Document:

EX-10.1 STOCK PURCHASE AGREEMENT

 

Exhibit 10.1
EXECUTION
COPY

 

 

STOCK PURCHASE AGREEMENT

by and among

DORAL FINANCIAL CORPORATION,

DORAL HOLDINGS DELAWARE, LLC

and

(solely for purposes of Section 5.15)

DORAL HOLDINGS, L.P.

dated as of May 16, 2007

 

 

 

 

Table of Contents

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

i

 

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

ii

 

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

iii

 

Exhibits

Exhibit A — Form of Securityholders and Registration Rights Agreement

Exhibit B  — Form of Advisory Agreement

Exhibit C  — Form of Amendment to Certificate of Incorporation

Exhibit D  — Form of Deferred Tax Confirmation

iv

 

Index of Principal Terms

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

v

 

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

6

 

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

7

 

STOCK PURCHASE AGREEMENT

          THIS STOCK PURCHASE AGREEMENT (this “Agreement”) is entered into as of May 16, 2007,
by and among Doral Financial Corporation, a corporation organized under the laws of the
Commonwealth of Puerto Rico (the “Company”), Doral Holdings Delaware, LLC, a Delaware
limited liability company (the “Purchaser”), and (solely for purposes of Section 5.15)
Doral Holdings, L.P., a Cayman Islands limited partnership (“Parent”).

RECITALS

          WHEREAS, subject to the terms and conditions set forth in this Agreement, the Company has
agreed to sell to the Purchaser and the Purchaser has agreed to purchase from the Company
968,253,968 shares (the “Purchased Stock”) of its common stock (the “Common
Stock”), par value (upon the Closing) $0.01 per share; and

          WHEREAS, the parties hereto are entering into this Agreement to provide for the purchase and
sale of the Purchased Stock.

          NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises hereinafter
set forth, the parties hereto agree as follows:

ARTICLE I

AGREEMENT TO SELL AND PURCHASE

COMMON STOCK

          SECTION 1.1 Sale and Purchase. (a) Subject to the terms and conditions hereof, the Company hereby agrees to issue and
sell to the Purchaser, and the Purchaser agrees to purchase from the Company, at the Closing (as
defined below), the Purchased Stock for a purchase price of $0.63 per share, or $610,000,000 in the
aggregate (such aggregate price, the “Purchase Price”).

          (b) In the event that, subsequent to the date of this Agreement but prior to the Closing,
the outstanding shares of Common Stock shall have been increased, decreased, changed into or
exchanged for a different number or kind of shares or securities through any reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock split, or other like
changes in the Company’s capitalization, (i) the number of shares of Common Stock constituting the
Purchased Stock shall be multiplied by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately after, and the denominator of which shall be the
number of such shares outstanding immediately before, the occurrence of such event (the
“Adjustment Factor”), and the resulting number shall from and after the date of such event
be the number of shares of Common Stock constituting the Purchased Stock, subject to further
adjustment in accordance with this sentence, and (ii) the purchase price per share of Purchased
Stock shall be divided by the Adjustment Factor, and the resulting number shall from

 

 

2

and after the date of such event be the purchase price per share of Purchased Stock,
subject to further adjustment in accordance with this sentence.

ARTICLE II

CLOSING, DELIVERY AND PAYMENT

          SECTION 2.1 Closing. The closing (the “Closing”) of the sale and purchase of the Purchased Stock under
this Agreement shall take place on the second Business Day after the satisfaction or waiver of the
conditions set forth in Article VI (other than those conditions which by their terms are to be
satisfied at the Closing, but subject to the satisfaction or waiver of those conditions at the
Closing), at the offices of Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New
York 10017, or at such other time or place within the United States as the Company and the
Purchaser may mutually agree (such date, the “Closing Date”). All right, title and
interest in or to the Purchased Stock and the Purchase Price shall be transferred from the Company
to the Purchaser and from the Purchaser to the Company, respectively, at the place of the Closing.

          SECTION 2.2 Closing Deliveries. (a) At the Closing, subject to the terms and conditions hereof, the Company will deliver
to the Purchaser:

     (i) stock certificates evidencing the Purchased Stock, or evidence of
issuance of the Purchased Stock in book entry form, in either case free and clear of
any Encumbrances (as defined below) (other than those created by the Purchaser),
registered in the name of the Purchaser or one or more of its nominees, in form
reasonably satisfactory to the Purchaser;

     (ii) a receipt for the Purchase Price; and

     (iii) the duly executed Transaction Agreements, certificates and other
documents required to be delivered pursuant to Section 6.1.

          (b) At the Closing, subject to the terms and conditions hereof, the Purchaser shall deliver
to the Company:

     (i) the Purchase Price by wire transfer of immediately available funds to an
account designated by the Company at least two Business Days prior to the Closing
Date;

     (ii) a receipt for the Purchased Stock; and

     (iii) the duly executed Transaction Agreements, certificates and other
documents required to be delivered pursuant to Section 6.2.

 

 

3

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

          Except (i) as disclosed in (x) the Company’s Annual Report on Form 10-K for the year ended
December 31, 2004, as filed on March 15, 2005, and as amended by Amendment No. 1 thereto filed on
February 27, 2006, and (y) the SEC Reports filed since June 30, 2006 and prior to the date of this
Agreement (other than any such disclosures (x) made solely in the exhibits and schedules thereto,
documents incorporated by reference therein, the “Risk Factors” sections thereof or in any section
relating to forward-looking statements or (y) included in such filings that are cautionary,
predictive or forward-looking in nature) or (ii) as disclosed in the corresponding section of the
disclosure schedule provided by the Company to the Purchaser on the date hereof (the “Company
Disclosure Schedule”) (it being agreed that, except as otherwise expressly provided in the
Company Disclosure Schedule, disclosure of any item in any section of the Company Disclosure
Schedule shall be deemed disclosure with respect to any other section to which the relevance of
such item is reasonably apparent on its face), the Company represents and warrants to the Purchaser
as follows:

          SECTION 3.1 Organization, Good Standing and Qualification of the Company and
the Company’s Subsidiaries. The Company and each Subsidiary of the Company is a corporation or other entity duly
organized, validly existing and in good standing under the laws of the jurisdiction of its
incorporation or formation, as the case may be, and has all requisite corporate or other power and
authority to own, lease and operate its properties and assets and to carry on its business as
currently conducted. The Company and each Subsidiary of the Company is duly qualified and is
authorized to do business and is in good standing as a foreign corporation or other entity in all
jurisdictions in which the character or location of its activities or of the properties owned or
operated by it makes such qualification necessary, except for any such failures to be so qualified,
authorized or in good standing, individually or in the aggregate, as would not reasonably be
expected to have a Material Adverse Effect. The Company has made available to the Purchaser true,
complete and correct copies of its certificate of incorporation and by-laws and the certificate of
incorporation and by-laws (or other equivalent organizational documents) of each Subsidiary of the
Company, in each case as amended to, and as in effect as of, the date of this Agreement. For
purposes of this Agreement, “Material Adverse Effect” shall mean a material adverse effect
on (x) the business, operations, properties, assets, liabilities, financial condition or results of
operations of the Company and its Subsidiaries, taken as a whole, or (y) the ability of the Company
to perform its obligations under this Agreement and the other Transaction Agreements and to
consummate the transactions contemplated hereby and thereby on a timely basis; provided,
however, that in determining whether a Material Adverse Effect has occurred pursuant to
clause (x) above, there shall be excluded any effect the cause of which is (i) any change after the
date of this Agreement in laws, rules or regulations of general applicability or published
interpretations thereof by Governmental Entities or in U.S. generally accepted accounting
principles (“GAAP”) or regulatory accounting requirements, in any such case applicable to
banks, savings associations or their holding companies generally, (ii) the pendency or the
announcement of the transactions contemplated by this Agreement (including, for the avoidance of
doubt, any halt in trading of shares of Common Stock on the NYSE under NYSE Rule 123D(3)), (iii)
the performance of obligations required by this Agreement or consented to in writing by the
Purchaser, (iv) factors generally affecting the banking industry as

 

 

4

a whole, (v) any changes in general economic or political conditions or changes affecting the
securities, credit or financial markets in general (including any disruptions thereof and any
changes in interest rates in general) in the United States and Puerto Rico, and (vi) acts of war or
terrorism (other than any such acts that cause any damage or destruction to or render unusable any
facility or property of the Company or any of its Subsidiaries or that render any such facilities
or properties inaccessible), provided that the effect of such changes, effects,
circumstances or developments described in clauses (iv), (v) or (vi) shall not be excluded to the
extent of the disproportionate impact, if any, they have on the Company and its Subsidiaries
(relative to other banks, savings associations or their holding companies in the United States and
Puerto Rico). The Company is a bank holding company and, as of the date of this Agreement, a
financial holding company duly registered under the Bank Holding Company Act of 1956, as amended
(the “BHC Act”).

          SECTION 3.2 Company Subsidiaries. (a) The only direct or indirect Subsidiaries of the Company are those listed in Section
3.2 of the Company Disclosure Schedule. All the outstanding shares of capital stock of each
Subsidiary have been duly authorized and validly issued and are fully paid and nonassessable and
not subject to any preemptive or similar rights and (other than directors’ qualifying shares, if
any) are owned, either directly or indirectly through a wholly-owned Subsidiary, by the Company,
free and clear of all Encumbrances. For purposes of this Agreement, “Encumbrance” means
any security interest, pledge, mortgage, lien (statutory or other), charge, option to purchase,
lease, claim, restriction, covenant, title defect, hypothecation, assignment, deposit arrangement
or other encumbrance of any kind or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any conditional sale or other
title retention agreement).

