meaning of Rules 13a-15(e) and
15d-15(e) of the Exchange Act) to ensure that material information relating to
the Company and its Subsidiaries is made known to the management of the Company
by others within those entities as appropriate to allow timely decisions
regarding required disclosure and to make the certifications required by the
Exchange Act with respect to documents required to be filed by the Company with
the SEC, and (B) has disclosed, based on its most recent evaluation prior to the
date hereof, to the Company’s auditors and the audit committee of the Company’s
Board of Directors (1) any significant deficiencies in the design or operation
of internal controls which could adversely affect in any material respect the
Company’s ability to record, process, summarize and report financial data and
have identified for the Company’s auditors any material weaknesses in internal
controls and (2) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Company’s internal controls.
The Company has made available to the Purchaser a summary of any such disclosure
made by management to the Company’s auditors and audit committee since
January 1, 2004.
          (d) Since January 1, 2004, (i) neither the Company nor any of its
Subsidiaries nor, to the knowledge of the Company, any director, officer,
employee, auditor, accountant or representative of the Company or any of its
Subsidiaries has received or otherwise had or obtained knowledge of any material
complaint, allegation, assertion or claim, whether written or oral, regarding
the accounting or auditing practices, procedures, methodologies or methods of
the Company or any of its Subsidiaries or their respective internal accounting
controls, including any material complaint, allegation, assertion or claim that
the Company or any of its Subsidiaries has engaged in questionable accounting or
auditing practices, other than routine recommendations made in letters from the
Company’s independent public accountants to the Company’s management, true and
complete copies of which letters have been made available to the Purchaser and
(ii) no attorney representing the Company or any of its Subsidiaries, whether or
not employed by the Company or any of its Subsidiaries, has reported evidence of
a material violation of securities laws, breach of fiduciary duty or similar
violation by the Company or any of its officers, directors, employees or agents
to the Board of Directors of the Company or any committee thereof or to any
director or officer of the Company.
          SECTION 3.7 Financial Statements; Absence of Undisclosed Liabilities.
(a) The consolidated financial statements of the Company (including any related
notes thereto) included in the SEC Reports complied as to form, as of their
respective dates of filing with the SEC (or, if amended or superseded by a
subsequent filing prior to the date hereof, as of the date of such subsequent
filing), in all material respects, with all applicable accounting requirements
and with the published rules and regulations of the SEC with respect thereto
(except, in the case

 

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10
of unaudited statements, as permitted by Form 10-Q of the SEC), have been
prepared in accordance with GAAP applied on a consistent basis during the
periods involved (except as may be disclosed therein), and fairly present, in
all material respects, the consolidated financial position of the Company and
its consolidated Subsidiaries and the consolidated results of operations,
changes in shareholders’ equity and cash flows of such companies as of the dates
and for the periods shown. The books and records of the Company and its
Subsidiaries have been, and are being, maintained in all material respects in
accordance with GAAP and any other applicable legal and accounting requirements
and reflect only actual transactions.
          (b) Except for (i) those liabilities that are fully reflected or
reserved for in the consolidated financial statements of the Company included in
its Annual Report on Form 10-K for the year ended December 31, 2006, as filed
with the SEC on April 30, 2007 (the “2006 Form 10-K”), (ii) liabilities incurred
since December 31, 2006 in the ordinary course of business consistent with past
practice and (iii) liabilities that would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, neither the Company
nor any of its Subsidiaries has incurred any liability of any nature whatsoever
(whether absolute, accrued, contingent or otherwise and whether due or to become
due), other than pursuant to this Agreement and the other Transaction Agreements
or the transactions contemplated hereby and thereby.
          SECTION 3.8 Absence of Certain Changes. Since December 31, 2006,
(i) no event, change or circumstance has occurred which, individually or in the
aggregate, has had or would reasonably be expected to have a Material Adverse
Effect and (ii) neither the Company nor any of its Subsidiaries has taken any
action or entered into any transaction, and no event has occurred, that would
have required the Purchaser’s consent pursuant to Section 5.2 if such action had
been taken, transaction had been entered into or event had occurred, in each
case, after the date of this Agreement.
          SECTION 3.9 Title to Properties and Assets; Encumbrances; Condition.
(a) The Company and its Subsidiaries have good, valid and marketable title to
all material real property owned by them free and clear of all Encumbrances,
except Encumbrances for current Taxes not yet due and payable and other standard
exceptions commonly found in title policies in the jurisdiction where such real
property is located, and such Encumbrances and imperfections of title, if any,
as do not materially detract from the value of the properties and do not
materially interfere with the present or proposed use of such properties. All
real property and fixtures material to the business, operations or financial
condition of the Company and its Subsidiaries are in good condition and repair
except as would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
          (b) The Company and its Subsidiaries have good, valid and marketable
title to all tangible personal property owned by them, free and clear of all
Encumbrances except as would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect.
          (c) All leases of real property and all other leases material to the
Company and its Subsidiaries under which the Company or a Subsidiary, as lessee,
leases personal property are valid and binding in accordance with their
respective terms, there is not under such lease any

 

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11
material existing default by the Company or such Subsidiary or, to the knowledge
of the Company, any other party thereto, or any event which with notice or lapse
of time would constitute such a default, and, in the case of leased premises,
the Company or such Subsidiary quietly enjoys the premises provided for in such
lease, except in any such case as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
          SECTION 3.10 Compliance with Law; Permits. (a) Except in connection
with the matters addressed by the Specified Regulatory Agreements, (i) since
January 1, 2004, the Company and each of its Subsidiaries have complied in all
material respects with, and have not violated in any material respect, all
applicable Laws and Orders and (ii) neither the Company nor any of its
Subsidiaries knows of or has received any written notice since January 1, 2004
of any violation of any Law or Order, except in the case of clause (ii) for any
such violation that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
          (b) Except as would not reasonably be expected to have a Material
Adverse Effect, (i) the Company, each of its Subsidiaries and their respective
officers and employees hold, and have, since January 1, 2004, held, all
licenses, franchises, permits, orders, consents, approvals, registrations,
authorizations, qualifications and filings with and under all federal, state,
local or foreign Laws (“Permits”) necessary for the lawful conduct of their
respective businesses as they are presently being conducted, (ii) all such
Permits are in full force and effect, (iii) the Company and its Subsidiaries
have complied in all respects with the terms of the Permits and there are no
pending modifications, amendments or revocations of any such Permits, and
(iv) there are no pending (or, to the knowledge of the Company, threatened)
legal, administrative, regulatory or other suits, actions, claims, audits,
assessments, arbitrations or other proceedings or, to the knowledge of the
Company, investigations or inquiries (“Actions”) with respect to the possible
revocation, cancellation, suspension, limitation or nonrenewal of any Permits,
and there has occurred no event which (whether with notice or lapse of time or
both) would reasonably be expected to result in or constitute the basis for such
a revocation, cancellation, suspension, limitation or nonrenewal thereof. None
of the execution and delivery of this Agreement and the other Transaction
Agreements, the consummation of the transactions contemplated hereby and thereby
or the performance by the Company of its obligations hereunder and thereunder
will result in the suspension, revocation, impairment, forfeiture or nonrenewal
of any Permit applicable to the Company or any of its Subsidiaries, their
respective businesses or operations or any of their respective assets or
properties, except where such suspension, revocation, impairment, forfeiture or
nonrenewal would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
          (c) The Company and each of its Subsidiaries has administered all
accounts for which it acts as a fiduciary, including accounts for which it
serves as a trustee, agent, custodian, personal representative, guardian,
conservator or investment advisor, in accordance with the terms of the governing
documents, applicable federal, state, local and foreign law and regulation and
common law, except where the failure to so administer such accounts would not
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect. None of the Company, any of its Subsidiaries, or, to
the knowledge of the Company, any director, officer or employee of the Company
or of any of its Subsidiaries, has committed any breach of trust or fiduciary
duty with respect to any such fiduciary account except for any such breach that
would

 

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12
not reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect. Except as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, the accountings for
each such fiduciary account are true and correct and accurately reflect the
assets of such fiduciary account.
          (d) The Company and each of its Subsidiaries is in compliance in all
material respects with the applicable provisions of the Community Reinvestment
Act of 1977 and the regulations promulgated thereunder (collectively, “CRA”).
Doral Bank and Doral Bank, FSB each received CRA ratings of “satisfactory” in
their most recently completed exams.
          (e) Section 3.10(e)(i) of the Company Disclosure Schedule sets forth a
complete list of all securities exchanges, commodities exchanges, boards of
trade, clearing organizations, trade associations and similar organizations in
which the Company or any of its Subsidiaries holds membership or has been
granted trading privileges. Section 3.10(e)(ii) of the Company Disclosure
Schedule sets forth with respect to the Company and its Subsidiaries a complete
list of all (i) broker-dealer licenses or registrations and (ii) all licenses
and registrations as an investment adviser under the Investment Advisers Act of
1940, as amended, and the rules and regulations promulgated thereunder or any
similar state, local or foreign laws. Neither the Company nor any of its
Subsidiaries is, or is required to be, registered as a futures commission
merchant, commodities trading adviser, commodity pool operator or introducing
broker under the Commodities Futures Trading Act or any similar state, local or
foreign laws.
          SECTION 3.11 Agreements with Regulatory Agencies. Other than (i) the
cease and desist order dated March 16, 2006 entered into by the Company with the
Federal Reserve Board, (ii) the cease and desist order dated March 16, 2006
entered into by Doral Bank with the FDIC and the Commissioner, (iii) the letter
dated February 9, 2006 from the Office of Thrift Supervision to Doral Bank, FSB,
(iv) the memorandum of understanding, dated August 23, 2006 entered into by
Doral Bank with the Commissioner and the FDIC and (v) the memorandum of
understanding dated October 23, 2006 entered into by Doral Bank with the
Commissioner and the FDIC, each in the form filed as exhibits to SEC Reports
filed prior to the date of this Agreement (the “Specified Regulatory
Agreements”), neither the Company nor any of its Subsidiaries is subject to any
cease-and-desist or other order or directive (other than those generally
applicable to businesses such as the business of the Company or any of its
Subsidiaries) issued by, or is a party to any written agreement, consent
agreement or memorandum of understanding with, or is a party to any commitment
letter or similar undertaking to, or is a recipient of any extraordinary
supervisory letter from, or has adopted any board resolutions at the request of
(each, whether or not described above or set forth in the Company Disclosure
Schedule, a “Company Regulatory Agreement”), any Governmental Entity that
currently restricts or by its terms will in the future restrict the conduct of
its business or relates to its capital adequacy, its credit or risk management
policies, its dividend policies, its management or its business, nor has the
Company or any of its Subsidiaries been advised in writing (or, to the knowledge
of the Company, orally) by any Governmental Entity that it is considering
issuing or requesting the Company or any Subsidiary to enter into or become
bound by any Company Regulatory Agreement.
          SECTION 3.12 Litigation. There are no material Actions pending or, to
the knowledge of the Company, threatened against the Company, any of its
Subsidiaries or any of

 

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their respective properties or assets. To the knowledge of the Company, there
are no material Actions pending or threatened against any of the past or present
executive officers or directors of the Company or any of its Subsidiaries
related to their status as an officer or director thereof. Section 3.12 of the
Company Disclosure Schedule sets forth a list of all Actions pending or, to the
knowledge of the Company, threatened against the Company, any of its
Subsidiaries or any of their respective properties or assets as of the date of
the Agreement which seek monetary damages in excess of $1 million or the
imposition of injunctive or other equitable relief which would reasonably be
expected to have, individually or in the aggregate, a material adverse effect on
the business or operations of the Company and its Subsidiaries after the
Closing. Neither the Company nor any of its Subsidiaries is a party or subject
to the provisions of any material Order of any court or Governmental Entity.
Prior to or concurrently with the execution of this Agreement, the Company has
entered into a settlement agreement and related agreements, true, correct and
complete copies of which have been provided to the Purchaser (collectively, the
“Settlement Agreement”), providing for the complete settlement of the class
action and derivative litigation set forth in Section 3.12 of the Company
Disclosure Schedule under the heading “Specified Shareholder Litigation”
(collectively, the “Shareholder Litigation”). Other than the Settlement
Agreement, neither the Company nor any of its Subsidiaries is a party to or
bound by any contracts, arrangements, commitments or understandings relating to
the Shareholder Litigation.
          SECTION 3.13 Certain Contracts. (a) Neither the Company nor any of its
Subsidiaries is a party to or is bound by any contract, arrangement, commitment
or understanding (whether written or oral) (i) which is a material contract (as
defined in Item 601(b)(10) of Regulation S-K of the SEC) to be performed in
whole or in part after the date of this Agreement, (ii) which limits the freedom
of the Company or any of its Subsidiaries to compete in any line of business, in
any geographic area or with any Person, or which requires referrals of business
or requires the Company or any of its Subsidiaries to make available investment
or business opportunities to any Person on a priority or exclusive basis,
(iii) which relates to the incurrence of indebtedness with an unpaid principal
amount in excess of $1 million (other than deposit liabilities, advances and
loans from the FHLB of New York and sales of securities subject to repurchase,
in each case incurred in the ordinary course of business consistent with past
practice) by the Company or any of its Subsidiaries, including any sale and
leaseback transactions, capitalized leases and other similar financing
transactions, (iv) which grants any right of first refusal, right of first offer
or similar right with respect to any material assets or properties of the
Company or any of its Subsidiaries, (v) which limits the payment of dividends by
the Company, Doral Bank or Doral Bank, FSB, or (vi) for a joint venture,
partnership, or similar agreement for a business venture involving a sharing of
profits or expenses. Each contract, arrangement, commitment or understanding of
the type described in this Section 3.13(a), whether or not publicly disclosed in
the SEC Reports described in clause (i) of the introductory paragraph of this
Article III or set forth in Section 3.13(a) of the Company Disclosure Schedule,
is referred to herein as a “Company Contract.” The Company has made available
all contracts (including all lease, rental or occupancy agreements or other
contracts affecting or relating to the ownership or use of any real or personal
property; all agreements for the purchase or sale of mortgage servicing rights;
all agreements for the purchase or sale of mortgage Loans (as hereinafter
defined) on a wholesale or bulk basis; and all consulting agreements with
outside consultants) which involved payments by the Company or any of its
Subsidiaries during fiscal year 2006 of more than $1 million or which would
reasonably be

 

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expected to involve payments during fiscal year 2007 of more than $1 million,
other than any such contract that is terminable at will on 60 days or less
notice without payment of a penalty in excess of $150,000 and other than any
contract entered into on or after the date hereof that is permitted under the
provisions of Section 5.2.
          (b) (i) Each Company Contract is valid and binding on the Company or
its applicable Subsidiary and is in full force and effect, and, to the knowledge
of the Company, is valid and binding on the other parties thereto, (ii) the
Company and each of its Subsidiaries and, to the knowledge of the Company, each
of the other parties thereto, has in all material respects performed all
obligations required to be performed by it to date under each Company Contract,
and (iii) no event or condition exists which constitutes or, after notice or
lapse of time or both, would constitute a material breach or default on the part
of the Company or any of its Subsidiaries or, to the knowledge of the Company,
any other party thereto, under any such Company Contract, except, in each case,
where such invalidity, failure to be binding, failure to so perform or breach or
default, individually or in the aggregate, would not have or reasonably be
expected to have a Material Adverse Effect.
          SECTION 3.14 Insurance. The Company and its Subsidiaries are insured
with reputable and financially sound insurers against such risks and in such
amounts as is sufficient to comply with applicable Law, is consistent with
industry practice and which the management of the Company reasonably has
determined to be prudent. Section 3.14 of the Company Disclosure Schedule
contains a true and complete list and summary description (including name of
insurer, agent, coverage and expiration date) of all insurance policies in force
on the date hereof that are material to the business and assets of the Company
and its Subsidiaries (other than insurance policies under which the Company or
any Subsidiary thereof is named as a loss payee, insured or additional insured
as a result of its position as a secured lender on specific loans and mortgage
insurance policies on specific loans or pools of loans). The Company and its
Subsidiaries are in material compliance with such insurance policies and are not
in default under any of the material terms thereof. Neither the Company nor any
Subsidiary thereof has taken any action or failed to take any action which, with
notice or the lapse of time, or both, would constitute such a default. None of
the execution and delivery of this Agreement and the other Transaction
Agreements, the performance by the Company of its obligations hereunder and
thereunder or the consummation of the transactions contemplated hereby and
thereby will constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, or result in the cancellation
of or non-compliance with any provisions of, such policies (including any change
of control provisions thereof), except for such defaults or other events which
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Each such policy is outstanding and in full force and
effect and except for policies insuring against potential liabilities of
officers, directors and employees of the Company and its Subsidiaries, the
Company or the relevant Subsidiary thereof is the sole beneficiary of such
policies. No written notice of cancellation or termination has been received
with respect to any such policy. All premiums and other payments due under any
such policy have been paid, and all claims thereunder have been filed in due and
timely fashion.
          SECTION 3.15 Tax Matters. (a) Each of the Company and its Subsidiaries
has (i) duly and timely filed (including pursuant to applicable extensions
granted without penalty) all material Tax Returns (as hereinafter defined)
required to be filed by it, and such Tax

