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                                                                  EXHIBIT 3.1(c)



                  SECOND RESTATED CERTIFICATE OF INCORPORATION

                                       OF

                           DORAL FINANCIAL CORPORATION


      Doral Financial Corporation, a corporation organized under the laws of the
Commonwealth of Puerto Rico, does hereby certify pursuant to Article 8.05 of the
Puerto Rico General Corporation Law, that

      FIRST: The name under which it was originally incorporated was HF, Inc.
The name was subsequently amended to First Financial Caribbean Corporation and
on September 22, 1997 was amended to Doral Financial Corporation.

      SECOND: Its original Certificate of Incorporation was filed in the Office
of the Secretary of State of the Commonwealth of Puerto Rico on October 23,
1972, Reg. No. 29,324. The original Certificate of Incorporation as amended to
such date was restated on March 26, 1997.

      THIRD: This Second Restated Certificate of Incorporation was approved by
the Board of Directors of Doral Financial Corporation at a meeting duly called
and held on October 6, 1997 and does not further amend the provisions of Doral
Financial Corporation's Restated Certificate of Incorporation as heretofore
amended, and there are no discrepancies between those provisions and of this
Second Restated Certificate of Incorporation.

      FOURTH: The text of the Restated Certificate of Incorporation of Doral
Financial Corporation, as amended, is hereby restated without further amendment
or change, effective as of the date of filing of this instrument with the
Secretary of State of the Commonwealth of Puerto Rico, to read as follows:

            FIRST: The name of the corporation (hereinafter called the
      Corporation) is DORAL FINANCIAL CORPORATION.

            SECOND: The principal office of the Corporation in the Commonwealth
      of Puerto Rico is located at Avenida F.D. Roosevelt 1159, Puerto Nuevo,
      Puerto Rico 00920, in the Municipality of San Juan. The name of the
      resident agent of the Corporation is David Levis, the mailing address of
      such resident agent is Avenida F.D. Roosevelt 1159, Puerto Nuevo, Puerto
      Rico 00920.

            THIRD: The nature of the business of the Corporation and the objects
      or purposes to be transacted, promoted or carried on by it are as follows:

            1.    To engage in the business of mortgage banking, including but
      not limited to the origination, servicing


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      and resale of first and second mortgages, both conventional and Veterans
      Administration guaranteed and Federal Housing Administration insured, and
      the issuance and brokerage of mortgage-backed certificates.

            2.    To make, manufacture, produce, prepare, process, purchase or
      otherwise acquire, and to hold, own, use, sell, import, export, dispose of
      or otherwise trade or deal in and with, machines, machinery, appliances,
      apparatus, goods, wares, products and merchandise of every kind, nature
      and description; and, in general, to engage or participate in any
      manufacturing or other business of any kind or character whatsoever,
      whether or not related to, conducive to, incidental to or in any way
      connected with the above business.

            3.    To engage in research, exploration, laboratory and development
      work relating to any material, substance, compound or mixture now known or
      which may hereafter be known, discovered or developed, and to perfect,
      develop, manufacture, use, apply and generally to deal in and with any
      such material, substance, compound or mixture.

            4.    To adopt, apply for, obtain, register, purchase, lease, take
      licenses in respect of or otherwise acquire, and to maintain, protect,
      hold, use, own, exercise, develop, manufacture under, operate and
      introduce, and to sell and grant licenses or other rights in respect of,
      assign or otherwise dispose of, turn to account, or in any manner deal
      with and contract with reference to, any trademarks, trade names, patents,
      patent rights, concessions, franchises, designs, copyrights and
      distinctive marks and rights analogous thereto, and inventions, devices,
      processes, recipes, formulae and improvements and modifications thereof.

            5.    To act as agent or broker for any person, firm or corporation
      including, but not limited to, acting as agent for any local, municipal,
      state or Commonwealth agency or instrumentality.

            6.    To purchase, lease or otherwise acquire, to hold, own, use,
      develop, maintain, manage and operate, and to sell, transfer, lease,
      assign, convey, exchange or otherwise turn to account or dispose of, and
      otherwise deal in and with such real property, whether located within the
      Commonwealth of Puerto Rico or elsewhere, as may be necessary or
      convenient in connection with the business of the Corporation, and
      personal property, tangible or intangible, without limitation; provided,
      however, that the Corporation shall not be authorized, as respects real


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      property located within the Commonwealth of Puerto Rico, to conduct the
      business of buying and selling real estate, and shall in all other
      respects be subject to the provisions of Section 14 of Article VI of the
      Constitution of the Commonwealth of Puerto Rico.

            7.    To enter into any joint ventures, agreements and any other
      lawful arrangements for sharing profits, union of interest, reciprocal
      concession or cooperation, with any corporation, association, partnership,
      syndicate, entity, person or governmental, municipal or public authority,
      domestic or foreign, in the carrying on of any business that the
      Corporation is authorized to carry on or any business or transaction
      deemed necessary, convenient or incidental to carrying out any of the
      purposes of the Corporation.

            8.    To enter into, make, perform and carry out contracts of every
      kind and description, not prohibited by law, with any person, firm,
      association, corporation or governmental body; and to guarantee the
      contracts or obligations, and the payment of interest or dividends on
      securities of any other person, firm, association, corporation or
      governmental body.

            9.    To lend its uninvested funds from time to time to such extent,
      to such persons, firms, associations, corporations or governments or
      subdivisions, agencies or instrumentalities thereof, and on such terms and
      on such security, if any, as the Board of Directors of the Corporation may
      determine.

            10.   To acquire and undertake all or any part of the business
      assets and liabilities of any person, firm, association or corporation on
      such terms and conditions as may be agreed upon, and to pay for the same
      in cash, property or securities of the Corporation, or otherwise, and to
      conduct the whole or any part of any business thus acquired, subject only
      to the provisions of the laws of the Commonwealth of Puerto Rico.

            11.   To merge into, merge into itself or consolidate with, and to
      enter into agreements and cooperative relations, not in contravention of
      law, with any person, firm, association or corporation.

            12.   To purchase, lease, construct or otherwise acquire, and to
      hold, own, use, maintain, manage and operate, buildings, factories,
      plants, laboratories, installations, equipment, machinery, pipelines,
      rolling stocks, and other structures, facilities and apparatus of



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      every kind and description, used or useful in the conduct of the business
      of the Corporation.

            13.   To purchase, lease, construct, or otherwise acquire, and to
      hold, own, use, maintain, manage and operate dwelling houses and other
      buildings at or near any place of business of the Corporation for the
      purpose of furnishing housing and other conveniences to employees of the
      Corporation, and others, and to carry on a general mercantile business at
      or near any such place of business for the convenience of those residing
      in the vicinity thereof, and others.

            14.   To purchase or otherwise acquire, and to hold, pledge, sell,
      exchange, or otherwise dispose of securities (which term, for the purpose
      of this Article THIRD, shall include any shares of stock, bonds,
      debentures, notes, mortgages or other obligations and any certificates,
      receipts or other instruments representing rights to receive, purchase or
      subscribe for the same, or representing any other rights or interests
      therein or in any property or assets) created or issued by any person,
      firm, association, corporation or governmental body, and while the holder
      thereof to exercise all the rights, powers and privileges in respect
      thereof, including the right to vote, to the same extent as a natural
      person might or could do.

            15.   To borrow money for any of the purposes of the Corporation,
      from time to time, and without limit as to amount; from time to time to
      issue and sell its own securities in such amounts, on such terms and
      conditions, for such purposes and for such consideration, as may now be or
      hereafter shall be permitted by the laws of the Commonwealth of Puerto
      Rico; and to secure the same by mortgage upon, or the pledge of, or the
      conveyance or assignment in trust of, the whole or any part of the
      properties, assets, business and goodwill of the Corporation, then owned
      or thereafter acquired.

            16.   To purchase, or otherwise acquire and to hold, cancel,
      reissue, sell, exchange, transfer or otherwise deal in its own securities
      from time to time to such extent and upon such terms as shall be permitted
      by the laws of the Commonwealth of Puerto Rico; provided, however, that
      shares of its own capital stock so purchased or held shall not be directly
      or indirectly voted, nor shall they be entitled to dividends during such
      period or periods as they shall be held by the Corporation.