          (b) Except for its ownership of Doral Bank and Doral Bank, FSB, the Company does not own,
beneficially or of record, either directly or through its Subsidiaries, any stock or other equity
interest in any depository institution (as defined in 12 U.S.C. Section 1813(c)(1)). The deposits
of each of Doral Bank and Doral Bank, FSB are insured by the Federal Deposit Insurance Corporation
(the “FDIC”) to the fullest extent permitted by law. Each of Doral Bank and Doral Bank,
FSB is a member of the Federal Home Loan Bank (“FHLB”) of New York.

          SECTION 3.3 Capitalization. (a) The authorized capital stock of the Company consists of (i) as of the date of this
Agreement, 500,000,000 shares of Common Stock, par value $1.00 per share, and as of the Closing
Date, 1,950,000,000 shares of Common Stock, par value $0.01 per share, and (ii) 40,000,000 shares
of preferred stock, par value $1.00 per share (the “Company Preferred Stock”), of which
1,495,000 have been designated as 7% Noncumulative Monthly Income Preferred Stock, Series A,
liquidation preference $50.00 per share (the “Series A Preferred Stock”), 2,000,000 have
been designated as 8.35% Noncumulative Monthly Income Preferred Stock, Series B, liquidation
preference $25.00 per share (the “Series B Preferred Stock”), 4,140,000 have been
designated as 7.25% Noncumulative Monthly Income Preferred Stock, Series C, liquidation preference
$25.00 per share (the “Series C Preferred Stock”) and 1,380,000 have been designated as
4.75% Perpetual Cumulative Convertible Preferred Stock, liquidation value $250.00 per share (the
“Convertible Preferred Stock”), of which there are, as of the date of this Agreement,
107,948,236 shares of Common Stock outstanding, 1,495,000 shares of Series A Preferred Stock
outstanding, 2,000,000 shares of Series B Preferred Stock outstanding, 4,140,000 shares of Series C
Preferred Stock outstanding

 

 

5

and 1,380,000 shares of Convertible Preferred Stock outstanding. No other shares of Common Stock
or Company Preferred Stock are issued or outstanding. As of the date of this Agreement, no shares
of Common Stock or Company Preferred Stock were reserved for issuances, except for (i) an aggregate
of 20,700 shares of Common Stock reserved for issuance upon exercise of options to purchase shares
of Common Stock (the “Company Stock Options”) under the 1997 Employee Option Plan, (ii) an
aggregate of 4,000,000 shares of Common Stock reserved for issuance under the Omnibus Incentive
Plan (together with the 1997 Employee Option Plan, the “Company Stock Plans”), including
(x) an aggregate of 1,650,000 shares of Common Stock reserved for issuance upon exercise of Company
Stock Options granted pursuant to the Omnibus Incentive Plan and (y) 200,000 shares of Common Stock
reserved for issuance pursuant to restricted stock unit awards granted pursuant to the Omnibus
Incentive Plan and (iii) an aggregate of 8,674,128 shares of Common Stock reserved for issuance
upon conversion of the Convertible Preferred Stock. All of the issued and outstanding shares of
Common Stock and Company Preferred Stock have been duly authorized and validly issued and are fully
paid, nonassessable and free of preemptive rights, with no personal liability attaching to the
ownership thereof. Section 3.3(a) of the Company Disclosure Schedule contains a list setting forth
as of the date of this Agreement all outstanding Company Stock Options and restricted stock units
granted pursuant to the Company Stock Plans, the names of the optionees or grantees, the date each
such option or grant was granted, the number of shares subject to each such option or restricted
stock unit grant, the expiration date of each such option or grant, any vesting schedule with
respect to an option or grant which is not yet fully vested, and the price at which each such
option or grant may be exercised.

          (b) There are no outstanding bonds, debentures, notes, debt securities or other indebtedness
for borrowed money of the Company or any of its Subsidiaries having the right to vote (or
convertible into or exercisable or exchangeable for securities having the right to vote) on any
matters on which the shareholders of the Company or any of its Subsidiaries may vote (“Voting
Debt”). Section 3.3(b) of the Company Disclosure Schedule sets forth a true and complete list
of all indebtedness for borrowed money (other than deposit liabilities, advances and loans from the
FHLB of New York and sales of securities subject to repurchase, in each case incurred in the
ordinary course of business consistent with past practice) of the Company and its Subsidiaries with
an unpaid principal amount in excess of $1 million on the date of this Agreement.

          (c) Except as set forth in paragraph (a) above, there are no issued, outstanding or
authorized securities (including securities convertible into or exercisable or exchangeable for
shares of capital stock or other equity or voting securities) of the Company and (except for the
issuance and sale of the Purchased Stock contemplated by this Agreement) there are no options,
warrants, calls, rights (including “phantom” stock or stock appreciation rights), commitments,
agreements, arrangements or undertakings of any kind to which the Company or any of its
Subsidiaries is a party or by which any of them is bound obligating the Company or any of its
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares
of capital stock or other equity or voting securities of the Company or of any of its Subsidiaries
(or securities convertible into or exercisable or exchangeable for shares of capital stock or other
equity or voting securities) or obligating the Company or any of its Subsidiaries to issue, grant,
extend or enter into any such option, warrant, call, right, commitment, agreement, arrangement or
undertaking. Except as set forth in the terms of the Company Preferred Stock as in effect on

 

 

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the date hereof, there are no outstanding contractual obligations, commitments, understandings
or arrangements of the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire or make any payment in respect of any shares of capital stock or other equity or voting
securities of the Company or any of its Subsidiaries or other agreements or arrangements with or
among any securityholders of the Company or any of its Subsidiaries with respect to securities of
the Company or any of its Subsidiaries. Except as set forth above, there are no agreements or
arrangements pursuant to which the Company is or could be required to register shares of Common
Stock or other securities of the Company or any of its Subsidiaries under the Securities Act.

          SECTION 3.4 Authority; No Conflict. (a) The Company has all requisite corporate power and authority to execute and deliver
this Agreement, the Securityholders and Registration Rights Agreement between the Company and the
Purchaser, in substantially the form attached as Exhibit A hereto (the “Securityholders
Agreement”), the Advisory Agreement between the Company and Bear Stearns Merchant Manager III
(Cayman), L.P. (“BSMM”), substantially in the form attached as Exhibit B hereto (the
“Advisory Agreement” and, together with this Agreement and the Securityholders Agreement,
the “Transaction Agreements”) and, subject to the receipt of the Requisite Shareholder
Approvals in the case of the approval of the Charter Amendment and the issuance of the Purchased
Stock pursuant to this Agreement, to consummate the transactions contemplated hereby and thereby
and to perform its obligations hereunder and thereunder. The execution and delivery of this
Agreement and the other Transaction Agreements and the consummation of the transactions
contemplated hereby and thereby have been duly and validly approved by all necessary corporate and
shareholder action of the Company, subject to the receipt of the Requisite Shareholder Approvals in
the case of the approval of the Charter Amendment and the issuance of the Purchased Stock pursuant
to this Agreement, and no other corporate or shareholder proceedings on the part of the Company are
necessary to approve this Agreement or the other Transaction Agreements or to consummate the
transactions contemplated hereby or thereby. This Agreement has been, and the other Transaction
Agreements when executed will be, duly and validly executed and delivered by the Company and
(assuming due authorization, execution and delivery by the Purchaser or BSMM, as applicable)
constitute (or, in the case of the other Transaction Agreements, will constitute when executed and
delivered) valid and binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as enforcement may be limited by general principles of equity
whether applied in a court of law or a court of equity and by bankruptcy, insolvency,
reorganization, moratorium, or other similar laws relating to creditors’ rights and remedies
generally.

          (b) The issuance and sale of the Purchased Stock pursuant to this Agreement is not and will
not be subject to any preemptive rights, rights of first refusal, subscription or similar rights.
The Purchased Stock, when issued in accordance with the terms of this Agreement, will be duly
authorized, validly issued, fully paid and nonassessable, and upon delivery to the Purchaser will
be free and clear of all Encumbrances (other than those created by the Purchaser).