 

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Returns are true, correct and complete in all material respects, and (ii) paid
in full all Taxes due or, where payment is not yet due, made adequate provision
in the financial statements of the Company (in accordance with GAAP) for all
such Taxes (as hereinafter defined); (y) no material deficiencies for any Taxes
have been proposed, asserted or assessed in writing against or with respect to
any Taxes due by or Tax Returns of the Company or any of its Subsidiaries; and
(z) there are no material Encumbrances for Taxes upon the assets of either the
Company or its Subsidiaries except for statutory liens for current Taxes not yet
due or Encumbrances for Taxes that are being contested in good faith by
appropriate proceedings and for which reserves adequate in accordance with GAAP
have been provided.
          (b) Neither the Company nor any of its Subsidiaries (i) is or has ever
been a member of an affiliated group (other than a group the common parent of
which is the Company) filing a consolidated tax return or (ii) has any material
liability for Taxes of any Person arising from the application of Treasury
Regulation section 1.1502-6 or any analogous provision of state, local or
foreign law, or as a transferee or successor, by contract, or otherwise.
          (c) None of the Company or any of its Subsidiaries is a party to, is
bound by or has any obligation under any Tax sharing or Tax indemnity agreement
or similar contract or arrangement.
          (d) Except for the Deferred Tax Agreement, no closing agreement
pursuant to section 7121 of the Internal Revenue Code of 1986, as amended (the
“Code”) (or any similar provision of state, local or foreign law, including
Section 6126 of the Puerto Rico Internal Revenue Code of 1994, as amended (the
“PR Code”)) has been entered into by or with respect to the Company or any of
its Subsidiaries.
          (e) All material Taxes required to be withheld, collected or deposited
by or with respect to the Company and each Subsidiary have been timely withheld,
collected or deposited as the case may be, and to the extent required, have been
paid to the relevant taxing authority.
          (f) Neither the Company nor any of its Subsidiaries has requested or
been granted any waiver of any federal, state, local or foreign statute of
limitations with respect to, or any extension of a period for the assessment of,
any Tax.
          (g) Neither the Company nor any of its Subsidiaries has entered into
any transactions that are or would be part of any “reportable transaction” under
Sections 6011, 6111, or 6112 of the Code (or any similar provision under any
state, local or foreign law).
          (h) The Company has made available to the Purchaser true and correct
copies of all income Tax Returns filed by the Company and its Subsidiaries for
taxable years 2003-2006.
          (i) No audit of any material Tax Return of the Company or any of its
Subsidiaries is pending or being conducted or, to the knowledge of the Company,
threatened by a Tax Authority.
          (j) Neither the Company nor any of its Subsidiaries has any requests
for material rulings in respect of Taxes pending between the Company or any
Subsidiary and any Tax Authority.

 

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16
          (k) Neither the Company nor any of its Subsidiaries will be required
to include any item of income in, or exclude any item of deduction from, taxable
income for any taxable period ending after the Closing as a result of any
(i) change in method of accounting either imposed by a Tax Authority or
voluntarily made by the Company or any of its Subsidiaries on or prior to the
date hereof, (ii) intercompany transaction or excess loss account described in
Treasury Regulations under Section 1502 of the Code (or any similar provision of
state, local, or foreign income Tax law) or (iii) installment sale or open
transaction disposition made on or prior to the Closing.
          (l) The Company was not a “passive foreign investment company” as
defined under Section 1297 of the Code for its 2004, 2005 or 2006 taxable years,
as determined for U.S. federal income tax purposes.
          (m) The Company has entered into a closing agreement with the
Department of the Treasury of Puerto Rico dated September 26, 2006 (the
“Deferred Tax Agreement”) that permits the Company to reduce the income of the
Company and/or its Subsidiaries pursuant to the Puerto Rico Internal Revenue
Code of 1994, as amended (and any other applicable local Law relating to Taxes),
by amortizing on a straight-line basis approximately $890,000,000 of the
adjusted Tax basis of interest-only strips over a 15-year amortization period
beginning on January 1, 2005 (any such reduction, an “Amortization Deduction”).
The Deferred Tax Agreement is in full force and effect and there has been no
amendment or modification thereto or waiver thereof.
          (n) For purposes of this Agreement:
     “Taxes” shall mean all federal, state, local, foreign and other taxes,
levies, imposts, assessments, impositions or other similar government charges,
including, but not limited to income, estimated income, withholding, business,
occupation, franchise, license, real property, payroll, personal property,
sales, transfer, stamp, use, escheat, employment-related, commercial rent or
withholding, net worth, occupancy, premium, gross receipts, profits, windfall
profits, deemed profits, license, lease, severance, capital, production,
corporation, ad valorem, excise, duty, utility, environmental, value-added,
recapture or other taxes, including any interest, penalties, and additions (to
the extent applicable) thereto, whether disputed or not;
     “Tax Return” shall mean any return, report, information return, declaration
or other document (including any related or supporting information) required to
be filed with any taxing authority with respect to Taxes, including all
information returns relating to Taxes of third parties, any claims for refunds
of Taxes and any amendments, schedules or supplements to any of the foregoing;
and
     “Tax Authority” shall mean any domestic, foreign, federal, national, state,
county or municipal or other local government, any subdivision, instrumentality,
dependency, agency, commission or authority thereof, or any quasi-governmental
body exercising any taxing authority or any other authority exercising Tax
regulatory authority.

 

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          SECTION 3.16 Environmental and Safety Laws. There are no Actions or
remediation activities seeking to impose, or that reasonably would be expected
to result in the imposition, on the Company or any of its Subsidiaries of any
liability or obligation arising under common law standards relating to
environmental protection, human health or safety, or under any Law, including
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended (collectively, the “Environmental Laws”), pending or, to the
knowledge of the Company, threatened against the Company or any of its
Subsidiaries, other than any such liability or obligation that would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. During or, to the knowledge of the Company prior to, the period
of (i) its or any of its Subsidiaries’ ownership or operation of any of their
respective current properties, (ii) its or any of its Subsidiaries’
participation in the management of any property, or (iii) its or any of its
Subsidiaries’ holding of a security interest or other interest in any property,
there were no releases or threatened releases of hazardous, toxic, radioactive
or dangerous materials or other materials regulated under Environmental Laws in,
on, under or affecting any such property, except as would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
Neither the Company nor any of its Subsidiaries is subject to any Order by or
with any Governmental Entity or third party imposing any liability or obligation
pursuant to or under any Environmental Law except as would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
          SECTION 3.17 Intellectual Property. (a) As used herein, the term
“Intellectual Property” shall mean all patents, patent applications, statutory
invention registrations, inventions and other industrial property rights;
trademarks, service marks, trade names, trade dress, logos, and other source
identified, including registrations and applications for the registration
thereof; copyrights (including without limitation, computer software programs);
Internet domain name registrations; Internet web sites, web content, and
registrations and applications for registrations thereof; confidential and
proprietary information, including know-how and trade secret rights,
technologies, techniques and processes; computer software, programs and
databases in any form, all versions, updates, corrections, enhancements,
replacements, and modifications thereof, and all documentation related thereto;
and rights of privacy, publicity and endorsement, in each case under the laws of
any jurisdiction in the world, and including rights under and with respect to
all applications, registrations, continuations, divisions, renewals, extensions
and reissues of the foregoing. As used herein, “Company Intellectual Property”
shall mean the Intellectual Property currently used in connection with the
business of the Company or any of its Subsidiaries or owned or held for use by
the Company or any of its Subsidiaries.
          (b) Except as would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect, (i) the Company and/or each of
its Subsidiaries owns, or is licensed or otherwise possesses sufficient rights
to use such rights as it has in and to all the Company Intellectual Property,
(ii) the use of the Company Intellectual Property by the Company and its
Subsidiaries does not constitute an infringement or misappropriation of any
valid third party Intellectual Property right in existence as of the date
hereof, (iii) except for allegations that have since been resolved, neither the
Company nor any of its Subsidiaries has received any written notice from any
Person alleging that the use of any of the Company Intellectual Property or the
operation of the Company’s or its Subsidiaries’ businesses infringes, dilutes
(in the case of trademarks), or otherwise violates the Intellectual Property of
such Person.

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          (c) Except as would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect, (i) no written claims, charges,
or demands are currently pending or, to the knowledge of the Company, threatened
by any Person with respect to the Company Intellectual Property and (ii) there
are no pending claims by the Company or any Subsidiary alleging or asserting
that any third party has violated, misappropriated or infringed any of the
Company Intellectual Property.
          (d) The information technology assets of the Company, including
without limitation all computer software, hardware, firmware and
telecommunications systems, are adequate in all respects for the operation of
the Company’s and its Subsidiaries’ businesses as currently conducted, except as
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
          SECTION 3.18 Employee Matters. (a) There are no material controversies
pending or, to the knowledge of the Company, threatened between the Company or
any of its Subsidiaries and any current or former employees of the Company or
any of its Subsidiaries. There has been no “mass layoff” or “plant closing” as
defined by the Worker Adjustment Retraining Notification Act or similar state or
local “plant closing” Law with respect to the Company or any of its Subsidiaries
since January 1, 2004. Since January 1, 2004, neither the Company nor any of its
Subsidiaries has experienced any employee strikes, work stoppages, slowdowns or
lockouts. There is no material unfair labor practice complaint against the
Company or any of its Subsidiaries pending or, to the knowledge of the Company,
threatened before any Governmental Entity, and no pending or, to the knowledge
of the Company, threatened arbitration arising out of any collective bargaining
agreement.
          (b) The Company has obtained a waiver substantially in the form
included in Section 3.18(b) of the Company Disclosure Schedule from each
employee of the Company or its Subsidiaries set forth in Section 3.18(b) of the
Company Disclosure Schedule relating to such employee’s employment agreement
with the Company or its Subsidiaries, as applicable, and each such waiver is in
full force and effect.
          SECTION 3.19 Employee Benefit Plans. (a) Section 3.19(a) of the
Company Disclosure Schedule contains a true and complete list of each material
Plan. For purposes of this Agreement, the term “Plan” shall mean any “employee
benefit plan” (within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”), including multiemployer plans
within the meaning of ERISA Section 3(37)), stock purchase, stock option,
severance, employment, loan, change-in-control, fringe benefit, collective
bargaining, bonus, incentive, deferred compensation and all other employee
benefit plans, agreements, programs, policies or other arrangements, whether or
not subject to ERISA (including any funding mechanism therefore now in effect or
required in the future as a result of the transactions contemplated by this
Agreement or otherwise), whether formal or informal, oral or written, legally
binding or not, under which any current or former employee, officer, director,
consultant or independent contractor of the Company or any of its Subsidiaries
(“Company Employees”) has any present or future right to benefits or under which
the Company or any of its Subsidiaries has any present or future material
liability.
          (b) With respect to each Plan, the Company has made available to the
Purchaser a current, accurate and complete copy (or, to the extent no such copy
exists, an accurate

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description) thereof and, to the extent applicable: (i) any related trust
agreement or other funding instrument; (ii) the most recent determination
letter, if applicable; (iii) any summary plan description and other written
communications by the Company or any of its Subsidiaries to Company Employees
concerning the extent of the benefits provided under a Plan; (iv) a summary of
any proposed amendments or changes anticipated to be made to the Plans at any
time within the twelve months immediately following the date hereof and (v) for
the three most recent fiscal years (A) the Form 5500 and attached schedules,
(B) audited financial statements and (C) actuarial valuation reports.
          (c) (i) Except as would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, each Plan has been
established and administered in accordance with its terms, and in compliance
with the applicable provisions of ERISA, the Code and other applicable laws,
rules and regulations; (ii) each Plan which is intended to be qualified within
the meaning of Section 401(a) of the Code is so qualified and has received a
favorable determination letter as to its qualification, and to the knowledge of
the Company, nothing has occurred, whether by action or failure to act, that
would reasonably be expected to cause the loss of such qualification; (iii) no
event has occurred and no condition exists that would subject the Company or any
of its Subsidiaries, either directly or by reason of their affiliation with any
“ERISA Affiliate” (defined as any organization which is a member of a controlled
group of organizations within the meaning of Sections 414(b), (c), (m) or (o) of
the Code), to any material tax, fine, lien, penalty or other liability imposed
by ERISA, the Code or other applicable laws, rules and regulations; (iv) for
each Plan with respect to which a Form 5500 has been filed, no material change
has occurred with respect to the matters covered by the most recent Form since
the date thereof, (v) no “reportable event” (as such term is defined in
Section 4043 of ERISA), “prohibited transaction” (as such term is defined in
Section 406 of ERISA and Section 4975 of the Code) or “accumulated funding
deficiency” (as such term is defined in Section 302 of ERISA and Section 412 of
the Code (whether or not waived)) has occurred with respect to any Plan;
(vi) except as set forth in Section 3.19(c)(vi) of the Company Disclosure
Schedule, no Plan provides post-employment welfare (including health, medical or
life insurance) benefits and neither the Company nor any of its Subsidiaries
have any obligation to provide any such post-employment welfare benefits now or
in the future, other than as required by Section 4980B of the Code; (vii) there
is no present intention that any Plan be materially amended, suspended or
terminated, or otherwise modified to adversely change benefits (or the levels
thereof) under any Plan at any time within the twelve months immediately
following the date hereof; and (viii) neither the Company nor any ERISA
Affiliate has engaged in, or is a successor or parent corporation to an entity
that has engaged in, a transaction described in Sections 4069 or 4212(c) of
ERISA.
          (d) None of the Plans is a “single employer plan” (within the meaning
of Section 3(41) of ERISA) nor a “multiemployer plan” (within the meaning of
Section 4001(a)(3) of ERISA) and none of the Company, its Subsidiaries or any
ERISA Affiliate has at any time sponsored or contributed to, or has or had any
material liability with respect to a single employer plan or a multiemployer
plan that remains unsatisfied.
          (e) With respect to any Plan, (i) no Actions (other than routine
claims for benefits in the ordinary course of business consistent with past
practice) are pending or, to the knowledge of the Company, threatened, (ii) to
the knowledge of the Company, no facts or circumstances exist that would
reasonably be expected to give rise to any such Actions, (iii) no

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written or oral communication has been received from the Pension Benefit
Guaranty Corporation (the “PBGC”) in respect of any Plan subject to Title IV of
ERISA concerning the funded status of any such plan or any transfer of assets
and liabilities from any such plan in connection with the transactions
contemplated herein and (iv) no administrative investigation, audit or other
administrative proceeding by the Department of Labor, the PBGC, the Internal
Revenue Service or other Governmental Entities are pending or in progress or, to
the knowledge of the Company, threatened (excluding any routine requests for
information from the PBGC).
          (f) No Plan exists that would result in the payment to any present or
former Company Employee of any money or other property or accelerate or provide
any other rights or benefits to any present or former Company Employee as a
result of the transactions contemplated by this Agreement. There is no Plan
that, individually or collectively, could give, or has given, rise to the
payment of any amount that would reasonably be expected to be subject to excise
tax under Section 4999 of the Code.
          SECTION 3.20 Board Approval; Requisite Shareholder Approvals. (a) The
Board of Directors of the Company, by resolutions duly adopted by unanimous vote
of the entire Board of Directors at a meeting duly called and held, has
(i) approved this Agreement, the other Transaction Agreements, the issuance and
sale of the Purchased Stock as provided herein, the amendment to the certificate
of incorporation of the Company in the form attached as Exhibit C hereto (the
“Charter Amendment”) and the other transactions contemplated hereby and by the
other Transaction Agreements, and determined that such agreements, such
amendment and such transactions are fair to and in the best interests of the
Company and its shareholders and declared such agreements, such amendment and
such transactions to be advisable and (ii) recommended that the shareholders of
the Company approve the issuance of the Purchased Stock and adopt the Charter
Amendment and directed that such matters be submitted for consideration by the
shareholders of the Company at the Company Shareholders Meeting.
          (b) The affirmative vote of (i) the holders of a majority of the
outstanding shares of Common Stock to adopt the Charter Amendment and (ii) the
holders of a majority of the shares of Common Stock having voting power and
present in person or represented by proxy and voting at a meeting at which the
holders of a majority of the outstanding Common Stock are present or represented
by proxy to approve the issuance of the Purchased Stock pursuant to this
Agreement (together, the “Requisite Shareholder Approvals”) are the only votes
of the holders of any class or series of capital stock of the Company necessary
to approve the transactions contemplated by this Agreement and the other
Transaction Agreements.
          SECTION 3.21 Opinion of Financial Advisor. The Company has received
the opinion of Rothschild, Inc., dated as of the date of this Agreement, to the
effect that, as of such date, the consideration to be paid to the Company in
connection with the issuance and sale of the Purchased Stock is fair, from a
financial point of view, to the holders of Common Stock.
          SECTION 3.22 Broker’s Fees. Except for Bear, Stearns & Co. Inc. and
Rothschild, Inc., neither the Company nor any Subsidiary thereof nor any of
their respective officers or directors has employed any broker or finder or
incurred any liability for any broker’s fees, commissions or finder’s fees in
connection with any of the transactions contemplated by