            17.   To such extent as a corporation organized under the laws of
      the Commonwealth of Puerto Rico may now or



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      hereafter lawfully do, to do, either as principal or agent and either
      alone or through subsidiaries or in connection with other persons, firms,
      associations or corporations, all and everything necessary, suitable,
      convenient or proper for, or in connection with, or incident to, the
      accomplishment of any of the purposes or the attainment of any one or more
      of the objects herein enumerated, or designed directly or indirectly to
      promote the interests of the Corporation or to enhance the value of its
      properties; and in general to do any and all things and exercise any and
      all powers, rights, and privileges which a corporation may now or
      hereafter be organized to do or to exercise under the laws of the
      Commonwealth of Puerto Rico.

            The foregoing provisions of this Article THIRD shall be construed
      both as purposes and powers and each as an independent purpose and power.
      The foregoing enumeration of specific purposes and powers shall not be
      held to limit or restrict in any manner the purposes and powers of the
      Corporation, and the purposes and powers herein specified shall, except
      when otherwise provided in this Article THIRD, be in no wise limited or
      restricted by reference to, or inference from, the terms of any provisions
      of this or any other Article of this Certificate of Incorporation.

            The Corporation is to be carried on for pecuniary profit.

            FOURTH: The total number of shares of all classes of stock which the
      Corporation is authorized to issue is 52,000,000 shares, consisting of
      50,000,000 shares of Common Stock, $1.00 par value and 2,000,000 shares of
      Serial Preferred Stock, $1.00 par value.

            The minimum amount of capital with which the Corpora tion will
      commence business is $10,000.00.

            The Board of Directors is authorized at any time, and from time to
      time, to provide for the issuance of shares of Serial Preferred Stock in
      one or more series, and to determine the designations, preferences,
      limitations and relative or other rights of the Serial Preferred Stock or
      any series thereof. For each series, the Board of Directors shall
      determine, by resolution or resolutions adopted prior to the issuance of
      any shares thereof, the designations, preferences, limitations and
      relative or other rights thereof, including but not limited to the
      following relative rights and preferences, as to which there may be
      variations among different series:



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                  (a) The rates or rates (which may be floating, variable or
            adjustable), or the method of determining such rate or rates and the
            times and manner of payment of dividends, if any (and whether such
            payment should be in cash or securities);

                  (b) Whether shares may be redeemed or purchased, in whole or
            in part, at the option of the holder or the Corporation and, if so,
            the price or prices and the terms and conditions of such redemption
            or purchase;

                  (c) The amount payable upon shares in the event of voluntary
            or involuntary liquidation, dissolution or other winding up of the
            Corporation;

                  (d) Sinking fund provisions, if any, for the redemption or
            purchase of shares;

                  (e) The terms and conditions, if any, on which shares may be
            converted or exchanged into shares of Common Stock or other capital
            stock or securities of the Corporation;

                  (f) Voting rights, if any; and

                  (g) Any other rights and preferences of such shares, to the
            full extent now or hereafter permitted by the laws of the
            Commonwealth of Puerto Rico.

            All shares of Serial Preferred Stock (i) shall rank senior to the
      Common Stock in respect of the right to receive dividends and the right to
      receive payments out of the assets of the Corporation upon voluntary or
      involuntary liquidation, dissolution or winding up of the Corporation,
      (ii) shall be of equal rank, regardless of series, and (iii) shall be
      identical in all respects except as provided in (a) through (g) above. The
      shares of any series of the Serial Preferred Stock shall be identical with
      each other in all respects except as to the dates from and after which
      dividends thereof shall be cumulative. In case the stated dividends or the
      amounts payable on liquidation are not paid in full, the shares of all
      series of the Serial Preferred Stock shall share ratably in the payment of
      dividends, including accumulations, if any, in accordance with the sums
      which would be payable on said shares if all dividends were declared and
      paid in full, and in any distribution of assets other than by way of
      dividends in accordance with the sums which would be payable on such
      distribution if all sums payable were discharged in full.



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            The Board of Directors shall have the authority to determine the
      number of shares that will comprise each series. Unless otherwise provided
      in the resolution establishing such series, all shares of Serial Preferred
      Stock redeemed, retired by sinking fund payment, repurchased by the
      Corporation or converted into Common Stock shall have the status of
      authorized but unissued shares of Serial Preferred Stock undesignated as
      to series.

            Prior to the issuance of any shares of a series, but after adoption
      by the Board of Directors of the resolution establishing such series, the
      appropriate officers of the Corporation shall file such documents with the
      Commonwealth of Puerto Rico as may be required by law.

            No holder of shares of Common Stock or Serial Preferred Stock shall
      be entitled as a matter right to subscribe for or purchase, or have any
      preemptive right with respect to, any part of any new or additional issue
      of stock of any class whatsoever, or of securities convertible into any
      stock of any class whatsoever, whether now or hereafter authorized and
      whether issued for cash or other consideration or by way of dividend.

            FIFTH: The Corporation is to have perpetual existence.

            SIXTH: For the management of the business and for the conduct of the
      affairs of the Corporation, and in further creation, definition,
      limitation and regulation of the powers of the Corporation and of its
      directors and stockholders, it is further provided:

            1.    The number of directors of the Corporation shall be fixed by,
      or in the manner provided in, the By-laws, but in no case shall the number
      be less than three. The directors need not be stockholders. Election of
      directors need not be by ballot unless the By-laws so require. Meetings of
      the Board of Directors may be held at such place or places within or
      without the Commonwealth of Puerto Rico as shall be specified in the
      respective notices thereof or in the respective waivers of notice thereof
      signed by all the directors of the Corporation at the time in office

            2.    In furtherance and not in limitation of the powers conferred
      by the laws of the Commonwealth of Puerto Rico, and subject at all times
      to the provisions thereof, the Board of Directors is expressly authorized
      and empowered:

                  (a) To make, alter and repeal the By-laws of the Corporation,
            subject to the power of the 


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            stockholders to alter or repeal the By-laws made by the Board of
            Directors.

                  (b) To determine, from time to time, whether and to what
            extent and at what times and places and under what conditions and
            regulations the accounts and books and documents of the Corporation
            (other than the stock ledger), or any of them, shall be open to
            inspection by the stockholders; and no stockholder shall have any
            right to inspect any account or book or document of the Corporation,
            except as conferred by the laws of the Commonwealth of Puerto Rico,
            unless and until duly authorized to do so by resolution of the Board
            of Directors.

                  (c) To authorize and issue obligations of the Corporation,
            secured or unsecured, to include therein such provisions as to
            redeemability, convertibility or otherwise, as the Board cf
            Directors in its sole discretion may determine, and to authorize the
            mortgaging or pledging of, and to authorize and cause to be executed
            mortgages and liens upon, any property of the Corporation, real or
            personal, including after-acquired property.

                  (d) To determine whether any, and, if any, what part, of the
            net profits of the Corporation or of its net assets in excess of its
            capital shall be declared in dividends and paid to the stockholders,
            and to direct and determine the use and disposition thereof.

                  (e) To set apart a reserve or reserves, and to abolish any
            such reserve or reserves, or to make such other provisions, if any,
            as the Board of Directors may deem necessary or advisable for
            working capital, for additions, improvements and betterments to
            plant and equipment, for expansion of the business of the
            Corporation (including the acquisition of real and personal property
            for that purpose) and for any other purpose of the Corporation.

                  (f) To establish bonus, profit-sharing, pension, thrift, and
            other types of incentive, compensation or retirement plans for the
            officers and employees (including officers and employees who are
            also directors) of the Corporation and to fix the amounts of profits
            to be distributed or shared or contributed and the amounts of the
            Corporation's funds otherwise to be devoted thereto and to determine
            the persons to participate in any such plans and the amounts of
            their respective participations.


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                  (g) To issue, or grant options for the purchase of, shares of
            stock of the Corporation to officers and employees (including
            officers and employees who are also directors) of the Corporation
            and its subsidiaries for such consideration and on such terms and
            conditions as the Board of Directors may from time to time
            determine.

                  (h) To enter into contracts for the management of the business
            of the Corporation for terms not exceeding three years.