          (c) Neither the execution and delivery of this Agreement or the other Transaction Agreements
by the Company nor the consummation by the Company of the transactions contemplated hereby or
thereby, nor compliance by the Company with any of the terms or provisions hereof or thereof, will
(i) subject to the receipt of the Requisite Shareholder

 

 

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Approvals in the case of the approval of the Charter Amendment, violate any provision of the
certificate of incorporation or by-laws of the Company or any of the similar governing documents of
any of its Subsidiaries or (ii) assuming that the consents and approvals referred to in Section 3.5
are duly obtained, (x) violate any statute, law, code, ordinance, rule or regulation of any
Governmental Entity (“Law”), or any judgment, order, writ, decision, settlement,
stipulation, decree or injunction (an “Order”) applicable to the Company or any of its
Subsidiaries or any of their respective properties or assets, or (y) violate, conflict with, result
in a breach of any provision of or the loss of any benefit under, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under, result in the
termination of or a right of termination or cancellation under, accelerate the performance required
by, or result in the creation of any Encumbrance upon any of the respective properties or assets of
the Company or any of its Subsidiaries under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust, license, lease or other agreement, instrument or
obligation to which the Company or any of its Subsidiaries is a party, or by which they or any of
their respective properties or assets may be bound or affected, except (in the case of clause (y)
above) for such violations, conflicts, breaches, defaults or other events which would not
reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

          SECTION 3.5 Consents. Except for (i) the filing of applications and notices, as applicable, with the Board of
Governors of the Federal Reserve System (the “Federal Reserve Board”) under the BHC Act and
the Office of the Commissioner of Financial Institutions of Puerto Rico (the
“Commissioner”) under the Puerto Rico Banking Law and the Puerto Rico Mortgage Institutions
Act and the approval of such applications and notices, (ii) approval of the listing of the
Purchased Stock on the New York Stock Exchange (“NYSE”), (iii) the filing with the
Securities and Exchange Commission (the “SEC”) of a proxy statement in definitive form
relating to the meeting of the shareholders of the Company to be held to vote on, among other
things, the Charter Amendment and the issuance of the Purchased Stock (the “Proxy
Statement”), (iv) the filing of the restated certificate of incorporation of the Company,
reflecting the Charter Amendment, with the Secretary of State of the Commonwealth of Puerto Rico
pursuant to the Puerto Rico General Corporations Law (the “PRGCL”), (v) the approval of the
Charter Amendment and the issuance of the Purchased Stock by the Requisite Shareholder Approvals,
(vi) notice to and approval of the National Association of Securities Dealers, Inc.,
(“NASD”), notice to and approval of the Commissioner under the Mortgage Institutions Act
and notice to the Office of the Commissioner of Insurance of Puerto Rico, in each case relating to
the indirect change of control of the Subsidiaries of the Company set forth in Section 3.5 (vi) of
the Company Disclosure Schedule, (vii) any notices or filings under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the “HSR Act”) and the expiration or termination of
any applicable waiting periods thereunder, and (viii) the consents and approvals of third parties
which are not Governmental Entities, the failure of which to be obtained would not be reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect, no consents or
approvals of, or filings or registrations with, any court, administrative agency or commission or
other federal, state, local (which, for all purposes of this Agreement, shall include the
Commonwealth of Puerto Rico and any subdivision thereof) or foreign governmental authority or
instrumentality or self-regulatory organization (each, a “Governmental Entity”) or with any
other third party are necessary in connection with (A) the execution and delivery by the Company of
this Agreement or the other Transaction Agreements and (B) the consummation by

 

 

8

the Company of the transactions contemplated hereby and thereby and the performance by the
Company of its obligations hereunder and thereunder. As of the date of this Agreement, the Company
does not know of any reason why the approvals and authorizations required by Section 6.1(d)(i)
should not be obtained.

          SECTION 3.6 SEC Documents; Other Reports; Internal Controls. (a) The Company has filed with the SEC and made available to the Purchaser (through the SEC’s
Electronic Data Gathering Analysis and Retrieval System or otherwise) all forms, reports,
schedules, registration statements and other documents required to be filed by the Company with the
SEC since January 1, 2004 (collectively, and in each case including all exhibits and schedules
thereto and documents incorporated by reference therein, the “SEC Reports”). As of their
respective dates of filing with the SEC (or, if amended or superseded by a subsequent filing prior
to the date hereof, as of the date of such subsequent filing), the SEC Reports complied in all
material respects with the requirements of the Securities Act of 1933, as amended (the
“Securities Act”), or the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), as the case may be, and the rules and regulations of the SEC thereunder applicable to
such SEC Reports, and none of the SEC Reports when filed (or, if amended or superseded by a
subsequent filing prior to the date hereof, as of the date of such subsequent filing) contained
any untrue statement of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the circumstances under which they
were made, not misleading, and there are no outstanding comments from the SEC with respect to any
of the SEC Reports. None of the Company’s Subsidiaries is required to file periodic reports with
the SEC pursuant to Section 13 or 15(d) of the Exchange Act.

          (b) The Company and each of its Subsidiaries have filed all material forms, reports,
schedules and other documents, together with any amendments required to be made with respect
thereto, that they were required to file since January 1, 2004 with any Governmental Entity (other
than SEC Reports) and have paid all material fees and assessments due and payable in connection
therewith. Except in connection with the Specified Regulatory Agreements and except for normal
examinations conducted by a Governmental Entity in the regular course of the business of the
Company and its Subsidiaries, no Governmental Entity has initiated any Action or, to the knowledge
of the Company, threatened in writing an investigation into the business or operations of the
Company or any of its Subsidiaries since January 1, 2004. Except in connection with the Specified
Regulatory Agreements, there is no material unresolved violation or exception by any Governmental
Entity (other than the SEC) with respect to any report, form, schedule or other document filed by,
or relating to any examinations by any such Governmental Entity of, the Company or any of its
Subsidiaries.

          (c) The records, systems, controls, data and information of the Company and its Subsidiaries
are recorded, stored, maintained and operated under means (including any electronic, mechanical or
photographic process, whether computerized or not) that are under the exclusive ownership and
direct control of the Company or its Subsidiaries or accountants (including all means of access
thereto and therefrom), except for any non-exclusive ownership and non-direct control that would
not reasonably be expected to have a material adverse effect on the system of internal accounting
controls described in the following sentence. As and to the extent described in the SEC Reports
(or, if amended or superseded by a subsequent filing prior to the date hereof, as and to the extent
described in such subsequent filing), the Company and its

 

 

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Subsidiaries have devised and maintain a system of internal accounting controls sufficient to
provide reasonable assurances regarding the reliability of financial reporting and the preparation
of financial statements in accordance with GAAP, including that (i) transactions are executed only
in accordance with management’s authorization; (ii) transactions are recorded as necessary to
permit preparation of the financial statements of the Company and to maintain accountability for
the Company’s assets; (iii) access to the Company’s assets is permitted only in accordance with
management’s authorization; (iv) the reporting of the Company’s assets is compared with existing
assets at regular intervals; and (v) accounts, notes and other receivables and inventory are
recorded accurately, and proper and adequate procedures are implemented to effect the collection
thereof on a current and timely basis. The Company (A) has designed disclosure controls and
procedures (within the meaning of Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to ensure that
material information relating to the Company and its Subsidiaries is made known to the management
of the Company by others within those entities as appropriate to allow timely decisions regarding
required disclosure and to make the certifications required by the Exchange Act with respect to
documents required to be filed by the Company with the SEC, and (B) has disclosed, based on its
most recent evaluation prior to the date hereof, to the Company’s auditors and the audit committee
of the Company’s Board of Directors (1) any significant deficiencies in the design or operation of
internal controls which could adversely affect in any material respect the Company’s ability to
record, process, summarize and report financial data and have identified for the Company’s auditors
any material weaknesses in internal controls and (2) any fraud, whether or not material, that
involves management or other employees who have a significant role in the Company’s internal
controls. The Company has made available to the Purchaser a summary of any such disclosure made by
management to the Company’s auditors and audit committee since January 1, 2004.

          (d) Since January 1, 2004, (i) neither the Company nor any of its Subsidiaries nor, to the
knowledge of the Company, any director, officer, employee, auditor, accountant or representative of
the Company or any of its Subsidiaries has received or otherwise had or obtained knowledge of any
material complaint, allegation, assertion or claim, whether written or oral, regarding the
accounting or auditing practices, procedures, methodologies or methods of the Company or any of its
Subsidiaries or their respective internal accounting controls, including any material complaint,
allegation, assertion or claim that the Company or any of its Subsidiaries has engaged in
questionable accounting or auditing practices, other than routine recommendations made in letters
from the Company’s independent public accountants to the Company’s management, true and complete
copies of which letters have been made available to the Purchaser and (ii) no attorney representing
the Company or any of its Subsidiaries, whether or not employed by the Company or any of its
Subsidiaries, has reported evidence of a material violation of securities laws, breach of fiduciary
duty or similar violation by the Company or any of its officers, directors, employees or agents to
the Board of Directors of the Company or any committee thereof or to any director or officer of the
Company.

          SECTION 3.7 Financial Statements; Absence of Undisclosed Liabilities. (a) The consolidated financial statements of the Company (including any related notes
thereto) included in the SEC Reports complied as to form, as of their respective dates of filing
with the SEC (or, if amended or superseded by a subsequent filing prior to the date hereof, as of
the date of such subsequent filing), in all material respects, with all applicable accounting
requirements and with the published rules and regulations of the SEC with respect thereto (except,
in the case

 

 

10

of unaudited statements, as permitted by Form 10-Q of the SEC), have been prepared in accordance
with GAAP applied on a consistent basis during the periods involved (except as may be disclosed
therein), and fairly present, in all material respects, the consolidated financial position of the
Company and its consolidated Subsidiaries and the consolidated results of operations, changes in
shareholders’ equity and cash flows of such companies as of the dates and for the periods shown.
The books and records of the Company and its Subsidiaries have been, and are being, maintained in
all material respects in accordance with GAAP and any other applicable legal and accounting
requirements and reflect only actual transactions.

          (b) Except for (i) those liabilities that are fully reflected or reserved for in the
consolidated financial statements of the Company included in its Annual Report on Form 10-K for the
year ended December 31, 2006, as filed with the SEC on April 30, 2007 (the “2006 Form
10-K”), (ii) liabilities incurred since December 31, 2006 in the ordinary course of business
consistent with past practice and (iii) liabilities that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, neither the Company nor any of
its Subsidiaries has incurred any liability of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether due or to become due), other than pursuant to this Agreement
and the other Transaction Agreements or the transactions contemplated hereby and thereby.