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this Agreement. True, correct and complete copies of all agreements with each of
Bear, Stearns & Co. Inc. and Rothschild, Inc. have previously been made
available to the Purchaser.
          SECTION 3.23 Loan Matters. (a) (i) Section 3.23 of the Company
Disclosure Schedule sets forth a list of all extensions of credit (including
commitments to extend credit) (“Loans”) by the Company and its Subsidiaries to
any directors, executive officers and principal shareholders (as such terms are
defined in Regulation O (“Regulation O”) of the Federal Reserve Board (12 C.F.R.
Part 215)) of the Company or any of its Subsidiaries; (ii) there are no
employee, officer, director or other affiliate Loans on which the borrower is
paying a rate other than that reflected in the note or the relevant credit
agreement or, except for Loans made by the Company and its Subsidiaries to its
employees in accordance with its policies as disclosed in Section 3.23 of the
Company Disclosure Schedule, on which the borrower is paying a rate which was
below market at the time the Loan was made; and (iii) all such Loans are and
were made in compliance in all material respects with all applicable Law.
          (b) All reserves for loan losses shown on the financial statements of
the Company included in the 2006 Form 10-K have been calculated in accordance
with prudent and customary banking practices and are adequate in all material
respects to reflect all known and reasonably anticipated risk of losses inherent
in the Loans of the Company and its Subsidiaries. To the knowledge of the
Company, no fact exists which would be reasonably likely to require a future
material increase in the provision for loan losses reflected in such financial
statements in accordance with GAAP. Neither Doral Bank nor Doral Bank, FSB has
any Loan exceeding its legal lending limit or any Loan with an unpaid principal
amount or unfunded commitment in excess of $1,000,000 which is, or in accordance
with applicable regulatory requirements should be, classified as sub-standard,
doubtful or a loss, except as set forth in Section 3.23(c) of the Company
Disclosure Schedule.
          (c) None of the material agreements pursuant to which the Company or
any of its Subsidiaries has sold Loans or pools of Loans or participations in
Loans or pools of Loans contains any continuing obligation to repurchase such
Loans or interests therein solely on account of a payment default by the obligor
on any such Loan, other than (i) customary repurchase obligations pursuant to
standard agreements with Fannie Mae or Freddie Mac and (ii) customary repurchase
obligations on account of an early payment default.
          (d) Either the Company or one or more of its Subsidiaries is
authorized: (i) as a supervised mortgagee by the Department of Housing and Urban
Development (“HUD”) to originate and service Title I FHA mortgage Loans; (ii) as
a GNMA I and II Issuer by the Government National Mortgage Association (“Ginnie
Mae”); (iii) by the Department of Veteran’s Affairs (“VA”) to originate and
service VA Loans; (iv) as a seller/servicer by the Federal National Mortgage
Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation
(“Freddie Mac”) to originate and service conventional residential mortgage
Loans; and (v) to originate mortgage Loans guaranteed by the Rural Housing
Service.
          (e) None of the Company or any of its Subsidiaries is now nor has it
been within the past three years subject to any material fine, suspension,
settlement or other administrative agreement or sanction by, or any reduction in
any loan purchase commitment from, HUD, Ginnie Mae, the VA, Fannie Mae, Freddie
Mac or other investor or Governmental Entity relating

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to the origination, sale or servicing of mortgage or consumer Loans. The Company
has not received any written notice, nor does it have any reason to believe,
that Fannie Mae or Freddie Mac propose to materially limit or terminate the
underwriting authority of the Company and its Subsidiaries or to materially
increase the guarantee fees payable to such investor.
          (f) Each of the Company and its Subsidiaries is in compliance in all
material respects with the Truth-In-Lending Act and Regulation Z, the Equal
Credit Opportunity Act and Regulation B, the Real Estate Settlement Procedures
Act and Regulation X, the Fair Credit Reporting Act, the Fair Debt Collection
Practices Act and all HUD, Ginnie Mae, Fannie Mae, Freddie Mac, and other
investor and mortgage insurance company requirements relating to the
origination, sale and servicing of mortgage and consumer Loans.
          (g) To the knowledge of the Company, each Loan included in a pool of
Loans originated, acquired or serviced by the Company or any of its Subsidiaries
(a “Pool”) meets all eligibility requirements (including all applicable
requirements for obtaining mortgage insurance certificates and loan guaranty
certificates) for inclusion in such Pool.
          SECTION 3.24 Interest Rate Risk Management Instruments. (a) Except as
would not be reasonably expected to have, either individually or in the
aggregate, a Material Adverse Effect, (i) all existing interest rate swaps,
caps, floors and option agreements and other interest rate risk management
arrangements, whether entered into for the account of the Company or any of its
Subsidiaries or for the account of a customer of the Company or any of its
Subsidiaries, were entered into in the ordinary course of business consistent
with past practice and in accordance with prudent banking practice and
applicable rules, regulations and policies of all applicable Governmental
Entities and with counterparties believed to be financially responsible at the
time and are legal, valid and binding obligations of the Company or one of its
Subsidiaries and, to the knowledge of the Company, each of the counterparties
thereto, and are enforceable in accordance with their terms, except as
enforcement may be limited by general principles of equity whether applied in a
court of law or a court of equity and by bankruptcy, insolvency, reorganization,
moratorium, or other similar laws relating to creditors’ rights and remedies
generally, and are in full force and effect, (ii) the Company or its
Subsidiaries and, to the knowledge of the Company, the counterparties thereto,
have duly performed their obligations thereunder to the extent that such
obligations to perform have accrued, and (iii) to the Company’s knowledge, there
are no breaches, violations or defaults or allegations or assertions of such by
any party thereunder.
          SECTION 3.25 Transactions with Affiliates. Except (i) for Loans by the
Company or any of its Subsidiaries to any directors, executive officers and
principal shareholders pursuant to Regulation O and set forth in Section 3.23 of
the Company Disclosure Schedule, and (ii) for any arrangement, contract,
agreement or transaction which involves aggregate per annum payments by the
Company and its Subsidiaries of less than $120,000, there are no contracts or
other agreements between the Company or any of its Subsidiaries, on the one
hand, and any of its Affiliates (other than the Company or any of its
Subsidiaries) or any officer, director or employee of any such Affiliate, on the
other hand.
          SECTION 3.26 Valid Offering. Assuming the accuracy of the
representations and warranties of the Purchaser contained in Section 4.2, the
offer, sale and issuance by the

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Company of Purchased Stock to the Purchaser will be exempt from the registration
requirements of the Securities Act and will have been registered or qualified
(or are exempt from registration and qualification) under the registration,
permit or qualification requirements of all applicable state or other local
securities laws.
          SECTION 3.27 Takeover Statutes; No Rights Plan. No takeover,
anti-takeover, “fair price,” “moratorium,” “control share acquisition” or other
similar Law (a “Takeover Statute”) or any anti-takeover provision in the
Company’s certificate of incorporation or bylaws is applicable to the
transactions contemplated by this Agreement, the other Transaction Agreements or
the Voting Agreement or the transactions contemplated thereby. The Company does
not have any shareholder rights plan in effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
          Except as disclosed in the corresponding section of the disclosure
schedule provided by the Purchaser to the Company on the date hereof (the
“Purchaser Disclosure Schedule”) (it being agreed that disclosure of any item in
any section of the Purchaser Disclosure Schedule shall be deemed disclosure with
respect to any other section to which the relevance of such item is reasonably
apparent on its face), the Purchaser hereby represents and warrants to the
Company as follows:
          SECTION 4.1 Organization; Authority; No Conflict. The Purchaser is a
limited liability company validly existing and in good standing under the Laws
of the State of Delaware. The Purchaser has all requisite power and authority to
execute and deliver this Agreement and the Securityholders Agreement, to
consummate the transactions contemplated hereby and thereby and to perform its
obligations hereunder and thereunder. The execution and delivery of this
Agreement and the Securityholders Agreement by the Purchaser and the
consummation by the Purchaser of the transactions contemplated hereby and
thereby have been duly authorized by all necessary action on the part of the
Purchaser. This Agreement has been (and the Securityholders Agreement, when
executed, will be) duly and validly executed and delivered by the Purchaser and
(assuming due authorization, execution and delivery by the Company) constitute
(or, in the case of the Securityholders Agreement, will constitute when executed
and delivered) legal, valid and binding obligations of the Purchaser,
enforceable against it in accordance with their terms, except as enforcement may
be limited by general principles of equity whether applied in a court of law or
a court of equity and by bankruptcy, insolvency, reorganization, moratorium, or
other similar laws relating to creditors’ rights and remedies generally. Neither
the execution and delivery of this Agreement or the Securityholders Agreement by
the Purchaser nor the consummation by the Purchaser of the transactions
contemplated hereby or thereby, nor compliance by the Purchaser with any of the
terms or provisions hereof or thereof, will (i) violate any provision of the
limited liability company agreement or similar governing documents of the
Purchaser or (ii) assuming that the consents and approvals referred to in
Section 4.3 are duly obtained, (x) violate any Law or Order applicable to the
Purchaser or any of its properties or assets, or (y) violate, conflict with,
result in a breach of any provision of or the loss of any benefit under,
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, result in the

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termination of or a right of termination or cancellation under, accelerate the
performance required by, or result in the creation of any Encumbrance upon any
of the respective properties or assets of the Purchaser under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease or other agreement, instrument or obligation to which the
Purchaser is a party, or by which it or any of its properties or assets may be
bound or affected, except (in the case of clause (ii) above) for such
violations, conflicts, breaches, defaults or other events which would not
reasonably be expected to have, individually or in the aggregate, a material
adverse effect on the Purchaser’s ability to consummate the transactions
contemplated by this Agreement or the Securityholders Agreement or to perform
its obligations hereunder or thereunder. The Purchaser has delivered to the
Company true and complete copies of the Purchaser Organizational Documents.
          SECTION 4.2 Investment Representations. The Purchaser acknowledges (on
its own behalf and on behalf of its members and the limited and general partners
of Parent, that the Purchased Stock has not been registered under the Securities
Act or under any state or local securities laws. The Purchaser (i) is acquiring
the Purchased Stock for investment for its own account, not as a nominee or
agent, and not with the view to, or for resale in connection with, any
distribution thereof, (ii) is an “accredited investor” within the meaning of
Regulation D, Rule 501(a), promulgated by the SEC and (iii) acknowledges that
the Purchased Stock must be held indefinitely unless the distribution thereof is
subsequently registered under the Securities Act or unless an exemption from the
registration requirements of the Securities Act is available.
          SECTION 4.3 Consents. (a) Except as set forth in Section 3.5 of the
Company Disclosure Schedule and for (i) the filing of applications and notices,
as applicable, with the Federal Reserve Board under the BHC Act and the
Commissioner under the Puerto Rico Banking Law and the Puerto Rico Mortgage
Institutions Act and the approval of such applications and notices, (ii) any
notices or filings under the HSR Act and the expiration or termination of any
applicable waiting periods thereunder, (iii) notice to and approval of the NASD,
notice to and approval of the Commissioner under the Mortgage Institutions Act
and notice to the Office of the Commissioner of Insurance of Puerto Rico, of the
indirect change of control of certain of the Company’s Subsidiaries,
(iv) filings required as a result of facts or circumstances solely attributable
to the Company, its Subsidiaries, a direct or indirect change of control thereof
or the operation of their businesses, and (v) the consents and approvals of
third parties which are not Governmental Entities, the failure of which to be
obtained would not be reasonably expected to have, individually or in the
aggregate, a material adverse effect on the Purchaser’s ability to consummate
the transactions contemplated by this Agreement or the Securityholders Agreement
or to perform its obligations hereunder or thereunder, no consents or approvals
of, or filings or registrations by, the Purchaser, Parent or Doral GP Ltd. with
any Governmental Entity or with any other third party are necessary in
connection with (A) the execution and delivery by the Purchaser of this
Agreement or the Securityholders Agreement and (B) the consummation by the
Purchaser of the transactions contemplated hereby and thereby.
          (b) As of the date of this Agreement, neither the Purchaser nor BSMM
knows of any reason why the approvals, authorizations, written confirmations and
determinations required by Section 6.1(d) should not be obtained.

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          SECTION 4.4 Litigation. There is no Action pending or, to the
Purchaser’s knowledge, threatened against the Purchaser, Parent or Doral GP Ltd.
which would reasonably be expected to have, individually or in the aggregate, a
material adverse effect on the ability of the Purchaser to perform its
obligations under this Agreement or the Securityholders Agreement and to
consummate the transactions contemplated hereby and thereby.
          SECTION 4.5 Financing. The Purchaser has delivered to the Company true
and complete copies of the subscription agreements and the related letters
listed in Section 4.5 of the Purchaser Disclosure Schedule, dated as of the date
of this Agreement (the “Existing Equity Commitments”), pursuant to which the
Persons party thereto have committed, subject to the terms thereof, to invest in
Parent the cash amounts set forth therein, which represent in the aggregate not
less than $415 million. As of the date of this Agreement, the Existing Equity
Commitments are in full force and effect, have not been withdrawn or terminated
or otherwise amended or modified in any respect, and are legal, valid and
binding obligations of Parent and, to the knowledge of the Purchaser, the other
parties thereto. There are no other agreements, side letters or arrangements
that would permit the Persons party to the Existing Equity Commitments to reduce
the cash amounts required to be invested thereby. The only conditions precedent
to the obligations of the Persons committing pursuant to the Existing Equity
Commitments to make the financing contemplated thereby available to Parent are
those contemplated by the terms of the Existing Equity Commitments. The proceeds
contemplated by the Existing Equity Commitments and the proceeds anticipated to
be committed pursuant to the Additional Equity Commitments or any other
alternative financing arrangements are sufficient to fully fund the Purchaser’s
obligation to pay the Purchase Price for the purchase of the Purchased Stock
pursuant to the terms of this Agreement and subject to the terms and conditions
of such Existing Equity Commitments and Additional Equity Commitments.
          SECTION 4.6 No Brokers. The Purchaser has not employed any broker or
finder, or incurred any liability for any brokerage or finders’ fees or any
similar fees or commissions, in connection with the transactions contemplated by
this Agreement and the other Transaction Agreements in the event that the
Closing does not occur.
          SECTION 4.7 Parent Company; Subsidiaries. As of the date hereof, the
members of the Purchaser and the general partner of Parent are set forth in
Section 4.7 of the Purchaser Disclosure Schedule. As of the Closing Date, no
Person will own, control or have entered into an agreement to acquire, an
interest of 25% or more of the total equity of Parent. The Purchaser does not
have any Subsidiaries.
          SECTION 4.8 Limited Guaranty. Concurrently with the execution of this
Agreement, the Persons listed on Section 4.8 of the Purchaser Disclosure
Schedule (collectively, the “Guarantors”) have delivered to the Company a
limited guaranty, dated as of the date hereof, in favor of the Company (the
“Limited Guaranty”). The Limited Guaranty is in full force and effect and is the
legal, valid and binding obligation of the Guarantors.
          SECTION 4.9 No Other Operations. The Purchaser has not conducted any
business and has no assets, liabilities or obligations of any nature other than
those incident to its formation and pursuant to this Agreement, the other
Transaction Agreements and the Equity Commitments and the transactions
contemplated hereby and thereby.