                  (i) By resolution or resolutions passed by a majority of the
            whole Board, to designate one or more committees, each committee to
            consist of two or more of the directors of the Corporation, which to
            the extent provided in such resolution or resolutions or in the
            Bylaws, shall have and may exercise the powers of the Board of
            Directors (other than to remove or elect officers) in the management
            of the business and affairs of the Corporation and may have power to
            authorize the seal of the Corporation to be affixed to all papers
            which may require it, such committee or committees to have such name
            or names as may be stated in the By-laws or as may be determined
            from time to time by resolution adopted by the Board of Directors.

                  (j) To exercise all the powers of the Corporation, except such
            as are conferred by law, or by this Certificate of Incorporation or
            by the By-laws of the Corporation, upon the stockholders.

            3.    Any one or all of the directors may be removed, with or
      without cause, at any time, by either (a) the vote of the holders of a
      majority of the stock of the Corporation issued and outstanding and
      entitled to vote and present in person or by proxy at any meeting of the
      stockholders called for the purpose, or (b) an instrument or instruments
      in writing addressed to the Board of Directors directing such removal and
      signed by the holders of a majority of the stock of the Corporation issued
      and outstanding and entitled to vote; and thereupon the term of each such
      director who shall be so removed shall terminate.

            4.    No contract or other transaction between the Corporation and
      any other corporation, whether or not such other corporation is related to
      the Corporation through the direct or indirect ownership by such other
      corporation of a majority of the shares of the capital stock of the
      Corporation or by the Corporation of a majority of the 


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      shares of the capital stock of such other corporation, and no other act of
      the Corporation shall, in the absence of fraud, in any way be affected or
      invalidated by the fact that any of the directors of the Corporation are
      pecuniarily or otherwise interested in, or are directors or officers of,
      such other corporation or by the fact that such other corporation is so
      related to the Corporation. Any director of the Corporation individually,
      or any firm or association of which any director may be a member, may be a
      party to, or may be pecuniarily or otherwise interested in, any contract
      or transaction of the Corporation, provided that the fact that he
      individually or such firm or association is so interested shall be
      disclosed or shall have been known to the Board of Directors or a majority
      of such members thereof as shall be present at any meeting of the Board of
      Directors at which action upon any such contract or transaction shall be
      taken. Any director of the Corporation who is also a director or officer
      of such other corporation or who is so interested may be counted in
      determining the existence of a quorum at any meeting of the Board of
      Directors which shall authorize any such contract or transaction, with
      like force and effect as if he were not such director or officer of such
      other corporation or not so interested.

            5.    Any person made or threatened to be made a party to any action
      or proceeding, whether civil or criminal, by reason of the fact that he,
      his testator or intestate is or was a Director, officer or employee of the
      Corporation or serve or served any other corporation, partnership, joint
      venture, trust, employee benefit plan or other enterprises in any capacity
      at the request of the Corporation shall be indemnified by the Corporation,
      and the Corporation may advance his related expenses, to the fullest
      extent permitted by law. The Corporation may purchase and maintain
      insurance on behalf of any person who is or was a Director, officer,
      employee or agent of the Corporation, or is or was serving at the request
      of the Corporation as a Director, officer, employee or agent of another
      corporation, partnership, joint venture, trust or other enterprise,
      against any liability asserted against him and incurred by him in any such
      capacity, or arising out of his status as such.

            SEVENTH: A director of this Corporation shall not be personally
      liable to the Corporation or its stockholders for monetary damages for
      breach of fiduciary duty as a director, except to the extent such
      exemption from liability or limitation thereof is not permitted under the
      Puerto Rico General Corporation Law of 1995 as the same exists or may
      hereafter be amended. Any repeal or modification


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      of the foregoing provisions of this Article SEVENTH shall not adversely
      affect any right or protection of a director of the Corporation existing
      hereunder with respect to any act or omission occurring prior to or at the
      time of such repeal or modification.

            EIGHTH: The Corporation reserves the right to amend, alter or repeal
      any of the provisions of this Certificate of Incorporation and to add
      other provisions authorized by the laws of the Commonwealth of Puerto Rico
      at the time in force in the manner and at the time prescribed by said
      laws, and all rights, powers and privileges at any time conferred upon the
      Board of Directors and the stockholders are granted subject to the
      provisions of this Article."

            RESOLVED, that pursuant to the authority expressly granted to and
      vested in the Board of Directors of the Corporation in accordance with the
      provisions of its Restated Certificate of Incorporation, a series of
      Serial Preferred Stock of the Corporation be and it hereby is created.

            FURTHER RESOLVED, that the directors have determined that the
      preferences and relative, participating, optional or other special rights
      of the shares of such series of Preferred Stock, and the qualifications,
      limitations or restrictions thereof, as stated and expressed herein, are
      under the circumstances prevailing on the date hereof fair and equitable
      to all the existing shareholders of the Corporation.

            FURTHER RESOLVED, that the designation and amount of such series and
      the voting powers, preferences and relative, participating, optional or
      other special rights of the shares of such series of Preferred Stock, and
      the qualifications, limitations or restrictions thereof are as follows:

            A.    DESIGNATION AND AMOUNT

                  The shares of such series of Preferred Stock shall be
      designated as the "8% Convertible Cumulative Preferred Stock (Liquidation
      Preference $1,000 per share)" (herein after called the "8% Preferred
      Stock"), and the number of authorized shares constituting such series
      shall be 20,000.

            B.    DIVIDENDS

                  (i)   Holders of record of the 8% Preferred Stock ("Holders")
            will be entitled to receive, when, as and if declared by the Board
            of Directors of the

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            Corporation, out of funds of the Corporation legally available
            therefor, cumulative cash dividends at the annual rate per share of
            8% of their liquidation pref erences, or $6.662/3 per share per
            month.

                  (ii)  Dividends on the 8% Preferred Stock will accrue from
            their date of original issuance and will be payable (when, as and if
            declared by the Board of Directors of the Corporation out of funds
            of the Corporation legally available therefor) monthly in arrears in
            United States dollars commencing on the last day of the month in
            which the 8% Preferred Stock is issued, and on the last day of each
            calendar month of each year thereafter to the holders of record of
            the 8% Preferred Stock as they appear on the books of the
            Corporation on the Business Day (as defined below) immediately
            preceding the relevant date of pay ment. In the case of the dividend
            payable in the month in which the 8% Preferred Stock is issued, such
            dividend shall cover the period from the date of issuance of the 8%
            Preferred Stock to the end of such month. In the event that any date
            on which dividends are payable is not a Business Day, then payment
            of the dividend payable on such date will be made on the next
            succeeding Business Day without any interest or other payment in
            respect of any such delay, except that, if such Business Day is in
            the next succeeding calendar year, such payment will be made on the
            Business Day immediately preceding the relevant date of payment, in
            each case with the same force and effect as if made on such date. A
            "Business Day" is a day other than a Saturday, Sunday or bank
            holiday in San Juan, Puerto Rico.

                  (iii) Dividends on the 8% Preferred Stock will be cumulative
            from their date of issuance, and will accrue, to the extent not
            paid, on the last day of each month.

                  (iv)  The amount of dividends payable for any monthly dividend
            period will be computed on the basis of twelve 30-day months and a
            360-day year. The amount of dividends payable for any period shorter
            than a full monthly dividend period will be computed on the basis of
            the actual number of days elapsed in such period.

                  (v)   Subject to any applicable fiscal or other laws and
            regulations, each dividend payment will be made by dollar check
            drawn on a bank in New York, New York or San Juan, Puerto Rico and
            mailed to the record 


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            holder thereof at such holder's address as it appears on the
            register for such 8% Preferred Stock or, in the case of holders of
            $1,000,000 or more in aggregate liquidation preference of the 8%
            Preferred Stock, by wire transfer of immediately available funds to
            the account of such holders as notified by such holders to the
            Corporation.