          SECTION 3.8 Absence of Certain Changes. Since December 31, 2006, (i) no event, change or circumstance has occurred which,
individually or in the aggregate, has had or would reasonably be expected to have a Material
Adverse Effect and (ii) neither the Company nor any of its Subsidiaries has taken any action or
entered into any transaction, and no event has occurred, that would have required the Purchaser’s
consent pursuant to Section 5.2 if such action had been taken, transaction had been entered into or
event had occurred, in each case, after the date of this Agreement.

          SECTION 3.9 Title to Properties and Assets; Encumbrances; Condition. (a) The Company and its Subsidiaries have good, valid and marketable title to all material
real property owned by them free and clear of all Encumbrances, except Encumbrances for current
Taxes not yet due and payable and other standard exceptions commonly found in title policies in the
jurisdiction where such real property is located, and such Encumbrances and imperfections of title,
if any, as do not materially detract from the value of the properties and do not materially
interfere with the present or proposed use of such properties. All real property and fixtures
material to the business, operations or financial condition of the Company and its Subsidiaries are
in good condition and repair except as would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect.

          (b) The Company and its Subsidiaries have good, valid and marketable title to all tangible
personal property owned by them, free and clear of all Encumbrances except as would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect.

          (c) All leases of real property and all other leases material to the Company and its
Subsidiaries under which the Company or a Subsidiary, as lessee, leases personal property are valid
and binding in accordance with their respective terms, there is not under such lease any

 

 

11

material existing default by the Company or such Subsidiary or, to the knowledge of the
Company, any other party thereto, or any event which with notice or lapse of time would constitute
such a default, and, in the case of leased premises, the Company or such Subsidiary quietly enjoys
the premises provided for in such lease, except in any such case as would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.

          SECTION 3.10 Compliance with Law; Permits. (a) Except in connection with the matters addressed by the Specified Regulatory
Agreements, (i) since January 1, 2004, the Company and each of its Subsidiaries have complied in
all material respects with, and have not violated in any material respect, all applicable Laws and
Orders and (ii) neither the Company nor any of its Subsidiaries knows of or has received any
written notice since January 1, 2004 of any violation of any Law or Order, except in the case of
clause (ii) for any such violation that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

          (b) Except as would not reasonably be expected to have a Material Adverse Effect, (i) the
Company, each of its Subsidiaries and their respective officers and employees hold, and have, since
January 1, 2004, held, all licenses, franchises, permits, orders, consents, approvals,
registrations, authorizations, qualifications and filings with and under all federal, state, local
or foreign Laws (“Permits”) necessary for the lawful conduct of their respective businesses
as they are presently being conducted, (ii) all such Permits are in full force and effect, (iii)
the Company and its Subsidiaries have complied in all respects with the terms of the Permits and
there are no pending modifications, amendments or revocations of any such Permits, and (iv) there
are no pending (or, to the knowledge of the Company, threatened) legal, administrative, regulatory
or other suits, actions, claims, audits, assessments, arbitrations or other proceedings or, to the
knowledge of the Company, investigations or inquiries (“Actions”) with respect to the
possible revocation, cancellation, suspension, limitation or nonrenewal of any Permits, and there
has occurred no event which (whether with notice or lapse of time or both) would reasonably be
expected to result in or constitute the basis for such a revocation, cancellation, suspension,
limitation or nonrenewal thereof. None of the execution and delivery of this Agreement and the
other Transaction Agreements, the consummation of the transactions contemplated hereby and thereby
or the performance by the Company of its obligations hereunder and thereunder will result in the
suspension, revocation, impairment, forfeiture or nonrenewal of any Permit applicable to the
Company or any of its Subsidiaries, their respective businesses or operations or any of their
respective assets or properties, except where such suspension, revocation, impairment, forfeiture
or nonrenewal would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.

          (c) The Company and each of its Subsidiaries has administered all accounts for which it acts
as a fiduciary, including accounts for which it serves as a trustee, agent, custodian, personal
representative, guardian, conservator or investment advisor, in accordance with the terms of the
governing documents, applicable federal, state, local and foreign law and regulation and common
law, except where the failure to so administer such accounts would not reasonably be expected to
have, either individually or in the aggregate, a Material Adverse Effect. None of the Company, any
of its Subsidiaries, or, to the knowledge of the Company, any director, officer or employee of the
Company or of any of its Subsidiaries, has committed any breach of trust or fiduciary duty with
respect to any such fiduciary account except for any such breach that would

 

 

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not reasonably be expected to have, either individually or in the aggregate, a Material
Adverse Effect. Except as would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, the accountings for each such fiduciary account are true and
correct and accurately reflect the assets of such fiduciary account.

          (d) The Company and each of its Subsidiaries is in compliance in all material respects with
the applicable provisions of the Community Reinvestment Act of 1977 and the regulations promulgated
thereunder (collectively, “CRA”). Doral Bank and Doral Bank, FSB each received CRA ratings
of “satisfactory” in their most recently completed exams.

          (e) Section 3.10(e)(i) of the Company Disclosure Schedule sets forth a complete list of all
securities exchanges, commodities exchanges, boards of trade, clearing organizations, trade
associations and similar organizations in which the Company or any of its Subsidiaries holds
membership or has been granted trading privileges. Section 3.10(e)(ii) of the Company Disclosure
Schedule sets forth with respect to the Company and its Subsidiaries a complete list of all (i)
broker-dealer licenses or registrations and (ii) all licenses and registrations as an investment
adviser under the Investment Advisers Act of 1940, as amended, and the rules and regulations
promulgated thereunder or any similar state, local or foreign laws. Neither the Company nor any of
its Subsidiaries is, or is required to be, registered as a futures commission merchant, commodities
trading adviser, commodity pool operator or introducing broker under the Commodities Futures
Trading Act or any similar state, local or foreign laws.

          SECTION 3.11 Agreements with Regulatory Agencies. Other than (i) the cease and desist order dated March 16, 2006 entered into by the Company
with the Federal Reserve Board, (ii) the cease and desist order dated March 16, 2006 entered into
by Doral Bank with the FDIC and the Commissioner, (iii) the letter dated February 9, 2006 from the
Office of Thrift Supervision to Doral Bank, FSB, (iv) the memorandum of understanding, dated August
23, 2006 entered into by Doral Bank with the Commissioner and the FDIC and (v) the memorandum of
understanding dated October 23, 2006 entered into by Doral Bank with the Commissioner and the FDIC,
each in the form filed as exhibits to SEC Reports filed prior to the date of this Agreement (the
“Specified Regulatory Agreements”), neither the Company nor any of its Subsidiaries is
subject to any cease-and-desist or other order or directive (other than those generally applicable
to businesses such as the business of the Company or any of its Subsidiaries) issued by, or is a
party to any written agreement, consent agreement or memorandum of understanding with, or is a
party to any commitment letter or similar undertaking to, or is a recipient of any extraordinary
supervisory letter from, or has adopted any board resolutions at the request of (each, whether or
not described above or set forth in the Company Disclosure Schedule, a “Company Regulatory
Agreement”), any Governmental Entity that currently restricts or by its terms will in the
future restrict the conduct of its business or relates to its capital adequacy, its credit or risk
management policies, its dividend policies, its management or its business, nor has the Company or
any of its Subsidiaries been advised in writing (or, to the knowledge of the Company, orally) by
any Governmental Entity that it is considering issuing or requesting the Company or any Subsidiary
to enter into or become bound by any Company Regulatory Agreement.

          SECTION 3.12 Litigation. There are no material Actions pending or, to the knowledge of the Company, threatened
against the Company, any of its Subsidiaries or any of

 

 

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their respective properties or assets. To the knowledge of the Company,
there are no material Actions pending or threatened against any of the past or present executive
officers or directors of the Company or any of its Subsidiaries related to their status as an
officer or director thereof. Section 3.12 of the Company Disclosure Schedule sets forth a list of
all Actions pending or, to the knowledge of the Company, threatened against the Company, any of its
Subsidiaries or any of their respective properties or assets as of the date of the Agreement which
seek monetary damages in excess of $1 million or the imposition of injunctive or other equitable
relief which would reasonably be expected to have, individually or in the aggregate, a material
adverse effect on the business or operations of the Company and its Subsidiaries after the Closing.
Neither the Company nor any of its Subsidiaries is a party or subject to the provisions of any
material Order of any court or Governmental Entity. Prior to or concurrently with the execution of
this Agreement, the Company has entered into a settlement agreement and related agreements, true,
correct and complete copies of which have been provided to the Purchaser (collectively, the
“Settlement Agreement”), providing for the complete settlement of the class action and
derivative litigation set forth in Section 3.12 of the Company Disclosure Schedule under the
heading “Specified Shareholder Litigation” (collectively, the “Shareholder Litigation”).
Other than the Settlement Agreement, neither the Company nor any of its Subsidiaries is a party to
or bound by any contracts, arrangements, commitments or understandings relating to the Shareholder
Litigation.