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ARTICLE V
COVENANTS
          SECTION 5.1 Conduct of Business Prior to the Closing. Except (w) as
otherwise expressly contemplated or permitted by the terms of this Agreement,
(x) as set forth in Section 5.1-2 of the Company Disclosure Schedule, (y) as
required by applicable Law or (z) with the prior written consent of the
Purchaser (which consent shall not be unreasonably withheld, conditioned or
delayed), during the period from the date of this Agreement to the Closing Date
(the “Pre-Closing Period”), the Company shall, and shall cause each of its
Subsidiaries to, (i) conduct its business in the ordinary course consistent with
past practice, (ii) use reasonable best efforts to preserve intact its current
business organizations and its rights and Permits issued by Governmental
Entities, keep available the services of its current officers and key employees
and preserve its relationships with customers, suppliers, Governmental Entities
and others having business dealings with it to the end that its goodwill and
ongoing businesses shall be unimpaired and (iii) not take any action that would
reasonably be expected to materially adversely affect or materially delay the
receipt of any approvals of any Governmental Entity required to consummate the
transactions contemplated hereby or by the other Transaction Agreements or
materially adversely affect or materially delay the consummation of the
transactions contemplated hereby or by the other Transaction Agreements.
          SECTION 5.2 Company Forbearances. Except (i) as otherwise expressly
contemplated or permitted by the terms of this Agreement, (ii) as set forth in
Section 5.1-2 of the Company Disclosure Schedule or (iii) with the prior written
consent of the Purchaser (which consent shall not be unreasonably withheld,
conditioned or delayed), during the Pre-Closing Period, the Company shall not,
and shall not permit any of its Subsidiaries to:
          (a) (i) adjust, split, combine or reclassify any of its capital stock
other than in connection with any reverse stock split affecting the Common
Stock, the terms of which shall be subject to the prior written consent of the
Purchaser (which consent shall not be unreasonably withheld, conditioned or
delayed) (a “Reverse Stock Split”); (ii) set any record or payment dates for the
payment of any dividends or distributions on its capital stock or make, declare
or pay any dividend or make any other distribution on, or directly or indirectly
redeem, purchase or otherwise acquire, any shares of its capital stock or any
securities or obligations convertible into or exercisable or exchangeable for
any shares of its capital stock or stock appreciation rights or grant any Person
any right to acquire any shares of its capital stock, other than, to the extent
permitted by the Specified Regulatory Agreements, (A) regular quarterly or
monthly cash dividends on the Company Preferred Stock as required by the terms
thereof in effect as of the date hereof and with record and payment dates
consistent with past practice; (B) dividends paid by any of the Subsidiaries of
the Company so long as such dividends are only paid to the Company or any of its
other wholly-owned Subsidiaries; and (C) dividends by the Company at a rate not
in excess of the rate in effect during the last fiscal quarter preceding the
date hereof; provided that no such dividend shall cause Doral Bank or Doral
Bank, FSB to cease to qualify as a “well capitalized” institution under the
prompt corrective action provisions of the Federal Deposit Insurance Corporation
Improvement Act of 1991, as amended, and the applicable regulations thereunder;
or (iii) issue or commit to issue any additional shares of capital stock (except
pursuant to the exercise of Company Stock Options and restricted stock unit
grants

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outstanding as of the date hereof and disclosed in Section 3.3(a) of the Company
Disclosure Schedule or upon conversion of the Convertible Preferred Stock in
accordance with its terms), Voting Debt or any securities convertible into or
exercisable or exchangeable for, or any rights, warrants or options to acquire,
any additional shares of capital stock (including Company Options) or Voting
Debt;
          (b) enter into any new line of business or change its lending,
investment, risk and asset-liability management and other material banking or
operating policies in any material respect, except as required by Law or by
policies imposed by a Governmental Entity;
          (c) other than in the ordinary course of business consistent with past
practice or as expressly required by the terms of any contracts or agreements in
force at the date of this Agreement and set forth in Section 5.2(c) of the
Company Disclosure Schedule, sell, lease, transfer, mortgage, encumber or
otherwise dispose of any of its assets or properties to any Person (other than
to a wholly-owned Subsidiary of the Company and other than disposals of obsolete
equipment), provided that any sales of Loans permitted on the basis that they
are effected in the ordinary course of business consistent with past practice
shall only be permitted if such sales are made on a non-recourse basis;
          (d) make any acquisition of or investment in any other Person, by
purchase or other acquisition of stock or other equity interests (other than in
a fiduciary capacity in the ordinary course of business consistent with past
practice), by merger, consolidation, asset purchase or other business
combination, or by formation of any joint venture, partnership or other business
organization or by contributions to capital; or make any purchases or other
acquisitions of any debt securities, property or assets (including any
investments or commitments to invest in real estate or any real estate
development project) in or from any Person other than a wholly-owned Subsidiary
of the Company, except for (i) foreclosures and other similar acquisitions in
connection with debts previously contracted in the ordinary course of business
consistent with past practice, (ii) purchases of U.S. government and U.S.
government agency securities which are investment grade rated and have a final
maturity of five years or less and (iii) transactions that, together with all
other such transactions, are not material to the Company, in each case, in the
ordinary course of business consistent with past practice;
          (e) enter into, renew, extend or terminate any lease, license,
contract or other agreement or arrangement, other than Loans made in accordance
with paragraph (i) below or the incurrence of indebtedness for borrowed money in
accordance with paragraph (j) below, that calls for aggregate annual payments of
$500,000 or more (including the Settlement Agreement), or make any material
change in or waive any material provision of any of such leases, licenses,
contracts or other agreements or arrangements, other than renewals of such
leases, licenses, contracts or other agreements or arrangements for a term of
one year or less without material changes to the terms thereof;
          (f) (i) increase the compensation or benefits of any Company Employee
(except (x) for increases in salary or wages of Company Employees in the
ordinary course of business consistent with past practice, provided that no such
increase shall result in an annual adjustment of more than 5% of the aggregate
base salary and wages payable by the Company and its Subsidiaries during 2006
and (y) pursuant to the Company’s Key Employee Incentive Plan as

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described in Section 5.2(f) of the Company Disclosure Schedule; (ii) except as
required by Law, grant any severance or termination pay to any Company Employee
except pursuant to the terms of any Plan in effect on the date of this Agreement
and which was made available to the Purchaser prior to the date of this
Agreement and disclosed in Section 3.19(a) of the Company Disclosure Schedule;
(iii) loan or advance any money or other property to any Company Employee other
than in the ordinary course of business consistent with past practice; (iv)
(x) establish, adopt, enter into, amend or terminate, or (y) grant (other than
in the ordinary course of business consistent with past practice), any waiver or
consent under any Plan (including any waiver referenced in Section 3.18) or any
plan, agreement, program, policy, trust, fund or other arrangement that would be
a Plan if it were in existence as of the date of this Agreement; or (v) grant
any equity or equity-based awards (including Company Stock Options and
restricted stock units);
          (g) make or authorize any capital expenditures in excess of (A)
$250,000 per project or related series of projects or (B) $1 million in the
aggregate, other than expenditures budgeted in the capital expenditure budget
made available to the Purchaser prior to the date of this Agreement;
          (h) except as required by Law, make application for the opening,
relocation or closing of any, or open, relocate or close any, branch office,
loan production or servicing facility;
          (i) except for Loans or commitments for Loans that have previously
been approved by the Company prior to the date of this Agreement, (i) make or
acquire any Loan or issue a commitment (or renew or extend an existing
commitment) for any Loan other than Loans and commitments made or Loans acquired
in each case in the ordinary course of business consistent with past practice
which have (x) in the case of commercial and commercial real estate Loans, (A) a
principal balance not in excess of $15 million and (B) involve aggregate
borrowings by the applicable borrower or group of related borrowers not in
excess of $30 million, or (y) in the case of any other Loans, a principal
balance not in excess of $1 million, without in each such case submitting to the
Purchaser, at least four (4) Business Days prior to taking such action, a copy
of the Loan write up containing the information customarily submitted to the
Company’s Board of Directors or the applicable authorizing or reviewing body for
such Loans in connection with obtaining approval for such action; provided that
the Company may nevertheless make such Loan or Loan commitment or renewal or
extension thereof or such acquisition after providing such notice and obtaining
the approval of a majority of the members of its Board of Directors or the
applicable authorizing or reviewing body for such Loans; or (ii) take any action
that would result in any discretionary releases of collateral or guarantees or
otherwise restructure any Loan or commitment for any Loan with a principal
balance in excess of the respective amounts set forth in clause (i) above;
          (j) (A) incur any indebtedness for borrowed money, other than
(x) deposit liabilities, FHLB advances and reverse repurchase agreements, in
each case entered into in the ordinary course of business consistent with past
practice and, in the case of reverse repurchase agreements, with a final
maturity of five years or less or (y) indebtedness incurred in the ordinary
course of business consistent with past practice in order to finance working
capital (subject in the case of this clause (y) to an aggregate maximum amount
of $150 million), (B) guarantee, endorse or assume responsibility for, the
obligations of any Person other than any wholly-owned

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Subsidiary of the Company (other than the endorsement of checks and other
negotiable instruments in the normal process of collection) or (C) redeem,
repurchase, prepay, defease, or cancel, or modify in any material respect the
terms of, indebtedness for borrowed money, other than (x) deposit liabilities,
FHLB advances and reverse repurchase agreements in each case in the ordinary
course of business consistent with past practice or (y) in accordance with the
terms of the applicable instrument as in effect on the date hereof or (z) on or
after June 15, 2007 (and then only if the Company has a reasonable good faith
belief that the Closing will not occur by July 20, 2007 and following
consultation with the Purchaser), solely to effect a Short-Term Maturity
Extension for the purpose of facilitating the consummation of the transactions
contemplated by this Agreement;
          (k) settle any Action involving monetary damages or other payments in
excess of $250,000 (except as contemplated by the Settlement Agreement), agree
or consent to the issuance of any Order restricting or otherwise affecting its
business or operations, or release or dismiss any material claim against any
other Person;
          (l) amend its certificate of incorporation, bylaws or similar
governing documents (other than in connection with a Reverse Stock Split), or
enter into a plan of consolidation, merger, share exchange, reorganization or
complete or partial liquidation with any Person (other than consolidations,
mergers or reorganizations solely among wholly-owned Subsidiaries of the
Company), or a letter of intent or agreement in principle with respect thereto;
          (m) except as required by Law, materially change its investment
securities portfolio policy, or the manner in which the portfolio is classified
or reported;
          (n) except as required by Law, make any material changes in its
policies and practices with respect to (i) underwriting, pricing, originating,
acquiring, selling, servicing, or buying or selling rights to service Loans or
(ii) its hedging practices and policies;
          (o) make any changes in its accounting methods or method of Tax
accounting, practices or policies, except as may be required under Law or GAAP,
in each case following consultation with the Company’s independent public
accountants;
          (p) enter into any securitizations of any Loans or create any special
purpose funding or variable interest entity other than in the ordinary course of
business consistent with past practice;
          (q) introduce any material new products or services, any material
marketing campaigns or any material new sales compensation or incentive programs
or arrangements;
          (r) except as required by Law, make or change any Tax election, file
any amended Tax Returns, settle or compromise any material Tax liability of the
Company or any of its Subsidiaries, agree to an extension or waiver of the
statute of limitations with respect to the assessment or determination of Taxes
of the Company or any of its Subsidiaries, enter into any closing agreement with
respect to any Tax or surrender any right to claim a Tax refund; or
          (s) agree to, or make any commitment to, take any of the actions
prohibited by this Section 5.2.

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          SECTION 5.3 Access. (a) During the Pre-Closing Period, the Company
shall, and shall cause its Subsidiaries, and its and its Subsidiaries’ officers,
directors, employees, accountants and other agents and representatives
(collectively, the “Company Representatives”) to (i) afford the directors,
officers, employees, partners, members, advisors, agents, and representatives of
the Purchaser (collectively, the “Purchaser Representatives”), reasonable access
during normal business hours to its properties, offices, branches and other
facilities, to the Company Representatives and to all books and records of the
Company and its Subsidiaries, (ii) furnish the Purchaser with a copy of each
report, schedule, registration statement and other document filed or received by
it during such period pursuant to the requirements of any federal, state, local
or foreign securities, banking, mortgage lending, real estate or consumer
finance or protection Law (other than reports or documents which the Company is
not permitted to disclose under applicable Law) and all financial, operating and
other data and information as the Purchaser may from time to time reasonably
request, and (iii) afford the Purchaser the opportunity to discuss the Company’s
affairs, finances and accounts with the Company’s officers on a regular basis.
          (b) During the Pre-Closing Period, the Purchaser shall use all
non-public information delivered by or on behalf of the Company pursuant to
Section 5.3(a) or delivered before the date of this Agreement, and all notes,
reports, analyses, compilations, studies, files or other documents or material,
whether prepared by the Purchaser or the Purchaser Representatives, to the
extent the same are based on, contain or otherwise reflect such information
(collectively, the “Confidential Information”), solely in connection with the
transactions contemplated by this Agreement and will keep the Confidential
Information strictly confidential and shall not, without the Company’s prior
written consent, disclose such Confidential Information to any Person, except
that Confidential Information (or any portion thereof) may be disclosed to those
of the Purchaser Representatives who need to know such Confidential Information
in connection with the transactions contemplated by this Agreement and who are
advised of the confidential nature of the Confidential Information and obligated
to maintain the same in confidence. Notwithstanding the foregoing, the term
“Confidential Information” shall not include, and the provisions of this
Section 5.3(b) shall not apply to, information that (i) at the time of
disclosure or thereafter is generally known by or available to the public (other
than as a result of disclosure by the Purchaser or the Purchaser Representatives
in violation of this Section 5.3(b)); (ii) was or becomes available to the
Purchaser on a non-confidential basis from a Person not otherwise known to the
Purchaser to be bound by a confidentiality agreement with the Company or the
Company’s Representatives or prohibited from transmitting the information to the
Purchaser by a contractual, legal or fiduciary obligation owed to the Company,
(iii) was available to the Purchaser or any of the Purchaser Representatives
prior to its disclosure by or on behalf of the Company or (iv) has been or is
independently conceived or discovered by the Purchaser or the Purchaser
Representatives. In the event that the Purchaser or any of the Purchaser
Representatives are requested or required to disclose all or any part of the
information contained in the Confidential Information pursuant to the terms of a
valid and effective subpoena or order issued by a Governmental Entity or
pursuant to a civil investigative demand or other similar judicial process, the
Purchaser will, to the fullest extent legally permissible, promptly notify the
Company of the existence, terms and circumstances surrounding such a request or
requirement so that the Company may seek a protective order or other appropriate
remedy and consult with the Company on the advisability of taking legally
available steps to resist or narrow such request or requirement and use
reasonable

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best efforts, at the Company’s request and expense, to cooperate with the
Company if the Company determines to seek a protective order or other remedy. If
disclosure of such information is required, the Purchaser or the Purchaser
Representatives may disclose any of such information which the Purchaser or the
Purchaser Representatives are advised by legal counsel is legally required to be
disclosed and the Purchaser will exercise its reasonable best efforts, at the
Company’s request and expense, to obtain an order or other reliable assurance
that confidential treatment will be accorded to such information. In addition,
the Purchaser and the Purchaser Representatives may disclose Confidential
Information (x) in the course of inspections, examinations or inquiries by
Governmental Entities that have requested or required the inspection of records
that contain the Confidential Information and will exercise reasonable efforts
to obtain reliable assurances that confidential treatment will be accorded to
such information and (y) to the extent that the Company so agrees in writing.
The provisions of this Section 5.3(b) (i) shall survive any termination of this
Agreement but shall terminate 18 months following the date hereof, and
(ii) shall not survive the Closing.
          (c) No investigation by either of the parties or their respective
Representatives shall constitute a waiver of or otherwise affect the
representations, warranties, covenants or agreements of the other party set
forth herein.
          SECTION 5.4 Use of Proceeds. The Company shall use all of the proceeds
of the issuance and sale of the Purchased Stock and Additional Proceeds (i) to
pay, upon maturity thereof, all outstanding principal and accrued and unpaid
interest on the Floating Rate Senior Notes due July 20, 2007 of the Company (the
“2007 Notes”), and (ii) to pay the settlement consideration, and to pay or
reimburse fees and expenses, in each case pursuant to the terms of the
Settlement Agreement.
          SECTION 5.5 Proxy Statement.
          (a) As promptly as reasonably practicable following the date of this
Agreement, the Company shall prepare and shall cause to be filed with the SEC a
proxy statement (together with any amendments thereof or supplements thereto,
the “Proxy Statement”) relating to the meeting of the Company’s shareholders to
be held to consider, among other things, the approval of the Charter Amendment
and the issuance of the Purchased Stock to the Purchaser and, if so determined
by the Company, the Reverse Stock Split (the “Company Shareholders Meeting”).
The Company shall include in the Proxy Statement the recommendation of the Board
of Directors of the Company in favor of approval of the Charter Amendment and
the issuance of the Purchased Stock to the Purchaser (the “Company
Recommendation”), except that the Company shall not be obligated to so include
the Company Recommendation if the Company has effected a Change in
Recommendation in accordance with Section 5.7. None of the information with
respect to the Company or its subsidiaries to be included in the Proxy Statement
will, at the time of the mailing of the Proxy Statement or any amendments or
supplements thereto, and at the time of the Company Shareholders Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Proxy Statement will comply as to form in all material respects
with the provisions of the Exchange Act and the rules and regulations
promulgated thereunder.

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          (b) None of the information with respect to the Purchaser or its
Subsidiaries to be included in the Proxy Statement will, at the time of the
mailing of the Proxy Statement or any amendments or supplements thereto, and at
the time of the Company Shareholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
          (c) The Company and the Purchaser shall cooperate and consult with
each other in the preparation of the Proxy Statement. The Company shall
cooperate and provide the Purchaser with a reasonable opportunity to review and
comment on the draft of the Proxy Statement (including each amendment or
supplement thereto) prior to filing with the SEC. Without limiting the
generality of the foregoing, the Purchaser will furnish to the Company the
information relating to it required by the Exchange Act and the rules and
regulations promulgated thereunder to be set forth in the Proxy Statement. Each
of the Company and the Purchaser shall promptly (i) notify the other of the
receipt of any comments from the SEC with respect to the Proxy Statement and of
any request by the SEC for amendments of, or supplements to, the Proxy
Statement, and (ii) provide the other with copies of all filings made with the
SEC and correspondence between it and the SEC with respect to the Proxy
Statement. Each of the Company and the Purchaser shall use its reasonable best
efforts to respond to and resolve all comments from the SEC with respect to the
Proxy Statement as promptly as practicable.
          (d) The Company shall mail, as promptly as practicable after filing,
the definitive Proxy Statement to the holders of Common Stock as of the record
date established for the Company Shareholders Meeting. If at any time prior to
the Closing any event or circumstance relating to the Company or the Purchaser
or any of their respective Affiliates, officers or directors, should be
discovered by the Company or the Purchaser, respectively, which, pursuant to the
Exchange Act and the rules and regulations promulgated thereunder should be set
forth in an amendment or a supplement to the Proxy Statement, such party shall
promptly inform the other. Each of the Purchaser and the Company agrees to
correct any information provided by it for use in the Proxy Statement which
shall have become false or misleading in any material respect. All documents
that each of the Company and the Purchaser is responsible for filing with the
SEC in connection with the transactions contemplated hereby will comply as to
form in all material respects with the applicable requirements of the Exchange
Act and the rules and regulations promulgated thereunder.
          SECTION 5.6 Company Shareholders Meeting. The Company shall, as
promptly as reasonably practicable following the date of this Agreement,
establish a record date for, duly call, give notice of, convene and hold the
Company Shareholders Meeting. At such Company Shareholders Meeting, the Company
shall make the Company Recommendation to its shareholders, and the Company shall
use all reasonable best efforts to solicit from its shareholders proxies in
favor of the approval of the Charter Amendment and the issuance of the Purchased
Stock; provided, however, that the Company shall not be obligated to recommend
to its shareholders the approval of the Charter Amendment and the issuance of
the Purchased Stock at the Company Shareholders Meeting or solicit proxies in
favor of such approval to the extent that the Board of Directors of the Company
has duly made a Change in Recommendation in accordance with Section 5.7.