                  (vi)  So long as any shares of the 8% Preferred Stock remain
            outstanding, the Corporation shall not declare, set apart or pay any
            dividend or make any other distribution of assets (other than
            dividends paid or other distributions made in stock of the
            Corporation ranking junior to the 8% Preferred Stock as to the
            payment of dividends and the distribution of assets upon
            liquidation, dissolution or winding up of the Corporation) on, or
            redeem, purchase, set apart or otherwise acquire (except upon
            conversion or exchange for stock of the Corporation ranking junior
            to the 8% Preferred Stock as to the payment of dividends and the
            distribution of assets upon liquidation, dissolution or winding up
            of the Corporation), shares of common stock or of any other class of
            stock of the Corporation ranking junior to the 8% Preferred Stock as
            to the payment of dividends or the distribution of assets upon
            liquidation, dissolution or winding up of the Corporation, unless
            all accrued and unpaid dividends on the 8% Preferred Stock shall
            have been paid or are paid contemporaneously and the full monthly
            dividend on the 8% Preferred Stock for the then current month has
            been or is contemporaneously declared and paid or declared and set
            apart for payment and unless the Corporation has not defaulted in
            the payment of the redemption price of any shares of 8% Preferred
            Stock called for redemption.

                  (vii) When dividends are not paid in full on the 8% Preferred
            Stock and any other shares of stock of the Corporation ranking on a
            parity as to the payment of dividends with the 8% Preferred Stock,
            all dividends declared upon the 8% Preferred Stock and any such
            other shares of stock of the Corporation will be declared pro rata
            so that the amount of dividends declared per share on the 8%
            Preferred Stock and any such other shares of stock will in all cases
            bear to each other the same ratio that the liquidation preference
            per share of the 8% Preferred Stock and any such other shares of
            stock bear to each other.

                  (viii) Holders of record of the 8% Preferred Stock will not be
            entitled to any dividend, whether 


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            payable in cash, property or stock, in excess of the dividends
            provided for herein on the shares of 8% Preferred Stock. The
            Corporation may, however, at its discretion, declare a special
            dividend in an amount sufficient to allow the Corporation to pay
            dividends on any stock of the Corporation ranking junior to the 8%
            Preferred Stock in compliance with the provisions of Section B.6
            above.

            C.    CONVERSION

                  (i)   A holder of a share of 8% Preferred Stock may convert it
            into common stock of the Corporation at any time before the close of
            business on December 1, 2005 (the "Expiration Date"). If a share of
            8% Preferred Stock is called for redemption, the holder may convert
            it at any time before the close of business on the day preceding the
            redemption date. The initial conversion price is $8.75 per share of
            common stock of the Corporation, subject to adjustment in certain
            events as provided in subsection 4 below (as so adjusted from time
            to time, the "Conversion Price"). To determine the number of shares
            of common stock of the Corporation issuable upon conversion of a
            share of 8% Preferred Stock, divide (a) the aggregate liquidation
            preference of the shares of 8% Preferred Stock to be converted by
            (b) the Conversion Price in effect on the conversion date. The
            Corporation will deliver a check for an amount equal to the value of
            any fractional share plus the total amount of accrued but unpaid
            dividends on such shares to the date of conversion.

                  (ii)  To convert a share of 8% Preferred Stock a Holder must
            (1) complete and sign the conversion election on the back of the
            certificate, (2) surrender the certificate to the Corporation, (3)
            furnish appropriate endorsements and transfer documents if required
            by the Corporation, and (4) pay any transfer or similar tax if
            required.

                  (iii) Reservation, Listing and Issuance of Shares. The
            Corporation will at all times have authorized, and reserve and keep
            available, free from preemptive rights, for the purpose of enabling
            it to satisfy any obligation to issue shares of common stock of the
            Corporation upon the conversion of shares of 8% Preferred Stock, the
            number of shares of common stock of the Corporation deliverable upon
            conversion of the outstanding shares of 8% Preferred Stock. The
            Corporation will, at its expense, cause the shares


<PAGE>   15

                                       15

            of common stock of the Corporation deliverable upon conversion of
            the 8% Preferred Stock to be listed (subject to issuance or notice
            of issuance of such shares) on all stock exchanges on which the
            common stock is listed not later than the date such common stock is
            so listed. The Corporation agrees to list such shares (subject to
            issuance or notice of issuance) on NASDAQ-NMS, to the extent not
            already listed, promptly after the date of this Certificate of
            Designation.

                  Before taking any action which could cause an adjustment
            pursuant to subsection 4 below reducing the Conversion Price below
            the then par value (if any) of the shares of common stock of the
            Corporation, the Corporation will take any corporate action which
            may be necessary in order that the Corporation may validly and
            legally issue at the Conversion Price as so adjusted shares of
            common stock of the Corporation that are fully paid and
            non-assessable.

                  The Corporation covenants that all shares of common stock of
            the Corporation deliverable upon conversion of the 8% Preferred
            Stock will, upon issuance in accordance with the terms hereof, be
            (i) duly authorized, fully paid and non-assessable, and (ii) free
            from all taxes with respect to the issuance thereof and from all
            liens, charges and security interests created by the Corporation.

                  (iv)  Adjustments of Conversion Price and Number of Shares of
            Common Stock Issuable upon Conversion of the 8% Preferred Stock.
            Adjustment of Conversion Price upon Issuance of Common Stock. If and
            whenever, after September 25, 1995, the Corporation shall issue or
            sell any shares of common stock (except upon conversion of one or
            more of the 8.25% convertible subordinated debentures due January 1,
            2006 or of one or more shares of the 8% Preferred Stock or upon
            exercise by Popular, Inc. of certain rights to purchase shares of
            common stock of the Corporation set forth in Article 5 of the
            Exchange Agreement dated July 9, 1997, between the Corporation and
            Popular, Inc.) for a consideration per share less than the Market
            Price (as hereinafter defined) at the time of such issue or sale,
            then, forthwith upon such issue or sale, the Conversion Price shall
            be reduced to the price (calculated to the nearest cent) determined
            by multiplying the Conversion Price in effect immediately prior to
            the time of such issue or sale by a fraction, the numerator of which
            shall be the sum of (a) the


<PAGE>   16
                                       16

            number of shares of common stock of the Corporation outstanding
            immediately prior to such issue or sale multiplied by the Market
            Price immediately prior to such issue or sale plus (b) the
            consideration received by the Corporation upon such issue or sale,
            and the denominator of which shall be the product of (c) the total
            number of shares of common stock outstanding immediately after such
            issue or sale, multiplied by (d) the Market Price immediately prior
            to such issue or sale. No adjustment of any Conversion Price,
            however, shall be made in an amount less than $0.01 per share, but
            any such lesser adjustment shall be carried forward and shall be
            made at the time of, and together with, the next subsequent
            adjustment which together with any adjustments so carried forward
            shall amount to $0.01 per share or more.

                        (i)   For the purposes of this subsection 4, the
                  following provisions shall also be applicable:

                              1)    Issuance of Rights or Options. In case at 
                  any time the Corporation shall grant (whether directly or by
                  assumption in a merger or otherwise) any rights to subscribe
                  for or to purchase, or any options for the purchase of, common
                  stock or any stock or securities convertible into or
                  exchangeable for common stock (such convertible or
                  exchangeable stock or securities being herein called
                  "Convertible Securities") whether or not such rights or
                  options or the right to convert or exchange any such
                  Convertible Securities are immediately exercisable, and the
                  price per share for which common stock is issuable upon the
                  conversion of such rights or options or upon conversion or
                  exchange of such Convertible Securities (determined as
                  provided below) shall be less than the Market Price determined
                  as of the date of granting such rights or options, then the
                  total maximum number of shares of common stock issuable upon
                  the conversion of such rights or options or upon conversion or
                  exchange of the total maximum amount of such Convertible
                  Securities issuable upon the conversion of such rights or
                  options shall (as of the date of granting of such rights or
                  options) be deemed to be outstanding and to have been issued
                  for such price per share. Except as provided in clause (iii)
                  of this subsection, no further adjustments of any Conversion
                  Price shall be made upon the actual 


<PAGE>   17


                                       17

                  issue of such common stock or of such Convertible Securities
                  upon conversion of such rights or options or upon the actual
                  issue of such common stock upon conversion or exchange of such
                  Convertible Securities. For the purposes of this clause (i),
                  the price per share for which common stock is issuable upon
                  the conversion of any such rights or options or upon
                  conversion or exchange of any such Convertible Securities
                  shall be determined by dividing (A) the total amount, if any,
                  received or receivable by the Corporation as consideration for
                  the granting of such rights or options, plus the minimum
                  aggregate amount of additional consideration payable to the
                  Corporation upon the conversion of all such rights or options,
                  plus, in the case of such rights or options which relate to
                  Convertible Securities, the minimum aggregate amount of
                  additional consideration, if any, payable upon the issue or
                  sale of such Convertible Securities and upon the conversion or
                  exchange thereof, by (B) the total maximum number of shares of
                  common stock issuable upon the conversion of such rights or
                  options or upon the conversion or exchange of all such
                  Convertible Securities issuable upon the conversion of such
                  rights or options.