          SECTION 3.13 Certain Contracts. (a) Neither the Company nor any of its Subsidiaries is a party to or is bound by any
contract, arrangement, commitment or understanding (whether written or oral) (i) which is a
material contract (as defined in Item 601(b)(10) of Regulation S-K of the SEC) to be performed in
whole or in part after the date of this Agreement, (ii) which limits the freedom of the Company or
any of its Subsidiaries to compete in any line of business, in any geographic area or with any
Person, or which requires referrals of business or requires the Company or any of its Subsidiaries
to make available investment or business opportunities to any Person on a priority or exclusive
basis, (iii) which relates to the incurrence of indebtedness with an unpaid principal amount in
excess of $1 million (other than deposit liabilities, advances and loans from the FHLB of New York
and sales of securities subject to repurchase, in each case incurred in the ordinary course of
business consistent with past practice) by the Company or any of its Subsidiaries, including any
sale and leaseback transactions, capitalized leases and other similar financing transactions, (iv)
which grants any right of first refusal, right of first offer or similar right with respect to any
material assets or properties of the Company or any of its Subsidiaries, (v) which limits the
payment of dividends by the Company, Doral Bank or Doral Bank, FSB, or (vi) for a joint venture,
partnership, or similar agreement for a business venture involving a sharing of profits or
expenses. Each contract, arrangement, commitment or understanding of the type described in this
Section 3.13(a), whether or not publicly disclosed in the SEC Reports described in clause (i) of
the introductory paragraph of this Article III or set forth in Section 3.13(a) of the Company
Disclosure Schedule, is referred to herein as a “Company Contract.” The Company has made
available all contracts (including all lease, rental or occupancy agreements or other contracts
affecting or relating to the ownership or use of any real or personal property; all agreements for
the purchase or sale of mortgage servicing rights; all agreements for the purchase or sale of
mortgage Loans (as hereinafter defined) on a wholesale or bulk basis; and all consulting agreements
with outside consultants) which involved payments by the Company or any of its Subsidiaries during
fiscal year 2006 of more than $1 million or which would reasonably be

 

 

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expected to involve payments during fiscal year 2007 of more than $1 million, other than any
such contract that is terminable at will on 60 days or less notice without payment of a penalty in
excess of $150,000 and other than any contract entered into on or after the date hereof that is
permitted under the provisions of Section 5.2.

          (b) (i) Each Company Contract is valid and binding on the Company or its applicable Subsidiary
and is in full force and effect, and, to the knowledge of the Company, is valid and binding on the
other parties thereto, (ii) the Company and each of its Subsidiaries and, to the knowledge of the
Company, each of the other parties thereto, has in all material respects performed all obligations
required to be performed by it to date under each Company Contract, and (iii) no event or condition
exists which constitutes or, after notice or lapse of time or both, would constitute a material
breach or default on the part of the Company or any of its Subsidiaries or, to the knowledge of the
Company, any other party thereto, under any such Company Contract, except, in each case, where such
invalidity, failure to be binding, failure to so perform or breach or default, individually or in
the aggregate, would not have or reasonably be expected to have a Material Adverse Effect.

          SECTION 3.14 Insurance. The Company and its Subsidiaries are insured with reputable and financially sound insurers
against such risks and in such amounts as is sufficient to comply with applicable Law, is
consistent with industry practice and which the management of the Company reasonably has determined
to be prudent. Section 3.14 of the Company Disclosure Schedule contains a true and complete list
and summary description (including name of insurer, agent, coverage and expiration date) of all
insurance policies in force on the date hereof that are material to the business and assets of the
Company and its Subsidiaries (other than insurance policies under which the Company or any
Subsidiary thereof is named as a loss payee, insured or additional insured as a result of its
position as a secured lender on specific loans and mortgage insurance policies on specific loans or
pools of loans). The Company and its Subsidiaries are in material compliance with such insurance
policies and are not in default under any of the material terms thereof. Neither the Company nor
any Subsidiary thereof has taken any action or failed to take any action which, with notice or the
lapse of time, or both, would constitute such a default. None of the execution and delivery of
this Agreement and the other Transaction Agreements, the performance by the Company of its
obligations hereunder and thereunder or the consummation of the transactions contemplated hereby
and thereby will constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in the cancellation of or non-compliance with any
provisions of, such policies (including any change of control provisions thereof), except for such
defaults or other events which would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. Each such policy is outstanding and in full force and effect
and except for policies insuring against potential liabilities of officers, directors and employees
of the Company and its Subsidiaries, the Company or the relevant Subsidiary thereof is the sole
beneficiary of such policies. No written notice of cancellation or termination has been received
with respect to any such policy. All premiums and other payments due under any such policy have
been paid, and all claims thereunder have been filed in due and timely fashion.

          SECTION 3.15 Tax Matters. (a) Each of the Company and its Subsidiaries has (i) duly and timely filed (including
pursuant to applicable extensions granted without penalty) all material Tax Returns (as hereinafter
defined) required to be filed by it, and such Tax

 

 

15

Returns are true, correct and complete in all material respects, and (ii) paid in full all Taxes
due or, where payment is not yet due, made adequate provision in the financial statements of the
Company (in accordance with GAAP) for all such Taxes (as hereinafter defined); (y) no material
deficiencies for any Taxes have been proposed, asserted or assessed in writing against or with
respect to any Taxes due by or Tax Returns of the Company or any of its Subsidiaries; and (z) there
are no material Encumbrances for Taxes upon the assets of either the Company or its Subsidiaries
except for statutory liens for current Taxes not yet due or Encumbrances for Taxes that are being
contested in good faith by appropriate proceedings and for which reserves adequate in accordance
with GAAP have been provided.

          (b) Neither the Company nor any of its Subsidiaries (i) is or has ever been a member of an
affiliated group (other than a group the common parent of which is the Company) filing a
consolidated tax return or (ii) has any material liability for Taxes of any Person arising from the
application of Treasury Regulation section 1.1502-6 or any analogous provision of state, local or
foreign law, or as a transferee or successor, by contract, or otherwise.

          (c) None of the Company or any of its Subsidiaries is a party to, is bound by or has any
obligation under any Tax sharing or Tax indemnity agreement or similar contract or arrangement.

          (d) Except for the Deferred Tax Agreement, no closing agreement pursuant to section 7121 of
the Internal Revenue Code of 1986, as amended (the “Code”) (or any similar provision of
state, local or foreign law, including Section 6126 of the Puerto Rico Internal Revenue Code of
1994, as amended (the “PR Code”)) has been entered into by or with respect to the Company
or any of its Subsidiaries.

          (e) All material Taxes required to be withheld, collected or deposited by or with respect to
the Company and each Subsidiary have been timely withheld, collected or deposited as the case may
be, and to the extent required, have been paid to the relevant taxing authority.

          (f) Neither the Company nor any of its Subsidiaries has requested or been granted any waiver
of any federal, state, local or foreign statute of limitations with respect to, or any extension of
a period for the assessment of, any Tax.

          (g) Neither the Company nor any of its Subsidiaries has entered into any transactions that
are or would be part of any “reportable transaction” under Sections 6011, 6111, or 6112 of the Code
(or any similar provision under any state, local or foreign law).

          (h) The Company has made available to the Purchaser true and correct copies of all income
Tax Returns filed by the Company and its Subsidiaries for taxable years 2003-2006.

          (i) No audit of any material Tax Return of the Company or any of its Subsidiaries is pending
or being conducted or, to the knowledge of the Company, threatened by a Tax Authority.

          (j) Neither the Company nor any of its Subsidiaries has any requests for material rulings in
respect of Taxes pending between the Company or any Subsidiary and any Tax Authority.

 

 

16

          (k) Neither the Company nor any of its Subsidiaries will be required to include any item of
income in, or exclude any item of deduction from, taxable income for any taxable period ending
after the Closing as a result of any (i) change in method of accounting either imposed by a Tax
Authority or voluntarily made by the Company or any of its Subsidiaries on or prior to the date
hereof, (ii) intercompany transaction or excess loss account described in Treasury Regulations
under Section 1502 of the Code (or any similar provision of state, local, or foreign income Tax
law) or (iii) installment sale or open transaction disposition made on or prior to the Closing.

          (l) The Company was not a “passive foreign investment company” as defined under Section 1297
of the Code for its 2004, 2005 or 2006 taxable years, as determined for U.S. federal income tax
purposes.

          (m) The Company has entered into a closing agreement with the Department of the Treasury of
Puerto Rico dated September 26, 2006 (the “Deferred Tax Agreement”) that permits the
Company to reduce the income of the Company and/or its Subsidiaries pursuant to the Puerto Rico
Internal Revenue Code of 1994, as amended (and any other applicable local Law relating to Taxes),
by amortizing on a straight-line basis approximately $890,000,000 of the adjusted Tax basis of
interest-only strips over a 15-year amortization period beginning on January 1, 2005 (any such
reduction, an “Amortization Deduction”). The Deferred Tax Agreement is in full force and
effect and there has been no amendment or modification thereto or waiver thereof.

          (n) For purposes of this Agreement:

     “Taxes” shall mean all federal, state, local, foreign and other taxes, levies,
imposts, assessments, impositions or other similar government charges, including, but not
limited to income, estimated income, withholding, business, occupation, franchise, license,
real property, payroll, personal property, sales, transfer, stamp, use, escheat,
employment-related, commercial rent or withholding, net worth, occupancy, premium, gross
receipts, profits, windfall profits, deemed profits, license, lease, severance, capital,
production, corporation, ad valorem, excise, duty, utility, environmental, value-added,
recapture or other taxes, including any interest, penalties, and additions (to the extent
applicable) thereto, whether disputed or not;

     “Tax Return” shall mean any return, report, information return, declaration or
other document (including any related or supporting information) required to be filed with
any taxing authority with respect to Taxes, including all information returns relating to
Taxes of third parties, any claims for refunds of Taxes and any amendments, schedules or
supplements to any of the foregoing; and

     “Tax Authority” shall mean any domestic, foreign, federal, national, state,
county or municipal or other local government, any subdivision, instrumentality, dependency,
agency, commission or authority thereof, or any quasi-governmental body exercising any
taxing authority or any other authority exercising Tax regulatory authority.