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          SECTION 5.7 No Solicitation of Competing Proposal.
          (a) From and after the date of this Agreement until the earlier of the
Closing and the date, if any, on which this Agreement is terminated pursuant to
Section 7.1, the Company agrees that, except as provided in Section 5.7 of the
Company Disclosure Schedule, neither it nor any of its Subsidiaries shall, and
that it shall direct and use its reasonable best efforts to cause the Company
Representatives not to, directly or indirectly: (i) solicit, initiate or
knowingly facilitate or encourage (including by providing information) any
inquiries, proposals or offers with respect to, or the making or completion of,
a Competing Proposal, (ii) engage or participate in any negotiations regarding,
or furnish or cause to be furnished to any Person any nonpublic information
relating to the Company or any of its Subsidiaries in connection with, or have
any discussions with any Person relating to, an actual or proposed Competing
Proposal, or otherwise knowingly encourage or facilitate any effort or attempt
to make or implement any Competing Proposal, (iii) engage in discussions with
any Person with respect to any Competing Proposal, (iv) approve, endorse or
recommend or propose publicly to approve, endorse or recommend any Competing
Proposal, (v) approve, endorse or recommend, or publicly announce an intention
to approve, endorse or recommend, or enter into, any letter of intent or similar
document or any agreement or commitment providing for or relating to any
Competing Proposal or requiring the Company to abandon, terminate or fail to
consummate the transactions contemplated hereby or breach its obligations
hereunder, or (vi) amend, terminate, waive or fail to enforce, or grant any
consent under, any confidentiality, standstill or similar agreement with a third
party. Without limiting the foregoing, it is understood that any violation of
the foregoing restrictions by any Subsidiary of the Company or any Company
Representative shall be deemed to be a breach of this Section 5.7 by the
Company.
          (b) Except as provided in Section 5.7 of the Company Disclosure
Schedule, the Company shall, and shall cause each of its Subsidiaries to, and
shall direct and use its reasonable best efforts to cause each of the Company
Representatives to, immediately cease any existing solicitations, discussions or
negotiations with any Person with respect to a Competing Proposal.
          (c) Notwithstanding the limitations set forth in Section 5.7(a) and
(b), if after the date of this Agreement the Company receives an unsolicited
Competing Proposal which did not result from or arise in connection with a
breach of Sections 5.7(a) or 5.7(b), and which (i) constitutes a Superior
Proposal or (ii) which the Board of Directors of the Company determines in good
faith, after consultation with the Company’s outside legal and financial
advisors, could reasonably be expected to result, after the taking of any of the
actions referred to in either of clause (x) or (y) below, in a Superior
Proposal, the Company may take the following actions: (x) furnishing nonpublic
information with respect to the Company and its Subsidiaries to the third party
making such Competing Proposal, if, and only if, prior to so furnishing such
information, the Company and such third party enter into a confidentiality
agreement that is no less restrictive of and no more favorable to such third
party than the terms of the confidentiality agreement, dated January 23, 2007,
between the Company and Bear Stearns Merchant Manager III, L.P. are to Bear
Stearns Merchant Manager III, L.P. and (y) engaging in discussions or
negotiations with the third party with respect to the Competing Proposal;
provided, however, that as promptly as reasonably practicable following the
Company taking such actions as described in clauses (x) or (y) above, the
Company shall provide written notice to the Purchaser of such Superior Proposal
or the determination of the Board of Directors of the Company as provided for

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in clause (ii) above, as applicable, and the Company shall promptly provide to
the Purchaser an executed copy of such confidentiality agreement and provide or
make available to the Purchaser any non-public information concerning the
Company or any of its Subsidiaries that is provided to the Person making such
Competing Proposal or its representatives which was not previously provided or
made available to the Purchaser.
          (d) Neither the Board of Directors of the Company nor any committee
thereof shall withdraw, qualify or modify the Company Recommendation in a manner
adverse to the Purchaser, or publicly propose to do so, or take any other action
or make any other public statement in connection with the Company Shareholders
Meeting or otherwise which is inconsistent with the Company Recommendation (any
of the foregoing, a “Change in Recommendation”) or approve or recommend or
publicly propose to approve or recommend, any Competing Proposal.
Notwithstanding the foregoing and the limitations set forth in Section 5.7(a)
and (b), if, prior to receipt of the Requisite Shareholder Approvals, the Board
of Directors of the Company determines in good faith, after consultation with
the Company’s outside legal and financial advisors, that failure to so withdraw,
qualify or modify the Company Recommendation would be reasonably likely to
constitute a breach by the Board of Directors of the Company of its fiduciary
duties under applicable Law, the Board of Directors of the Company may effect a
Change in Recommendation; provided, however, that if such Change in
Recommendation is the result of a Superior Proposal, (A) the Company shall have
first (i) provided five Business Days’ prior written notice (such notice, a
“Notice of Superior Proposal”) to the Purchaser that it is prepared to effect a
Change in Recommendation in response to a Superior Proposal and specifying the
reasons therefor, including the terms and conditions of the Superior Proposal
that is the basis of the proposed Change in Recommendation, and the identity of
the Person making the proposal (it being understood and agreed that any
amendment to the financial terms or any material amendment to any other material
term of any such Superior Proposal shall require a new Notice of Superior
Proposal and a new five Business Day period), (ii) provided to the Purchaser all
non-public information delivered or made available to the Person making any
Superior Proposal in connection with such Superior Proposal that was not
previously delivered or made available to the Purchaser and (iii) during such
five Business Day period, if requested by the Purchaser, engaged in, and caused
its financial and legal advisors to engage in, good faith negotiations with the
Purchaser to amend this Agreement in such a manner that any Competing Proposal
which was determined to be a Superior Proposal no longer is a Superior Proposal
and (B) at the end of such five Business Day period, such Competing Proposal has
not been withdrawn and continues to constitute a Superior Proposal (taking into
account any changes to the terms of this Agreement proposed by the Purchaser
following a Notice of Superior Proposal, as a result of the negotiations
contemplated by clause (iii) or otherwise).
          (e) Except as provided in Section 5.7 of the Company Disclosure
Schedule, the Company promptly (and in any event within 24 hours) shall advise
the Purchaser orally and in writing of the receipt of (i) any Competing Proposal
or indication or inquiry with respect to or that could reasonably be expected to
lead to any Competing Proposal, (ii) any request for non-public information
relating to the Company or its Subsidiaries, other than requests for information
that could not reasonably be expected to relate to or result in a Competing
Proposal, and (iii) any inquiry or request for discussions or negotiations
regarding a Competing Proposal, including in each case the identity of the
Person making any such Competing Proposal or indication, inquiry or request and
the material terms of any such Competing Proposal or

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35

indication, inquiry or request (including copies of any document or
correspondence evidencing such Competing Proposal or indication, inquiry or
request). The Company shall keep the Purchaser informed on a reasonably current
basis of any material change to the terms of any such Competing Proposal or
indication, inquiry or request.
          (f) Notwithstanding the limitations set forth in Section 5.7(a) and
(b), if the Board of Directors of the Company has effected a Change in
Recommendation in compliance with the requirements of Section 5.7(d), then the
Board of Directors of the Company may, prior to the later of June 12, 2007 and
the date on which the condition set forth in Section 6.1(j) is satisfied and
concurrently with such Change in Recommendation, cause the Company to enter into
a binding written agreement with respect to such Superior Proposal and terminate
this Agreement in accordance with Section 7.1(i); provided, however, that the
Company shall not terminate this Agreement pursuant to this Section 5.7(f), and
any purported termination pursuant to this Section 5.7(f) shall be void and of
no force or effect, unless prior to or concurrently with such termination the
Company pays the Termination Fee payable pursuant to Section 7.2(c).
          (g) Nothing contained in this Agreement shall prohibit the Company or
the Board of Directors of the Company from disclosing to the Company’s
shareholders a position contemplated by Rules 14d-9 and 14e-2(a) promulgated
under the Exchange Act; (or any similar communication to shareholders); provided
that any disclosure other than a “stop-look-and-listen” communication to the
shareholders of the Company pursuant to Rule 14d-9(f) promulgated under the
Exchange Act shall be deemed to be a Change in Recommendation unless the Board
of Directors of the Company expressly rejects the applicable Competing Proposal
and expressly reaffirms the Company Recommendation contemporaneously with such
disclosure.
          (h) As used in this Agreement, “Competing Proposal” shall mean any
inquiry, proposal or offer from any Person other than the Purchaser or any of
its Subsidiaries involving, in a single transaction or a series of transactions,
(i) a merger, reorganization, share exchange, consolidation, business
combination, recapitalization, dissolution, liquidation, or similar transaction
involving the Company or any of its Significant Subsidiaries, (ii) the issuance
by the Company or any of its Significant Subsidiaries of securities representing
20% or more of its outstanding voting securities (including upon the conversion,
exercise or exchange of securities convertible into or exercisable or
exchangeable for such voting securities) or (iii) the acquisition in any manner,
directly or indirectly, of (x) 20% or more of the outstanding voting securities
of the Company or any of its Significant Subsidiaries (including through the
acquisition of securities convertible into or exercisable or exchangeable for
such voting securities), (y) 20% or more of the consolidated total assets of the
Company and its Subsidiaries, taken as a whole or (z) one or more businesses or
divisions that constitute 20% or more of the revenues or net income of the
Company and its Subsidiaries, taken as a whole.
          (i) As used in this agreement, “Superior Proposal” shall mean a bona
fide written Competing Proposal not solicited or initiated in violation of
Section 5.7(a) or 5.7(b), that (i) relates to (x) the issuance by the Company of
securities representing more than 50% of its outstanding voting securities
(including upon the conversion, exercise or exchange of securities convertible
into or exercisable or exchangeable for such voting securities) or (y) the
acquisition by any Person of any of (A) more than 50% of the outstanding Common
Stock, by tender or exchange offer, merger or otherwise or (B) all or
substantially all of the consolidated total assets

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of the Company and its Subsidiaries, (ii) is not subject to any financing
contingency or qualification and provides for the repayment or refinancing in
full of the 2007 Notes upon their scheduled maturity date as of the date of this
Agreement, (iii) is otherwise on terms that the Board of Directors of the
Company determines in good faith, after consultation with the Company’s
financial and legal advisors and taking into account all the terms and
conditions of such proposal and this Agreement, are more favorable to the
Company, its shareholders and any other constituency of the Company to which the
Board of Directors of the Company then determines it owes fiduciary duties under
applicable Law than the transactions contemplated by this Agreement and (iv) is,
in the reasonable judgment of the Board of Directors of the Company, reasonably
capable of being completed on its stated terms, taking into account all
financial, regulatory, legal and other aspects of such inquiry, proposal or
offer.
          SECTION 5.8 Efforts. (a) Subject to the terms and conditions of this
Agreement, each of the Company and the Purchaser shall, and the Company shall
cause its Subsidiaries to, use their reasonable best efforts (i) to take, or
cause to be taken, all actions necessary, proper or advisable to consummate the
transactions contemplated by this Agreement and the other Transaction Agreements
and (ii) to obtain (and to cooperate with the other party to obtain) any
consent, authorization, confirmation, determination, order or approval of, or
any exemption by, any Governmental Entity and any other third party which is
required to be obtained by the Company, any of its Subsidiaries or the
Purchaser, Bear Stearns or any of the members of Doral GP Ltd. listed in
Section 6.1(d)(ii) of the Purchaser Disclosure Schedule in connection with the
transactions contemplated by this Agreement and the other Transaction
Agreements; provided, however, that the Purchaser shall not be required to take
any action pursuant to the foregoing sentence if the taking of such action or
the obtaining of such consents, authorizations, orders, approvals or exemptions
is reasonably likely to result in a condition or restriction having an effect of
the type referred to in the last sentence of Section 6.1(d)(i).
          (b) Subject to the terms and conditions of this Agreement (including
the proviso in Section 5.8(a)), each of the Company and the Purchaser agrees to
use reasonable best efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, all things necessary, proper or advisable to consummate
and make effective, as soon as practicable after the date of this Agreement, the
transactions contemplated hereby and by the other Transaction Agreements,
including using reasonable best efforts to (i) lift or rescind any injunction or
restraining order or other Order adversely affecting the ability of the parties
to consummate the transactions contemplated hereby or by the other Transaction
Agreements, and (ii) defend any litigation seeking to enjoin, prevent or delay
the consummation of the transactions contemplated hereby or by the other
Transaction Agreements or seeking material damages.
          (c) The Company agrees that as promptly as practicable after the date
hereof it shall give stop transfer instructions to the transfer agent for the
Common Stock with respect to shares of Common Stock held by the shareholders
party to that certain Voting Agreement, dated as of the date hereof (the “Voting
Agreement”), by and among the Purchaser and the shareholders of the Company
signatories thereto.
          SECTION 5.9 Notification of Certain Matters. (a) During the
Pre-Closing Period, the Company shall give prompt notice to the Purchaser of the
occurrence or non-occurrence of any event known to the Company the occurrence or
non-occurrence of which

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37

would reasonably be expected to cause the condition in Section 6.1(a) not to be
satisfied; provided, however, that the delivery of any notice pursuant to this
Section 5.9(a) shall not cure any breach of any representation or warranty
requiring disclosure of such matter prior to the date of this Agreement or
otherwise limit or affect the remedies available hereunder to the Purchaser.
          (b) During the Pre-Closing Period, the Purchaser shall give prompt
notice to the Company of the occurrence or non-occurrence of any event known to
the Purchaser the occurrence or non-occurrence of which would reasonably be
expected to cause the condition in Section 6.2(a) not to be satisfied; provided,
however, that the delivery of any notice pursuant to this Section 5.9(b) shall
not cure any breach of any representation or warranty requiring disclosure of
such matter prior to the date of this Agreement or otherwise limit or affect the
remedies available hereunder to the Company.
          SECTION 5.10 Regulatory and Other Authorizations; Notices and
Consents. (a) Subject to the other provisions of this Agreement (including the
proviso in Section 5.8(a)), the parties hereto shall cooperate with each other
and use reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, to
obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Entities which are
necessary or advisable to consummate the transactions contemplated by this
Agreement and by the other Transaction Agreements and to comply with the terms
and conditions of all such permits, consents, approvals and authorizations of
all such third parties and Governmental Entities.
          (b) Each of the parties hereto shall, upon request, furnish each other
with all information concerning themselves, their Subsidiaries, directors,
officers and shareholders or other equity holders (to the extent applicable) and
such other matters as may be reasonably necessary or advisable in connection
with any statement, filing, notice or application made by or on behalf of the
Company, any of its Subsidiaries or the Purchaser to any Governmental Entity in
connection with the transactions contemplated by this Agreement.
          (c) The parties hereto shall promptly advise each other upon receiving
any communication from any Governmental Entity whose consent or approval is
required for consummation of the transactions contemplated by this Agreement
which causes such party to believe that there is a reasonable likelihood that
any Requisite Regulatory Approval will not be obtained or that the receipt of
any such approval will be materially delayed or conditioned.
          SECTION 5.11 Shareholder Litigation. The Company shall give the
Purchaser the opportunity to participate in, subject to a customary joint
defense agreement, but not control, the defense and/or settlement of the
Shareholder Litigation and any litigation against the Company or any of its
directors or officers relating to or arising from the transactions contemplated
hereby or by the other Transaction Agreements; provided, however, that no
settlement of the Shareholder Litigation (other than as contemplated by the
Settlement Agreement) or any other such litigation shall be agreed to or
effected without the Purchaser’s prior written consent, which consent shall not
be unreasonably withheld, conditioned or delayed. The Company shall use its
reasonable best efforts to take, or cause to be taken, all actions necessary,
proper or advisable to satisfy all conditions to, and to finalize as promptly as