                             2)    Issuance of Convertible Securi ties. In case 
                  the Corporation shall issue (whether directly or by assumption
                  in a merger or otherwise) or sell any Convertible Securities,
                  whether or not the rights to exchange or convert thereunder
                  are immediately exercisable, and the price per share for which
                  common stock is issuable upon conversion or exchange of such
                  Convertible Securities (determined as provided below) shall be
                  less than the Market Price, determined as of the date of such
                  issue or sale of such Convertible Securities, then the total
                  maximum number of shares of common stock issuable upon
                  conversion or exchange of all such Convertible Securities
                  shall (as of the date of the issue or sale of such Convertible
                  Securities) be deemed to be outstanding and to have been
                  issued for such price per share, provided that (1) except as
                  provided in clause (iii) of this subsection, no further
                  adjustments of any Conversion Price shall be made upon the
                  actual issue of such common stock upon conversion or exchange
                  of such Convertible Securities, and (2) if any such issue or
                  sale of such Convertible 


<PAGE>   18

                                       18

                  Securities is made upon conversion of any rights to subscribe
                  for or to purchase or any option to purchase any such
                  Convertible Securities for which adjustments of any Conversion
                  Price have been or are to be made pursuant to other provisions
                  of this subsection (b), no further adjustment of any
                  Conversion Price shall be made by reason of such issue or
                  sale. For the purposes of this clause (ii), the price per
                  share for which common stock is issuable upon conversion or
                  exchange of Convertible Securities shall be determined by
                  dividing (A) the total amount received or receivable by the
                  Corporation as consideration for the issue or sale of such
                  Convertible Securities, plus the minimum aggregate amount of
                  additional consideration, if any, payable to the Corporation
                  upon the conversion or exchange thereof, by (B) the total
                  maximum number of shares of common stock issuable upon the
                  conversion or exchange of all such Convertible Securities.

                             3)    Change in Option Price or Conversion Rate. 
                  If the purchase price provided for in any rights or options
                  referred to in clause (i) above, or the additional
                  consideration, if any, payable upon the conversion or exchange
                  of Convertible Securities referred to in clause (i) or (ii)
                  above, or the rate at which any Convertible Securities
                  referred to in clause (i) or (ii) above are convertible into
                  or exchangeable for common stock, shall change (other than
                  under or by reason of provisions designed to protect against
                  dilution), then the Conversion Price in effect at the time of
                  such event shall forthwith be readjusted to the Conversion
                  Price which would have been in effect at such time had such
                  rights, options or Convertible Securities still outstanding
                  provided for such changed purchase price, additional
                  consideration or conversion rate, as the case may be, at the
                  time initially granted, issued or sold.

                             4)    Expiration of Options, Rights and Other 
                  Similar Conversion Privileges. On the expiration of any such
                  option or right or the termination of any such right to
                  convert or exchange such Convertible Securities, the
                  Conversion Price then in effect hereunder shall forthwith be
                  increased to the Conversion Price 


<PAGE>   19

                                       19

                  which would have been in effect at the time of such expiration
                  or termination had such right, option or Convertible Security,
                  to the extent outstanding immediately prior to such expiration
                  or termination, never been issued, and the common stock
                  issuable thereunder shall no longer be deemed to be
                  outstanding. If the purchase price provided for in any such
                  right or option referred to in clause (i) above or the rate at
                  which any Convertible Securities referred to in clause (i) or
                  (ii) above are convertible into or exchangeable for common
                  stock, shall decrease at any time under or by reason of
                  provisions with respect thereto designed to protect against
                  dilution, then in case of the delivery of common stock upon
                  the conversion of any such right or option or upon conversion
                  or exchange of any such Convertible Security, the Conversion
                  Price then in effect hereunder shall forthwith be adjusted to
                  such respective amount as would have obtained had such right,
                  option or Convertible Security never been issued as to such
                  common stock and had adjustments been made upon the issuance
                  of the shares of common stock delivered as aforesaid, but only
                  if as a result of such adjustment the Conversion Price then in
                  effect hereunder is thereby decreased.

                            5)    Stock Dividends. In case the Corporation shall
                  declare a dividend or make any other distribution upon any
                  stock of the Corporation payable in common stock or
                  Convertible Securities, any common stock or Convertible
                  Securities, as the case may be, issuable in payment of such
                  dividend or distribution shall be deemed to have been issued
                  or sold without consideration.

                            6)    Consideration for Stock. In case any shares of
                  common stock or Convertible Securities or any rights or
                  options to purchase any such common stock or Convertible
                  Securities shall be issued or sold for cash, the consideration
                  received therefor shall be deemed to be the amount received by
                  the Corporation therefor, without deduction therefrom of any
                  expenses incurred or any underwriting commissions or
                  concessions paid or allowed by the Corporation in connection
                  therewith. In case any shares of common stock or Convertible
                  Securities or any rights or options to purchase any such
                  common 


<PAGE>   20

                                       20

                  stock or Convertible Securities shall be issued or sold for a
                  consideration other than cash, the amount of the consideration
                  other than cash received by the Corporation shall be deemed to
                  be the fair value of such consideration as determined, in good
                  faith and in the exercise of reasonable business judgment, by
                  the board of directors of the Corporation, without deduction
                  of any expenses incurred or any underwriting commissions or
                  concessions paid or allowed by the Corporation in connection
                  therewith. In case any shares of common stock or Convertible
                  Securities or any rights or options to purchase such shares of
                  common stock or Convertible Securities shall be issued in
                  connection with any merger or consolidation in which the
                  Corporation is the surviving corporation (other than any
                  consolidation or merger in which the previously outstanding
                  shares of common stock of the Corporation shall be changed
                  into or exchanged for the stock or other securities of another
                  corporation), the amount of consideration therefor shall be
                  deemed to be the fair value as determined reasonably and in
                  good faith by the board of directors of the Corporation of
                  such portion of the assets and business of the non-surviving
                  corporation as such board may determine to be attributable to
                  such shares of common stock, Convertible Securities, rights or
                  options, as the case may be. In the event of any consolidation
                  or merger of the Corporation in which the Corporation is not
                  the surviving corporation or in which the previously
                  outstanding shares of common stock of the Corporation shall be
                  changed into or exchanged for the stock or other securities of
                  another corporation or in the event of any sale of all or
                  substantially all of the assets of the Corporation for stock
                  or other securities of any corporation, the Corporation shall
                  be deemed to have issued a number of shares of its common
                  stock for stock or securities or other property of the other
                  corporation computed on the basis of the actual exchange ratio
                  on which the transaction was predicated and for a
                  consideration equal to the fair market value on the date of
                  such transaction of all such stock or securities or other
                  property of the other corporation, and if any such calculation
                  results in adjustment of the Conversion Price, the
                  determination of the number of shares of common 


<PAGE>   21

                                       21

                  stock issuable upon conversion of the Securities immediately
                  prior to such merger, consolidation or sale, for purposes of
                  subsection (e) below, shall be made after giving effect to
                  such adjustment of the Conversion Price.

                        7)    Record Date. In case the Corpora tion shall take a
                  record of the holders of its common stock for the purpose of
                  entitling them (A) to receive a dividend or other distribution
                  payable in common stock or in Convertible Securities, or (B)
                  to subscribe for or purchase common stock or Convertible
                  Securities, then such record date shall be deemed to be the
                  date of the issue or sale of the shares of common stock deemed
                  to have been issued or sold upon the declaration of such
                  dividend or the making of such other distribution or the date
                  of the granting of such right of subscription or purchase, as
                  the case may be.