 

 

17

          SECTION 3.16 Environmental and Safety Laws. There are no Actions or
remediation activities seeking to impose, or that reasonably would be expected to result in the
imposition, on the Company or any of its Subsidiaries of any liability or obligation arising under
common law standards relating to environmental protection, human health or safety, or under any
Law, including the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended (collectively, the “Environmental Laws”), pending or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries, other than any such liability
or obligation that would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect. During or, to the knowledge of the Company prior to, the period of (i)
its or any of its Subsidiaries’ ownership or operation of any of their respective current
properties, (ii) its or any of its Subsidiaries’ participation in the management of any property,
or (iii) its or any of its Subsidiaries’ holding of a security interest or other interest in any
property, there were no releases or threatened releases of hazardous, toxic, radioactive or
dangerous materials or other materials regulated under Environmental Laws in, on, under or
affecting any such property, except as would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is
subject to any Order by or with any Governmental Entity or third party imposing any liability or
obligation pursuant to or under any Environmental Law except as would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.

          SECTION 3.17 Intellectual Property. (a) As used herein, the term “Intellectual
Property” shall mean all patents, patent applications, statutory invention registrations,
inventions and other industrial property rights; trademarks, service marks, trade names, trade
dress, logos, and other source identified, including registrations and applications for the
registration thereof; copyrights (including without limitation, computer software programs);
Internet domain name registrations; Internet web sites, web content, and registrations and
applications for registrations thereof; confidential and proprietary information, including
know-how and trade secret rights, technologies, techniques and processes; computer software,
programs and databases in any form, all versions, updates, corrections, enhancements, replacements,
and modifications thereof, and all documentation related thereto; and rights of privacy, publicity
and endorsement, in each case under the laws of any jurisdiction in the world, and including rights
under and with respect to all applications, registrations, continuations, divisions, renewals,
extensions and reissues of the foregoing. As used herein, “Company Intellectual Property”
shall mean the Intellectual Property currently used in connection with the business of the Company
or any of its Subsidiaries or owned or held for use by the Company or any of its Subsidiaries.

          (b) Except as would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect, (i) the Company and/or each of its Subsidiaries owns, or is licensed or
otherwise possesses sufficient rights to use such rights as it has in and to all the Company
Intellectual Property, (ii) the use of the Company Intellectual Property by the Company and its
Subsidiaries does not constitute an infringement or misappropriation of any valid third party
Intellectual Property right in existence as of the date hereof, (iii) except for allegations that
have since been resolved, neither the Company nor any of its Subsidiaries has received any written
notice from any Person alleging that the use of any of the Company Intellectual Property or the
operation of the Company’s or its Subsidiaries’ businesses infringes, dilutes (in the case of
trademarks), or otherwise violates the Intellectual Property of such Person.

 

18

          (c) Except as would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect, (i) no written claims, charges, or demands are currently pending or, to
the knowledge of the Company, threatened by any Person with respect to the Company Intellectual
Property and (ii) there are no pending claims by the Company or any Subsidiary alleging or
asserting that any third party has violated, misappropriated or infringed any of the Company
Intellectual Property.

          (d) The information technology assets of the Company, including without limitation all
computer software, hardware, firmware and telecommunications systems, are adequate in all respects
for the operation of the Company’s and its Subsidiaries’ businesses as currently conducted, except
as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse
Effect.

          SECTION 3.18 Employee Matters. (a) There are no material controversies pending or,
to the knowledge of the Company, threatened between the Company or any of its Subsidiaries and any
current or former employees of the Company or any of its Subsidiaries. There has been no “mass
layoff” or “plant closing” as defined by the Worker Adjustment Retraining Notification Act or
similar state or local “plant closing” Law with respect to the Company or any of its Subsidiaries
since January 1, 2004. Since January 1, 2004, neither the Company nor any of its Subsidiaries has
experienced any employee strikes, work stoppages, slowdowns or lockouts. There is no material
unfair labor practice complaint against the Company or any of its Subsidiaries pending or, to the
knowledge of the Company, threatened before any Governmental Entity, and no pending or, to the
knowledge of the Company, threatened arbitration arising out of any collective bargaining
agreement.

          (b) The
Company has obtained a waiver substantially in the form included in
Section 3.18(b) of the Company Disclosure Schedule from
each employee of the Company or its Subsidiaries set forth in Section 3.18(b) of the Company
Disclosure Schedule relating to such employee’s employment agreement with the Company or its
Subsidiaries, as applicable, and each such waiver is in full force and effect.

          SECTION 3.19 Employee Benefit Plans. (a) Section 3.19(a) of the Company Disclosure
Schedule contains a true and complete list of each material Plan. For purposes of this Agreement,
the term “Plan” shall mean any “employee benefit plan” (within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), including
multiemployer plans within the meaning of ERISA Section 3(37)), stock purchase, stock option,
severance, employment, loan, change-in-control, fringe benefit, collective bargaining, bonus,
incentive, deferred compensation and all other employee benefit plans, agreements, programs,
policies or other arrangements, whether or not subject to ERISA (including any funding mechanism
therefore now in effect or required in the future as a result of the transactions contemplated by
this Agreement or otherwise), whether formal or informal, oral or written, legally binding or not,
under which any current or former employee, officer, director, consultant or independent contractor
of the Company or any of its Subsidiaries (“Company Employees”) has any present or future
right to benefits or under which the Company or any of its Subsidiaries has any present or future
material liability.

          (b) With respect to each Plan, the Company has made available to the Purchaser a current,
accurate and complete copy (or, to the extent no such copy exists, an accurate

 

19

description) thereof
and, to the extent applicable: (i) any related trust agreement or other funding instrument; (ii)
the most recent determination letter, if applicable; (iii) any summary plan description and other
written communications by the Company or any of its Subsidiaries to Company Employees concerning
the extent of the benefits provided under a Plan; (iv) a summary of any proposed amendments or
changes anticipated to be made to the Plans at any time within the twelve months immediately
following the date hereof and (v) for the three most recent fiscal years (A) the Form 5500 and
attached schedules, (B) audited financial statements and (C) actuarial valuation reports.

          (c) (i) Except as would not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect, each Plan has been established and administered in accordance with its
terms, and in compliance with the applicable provisions of ERISA, the Code and other applicable
laws, rules and regulations; (ii) each Plan which is intended to be qualified within the meaning of
Section 401(a) of the Code is so qualified and has received a favorable determination letter as to
its qualification, and to the knowledge of the Company, nothing has occurred, whether by action or
failure to act, that would reasonably be expected to cause the loss of such qualification; (iii) no
event has occurred and no condition exists that would subject the Company or any of its
Subsidiaries, either directly or by reason of their affiliation with any “ERISA Affiliate”
(defined as any organization which is a member of a controlled group of organizations within the
meaning of Sections 414(b), (c), (m) or (o) of the Code), to any material tax, fine, lien, penalty
or other liability imposed by ERISA, the Code or other applicable laws, rules and regulations; (iv)
for each Plan with respect to which a Form 5500 has been filed, no material change has occurred
with respect to the matters covered by the most recent Form since the date thereof, (v) no
“reportable event” (as such term is defined in Section 4043 of ERISA), “prohibited transaction” (as
such term is defined in Section 406 of ERISA and Section 4975 of the Code) or “accumulated funding
deficiency” (as such term is defined in Section 302 of ERISA and Section 412 of the Code (whether
or not waived)) has occurred with respect to any Plan; (vi) except as set forth in Section
3.19(c)(vi) of the Company Disclosure Schedule, no Plan provides post-employment welfare (including
health, medical or life insurance) benefits and neither the Company nor any of its Subsidiaries
have any obligation to provide any such post-employment welfare benefits now or in the future,
other than as required by Section 4980B of the Code; (vii) there is no present intention that any
Plan be materially amended, suspended or terminated, or otherwise modified to adversely change
benefits (or the levels thereof) under any Plan at any time within the twelve months immediately
following the date hereof; and (viii) neither the Company nor any ERISA Affiliate has engaged in,
or is a successor or parent corporation to an entity that has engaged in, a transaction described
in Sections 4069 or 4212(c) of ERISA.

          (d) None of the Plans is a “single employer plan” (within the meaning of Section 3(41) of
ERISA) nor a “multiemployer plan” (within the meaning of Section 4001(a)(3) of ERISA) and none of
the Company, its Subsidiaries or any ERISA Affiliate has at any time sponsored or contributed to,
or has or had any material liability with respect to a single employer plan or a multiemployer plan
that remains unsatisfied.

          (e) With respect to any Plan, (i) no Actions (other than routine claims for benefits in the
ordinary course of business consistent with past practice) are pending or, to the knowledge of the
Company, threatened, (ii) to the knowledge of the Company, no facts or circumstances exist that
would reasonably be expected to give rise to any such Actions, (iii) no

 

20

written or oral
communication has been received from the Pension Benefit Guaranty Corporation (the “PBGC”)
in respect of any Plan subject to Title IV of ERISA concerning the funded status of any such plan
or any transfer of assets and liabilities from any such plan in connection with the transactions
contemplated herein and (iv) no administrative investigation, audit or other administrative
proceeding by the Department of Labor, the PBGC, the Internal Revenue Service or other Governmental
Entities are pending or in progress or, to the knowledge of the Company, threatened (excluding any
routine requests for information from the PBGC).