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reasonably practicable, the settlement of the Shareholder Litigation
contemplated by the Settlement Agreement.
          SECTION 5.12 Appointment of Directors. Prior to the Closing and
effective as of the Closing, the Company shall (i) take all necessary action to
cause the Board of Directors of each of the Company, Doral Bank and Doral Bank,
FSB to be comprised of eleven directors (or, in the case of the Boards of
Directors of Doral Bank and Doral Bank, FSB, such other number specified by the
Purchaser) specified by the Purchaser (subject to applicable stock exchange
requirements), including the CEO of the Company and Dennis Buchert (assuming
each is willing to so serve) (provided that, in the case of the Boards of
Directors of Doral Bank and Doral Bank, FSB, such designated directors shall
satisfy all requirements of applicable Law), (ii) enter into an agreement with
each such designated director (to the extent described in Section 5.12 of the
Purchaser Disclosure Schedule) in the form set forth in Section 5.12 of the
Purchaser Disclosure Schedule (assuming such designated director is willing to
enter into such agreement) and (iii) take any necessary action to amend its
bylaws to authorize the transactions contemplated by the agreements referenced
in clause (ii).
          SECTION 5.13 Termination of Company Stock Options; Employee Benefits.
(a) Prior to the Closing and effective as of the Closing, the Company shall take
all necessary action to ensure that all Company Stock Options shall terminate,
without any liability to the Purchaser, the Company or any of its Subsidiaries
on or after the Closing.
          (b) From and after the Closing, the Purchaser will cause the Company
and its Subsidiaries to honor, in accordance with their terms, all existing
employment, severance, retention and bonus agreements between the Company or any
of its Subsidiaries and any officer, director or employee of the Company or any
of its Subsidiaries (as modified pursuant to those certain letter agreements
executed by the individuals listed in Section 3.18(b) of the Company Disclosure
Schedule that are listed on Annex M of the Company Disclosure Schedule) that are
employment agreements or agreements entered into pursuant to the Plans described
in Section 3.19(a) of the Company Disclosure Schedule.
          (c) Purchaser shall cause the Company and each of its Subsidiaries,
for the period commencing on the Closing Date and ending on the one-year
anniversary thereof, to maintain for the Company Employees at the Closing Date
(other than those individuals who have entered into or will enter into an
individual employment agreement with the Company or any of its Subsidiaries, as
to which such agreement shall govern) (the “Current Employees”) annual rate of
base salary or wages, cash incentive compensation opportunities, severance
protections and retirement and welfare benefits provided under Plans which are
substantially comparable in the aggregate to the annual rate of base salary or
wages, cash incentive compensation opportunities, severance protections and
retirement and welfare benefits, in the aggregate, maintained for and provided
to Current Employees as a group immediately prior to the Closing; provided,
however, subject to the foregoing, that nothing herein shall be construed as an
amendment to any Plan or prevent the amendment or termination of any Plan or
interfere with the right or obligation of the Company or any Subsidiary thereof
to make such changes as are necessary to conform with applicable Law so long as
the foregoing covenant is satisfied. Nothing in this Section 5.13 shall limit
the right of the Purchaser, the Company or any of their Subsidiaries to
terminate the employment of any Current Employee at any time, subject to any
existing agreement.

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          (d) The provisions of clauses (b)-(d) of this Section 5.13 are solely
for the benefit of the parties to this Agreement, and no current or former
employee or any other individual associated therewith shall be regarded for any
purpose as a third party beneficiary of clauses (b)-(d) of this Section 5.13 and
nothing herein shall be construed as an amendment to any Plan for any purpose.
          SECTION 5.14 Directors’ and Officers’ Indemnification and Insurance.
          (a) The Purchaser agrees that all rights to exculpation and
indemnification for acts or omissions occurring at or prior to the Closing,
whether asserted or claimed prior to, at or after the Closing (including any
matters arising in connection with the transactions contemplated by this
Agreement), now existing in favor of the current or former directors or officers
of the Company or its Subsidiaries in their capacities as such (the
“Indemnitees”) as provided in the respective certificates of incorporation or
by-laws (or equivalent organization documents) of the Company and its
Subsidiaries or in any agreement set forth in Section 5.14(a) of the Company
Disclosure Schedule, in each case as in effect as of the date of this Agreement
(the “Indemnification Provisions”), shall survive the Closing and shall continue
in full force and effect. Following the Closing, the Purchaser (for so long as
it holds a majority of the outstanding voting securities of or otherwise
controls the Company) shall cause the Company to indemnify, defend and hold
harmless, and advance expenses to, the Indemnitees with respect to all acts or
omissions by them in their capacities as such at any time prior to the Closing,
to the fullest extent required by the Indemnification Provisions.
          (b) The Purchaser (for so long as it holds a majority of the
outstanding voting securities of or otherwise controls the Company) shall cause
the Company to provide, for a period of not less than six years after the
Closing Date, the Indemnitees who are insured under the Company’s directors’ and
officers’ insurance and indemnification policies set forth in Section 5.14(b) of
the Company Disclosure Schedule (the “Current D&O Policies”) with insurance
coverage under renewals of the Current D&O Policies and/or under separate “tail
policies” with insurers reasonably believed by the Purchaser to be reputable and
financially sound for events occurring at or prior to the Closing Date (the “D&O
Insurance”) that is at least as favorable, in the aggregate, to the Indemnitees
than the Current D&O Policies; provided, however, that the Purchaser shall not
be required to cause the Company to pay an annual premium for the D&O Insurance
in excess of 350% (the “Specified Percentage”) of the last annual premium paid
by the Company prior to the date hereof for the Current D&O Policies; provided,
further, that if the annual premiums of such insurance coverage exceed such
amount, the Purchaser (for so long as it holds a majority of the outstanding
voting securities of or otherwise controls the Company) shall cause the Company
to obtain a policy with the greatest coverage available for a cost not exceeding
such amount.
          (c) The Indemnitees to whom this Section 5.14 applies shall be third
party beneficiaries of this Section 5.14. The provisions of this Section 5.14
are intended to be for the benefit of and enforceable by each Indemnitee and his
or her successors, heirs or representatives. The indemnification and insurance
rights provided for herein shall not be deemed exclusive of any other rights to
which an Indemnitee is entitled, whether pursuant to Law, contract or otherwise.

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          (d) If the Company or the Purchaser or any of their respective
successors or assigns shall (i) consolidate with or merge into any other
corporation or entity and shall not be the continuing or surviving corporation
or entity of such consolidation or merger or (ii) transfer all or substantially
all of its properties and assets to any individual, corporation or other entity,
then, and in each such case, proper provisions shall be made so that the
successors and assigns of the Company or the Purchaser, as the case may be,
shall assume all of the obligations set forth in this Section 5.14.
          (e) The Purchaser acknowledges that the Company currently is
negotiating, and expects to enter into shortly, new directors’ and officers’
insurance and indemnification policies. Promptly thereafter, the Company and the
Purchaser shall negotiate in good faith to amend the provisions of
Section 5.14(b) to take into account the terms and premiums of such new
policies, including adjustment of the Specified Percentage to take into account
any increase in the premiums payable for such new policies.
          SECTION 5.15 Financing. (a) Prior to the Closing, the Company shall,
and shall cause its Subsidiaries to, and shall use its reasonable best efforts
to cause the Company Representatives to, provide all cooperation reasonably
requested by the Purchaser in connection with obtaining the Additional Equity
Commitments, including (i) participation in a reasonable number of meetings,
presentations and due diligence sessions, (ii) assisting with the preparation of
materials for offering documents, private placement memoranda and similar
documents required in connection with obtaining the Additional Equity
Commitments (collectively, “Offering Materials”) and (iii) providing any interim
financial information provided to management of the Company and its Subsidiaries
in the ordinary course of business. Any Offering Materials which include any
information provided by or on behalf of the Company or its Subsidiaries shall
include a disclaimer to the effect that the Company and its Subsidiaries and
their respective employees have no responsibility for the content of such
Offering Materials and disclaim all responsibility therefor other than with
respect to information provided by or on behalf of the Company or based on the
SEC Reports or other documents filed publicly by the Company or its
Subsidiaries.
          (b) The Purchaser and Parent shall use their commercially reasonable
efforts to obtain, on or prior to June 12, 2007 or as soon as possible
thereafter, but in any event prior to the date specified in Section 7.1(c),
binding subscription agreements (or comparable documentation) for the investment
in Parent of not less than $215 million in additional equity at or prior to the
Closing on terms and conditions comparable to those contained in the Existing
Equity Commitments, provided that the Purchaser and Parent shall have sole
discretion to determine whether, and in what percentages, to obtain such
commitments for Class A, Class B or Class C limited partnership interests of
Parent (the “Additional Equity Commitments” and, together with the Existing
Equity Commitments, the “Equity Commitments”). The Purchaser and Parent shall
use their reasonable best efforts to cause the Persons who are or become party
to Equity Commitments to comply with the terms thereof in order to consummate
the purchase of the Purchased Stock prior to the date specified in
Section 7.1(c) (including by taking reasonable enforcement action to cause such
Persons providing such Equity Commitments to fund the amounts contemplated
thereby in accordance with the terms thereof). In the event any portion of the
financing contemplated by any Equity Commitment becomes unavailable on the terms
and conditions contemplated thereby, the Purchaser and Parent shall use their
commercially

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41

reasonable efforts to obtain alternative financing from alternative sources on
terms no less favorable, taken as a whole, to Parent (as determined in the sole
good faith judgment of the Purchaser) and the Company as promptly as practicable
following the occurrence of such event. The Purchaser and Parent shall consult
with the Company regarding the process of obtaining the Additional Equity
Commitments, shall keep the Company reasonably apprised of material developments
relating to the Additional Equity Commitments and shall provide the Company with
executed copies of any Additional Equity Commitments received by Parent or the
Purchaser. The Purchaser and Parent shall use their reasonable best efforts to
satisfy on a timely basis the conditions that are within their control of the
Equity Commitments, or any alternative financing commitments. The Parent shall
not amend or alter, or agree to amend or alter, any Equity Commitment in any
manner that would materially impair, materially delay or prevent the
transactions contemplated by this Agreement without the prior written consent of
the Company. Parent will contribute to the Purchaser proceeds of the Equity
Commitments received by Parent at Closing, up to the Purchase Price.
          SECTION 5.16 Takeover Statutes. The parties shall use their respective
reasonable best efforts (i) to take all action necessary so that no Takeover
Statute is or becomes applicable to the issuance and sale of the Purchased Stock
to the Purchaser or any of the other transactions contemplated by this
Agreement, the other Transaction Agreements or the Voting Agreement and (ii) if
any such Takeover Statute is or becomes applicable to any of the foregoing, to
take all action necessary so that the issuance and sale of the Purchased Stock
to the Purchaser or any of the other transactions contemplated by this
Agreement, the other Transaction Agreements and the Voting Agreement may be
consummated as promptly as practicable on the terms contemplated by this
Agreement, the other Transaction Agreements and the Voting Agreement and
otherwise to minimize the effect of such Takeover Statute on the issuance and
sale of the Purchased Stock to the Purchaser and the other transactions
contemplated by this Agreement, the other Transaction Agreements and the Voting
Agreement.
          SECTION 5.17 Deferred Tax Confirmation. The parties agree to cooperate
in good faith and use their reasonable best efforts to obtain the Deferred Tax
Confirmation as promptly as practicable after the date of this Agreement;
provided that the Purchaser shall prepare any and all written correspondence
with the Department of the Treasury of Puerto Rico with respect to the Deferred
Tax Confirmation.
          SECTION 5.18 Stock Exchange Listing. The Company shall use its
reasonable best efforts to cause the Purchased Stock to be approved for listing
on the NYSE, subject to official notice of issuance, prior to the Closing.
          SECTION 5.19 Public Announcements. The Purchaser and the Company shall
consult with each other before issuing any press release or making any other
public statement with respect to the transactions contemplated by this Agreement
and the other Transaction Agreements, and shall not issue any such press release
or make any such other public statement without the other party’s prior consent,
provided that the Company may, without the consent of the Purchaser (but after
prior consultation, to the extent practicable in the circumstances) make such
public disclosures as may be required upon the advice of outside counsel by
applicable Law or the rules and regulations of the NYSE. The parties agree that
the initial press release or releases to be issued with respect to the
transactions contemplated by this

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Agreement shall be mutually agreed upon prior to the issuance thereof. In
addition, the Company and its Subsidiaries shall in accordance with Law
(a) consult with the Purchaser regarding communications with customers,
shareholders and employees related to the transactions contemplated hereby,
(b) provide the Purchaser with shareholder lists of the Company and (c) allow
and facilitate contact by the Purchaser with shareholders of the Company.
ARTICLE VI
CONDITIONS TO CLOSING
          SECTION 6.1 Conditions to the Obligations of the Purchaser. The
Purchaser’s obligation to purchase the Purchased Stock at the Closing is subject
to the satisfaction (or waiver by the Purchaser), on or prior to the Closing
Date, of the following conditions:
          (a) Representations and Warranties; Performance of Obligations.
(i) Except as set forth in clause (ii) below, the representations and warranties
of the Company contained in this Agreement (without giving effect to any
materiality or Material Adverse Effect qualifications set forth therein) shall
be true and correct as of the Closing Date as though made on and as of such date
and time (except to the extent that any such representation and warranty
expressly speaks as of an earlier date, in which case such representation and
warranty shall be true and correct as of such earlier date) except where any
failures of any such representations and warranties to be so true and correct,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Material Adverse Effect; and (ii) the representations and
warranties set forth in (x) Sections 3.3 and 3.4(a) shall be true and correct in
all but de minimis respects and (y) Section 3.8(i) shall be true and correct in
all respects. The Company shall have performed in all material respects all of
its agreements, obligations, covenants and conditions herein required to be
performed or observed by it on or prior to the Closing Date.
          (b) Legal Investment. On the Closing Date, there shall not be in
effect any Law or Order directing that the purchase and sale of the Purchased
Stock or any of the other transactions contemplated by this Agreement and the
other Transaction Agreements not be consummated or which has the effect of
rendering it unlawful to consummate such transactions.
          (c) Proceedings and Litigation. (i) No Action by any Governmental
Entity shall be pending against any party hereto seeking to restrain or prohibit
the purchase and sale of the Purchased Stock or the consummation of any of the
other transactions contemplated by this Agreement or the other Transaction
Agreements.
     (ii) No event shall have occurred that would give the Company the right to
terminate the Settlement Agreement pursuant to paragraph 14 thereof.
     (iii) The U.S. District Court for the Southern District of New York shall
have entered an order or orders approving the settlement of the Shareholder
Litigation on substantially the terms set forth in the Settlement Agreement, and
such order or orders shall be in full force and effect and shall not have been
stayed or reversed as a result of an appeal or other proceeding.