                        8)    Treasury Shares. The number of shares of common
                  stock outstanding at any given time shall not include shares
                  owned or held by or for the account of the Corporation, and
                  the disposition of any such shares shall be considered an
                  issue or sale of common stock for the purposes of this
                  subsection (b).

                        9)    Definition of Market Price. "Market Price" shall
                  mean the average of the daily closing prices per share of the
                  common stock for the ten consecutive trading days immediately
                  preceding the day as of which "Market Price" is being
                  determined, except that, in the case of an underwritten bona
                  fide public offering, "Market Price" shall mean the initial
                  public offering price. The closing price for each day shall be
                  the last sale price regular way or, in case no such sale takes
                  place on such day, the average of the closing bid and asked
                  prices regular way, in either case on the New York Stock
                  Exchange, or, if shares of the common stock are not listed or
                  admitted to trading on the New York Stock Exchange, on the
                  principal national securities exchange (including for this
                  purpose the NASDAQ-NMS) on which the shares are listed or
                  admitted to trading, or if the shares are not so listed or
                  admitted to trading, the average of the highest reported bid
                  and lowest reported asked prices as furnished by the


<PAGE>   22

                                       22

                  National Association of Securities Dealers, Inc. through
                  NASDAQ or through a similar organization if NASDAQ is no
                  longer reporting such information. If shares of the common
                  stock are not listed or admitted to trading on any exchange or
                  quoted through NASDAQ or any similar organization, the "Market
                  Price" shall be deemed to be the higher of (A) the book value
                  of a share of the common stock as determined by any firm of
                  independent public accountants of recognized standing,
                  selected by the board of directors of the Corporation, as at
                  the last day of any month ending within sixty days preceding
                  the date as of which the determination is to be made or (B)
                  the fair value thereof determined in good faith by an
                  independent brokerage firm or Standard & Poor's Corporation as
                  of a date which is within fifteen days of the date as of which
                  the determination is to be made (the fees and expenses of any
                  such independent public accountants, independent brokerage
                  firm or other firm engaged pursuant to subclauses (A) and (B)
                  of this clause (ix) to be paid by the Corporation).

                        10)   Determination of Market Price under Certain
                  Circumstances. Anything herein to the contrary
                  notwithstanding, in case the Corporation shall issue any
                  shares of common stock or Convertible Securities in connection
                  with the acquisition by the Corporation of the stock or assets
                  of any other corporation or the merger of any other
                  corporation into the Corporation, the Market Price shall be
                  determined as of the date the number of shares of common stock
                  or Convertible Securities (or in the case of Convertible
                  Securities other than stock, the aggregate principal amount of
                  Convertible Securities) was determined (as set forth in a
                  written agreement between the Corporation and the other party
                  to the transaction) rather than on the date of issuance of
                  such shares of common stock or Convertible Securities.

                        11)   Certain Issues Excepted. Anything herein to the
                  contrary notwithstanding, the Corporation shall not be
                  required to make any adjustment of any Conversion Price in
                  case of the issuance of shares of common stock (1) upon the
                  conversion of options or rights relating to up to 500,000
                  shares (subject to adjustment for 


<PAGE>   23

                                       23

                  stock splits, stock combinations, stock dividends and similar
                  events) of the Corporation's common stock granted or provided
                  or to be granted or provided under the Corporation's stock
                  option plan, as in effect on July 9, 1997, or (2) under the
                  Corporation's restricted stock plan, as in effect on July 9,
                  1997, up to a maximum of 250,000 shares (subject to adjustment
                  for stock splits, stock combinations, stock dividends and
                  similar events), and shall not be required to make any such
                  adjustment upon the granting of any options or rights referred
                  to above if and to the extent that issuance of the shares
                  covered thereby is excepted by this clause.

                        (ii)  Adjustment for Certain Special Dividends. In case
                  the Corporation shall declare a dividend upon the common stock
                  payable otherwise than out of earnings or earned surplus,
                  determined in accordance with Generally Accepted Accounting
                  Principles, and otherwise than in common stock or Convertible
                  Securities, the Conversion Price in effect immediately prior
                  to the declaration of such dividend shall be reduced by an
                  amount equal, in the case of a dividend in cash, to the amount
                  per share of the common stock so declared as payable otherwise
                  than out of earnings or earned surplus or, in the case of any
                  other dividend, to the fair value per share of the common
                  stock of the property so declared as payable otherwise than
                  out of earnings or earned surplus, as determined, reasonably
                  and in good faith, by the board of directors of the
                  Corporation. For the purposes of the foregoing a dividend
                  other than in cash shall be considered payable out of earnings
                  or earned surplus (other than revaluation or paid-in-surplus)
                  only to the extent that such earnings or earned surplus are
                  charged an amount equal to the fair value of such dividend, as
                  determined, reasonably and in good faith, by the board of
                  directors of the Corporation. Such reductions shall take
                  effect as of the date on which a record is taken for the
                  purpose of such dividend, or, if a record is not taken, the
                  date as of which the holders of common stock of record
                  entitled to such dividend are determined.

                        (iii) Subdivision or Combination of Stock. In case the
                  Corporation shall at any time subdivide the outstanding shares
                  of common stock


<PAGE>   24

                                       24

                  into a greater number of shares, the Conversion Price in
                  effect immediately prior to such subdivision shall be
                  proportionately reduced, and conversely, in case the
                  outstanding shares of common stock shall be combined into a
                  smaller number of shares, the Conversion Price in effect
                  immediately prior to such combination shall be proportionately
                  increased.

                        (iv)  Adjustments for Consolidation, Merger, Sale of
                  Assets, Reorganization, etc. In case the Corporation (a)
                  consolidates with or merges into any other corporation and is
                  not the continuing or surviving corporation of such
                  consolidation or merger, or (b) permits any other corporation
                  to consolidate with or merge into the Corporation and the
                  Corporation is the continuing or surviving corporation but, in
                  connection with such consolidation or merger, the common stock
                  is changed into or exchanged for stock or other securities of
                  any other corporation or cash or any other assets, or (c)
                  transfers all or substantially all of its properties and
                  assets to any other corporation, or (d) effects a capital
                  reorganization or reclassification of the capital stock of the
                  Corporation in such a way that holders of common stock shall
                  be entitled to receive stock, securities, cash or assets with
                  respect to or in exchange for common stock, then, and in each
                  such case, proper provision shall be made so that, upon the
                  basis and upon the terms and in the manner provided in this
                  subsection (e), the Holders, upon the conversion of each
                  Security at any time after the consummation of such
                  consolidation, merger, transfer, reorganization or
                  reclassification, shall be entitled to receive (at the
                  aggregate Conversion Price in effect for all shares of common
                  stock issuable upon such conversion immediately prior to such
                  consummation as adjusted to the time of such transaction), in
                  lieu of shares of common stock issuable upon such conversion
                  prior to such consummation, the stock and other securities,
                  cash and assets to which such Holder would have been entitled
                  upon such consummation if such Holder had so converted such
                  Security immediately prior thereto (subject to adjustments
                  subsequent to such corporate action as nearly equivalent as
                  possible to the adjustments provided for in this subsection
                  4).


<PAGE>   25

                                       25

                        (v)   Notice of Adjustment. Upon any adjust ment of the
                  Conversion Price, then and in each such case the Corporation
                  shall promptly deliver a notice to the registered holder of
                  the Secur ities, which notice shall state the Conversion Price
                  resulting from such adjustment, setting forth in reasonable
                  detail the method of calculation and the facts upon which such
                  calculation is based.