          (f) No Plan exists that would result in the payment to any present or former Company
Employee of any money or other property or accelerate or provide any other rights or benefits to
any present or former Company Employee as a result of the transactions contemplated by this
Agreement. There is no Plan that, individually or collectively, could give, or has given, rise to
the payment of any amount that would reasonably be expected to be subject to excise tax under
Section 4999 of the Code.

          SECTION 3.20 Board Approval; Requisite Shareholder Approvals. (a) The Board of
Directors of the Company, by resolutions duly adopted by unanimous vote of the entire Board of
Directors at a meeting duly called and held, has (i) approved this Agreement, the other Transaction
Agreements, the issuance and sale of the Purchased Stock as provided herein, the amendment to the
certificate of incorporation of the Company in the form attached as
Exhibit C hereto (the
“Charter Amendment”) and the other transactions contemplated hereby and by the other
Transaction Agreements, and determined that such agreements, such amendment and such transactions
are fair to and in the best interests of the Company and its shareholders and declared such
agreements, such amendment and such transactions to be advisable and (ii) recommended that the
shareholders of the Company approve the issuance of the Purchased Stock and adopt the Charter
Amendment and directed that such matters be submitted for consideration by the shareholders of the
Company at the Company Shareholders Meeting.

          (b) The affirmative vote of (i) the holders of a majority of the outstanding shares of
Common Stock to adopt the Charter Amendment and (ii) the holders of a majority of the shares of
Common Stock having voting power and present in person or represented by proxy and voting at a
meeting at which the holders of a majority of the outstanding Common Stock are present or
represented by proxy to approve the issuance of the Purchased Stock pursuant to this Agreement
(together, the “Requisite Shareholder Approvals”) are the only votes of the holders of any
class or series of capital stock of the Company necessary to approve the transactions contemplated
by this Agreement and the other Transaction Agreements.

          SECTION 3.21 Opinion of Financial Advisor. The Company has received the opinion of
Rothschild, Inc., dated as of the date of this Agreement, to the effect that, as of such date, the
consideration to be paid to the Company in connection with the issuance and sale of the Purchased
Stock is fair, from a financial point of view, to the holders of Common Stock.

          SECTION 3.22 Broker’s Fees. Except for Bear, Stearns & Co. Inc. and Rothschild,
Inc., neither the Company nor any Subsidiary thereof nor any of their respective officers or
directors has employed any broker or finder or incurred any liability for any broker’s fees,
commissions or finder’s fees in connection with any of the transactions contemplated by

 

21

this
Agreement. True, correct and complete copies of all agreements with each of Bear, Stearns & Co.
Inc. and Rothschild, Inc. have previously been made available to the Purchaser.

          SECTION 3.23 Loan Matters. (a) (i) Section 3.23 of the Company Disclosure Schedule
sets forth a list of all extensions of credit (including commitments to extend credit)
(“Loans”) by the Company and its Subsidiaries to any directors, executive officers and
principal shareholders (as such terms are defined in Regulation O (“Regulation O”) of the
Federal Reserve Board (12 C.F.R. Part 215)) of the Company or any of its Subsidiaries; (ii) there
are no employee, officer, director or other affiliate Loans on which the borrower is paying a rate
other than that reflected in the note or the relevant credit agreement or, except for Loans made by
the Company and its Subsidiaries to its employees in accordance with its policies as disclosed in
Section 3.23 of the Company Disclosure Schedule, on which the borrower is paying a rate which was
below market at the time the Loan was made; and (iii) all such Loans are and were made in
compliance in all material respects with all applicable Law.

          (b) All reserves for loan losses shown on the financial statements of the Company included
in the 2006 Form 10-K have been calculated in accordance with prudent and customary banking
practices and are adequate in all material respects to reflect all known and reasonably anticipated
risk of losses inherent in the Loans of the Company and its Subsidiaries. To the knowledge of the
Company, no fact exists which would be reasonably likely to require a future material increase in
the provision for loan losses reflected in such financial statements in accordance with GAAP.
Neither Doral Bank nor Doral Bank, FSB has any Loan exceeding its legal lending limit or any Loan
with an unpaid principal amount or unfunded commitment in excess of $1,000,000 which is, or in
accordance with applicable regulatory requirements should be, classified as sub-standard, doubtful
or a loss, except as set forth in Section 3.23(c) of the Company Disclosure Schedule.

          (c) None of the material agreements pursuant to which the Company or any of its Subsidiaries
has sold Loans or pools of Loans or participations in Loans or pools of Loans contains any
continuing obligation to repurchase such Loans or interests therein solely on account of a payment
default by the obligor on any such Loan, other than (i) customary repurchase obligations pursuant
to standard agreements with Fannie Mae or Freddie Mac and (ii) customary repurchase obligations on
account of an early payment default.

          (d) Either the Company or one or more of its Subsidiaries is authorized: (i) as a supervised
mortgagee by the Department of Housing and Urban Development (“HUD”) to originate and
service Title I FHA mortgage Loans; (ii) as a GNMA I and II Issuer by the Government National
Mortgage Association (“Ginnie Mae”); (iii) by the Department of Veteran’s Affairs
(“VA”) to originate and service VA Loans; (iv) as a seller/servicer by the Federal National
Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation
(“Freddie Mac”) to originate and service conventional residential mortgage Loans; and (v)
to originate mortgage Loans guaranteed by the Rural Housing Service.

          (e) None of the Company or any of its Subsidiaries is now nor has it been within the past
three years subject to any material fine, suspension, settlement or other administrative agreement
or sanction by, or any reduction in any loan purchase commitment from, HUD, Ginnie Mae, the VA,
Fannie Mae, Freddie Mac or other investor or Governmental Entity relating

 

22

to the origination, sale
or servicing of mortgage or consumer Loans. The Company has not received any written notice, nor
does it have any reason to believe, that Fannie Mae or Freddie Mac propose to materially limit or
terminate the underwriting authority of the Company and its Subsidiaries or to materially increase
the guarantee fees payable to such investor.

          (f) Each of the Company and its Subsidiaries is in compliance in all material respects with
the Truth-In-Lending Act and Regulation Z, the Equal Credit Opportunity Act and Regulation B, the
Real Estate Settlement Procedures Act and Regulation X, the Fair Credit Reporting Act, the Fair
Debt Collection Practices Act and all HUD, Ginnie Mae, Fannie Mae, Freddie Mac, and other investor
and mortgage insurance company requirements relating to the origination, sale and servicing of
mortgage and consumer Loans.

          (g) To the knowledge of the Company, each Loan included in a pool of Loans originated,
acquired or serviced by the Company or any of its Subsidiaries (a “Pool”) meets all
eligibility requirements (including all applicable requirements for obtaining mortgage insurance
certificates and loan guaranty certificates) for inclusion in such Pool.

          SECTION 3.24 Interest Rate Risk Management Instruments. (a) Except as would not be
reasonably expected to have, either individually or in the aggregate, a Material Adverse Effect,
(i) all existing interest rate swaps, caps, floors and option agreements and other interest rate
risk management arrangements, whether entered into for the account of the Company or any of its
Subsidiaries or for the account of a customer of the Company or any of its Subsidiaries, were
entered into in the ordinary course of business consistent with past practice and in accordance
with prudent banking practice and applicable rules, regulations and policies of all applicable
Governmental Entities and with counterparties believed to be financially responsible at the time
and are legal, valid and binding obligations of the Company or one of its Subsidiaries and, to the
knowledge of the Company, each of the counterparties thereto, and are enforceable in accordance
with their terms, except as enforcement may be limited by general principles of equity whether
applied in a court of law or a court of equity and by bankruptcy, insolvency, reorganization,
moratorium, or other similar laws relating to creditors’ rights and remedies generally, and are in
full force and effect, (ii) the Company or its Subsidiaries and, to the knowledge of the Company,
the counterparties thereto, have duly performed their obligations thereunder to the extent that
such obligations to perform have accrued, and (iii) to the Company’s knowledge, there are no
breaches, violations or defaults or allegations or assertions of such by any party thereunder.

          SECTION 3.25 Transactions with Affiliates. Except (i) for Loans by the Company or
any of its Subsidiaries to any directors, executive officers and principal shareholders pursuant to
Regulation O and set forth in Section 3.23 of the Company Disclosure Schedule, and (ii) for any
arrangement, contract, agreement or transaction which involves aggregate per annum
payments by the Company and its Subsidiaries of less than $120,000, there are no contracts or
other agreements between the Company or any of its Subsidiaries, on the one hand, and any of its
Affiliates (other than the Company or any of its Subsidiaries) or any officer, director or employee
of any such Affiliate, on the other hand.

          SECTION 3.26 Valid Offering. Assuming the accuracy of the representations and
warranties of the Purchaser contained in Section 4.2, the offer, sale and issuance by the

 

23

Company
of Purchased Stock to the Purchaser will be exempt from the registration requirements of the
Securities Act and will have been registered or qualified (or are exempt from registration and
qualification) under the registration, permit or qualification requirements of all applicable state
or other local securities laws.