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     (iv) There shall not have occurred any of the following events or
developments with respect to the investigation by the U.S. Attorney’s Office for
the Southern District of New York referenced in the SEC Reports (or any other
substantially similar federal criminal investigation): (x) notification (whether
oral or written) that the Company, any of its Subsidiaries, or any of their
respective current officers or directors, is a target of such investigation or
such other investigation, (y) notification (whether oral or written) that the
Company, any of its Subsidiaries, or any of their respective current officers or
directors is a subject of such investigation or such other investigation and a
determination by the Purchaser (in its sole good faith judgment) that such
development could reasonably be expected to materially and adversely affect the
Company and its Subsidiaries, taken as a whole or (z) an indictment (or threat
of an imminent indictment) of the Company, any of its Subsidiaries, or any of
their respective current officers or directors.
          (d) Regulatory Matters. (i) All approvals, consents, permits and
waivers of the Governmental Entities specified in Section 6.1(d)(i) of the
Company Disclosure Schedule (collectively, the “Requisite Regulatory
Approvals”), shall have been obtained and shall be in full force and effect, and
all waiting periods required by Law in connection therewith (including under the
HSR Act) shall have expired or been terminated. No such approval, consent,
permit or waiver shall contain or impose any condition or restriction that the
Purchaser determines, in its reasonable good faith judgment, is materially and
unreasonably burdensome or would reduce the benefits of its investment in the
Company to such a degree that the Purchaser would not have entered into this
Agreement had such condition or restriction been known to it at the date hereof.
     (ii) (A) Each of the Bear Stearns Companies Inc. (“Bear Stearns”) and each
of the investors in Doral GP Ltd. listed in Section 6.1(d)(ii) of the Purchaser
Disclosure Schedule shall have received written confirmation, satisfactory to it
in its reasonable good faith judgment, from the Federal Reserve Board to the
effect that neither it, nor any of its Affiliates (which for purposes of this
paragraph shall include all “affiliates” as defined in the BHC Act or
Regulation Y of the Federal Reserve Board) shall be deemed to “control” Doral GP
Ltd., Parent, the Purchaser or any of its Subsidiaries after the Closing
(including the Company, Doral Bank and Doral Bank, FSB) for purposes of
Sections 3 or 4 of the BHC Act by reason of the purchase of the Purchased Stock
by the Purchaser and the consummation of the other transactions contemplated by
this Agreement and the other Transaction Agreements or the Purchaser
Organizational Documents; (B) Bear Stearns shall have received written
confirmation, satisfactory to it in its reasonable good faith judgment, from the
Federal Reserve Board that neither it nor any of its Affiliates (which for
purposes of this paragraph shall include all “affiliates” as defined in the BHC
Act or Regulation Y of the Federal Reserve Board) will cease to be entitled to
the exemption set forth in Section 4(f)(1) of the BHC Act by reason of the
purchase of the Purchased Stock by the Purchaser and the other transactions
contemplated by this Agreement and the other Transaction Agreements or the
Purchaser Organizational Documents; and (C) the Purchaser shall have received a
written administrative determination, satisfactory to it in its reasonable good
faith judgment, from the Commissioner to the effect that the provisions of
change in

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control of Section 12 of the Puerto Rico Banking Law (7 LPRA 39) are only
applicable to the direct change in control of Doral Financial Corporation as
provided in the Resolution and Basis of Approval In the Matter of Doral Federal
Savings Bank (OCIF 97-98-D-CR1) issued by the Commissioner on September 24,
1997, which direct change in control shall be effected by the acquisition of the
Purchased Stock by the Purchaser, and therefore the requirements under such
change of control provisions do not extend to, and are not applicable to (I) the
members of the Purchaser, (II) Parent or any of its limited partners,
(III) Doral GP Ltd. or any of its members or (IV) any of their respective
successors or assigns. For purposes of this Agreement, “Purchaser Organizational
Documents” means the limited liability company agreement of the Purchaser, the
limited partnership agreement of Parent, the memorandum and articles of
association of the general partner of Parent and the members agreement among the
members of the general partner of Parent.
          (e) Board of Directors. The Company shall have taken all actions
required by Section 5.12 hereof.
          (f) Requisite Shareholder Approvals. The Requisite Shareholder
Approvals shall have been obtained in accordance with the laws of Puerto Rico
and the rules and regulations of the NYSE.
          (g) Certificate. The Company shall have delivered to the Purchaser a
certificate, executed on behalf of the Company by the Chief Executive Officer of
the Company and the Chief Financial Officer of the Company, dated the Closing
Date, to the effect that the conditions specified in paragraph (a) have been
satisfied.
          (h) Listing Qualification of Purchased Stock. The Purchased Stock
shall have been approved for listing on the New York Stock Exchange, subject to
official notice of issuance.
          (i) Other Agreements. The other Transaction Agreements shall have been
duly authorized, executed and delivered by the Company.
          (j) Additional Equity Commitments. Parent or the Purchaser shall have
received the Additional Equity Commitments (it being agreed that if Parent or
the Purchaser receives the Additional Equity Commitments, this condition shall
remain satisfied even if any such Additional Equity Commitment subsequently
fails to be available for any reason).
          (k) Additional Funding. (i) The sale of Doral Bank, FSB’s New York
City branches, substantially on the terms set forth in the Purchase and
Assumption Agreement, dated as of March 15, 2007, between Doral Bank FSB and New
York Commercial Bank shall have been consummated, (ii) the Company shall have
received, or shall have received all regulatory approvals with respect to
(subject only to the occurrence of the Closing) and shall have provided the
Purchaser with written confirmation of its Chief Executive Officer that it will
receive no later than one Business Day following the Closing, at least
$150,000,000 in cash, in the aggregate (the “Additional Proceeds”) from (x) the
distribution of excess capital by Doral Bank, FSB and (y)

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the transfer of mortgage servicing rights from the Company to Doral Bank, and
(iii) such Additional Proceeds shall, upon receipt thereof, be available for use
as provided in Section 5.4.
          (l) Deferred Tax Confirmation. The Company shall have received written
confirmation, reasonably satisfactory to the Purchaser, from the Department of
the Treasury of Puerto Rico substantially in the form attached hereto as
Exhibit E (the “Deferred Tax Confirmation”) that (i) the Deferred Tax Agreement
will remain in full force and effect with respect to the Company and each of its
Subsidiaries following the transactions contemplated by this Agreement and any
future change of control of the Company, (ii) each Subsidiary of the Company has
the right to enforce the Deferred Tax Agreement as if it were a party to such
agreement and (iii) the claim or utilization of the Amortization Deductions by
the Company or by its Subsidiaries for Puerto Rican income tax purposes will not
give rise to the realization or recognition of any income by the Company or by
the Subsidiaries.
          SECTION 6.2 Conditions to Obligations of the Company. The Company’s
obligation to issue and sell the Purchased Stock at the Closing is subject to
the satisfaction (or waiver by the Company), on or prior to the Closing Date, of
the following conditions:
          (a) Representations and Warranties; Performance of Obligations. The
representations and warranties of the Purchaser set forth in this Agreement
shall be true and correct in all material respects as of the Closing Date as
though made on and as of such date and time (except to the extent that any such
representation and warranty expressly speaks as of an earlier date, in which
case such representation and warranty shall be true and correct in all material
respects as of such earlier date) except where any failures to be so true and
correct would not prevent consummation of the transactions contemplated by this
Agreement. The Purchaser shall have performed in all material respects all of
its agreements, obligations, covenants and conditions herein required to be
performed or observed by it on or prior to the Closing Date.
          (b) Legal Investment. On the Closing Date, there shall not be in
effect any Law or Order directing that the purchase and sale of the Purchased
Stock or any of the other transactions contemplated by this Agreement or the
other Transaction Agreements not be consummated or which has the effect of
rendering it unlawful to consummate such transactions.
          (c) Regulatory Matters. The Requisite Regulatory Approvals shall have
been obtained and shall be in full force and effect, and all waiting periods
required by Law in connection therewith (including under the HSR Act) shall have
expired or been terminated.
          (d) Requisite Shareholder Approvals. The Requisite Shareholder
Approvals shall have been obtained in accordance with the laws of Puerto Rico
and the rules and regulations of the NYSE.
          (e) Certificate. The Purchaser shall have delivered to the Company a
certificate, executed on behalf of the Purchaser by an authorized signatory
thereof, dated the Closing Date, to the effect that the conditions specified in
paragraph (a) have been satisfied.
          (f) Other Agreements. The Securityholders Agreement shall have been
duly authorized, executed and delivered by the Purchaser.

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ARTICLE VII
TERMINATION AND AMENDMENT
          SECTION 7.1 Termination. This Agreement may be terminated at any time
prior to the Closing:
          (a) by mutual written consent of the Company and the Purchaser;
          (b) by (i) either the Company or the Purchaser if (x) any Governmental
Entity which must grant a Requisite Regulatory Approval has denied such approval
and such denial has become final and nonappealable, or (y) any Governmental
Entity of competent jurisdiction shall have issued a final, nonappealable Order
enjoining or otherwise prohibiting the consummation of the transactions
contemplated by this Agreement or, in the case of termination by the Purchaser,
any of the other Transaction Agreements or (ii) the Purchaser if (x) Bear
Stearns, the Purchaser, any of the other investors referred to in
Section 6.1(d)(ii), or any of their respective Affiliates receives final written
notice from the Federal Reserve Board or the Commissioner that it will not grant
any of the written confirmations or determinations described in
Section 6.1(d)(ii) or (y) any Governmental Entity which must grant any approval
required in order for the condition set forth in Section 6.1(k) to be satisfied
has denied such approval and such denial has become final and nonappealable;
          (c) by either the Company or the Purchaser if the Closing shall not
have occurred on or before September 30, 2007, unless the failure of the Closing
to occur by such date shall be due to the failure of the party seeking to
terminate this Agreement to perform or observe the covenants and agreements of
such party set forth herein;
          (d) by either the Company or the Purchaser (provided that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein), if the other party
shall have breached any of the covenants, agreements, representations or
warranties made by such other party herein, and such breach (x) is not cured
within 30 days following written notice to the party committing such breach, or
which breach, by its nature, cannot be cured prior to the Closing and (y) would
entitle the non-breaching party not to consummate the transactions contemplated
hereby under Article VI hereof;
          (e) by either the Company or the Purchaser if the Requisite
Shareholder Approvals shall not have been obtained upon a vote taken thereon at
the Company Shareholders Meeting or at any adjournment or postponement thereof;
          (f) by the Purchaser, if (i) the Board of Directors of the Company
shall have failed to recommend in the Proxy Statement and at the Company
Shareholders Meeting the approval of the issuance of the Purchased Stock and the
Charter Amendment by the shareholders of the Company or shall have effected a
Change in Recommendation (or shall have resolved to do so), whether or not
permitted by this Agreement, (ii) the Company shall have materially breached its
obligations under Section 5.6 by failing to call, give notice of, convene and
hold the Company Shareholders Meeting in accordance with Section 5.6 or
(iii) the Company shall have breached its obligations under Section 5.7 in any
material respect;

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          (g) by the Purchaser if there is a final non-appealable judgment of
the U.S. District Court for the Southern District of New York disapproving
settlement of the Shareholder Litigation on substantially the terms set forth in
the Settlement Agreement;
          (h) by the Company if the Additional Equity Commitments shall not have
been received by June 12, 2007;
          (i) by the Company in accordance with, and subject to the terms and
conditions of, Section 5.7(f); or
          (j) by the Purchaser if:
     (i) the Company or a Significant Subsidiary of the Company (x) pursuant to
or within the meaning of any Bankruptcy Law: (A) commences a voluntary case; (B)
consents to the entry of an order for relief against it in an involuntary case;
(C) consents to the appointment of a Custodian of it; or (D) makes a general
assignment for the benefit of its creditors; or (y) takes, under any foreign
laws relating to insolvency, any action comparable to the actions set forth in
clause (x);
     (ii) a court of competent jurisdiction enters an Order under any Bankruptcy
Law that: (A) is for relief against the Company or any Significant Subsidiary of
the Company in an involuntary case; (B) appoints a Custodian of the Company or
any Significant Subsidiary of the Company; or (C) orders the winding up or
liquidation of the Company or any Significant Subsidiary of the Company; or
(D) grants similar relief under any foreign laws and the order, decree or relief
remains unstayed and in effect for 60 days; or
     (iii) (A) the FDIC (or other competent Governmental Entity having
regulatory authority over Doral Bank or Doral Bank, FSB) appoints, under any
applicable federal, state or local banking Law or Bankruptcy Law, a Custodian
for Doral Bank or Doral Bank, FSB or for all or substantially all of the assets
of Doral Bank or Doral Bank, FSB, or (B) Doral Bank or Doral Bank, FSB files
with the FDIC (or other competent Governmental Entity having regulatory
authority over Doral Bank or Doral Bank, FSB) a notice of voluntary liquidation
or other similar action under any applicable federal, state or local banking
Law, Bankruptcy Law or other similar Law.
          SECTION 7.2 Effect of Termination.
          (a) In the event of termination of this Agreement by either the
Company or the Purchaser as provided in Section 7.1, this Agreement shall
forthwith become void and have no effect, and none of the Company, the
Purchaser, any of their respective officers, directors, or Affiliates (or, in
the case of the Purchaser, any of the Purchaser Related Parties) shall have any
liability of any nature whatsoever hereunder, or in connection with the
transactions contemplated hereby, except that (i) the Limited Guaranty (only to
the extent reflected therein) and Section 5.3(b), this Section 7.2, Section 8.10
and Section 8.12 shall survive any termination of this Agreement and (ii)
notwithstanding anything to the contrary contained in this Agreement (other than
Section 8.12 hereof), neither the Company nor the Purchaser shall be relieved or
released

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from any liabilities or damages arising out of its willful breach of any
provision of this Agreement.
          (b) In the event that this Agreement is terminated (i) by either the
Company or the Purchaser pursuant to Section 7.1(e) or (ii) by the Purchaser
pursuant to Section 7.1(d), Section 7.1(f), Section 7.1(g) or Section 7.1(j)
(or, in any such case, is terminated pursuant to another paragraph of
Section 7.1 at a time when this Agreement was terminable pursuant to one of the
foregoing specified provisions and by the party specified above), then the
Company shall reimburse the Purchaser for all expenses reasonably incurred by or
on its behalf in connection with the transactions contemplated by this
Agreement, including all reasonable expenses of counsel, accountants, investment
bankers, experts and other consultants retained by the Purchaser, Parent,
Parent’s limited partners and their respective Affiliates, in connection with
the transactions contemplated hereby (and not theretofore paid or reimbursed by
the Company) (the “Purchaser Expenses”) within two Business Days after the
receipt by the Company of an invoice therefor; provided that the payment by the
Company of such expenses shall not relieve the Company of any subsequent
obligation to pay the Termination Fee pursuant to Section 7.2(d), except to the
extent expressly provided therein.
          (c) The Company shall pay to or as directed by the Purchaser the sum
of $25 million (the “Termination Fee”) prior to or concurrently with, and as a
condition to, the termination of this Agreement by the Company pursuant to
Section 7.1(i).
          (d) The Company shall pay to or as directed by the Purchaser the
Termination Fee, less any Purchaser Expenses theretofore paid to the Purchaser
pursuant to Section 7.2(b), upon the execution and delivery by the Company or
any of its Subsidiaries of a definitive agreement with respect to, or
consummation of, a Qualifying Competing Proposal referred to in clause
(iii) below if (i) this Agreement is terminated by (A) the Purchaser pursuant to
Section 7.1(d) because of the Company’s willful breach of any representation,
warranty, covenant or agreement under this Agreement, (B) by the Purchaser
pursuant to Section 7.1(f), (C) by either the Company or the Purchaser pursuant
to Section 7.1(e) or (D) by either the Company or the Purchaser pursuant to
Section 7.1(c) without a vote of the shareholders of the Company contemplated by
this Agreement at the Company Shareholders Meeting having occurred (or, in any
such case, is terminated pursuant to another paragraph of Section 7.1 at a time
when this Agreement was terminable pursuant to one of the foregoing specified
provisions and by the party specified above), (ii) in any such case a Triggering
Competing Proposal shall have been publicly announced or otherwise communicated
or made known to the senior management or Board of Directors of the Company (or
any Person shall have publicly announced, communicated or made known an
intention, whether or not conditional on the termination of this Agreement or
otherwise, to make a Triggering Competing Proposal) at any time after the date
of this Agreement and on or prior to the date of the Company Shareholders
Meeting, in the case of clause (i)(C), or the date of termination, in the case
of clauses (i)(A), (i)(B) or (i)(D), and (iii) prior to the Outside Date the
Company or any of its Subsidiaries enters into a definitive agreement with
respect to, or consummates, a Qualifying Competing Proposal. For purposes of
this Section 7.2(d), (x) the term “Triggering Competing Proposal” means a
Competing Proposal, provided that (I) for purposes of the definition of
“Triggering Competing Proposal,” references to 20% in the definition of
“Competing Proposal” shall be deemed to be references to “33%”, (II) such
Competing Proposal allows for the repayment, refinancing, extension, amendment
or

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restructuring of all of the 2007 Notes (including any transaction that involves
the receipt by any holder of 2007 Notes (in its capacity as such) of any shares
of capital stock, or any securities or obligations convertible into or
exercisable or exchangeable for shares of capital stock, of the Company or any
of its Subsidiaries or the contribution by any such holder of cash to the
Company or any of its Subsidiaries) and (III) a Competing Proposal that would
result in the reorganization or liquidation of the Company pursuant to any
Bankruptcy Law in which holders of Common Stock do not receive any value for
their shares or the placement of Doral Bank under receivership by the FDIC shall
not constitute a Triggering Competing Proposal, (y) a “Qualifying Competing
Proposal” means a Triggering Competing Proposal, provided that a Qualifying
Competing Proposal shall not include any transaction that involves (in one
transaction or a series of related transactions) solely a one-time extension of
the maturity of (or a forbearance of the right to demand payment at maturity, or
of any other related enforcement rights, under) all or a portion of the 2007
Notes, in any such case for an aggregate of six months or less in which no
holder of 2007 Notes (in its capacity as such) receives any shares of capital
stock, or any securities or obligations convertible into or exercisable or
exchangeable for shares of capital stock, of the Company or any of its
Subsidiaries or contributes cash to the Company or any of its Subsidiaries (any
such excluded transaction, a “Short-Term Maturity Extension”) (it being
understood that if a definitive agreement is executed with respect to a
Short-Term Maturity Extension or a Short-Term Maturity Extension is consummated,
any other transaction for which a definitive agreement is executed or which is
consummated prior to the Outside Date may constitute a Qualifying Competing
Proposal) and (z) “Outside Date” means the later of (I) 12 months following a
termination of this Agreement as provided in clause (i) of this Section 7.2(d)
and (II) if the Company enters into one or more definitive agreements with
respect to or consummates a Short-Term Maturity Extension prior to the date
which is 12 months following such termination, the date which is one month
following the latest date to which the maturity of any of the 2007 Notes is
extended in connection with such Short-Term Maturity Extension.
          (e) Any expenses that become payable pursuant to Section 7.2(b) and
any Termination Fee or portion thereof that becomes payable pursuant to
Section 7.2(c) or Section 7.2(d) shall be paid by wire transfer of immediately
available funds to an account designated by the Purchaser in writing to the
Company.
          (f) The Company acknowledges that the agreements contained in
paragraphs (b), (c) and (d) above are an integral part of the transactions
contemplated by this Agreement, that without such agreement by the Company, the
Purchaser would not have entered into this Agreement, and that such amounts do
not constitute a penalty. If the Company fails to pay any amounts due under
paragraph (b), (c) or (d) above within the time periods specified in such
paragraphs, the Company shall pay the reasonable costs and expenses (including
reasonable legal fees and expenses) incurred by the Purchaser in connection with
any action, including the filing of any lawsuit, taken to collect payment of
such amounts, together with interest on the amount of any such unpaid amounts at
the prime rate of JPMorgan Chase Bank, N.A. from the date such amounts were
required to be paid until the date of actual payment.