                        (vi)  Other Notices. In case at any time:

                              (1)   the Corporation shall declare or pay any 
            dividend on or make any distribution with respect to its common
            stock, other than quarterly cash dividends consistent with past
            practice;

                              (2)   the Corporation shall offer for 
            subscription pro rata to the holders of its common stock any 
            additional shares of stock of any class or other rights;

                              (3)   there shall be any capital reorganization, 
            or reclassification of the capital stock of the Corporation, or
            consolidation or merger of the Corporation with another corporation
            (other than a Subsidiary of the Corporation in which the Corporation
            is the surviving or continuing corporation and no change occurs in
            the Corporation's common stock), or sale of all or substantially all
            of its assets to, another corporation;

                              (4)   there shall be a voluntary or involuntary
            dissolution, liquidation, bankruptcy, assignment for the benefit of
            creditors, or winding up of the Corporation; or

                              (5)   the Corporation proposes to take any other 
            action or an event occurs which would require an adjustment of the
            Conversion Price pursuant to subsection (h) below;

            then, in any one or more of said cases, the Corporation shall give
            written notice, addressed to each Holder at the address of such
            Holder as shown on the books of the Corporation, of (1) the date on
            which the books of the Corporation shall close or a record shall be
            taken for such dividend, distribution or subscription rights, or (2)
            the date (or, if not then known, a reasonable approximation thereof
            by the Corporation) on which such reorganization, reclassification,

<PAGE>   26

                                       26

            consolidation, merger, sale, dissolution, liquidation, bankruptcy,
            assignment for the benefit of creditors, winding up or other action,
            as the case may be, shall take place. Such notice shall also specify
            (or, if not then known, reasonably approximate) the date as of which
            the holders of common stock of record shall participate in such
            dividend, distribution or subscription rights, or shall be entitled
            to exchange their common stock for securities or other property
            deliverable upon such reorganization, reclassification,
            consolidation, merger, sale, dissolution, liquidation, bankruptcy,
            assignment for the benefit of creditors, winding up, or other
            action, as the case may be. Such written notice shall be given at
            least twenty days prior to the action in question and not less than
            twenty days prior to the record date or the date on which the
            Corporation's transfer books are closed in respect thereto.

                        (vii)  Certain Events. If any event occurs as to which 
                  in the reasonable opinion of the Corporation, in good faith,
                  the other provisions of this subsection 4 are not strictly
                  applicable but the lack of any adjustment would not in the
                  opinion of the Corporation fairly protect the conversion
                  rights of the Holders in accordance with the basic intent and
                  principles hereof, or if strictly applicable would not fairly
                  protect the conversion rights of the Holders in accordance
                  with the basic intent and principles hereof, then the
                  Corporation shall appoint a firm of independent certified
                  public accountants (which may be the regular auditors of the
                  Corporation) of recognized national standing, which shall give
                  their opinion upon the adjustment, if any, on a basis
                  consistent with the basic intent and principles established in
                  the other provisions of this subsection 4, necessary to
                  preserve, without dilution, the conversion rights of the
                  Holders. Upon receipt of such opinion, the Corporation shall
                  forthwith make the adjustments described therein.

                        (vii)  All calculations under this sub section 4 shall 
                  be made to the nearest cent or to the nearest one hundredth
                  (1/100) of a share, as the case may be.

                        (viii) In any case in which the provisions hereof
                  require that an adjustment shall become effective immediately
                  after a record date for an event, the Corporation may defer
                  until the 



<PAGE>   27

                                       27

                  occurrence of such event (i) issuing to the Holder of any
                  Security converted after such record date and before the
                  occurrence of such event the additional shares of common stock
                  issuable upon such conversion by reason of the adjustments
                  required by such event over and above the shares of common
                  stock issuable upon such conversion before giving effect to
                  such adjustment and (ii) paying to such Holder any amount in
                  cash in lieu of a fractional share of common stock; provided,
                  however, that the Corporation shall deliver to such Holder a
                  due bill or other appropriate instrument evidencing such
                  Holder's right to receive such additional shares and such cash
                  upon the occurrence of the event requiring such adjustment.

            D.    REDEMPTION AT THE OPTION OF THE CORPORATION

                  (i)   The shares of the 8% Preferred Stock are not redeemable
            prior to January 1, 2001. On and after that date, the shares of the
            8% Preferred Stock will be redeemable in whole or in part from time
            to time at the option of the Corporation, with the consent of the
            Board of Governors of the Federal Reserve System, upon not less than
            thirty nor more than sixty days' notice by mail, at the redemption
            prices set forth below, during the twelve-month periods beginning on
            January 1 of the years set forth below, plus accrued and unpaid
            dividends to the date fixed for redemption.

<TABLE>
<CAPTION>
                           YEAR                     REDEMPTION  
                           ----                     ----------  
                                                    PRICE       
                                                    -----       
                  <S>                               <C>        
                  2001..................                        
                  2002..................             $1,020.00  
                  2003..................             $1,015.00  
                  2004..................             $1,010.00  
                  2005 and thereafter ..             $1,005.00  
                                                     $1,000.00      
</TABLE>
                                                                   

                  (ii)  In the event that less than all of the out standing
            shares of the 8% Preferred Stock are to be redeemed in any
            redemption at the option of the Corporation, the total number of
            shares to be redeemed in such redemption shall be determined by the
            Board of Directors and the shares to be redeemed shall be allocated
            pro rata or by lot as may be determined by the Board of Directors or
            by such other method as the Board of Directors may approve and deem
            equitable, including any method to conform to any rule or regula-


<PAGE>   28


                                       28

            tion of any national or regional stock exchange or automated
            quotation system upon which the shares of the 8% Preferred Stock may
            at the time be listed or eligible for quotation.

                  (iii) Notice of any proposed redemption shall be given by the
            Corporation by mailing a copy of such notice to the holders of
            record of the shares of 8% Preferred Stock to be redeemed, at their
            address of record, not more than sixty nor less than thirty days
            prior to the redemption date. The notice of redemption to each
            holder of shares of 8% Preferred Stock shall specify the number of
            shares of 8% Preferred Stock to be redeemed, the redemption date and
            the redemption price payable to such holder upon redemption, and
            shall state that from and after said date dividends thereon will
            cease to accrue. If less than all the shares owned by a holder are
            then to be redeemed at the option of the Corporation, the notice
            shall also specify the number of shares of 8% Preferred Stock which
            are to be redeemed and the numbers of the certificates representing
            such shares. Any notice which is mailed as herein provided shall be
            conclusively presumed to have been duly given, whether or not the
            stockholder receives such notice; and failure duly to give such
            notice by mail, or any defect in such notice, to the holders of any
            stock designated for redemption shall not affect the validity of the
            proceedings for the redemption of any other shares of 8% Preferred
            Stock.

                  (iv)  Notice having been mailed as aforesaid, from and after
            the redemption date (unless default be made in the payment of the
            redemption price for any shares to be redeemed), all dividends on
            the shares of 8% Preferred Stock called for redemption shall cease
            to accrue and all rights of the holders of such shares as
            stockholders of the Corporation by reason of the ownership of such
            shares (except the right to receive the redemption price, on
            presentation and surrender of the respective certificates
            representing the redeemed shares), shall cease on the redemption
            date, and such shares shall not after the redemption date be deemed
            to be outstanding. In case less than all the shares represented by
            any such certificate are redeemed, a new certificate shall be issued
            without cost to the holder thereof representing the unredeemed
            shares.

                  (v)   At its option, the Corporation may, on or prior to the
            redemption date, irrevocably deposit the aggregate amount payable
            upon redemption of the shares of the 8% Preferred Stock to be
            redeemed with a bank or trust company designated by the Board of
            Directors 


<PAGE>   29

                                       29

            having its principal office in New York, New York, San Juan, Puerto
            Rico, or any other city in which the Corporation shall at that time
            maintain a transfer agency with respect to its capital stock, and
            having a combined capital and surplus (as shown by its latest
            published statement) of at least $50,000,000 (herein after referred
            to as the "Depositary"), to be held in trust by the Depositary for
            payment to the holders of the shares of the 8% Preferred Stock then
            to be redeemed. If such deposit is made and the funds so deposited
            are made immediately available to the holders of the shares of the
            8% Preferred Stock to be redeemed, the Corporation shall thereupon
            be released and dis charged (subject to the provisions of Section
            D.6) from any obligation to make payment of the amount payable upon
            redemption of the shares of the 8% Preferred Stock to be redeemed,
            and the holders of such shares shall look only to the Depositary for
            such payment.

                  (vi)  Any funds remaining unclaimed at the end of two years
            from and after the redemption date in respect of which such funds
            were deposited shall be returned to the Corporation forthwith and
            thereafter the holders of shares of the 8% Preferred Stock called
            for redemption with respect to which such funds were deposited shall
            look only to the Corporation for the payment of the redemption price
            thereof. Any interest accrued on any funds deposited with the
            Depositary shall belong to the Corporation and shall be paid to it
            from time to time on demand.