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ARTICLE VIII
MISCELLANEOUS
          SECTION 8.1 Other Definitions; Terms Generally. (a) The following
terms as used in this Agreement shall have the following meanings:
     (i) “Affiliate” means, with respect to any Person, any other Person that,
directly or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with such specified Person, for so long
as such Person remains so associated to the specified Person.
     (ii) “Bankruptcy Law” means Title 11, United States Code, or any similar
federal, state, local or foreign law providing for the insolvency,
reorganization, receivership, dissolution, winding up or liquidation of a
debtor.
     (iii) “Business Day” means any day other than a Saturday, Sunday or any
other day on which banks in New York, New York or San Juan, Puerto Rico are
required or authorized to close.
     (iv) “control” (including the terms “controlled by” and “under common
control with”), with respect to the relationship between or among two or more
Persons, means the possession, directly or indirectly, of the power to direct or
cause the direction of the affairs or management and policies of a Person,
whether through the ownership of voting securities, as trustee or executor, by
contract or otherwise.
     (v) “Custodian” means any receiver, trustee, conservator, assignee,
liquidator, custodian or similar official under any Bankruptcy Law or banking
Law.
     (vi) Fee Agreements” means those agreements (as they may be amended,
modified or supplemented) set forth in Section 8.1 of the Purchaser Disclosure
Schedule.
     (vii) “Person” means any individual, corporation, limited liability
company, limited or general partnership, joint venture, association, joint-stock
company, trust, unincorporated organization, government or any agency or
political subdivisions thereof or any group (within the meaning of
Section 13(d)(3) of the Exchange Act) comprised of two or more of the foregoing.
     (viii) “Significant Subsidiary” shall have the meaning ascribed thereto in
Rule 1.02 of Regulation S-X promulgated by the SEC.
     (ix) “Subsidiary” means (i) any corporation of which a majority of the
securities entitled to vote generally in the election of directors thereof, at
the time as of which any determination is being made, are owned by another
entity, either directly or indirectly, and (ii) any joint venture, general or
limited partnership,

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limited liability company or other legal entity in which an entity is the record
or beneficial owner, directly or indirectly, of a majority of the voting
interests or the general partner.
     (x) “to the knowledge of the Company” or similar expressions means the
actual knowledge of the senior executive officers of the Company and its
Subsidiaries and, without duplication, those executive officers or other
employees in charge of environmental, tax, labor, employee benefits or real
estate matters, in each case after reasonable investigation and inquiry.
          (b) Terms Generally. The definitions in Section 8.1(a) shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words “include”, “includes” and “including” shall
be deemed to be followed by the phrase “without limitation”, unless the context
expressly provides otherwise. All references herein to Sections, paragraphs,
subparagraphs, clauses, Exhibits or Schedules shall be deemed references to
Sections, paragraphs, subparagraphs or clauses of, or Exhibits or Schedules to
this Agreement, unless the context requires otherwise. Unless otherwise
expressly defined, terms defined in this Agreement have the same meanings when
used in any Exhibit or Schedule hereto, including the Company Disclosure
Schedule and the Purchaser Disclosure Schedule. Unless otherwise specified, the
words “this Agreement”, “herein”, “hereof”, “hereto” and “hereunder” and other
words of similar import refer to this Agreement as a whole (including the
Schedules, Exhibits, the Company Disclosure Schedule and the Purchaser
Disclosure Schedule) and not to any particular provision of this Agreement. The
term “or” is not exclusive. The word “extent” in the phrase “to the extent”
shall mean the degree to which a subject or other thing extends, and such phrase
shall not mean simply “if”. Any Law defined or referred to herein means such Law
as from time to time amended, modified or supplemented, including by succession
of comparable successor Laws and references to all attachments thereto and
instruments incorporated therein. References to a Person are also to its
permitted successors and assigns.
          SECTION 8.2 Representations and Warranties. None of the
representations, warranties, covenants and agreements in this Agreement or in
any instrument delivered pursuant to this agreement shall survive the Closing,
except for those covenants and agreements contained herein and therein which by
their terms apply in whole or in part after the Closing and then only to such
extent. Each of the Company and the Purchaser acknowledges and agrees that,
except for the representations and warranties expressly set forth in this
Agreement (a) no party makes, and has not made, any representations or
warranties relating to itself or its businesses or otherwise in connection with
the transactions contemplated by this Agreement and (b) no Person has been
authorized by any party to make any representation or warranty relating to
itself or its businesses or otherwise in connection with the transactions
contemplated by this Agreement and, if made, such representation or warranty
must not be relied upon as having been authorized by such party.
          SECTION 8.3 Governing Law; Jurisdiction; Waiver of Jury Trial.
(a) This Agreement shall be governed in all respects by the laws of the State of
New York except, in the case of the Company, to the extent that the PRGCL is
mandatorily applicable.

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          (b) Each of the Company and the Purchaser hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction and venue of
the United States District Court for the Southern District of New York and in
the courts hearing appeals therefrom unless no basis for federal jurisdiction
exists, in which event each party hereto irrevocably consents to the exclusive
jurisdiction and venue of the Supreme Court of the State of New York, New York
County, and the courts hearing appeals therefrom, for any action, suit or
proceeding arising out of or relating to this Agreement and the transactions
contemplated hereby. Each of the Company and the Purchaser irrevocably and
unconditionally waives, and agrees not to assert, by way of motion, as a
defense, counterclaim or otherwise, in any such action, suit or proceeding, any
claim that is not personally subject to the jurisdiction of the aforesaid courts
for any reason, other than the failure to serve process in accordance with this
Section 8.3, that it or its property is exempt or immune from jurisdiction of
any such court or from any legal process commenced in such courts (whether
through service of notice, attachment prior to judgment, attachment in aid of
execution of judgment, execution of judgment or otherwise), and to the fullest
extent permitted by applicable law, that the action, suit or proceeding in any
such court is brought in an inconvenient forum, that the venue of such action,
suit or proceeding is improper, or that this Agreement, or the subject matter
hereof, may not be enforced in or by such courts and further irrevocably waives,
to the fullest extent permitted by applicable law, the benefit of any defense
that would hinder, fetter or delay the levy, execution or collection of any
amount to which the party is entitled pursuant to the final judgment of any
court having jurisdiction. Each of the Company and the Purchaser expressly
acknowledges that the foregoing waivers are intended to be irrevocable under the
laws of the State of New York and of the United States of America; provided that
consent by the parties hereto to jurisdiction and service contained in this
Section 8.3 is solely for the purpose referred to in this Section 8.3 and shall
not be deemed to be a general submission to said courts or in the State of New
York other than for such purpose.
          (c) The Company hereby irrevocably designates Doral Bank, FSB, located
at 387 Park Avenue South, New York, New York 10016-8810, Attention: Paul Mak (in
such capacity, the “Company Process Agent”) its designee, appointee and agent to
receive, for and on its behalf, service of process in such jurisdiction in any
action, suit or proceeding arising out of or relating to this Agreement and such
service shall be deemed complete upon delivery thereof to the Company Process
Agent; provided that in the case of any such service upon the Company Process
Agent, the party effecting such service shall also deliver a copy thereof to the
Company in the manner provided in Section 8.9. In addition, each of the Company
and the Purchaser irrevocably consents to the service of process out of any of
the aforementioned courts in any such action, suit or proceeding by the mailing
of copies thereof by registered mail, postage prepaid, to such party at its
address specified pursuant to Section 8.9, such service of process to be
effective upon acknowledgment of receipt of such registered mail.
          (d) Each of the parties hereto hereby irrevocably and unconditionally
waives trial by jury in any legal action or proceeding in relation to this
Agreement or the other Transaction Agreements and for any counterclaim therein.
          SECTION 8.4 Successors and Assigns; Assignment; No Third Party
Beneficiaries. Except as otherwise expressly provided herein, the provisions
hereof shall inure to the benefit of, and be binding upon, the successors,
permitted assigns, heirs, executors and administrators of the parties hereto.
This Agreement may not be assigned by a

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party without the prior written consent of the other party (and any purported
assignment without such consent shall be void and without effect), except that
the Purchaser may assign all or any of its rights and obligations hereunder to
any Affiliate or Affiliates, provided that no such assignment shall relieve the
Purchaser of its obligations hereunder. Except as otherwise specifically
provided in Section 5.14 and Section 8.12, this Agreement is not intended to and
shall not confer upon any Person other than the parties hereto any rights or
remedies hereunder.
          SECTION 8.5 Entire Agreement. This Agreement (including the Exhibits
and Schedules hereto, which constitute part of this Agreement as if fully set
forth herein), the other Transaction Agreements, the Fee Agreements and the
Limited Guaranty constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and no party shall be
liable or bound to any other in any manner by any representations, warranties,
covenants and agreements except as specifically set forth herein and therein.
The Fee Agreements shall remain in full force and effect in accordance with
their respective terms, but such letter agreement included in the Fee Agreements
shall terminate upon the termination of this Agreement, except with respect to
fees and expenses accrued on or prior to the date of such termination, with
respect to which it shall survive until the payment or reimbursement in full
thereof. The Company agrees that any confidentiality agreements between any of
the members of the general partner of Parent, or any of their respective
Affiliates, shall be terminated effective upon the Closing.
          SECTION 8.6 Severability. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner so that the transactions
contemplated hereby are fulfilled to the extent possible.
          SECTION 8.7 Amendment and Waiver. This Agreement may be amended by the
parties hereto (in the case of the Company, by action taken by or on behalf of
its Board of Directors) at any time prior to the Closing, whether before or
after receipt of the Requisite Shareholder Approvals; provided, however, that,
after receipt of the Requisite Shareholder Approvals, no amendment may be made
which under applicable Law requires the further approval of the shareholders of
the Company without such further approval. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto. At any time
prior to the Closing, any party hereto may (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) subject to the
requirements of applicable Law, waive compliance with any of the agreements or
conditions contained for the benefit of such party contained herein. Any such
extension or waiver shall be valid if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
          SECTION 8.8 Delays or Omissions. It is agreed that no delay or
omission to exercise any right, power or remedy accruing to any party, upon any
breach, default or

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noncompliance by another party under this Agreement or the other Transaction
Agreements shall impair any such right, power or remedy, nor shall it be
construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence therein, or of or in any similar breach, default or noncompliance
thereafter occurring. All remedies, either under this Agreement or the other
Transaction Agreements, by law, or otherwise afforded to any party, shall be
cumulative and not alternative.
          SECTION 8.9 Notices. All notices required or permitted hereunder shall
be in writing and shall be deemed effectively given (i) upon personal delivery
to the party to be notified, (ii) when sent by confirmed facsimile if sent
during normal business hours of the recipient, if not, then on the next Business
Day or (iii) one Business Day after deposit with a nationally recognized
overnight courier, specifying next day delivery, with written verification of
receipt. All communications shall be sent to the addresses set forth below or
such other address or facsimile number as a party may from time to time specify
by notice to the other parties hereto:
If to the Company:
Doral Financial Corporation
1451 Franklin D. Roosevelt Avenue
San Juan, Puerto Rico 00920
Telephone: (787) 474-6381
Fax: (787) 474-6817
Attn: Glen Wakeman
          Enrique Ubarri
with a copy (which shall not constitute notice) to:
Cleary Gottlieb Steen & Hamilton LLP
One Liberty Plaza
New York, N.Y. 10006
Telephone: (212) 225-2000
Fax: (212) 225-3999
Attn: Victor Lewkow
          Jaime El Koury
          Francisco Cestero
Latham & Watkins LLP
885 Third Avenue
New York, N.Y. 10022
Telephone: (212) 906-1200
Fax: (212) 751-4864
Attn: Barry Bryer
          David Kurzweil

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If to the Purchaser:
Doral Holdings Delaware, LLC
c/o Bear Stearns Merchant Banking
383 Madison Avenue
New York, NY 10179
Telephone: (212) 272-2000
Fax: (212) 881-9516
Attn: David E. King
          Robert Juneja
with a copy (which shall not constitute notice) to:
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, N.Y. 10017
Telephone: (212) 455-2000
Fax: (212) 455-2502
Attn: Lee Meyerson
          Ellen Patterson
and
Kirkland & Ellis LLP
153 East 53rd Street
New York, N.Y. 10022
Telephone: (212) 446-4800
Fax: (212) 446-6460
Attn: Michael T. Edsall
          SECTION 8.10 Expenses. Except as provided in Section 7.2 or in the Fee
Agreements, all costs and expenses incurred in connection with this Agreement,
the other Transaction Agreements and the transactions contemplated hereby and
thereby shall be paid by the party incurring such expense.
          SECTION 8.11 Titles and Subtitles. The titles of the sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
          SECTION 8.12 Remedies.
          (a) Notwithstanding any other provision of this Agreement or any
rights of the Company at law or in equity, the Company agrees that to the extent
it has incurred losses or damages in connection with this Agreement or any of
the transactions contemplated hereby, the maximum liability of the Purchaser for
such losses and damages shall be limited to $25,000,000 and, without
duplication, the maximum liability of each Guarantor, directly or indirectly,
shall be limited to such Guarantor’s Pro Rata Share (as defined in the Limited
Guaranty) of the Maximum Amount (as defined in the Limited Guaranty) in
accordance with its express

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56

obligations under the Limited Guaranty. In no event shall the Company seek to
recover any money damages in excess of $25,000,000 in the aggregate from the
Purchaser or the Guarantors in connection therewith. In addition, the Company
agrees that no recourse under this Agreement, any documents or instruments
delivered in connection with this Agreement, any other Transaction Agreement or
any of the transactions contemplated hereby or thereby shall be had against any
(x) former, current or future director, officer, employee, partner (limited or
general) (other than the Guarantors, solely to the extent expressly provided in
the Limited Guaranty), member, manager, shareholder, Affiliate or controlling
Person of the Purchaser or (y) former, current or future director, officer,
employee, partner (limited or general), member, manager, shareholder, Affiliate
or controlling Person of any partner (limited or general) (other than the
Guarantors, solely to the extent expressly provided in the Limited Guaranty),
member, manager, shareholder, Affiliate or controlling Person of the Purchaser
(the “Purchaser Related Parties”) whether by the enforcement of any assessment
or by any legal or equitable proceeding, or by virtue of any Law, it being
expressly agreed and acknowledged that no personal liability whatsoever shall
attach to, be imposed on or otherwise be incurred by any of the Purchaser
Related Parties, as such (other than, for the avoidance of doubt, the
Guarantors, solely to the extent expressly provided in the Limited Guaranty),
for any obligation of Parent or the Purchaser under this Agreement or any
documents or instruments delivered in connection with this Agreement, any other
Transaction Agreement or any of the transactions contemplated hereby or thereby
or for any claim based on, in respect of or by reason of such obligations,
documents, instruments or transactions.
          (b) The parties hereto agree that irreparable damage would occur in
the event that any provision of this Agreement were not performed by the Company
in accordance with the terms hereof and that, prior to the termination of this
Agreement pursuant to Section 7.1, the Purchaser shall be entitled to specific
performance of the terms hereof, in addition to any other remedy at law or
equity. The parties acknowledge that the Company shall not be entitled to an
injunction or injunctions to prevent breaches of this Agreement by Parent or the
Purchaser or to enforce specifically the terms and provisions of this Agreement
and that the Company’s sole and exclusive remedy with respect to any such breach
shall be the remedy set forth in Section 8.12(a); provided, however, that the
Company shall be entitled to specific performance against the Purchaser to
prevent any breach or threatened breach by the Purchaser of Section 5.3(b).
          (c) The Purchaser Related Parties shall be third party beneficiaries
of this Section 8.12 and the provisions of this Section 8.12 are intended to be
for the benefit of and enforceable by each Purchaser Related Party and his or
her successors, heirs or representatives.
          SECTION 8.13 Counterparts; Execution by Facsimile Signature. This
Agreement may be executed in any number of counterparts, each of which shall be
an original, but all of which together shall constitute one instrument. This
Agreement may be executed by facsimile signature(s).

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          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth in the first paragraph hereof.

            DORAL FINANCIAL CORPORATION
      By:   /s/ Glen Wakeman       Name:   Glen Wakeman        Title:  
President and Chief Executive Officer       DORAL HOLDINGS DELAWARE, LLC

By: Doral Holdings, L.P.
Its: Managing Member

By: Doral GP Ltd.
Its: General Partner
      By:   /s/ David E. King       Name:   David E. King       Title:  
Director       For purposes of Section 5.15 only:

DORAL HOLDINGS, L.P.

By: Doral GP Ltd.
Its: General Partner
      By:   /s/ David E. King       Name:   David E. King       Title:  
Director    

[Stock Purchase Agreement]