                  (vii) Any shares of the 8% Preferred Stock which shall at any
            time have been redeemed shall, after such redemption, have the
            status of authorized but unissued shares of Preferred Stock, without
            designation as to series, until such shares are once more designated
            as part of a particular series by the Board of Directors.

            E.    LIQUIDATION PREFERENCE

                  (i)   Upon any voluntary or involuntary liquida tion,
            dissolution, or winding up of the Corporation, the then record
            holders of shares of 8% Preferred Stock will be entitled to receive
            out of the assets of the Corporation available for distribution to
            shareholders, before any distribution is made to holders of common
            stock or any other equity securities of the Corporation ranking
            junior upon liquidation to the 8% Preferred Stock, distributions
            upon liquidation in the amount of $1,000 per share plus an amount
            equal to any accrued and unpaid dividends to the date of payment.
            Such 



<PAGE>   30

                                       30

            amount shall be paid to the holders of the 8% Preferred Stock prior
            to any payment or distribution to the holders of the common stock of
            the Corporation or of any other class of stock or series thereof of
            the Corporation ranking junior to the 8% Preferred Stock in respect
            of dividends or as to the distribution of assets upon liquidation.

                  (ii)  If upon any voluntary or involuntary liquida tion,
            dissolution or winding up of the Corporation, the amounts payable
            with respect to the 8% Preferred Stock and any other shares of stock
            of the Corporation ranking as to any such distribution on a parity
            with the 8% Preferred Stock are not paid in full, the holders of the
            8% Preferred Stock and of such other shares will share ratably in
            any such distribution of assets of the Corporation in proportion to
            the full liquidation preferences to which each is entitled. After
            payment of the full amount of the liquidation preference to which
            they are entitled, the holders of shares of 8% Preferred Stock will
            not be entitled to any further participation in any distribution of
            assets of the Corporation.

                  (iii) Neither the consolidation or merger of the Corporation
            with any other corporation, nor any sale, lease or conveyance of all
            or any part of the property or business of the Corporation, shall be
            deemed to be a liquidation, dissolution, or winding up of the
            Corporation.

                  (iv)  If the assets distributable upon any dissolu tion,
            liquidation, or winding up of the Corporation shall be insufficient
            to permit the payment to the holders of the 8% Preferred Stock of
            the full preferential amounts aforesaid, then such assets or the
            proceeds thereof shall be distributed among the holders of the 8%
            Preferred Stock ratably in proportion to the respective amounts the
            holders of such shares of stock would be entitled to receive if they
            were paid the full preferential amounts aforesaid.

            F.    VOTING RIGHTS

                  (i)   Except as described in this Section F, or except as
            required by applicable law, holders of the 8% Preferred Stock will
            not be entitled to receive notice of or attend or vote at any
            meeting of stockholders of the Corporation.

                  (ii)  Any variation or abrogation of the rights, preferences
            and privileges of the 8% Preferred Stock by way of amendment of the
            Corporation's Restated 


<PAGE>   31

                                       31

            Certificate of Incorporation or otherwise (including, without
            limitation, the authorization or issuance of any shares of the
            Corporation ranking, as to dividend rights or rights on liquidation,
            winding up and dissolution, senior to the 8% Preferred Stock) shall
            not be effective (unless otherwise required by applicable law)
            except with the consent in writing of the holders of at least a
            majority of the outstanding shares of the 8% Preferred Stock or with
            the sanction of a special resolution passed at a separate general
            meeting by the holders of at least a majority of the outstanding
            shares of the 8% Pre ferred Stock. Notwithstanding the foregoing,
            the Corporation may, without the consent or sanction of the holders
            of the 8% Preferred Stock, authorize and issue shares of the
            Corporation ranking, as to dividend rights and rights on
            liquidation, winding up and disso lution, on a parity with or junior
            to the 8% Preferred Stock.

                  (iii) No vote of the holders of the 8% Preferred Stock will be
            required for the Corporation to redeem or purchase and cancel the 8%
            Preferred Stock in accordance with the Restated Certificate of
            Incorporation of the Corporation.

                  (iv)  The Corporation will cause a notice of any meeting at
            which holders of any series of Preferred Stock are entitled to vote
            to be mailed to each record holder of such series of Preferred
            Stock. Each such notice will include a statement setting forth (i)
            the date of such meeting, (ii) a description of any resolution to be
            proposed for adoption at such meeting on which such holders are
            entitled to vote and (iii) instructions for deliveries of proxies.

                  (v)   Except as set forth in this Section F, holders of 8%
            Preferred Stock shall have no special voting rights and their
            consent shall not be required (except to the extent they are
            entitled to vote as set forth herein) for taking any corporate
            action.

            G.    RANK

                  The 8% Preferred Stock will, with respect to dividend rights
            and rights on liquidation, winding up and dissolution, rank (i)
            senior to all classes of common stock of the Corporation and to all
            other equity securities issued by the Corporation the terms of which
            specifically provide that such equity securities will rank junior to
            the 8% Preferred Stock (or to a number of series of Preferred Stock
            which includes the 8% Preferred Stock); (ii) on a parity 


<PAGE>   32

                                       32

            with all equity securities issued by the Corporation the terms of
            which specifically provide that such equity securities will rank on
            a parity with the 8% Preferred Stock (or with a number of series of
            Preferred Stock which includes the 8% Preferred Stock); and (iii)
            junior to all equity securities issued by the Corporation the terms
            of which specifically provide that such equity securities will rank
            senior to the 8% Preferred Stock (or to a number of series of
            Preferred Stock which includes the 8% Preferred Stock). For this
            purpose, the term "equity securities" does not include debt
            securities convertible into or exchangeable for equity securities.

            H.    FORM OF CERTIFICATE FOR 8% PREFERRED STOCK; TRANSFER AND
                  REGISTRATION

                  (i)   The 8% Preferred Stock shall be issued in registered
            form only. The Corporation may treat the record holder of a share of
            8% Preferred Stock, including the Depository Trust Company and its
            nominee and any other holder that holds such share on behalf of any
            other person, as such record holder appears on the books of the
            registrar for the 8% Preferred Stock, as the sole owner of such
            share for all purposes.

                  (ii)  The transfer of a share of 8% Preferred Stock may be
            registered upon the surrender of the certificate evidencing the
            share of 8% Preferred Stock to be transferred, together with the
            form of transfer endorsed on it duly completed and executed, at the
            office of the transfer agent and registrar.

                  (iii) Registration of transfers of shares of 8% Preferred
            Stock will be effected without charge by or on behalf of the
            Corporation, but upon payment (or the giving of such indemnity as
            the transfer agent and registrar may require) in respect of any tax
            or other governmental charges which may be imposed in relation to
            it.

                  (iv)  The Corporation will not be required to register the
            transfer of a share of 8% Preferred Stock after such share has been
            called for redemption.

            I.    REPLACEMENT OF LOST CERTIFICATES

                  If any certificate for a share of 8% Preferred Stock is
            mutilated or alleged to have been lost, stolen or destroyed, a new
            certificate representing the same share shall be issued to the
            holder upon request

<PAGE>   33

                                       33

            subject to delivery of the old certificate or, if alleged to have
            been lost, stolen or destroyed, compliance with such conditions as
            to evidence, indemnity and the payment of out-of-pocket expenses of
            the Corporation in connection with the request as the Board of
            Directors of the Corporation may determine.

            J.    NO PREEMPTIVE RIGHTS

                  Holders of the 8% Preferred Stock will have no preemptive
            rights to purchase any securities of the Corporation.



<PAGE>   34

                                       34

      IN WITNESS WHEREOF, the said Doral Financial Corporation, has caused its 
corporate seal to be hereunto affixed and this Certificate to be signed by 
Zoila Levis, its President, and Luis Alvarado, its Assistant Secretary, this 
7th day of November, 1997.



                                                     /s/ Zoila Levis
                                             ----------------------------------
                                                        President


                                                    /s/ Luis Alvarado
                                             ----------------------------------
                                                     Assistant Secretary