          SECTION 3.27 Takeover Statutes; No Rights Plan. No takeover, anti-takeover, “fair
price,” “moratorium,” “control share acquisition” or other similar Law (a “Takeover
Statute”) or any anti-takeover provision in the Company’s certificate of incorporation or
bylaws is applicable to the transactions contemplated by this Agreement, the other Transaction
Agreements or the Voting Agreement or the transactions contemplated thereby. The Company does not
have any shareholder rights plan in effect.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

          Except as disclosed in the corresponding section of the disclosure schedule provided by the
Purchaser to the Company on the date hereof (the “Purchaser Disclosure Schedule”) (it being
agreed that disclosure of any item in any section of the Purchaser Disclosure Schedule shall be
deemed disclosure with respect to any other section to which the relevance of such item is
reasonably apparent on its face), the Purchaser hereby represents and warrants to the Company as
follows:

          SECTION 4.1 Organization; Authority; No Conflict. The Purchaser is a limited
liability company validly existing and in good standing under the Laws of the State of Delaware.
The Purchaser has all requisite power and authority to execute and deliver this Agreement and the
Securityholders Agreement, to consummate the transactions contemplated hereby and thereby and to
perform its obligations hereunder and thereunder. The execution and delivery of this Agreement and
the Securityholders Agreement by the Purchaser and the consummation by the Purchaser of the
transactions contemplated hereby and thereby have been duly authorized by all necessary action on
the part of the Purchaser. This Agreement has been (and the Securityholders Agreement, when
executed, will be) duly and validly executed and delivered by the Purchaser and (assuming due
authorization, execution and delivery by the Company) constitute (or, in the case of the
Securityholders Agreement, will constitute when executed and delivered) legal, valid and binding
obligations of the Purchaser, enforceable against it in accordance with their terms, except as
enforcement may be limited by general principles of equity whether applied in a court of law or a
court of equity and by bankruptcy, insolvency, reorganization, moratorium, or other similar laws
relating to creditors’ rights and remedies generally. Neither the execution and delivery of this
Agreement or the Securityholders Agreement by the Purchaser nor the consummation by the Purchaser
of the transactions
contemplated hereby or thereby, nor compliance by the Purchaser with any of the terms or
provisions hereof or thereof, will (i) violate any provision of the limited liability company
agreement or similar governing documents of the Purchaser or (ii) assuming that the consents and
approvals referred to in Section 4.3 are duly obtained, (x) violate any Law or Order applicable to
the Purchaser or any of its properties or assets, or (y) violate, conflict with, result in a breach
of any provision of or the loss of any benefit under, constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, result in the

 

24

termination of
or a right of termination or cancellation under, accelerate the performance required by, or result
in the creation of any Encumbrance upon any of the respective properties or assets of the Purchaser
under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust, license, lease or other agreement, instrument or obligation to which the Purchaser is a
party, or by which it or any of its properties or assets may be bound or affected, except (in the
case of clause (ii) above) for such violations, conflicts, breaches, defaults or other events which
would not reasonably be expected to have, individually or in the aggregate, a material adverse
effect on the Purchaser’s ability to consummate the transactions contemplated by this Agreement or
the Securityholders Agreement or to perform its obligations hereunder or thereunder. The Purchaser
has delivered to the Company true and complete copies of the Purchaser Organizational Documents.

          SECTION 4.2 Investment Representations. The Purchaser acknowledges (on its own
behalf and on behalf of its members and the limited and general partners of Parent, that the
Purchased Stock has not been registered under the Securities Act or under any state or local
securities laws. The Purchaser (i) is acquiring the Purchased Stock for investment for its own
account, not as a nominee or agent, and not with the view to, or for resale in connection with, any
distribution thereof, (ii) is an “accredited investor” within the meaning of Regulation D, Rule
501(a), promulgated by the SEC and (iii) acknowledges that the Purchased Stock must be held
indefinitely unless the distribution thereof is subsequently registered under the Securities Act or
unless an exemption from the registration requirements of the Securities Act is available.

          SECTION 4.3 Consents. (a) Except as set forth in Section 3.5 of the Company
Disclosure Schedule and for (i) the filing of applications and notices, as applicable, with the
Federal Reserve Board under the BHC Act and the Commissioner under the Puerto Rico Banking Law and
the Puerto Rico Mortgage Institutions Act and the approval of such applications and notices, (ii)
any notices or filings under the HSR Act and the expiration or termination of any applicable
waiting periods thereunder, (iii) notice to and approval of the NASD, notice to and approval of the
Commissioner under the Mortgage Institutions Act and notice to the Office of the Commissioner of
Insurance of Puerto Rico, of the indirect change of control of certain of the Company’s
Subsidiaries, (iv) filings required as a result of facts or circumstances solely attributable to
the Company, its Subsidiaries, a direct or indirect change of control thereof or the operation of
their businesses, and (v) the consents and approvals of third parties which are not Governmental
Entities, the failure of which to be obtained would not be reasonably expected to have,
individually or in the aggregate, a material adverse effect on the Purchaser’s ability to
consummate the transactions contemplated by this Agreement or the Securityholders Agreement or to
perform its obligations hereunder or thereunder, no consents or approvals of, or filings or
registrations by, the Purchaser, Parent or Doral GP Ltd. with any Governmental Entity or with any
other third party are necessary in connection with (A) the
execution and delivery by the Purchaser of this Agreement or the Securityholders Agreement and
(B) the consummation by the Purchaser of the transactions contemplated hereby and thereby.

          (b) As of the date of this Agreement, neither the Purchaser nor BSMM knows of any reason why
the approvals, authorizations, written confirmations and determinations required by Section 6.1(d)
should not be obtained.

 

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          SECTION 4.4 Litigation. There is no Action pending or, to the Purchaser’s
knowledge, threatened against the Purchaser, Parent or Doral GP Ltd. which would reasonably be
expected to have, individually or in the aggregate, a material adverse effect on the ability of the
Purchaser to perform its obligations under this Agreement or the Securityholders Agreement and to
consummate the transactions contemplated hereby and thereby.

          SECTION 4.5 Financing. The Purchaser has delivered to the Company true and complete
copies of the subscription agreements and the related letters listed in Section 4.5 of the
Purchaser Disclosure Schedule, dated as of the date of this Agreement (the “Existing Equity
Commitments”), pursuant to which the Persons party thereto have committed, subject to the terms
thereof, to invest in Parent the cash amounts set forth therein, which represent in the aggregate
not less than $415 million. As of the date of this Agreement, the Existing Equity Commitments
are in full force and effect, have not been withdrawn or terminated or otherwise amended or
modified in any respect, and are legal, valid and binding obligations of Parent and, to the
knowledge of the Purchaser, the other parties thereto. There are no other agreements, side letters
or arrangements that would permit the Persons party to the Existing Equity Commitments to reduce
the cash amounts required to be invested thereby. The only conditions precedent to the obligations
of the Persons committing pursuant to the Existing Equity Commitments to make the financing
contemplated thereby available to Parent are those contemplated by the terms of the Existing Equity
Commitments. The proceeds contemplated by the Existing Equity Commitments and the proceeds
anticipated to be committed pursuant to the Additional Equity Commitments or any other alternative
financing arrangements are sufficient to fully fund the Purchaser’s obligation to pay the Purchase
Price for the purchase of the Purchased Stock pursuant to the terms of this Agreement and subject
to the terms and conditions of such Existing Equity Commitments and Additional Equity Commitments.

          SECTION 4.6 No Brokers. The Purchaser has not employed any broker or finder, or
incurred any liability for any brokerage or finders’ fees or any similar fees or commissions, in
connection with the transactions contemplated by this Agreement and the other Transaction
Agreements in the event that the Closing does not occur.

          SECTION 4.7 Parent Company; Subsidiaries. As of the date hereof, the members of the
Purchaser and the general partner of Parent are set forth in Section 4.7 of the Purchaser
Disclosure Schedule. As of the Closing Date, no Person will own, control or have entered into an
agreement to acquire, an interest of 25% or more of the total equity of Parent. The Purchaser does
not have any Subsidiaries.

          SECTION 4.8 Limited Guaranty. Concurrently with the execution of this Agreement, the Persons listed on Section 4.8 of the
Purchaser Disclosure Schedule (collectively, the “Guarantors”) have delivered to the
Company a limited guaranty, dated as of the date hereof, in favor of the Company (the “Limited
Guaranty”). The Limited Guaranty is in full force and effect and is the legal, valid and
binding obligation of the Guarantors.

          SECTION 4.9 No Other Operations. The Purchaser has not conducted any business and
has no assets, liabilities or obligations of any nature other than those incident to its formation
and pursuant to this Agreement, the other Transaction Agreements and the Equity Commitments and the
transactions contemplated hereby and thereby.

 

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ARTICLE V

COVENANTS

          SECTION 5.1 Conduct of Business Prior to the Closing. Except (w) as otherwise
expressly contemplated or permitted by the terms of this Agreement, (x) as set forth in Section
5.1-2 of the Company Disclosure Schedule, (y) as required by applicable Law or (z) with the prior
written consent of the Purchaser (which consent shall not be unreasonably withheld, conditioned or
delayed), during the period from the date of this Agreement to the Closing Date (the
“Pre-Closing Period”), the Company shall, and shall cause each of its Subsidiaries to, (i)
conduct its business in the ordinary course consistent with past practice, (ii) use reasonable best
efforts to preserve intact its current business organizations and its rights and Permits issued by
Governmental Entities, keep available the services of its current officers and key employees and
preserve its relationships with customers, suppliers, Governmental Entities and others having
business dealings with it to the end that its goodwill and ongoing businesses shall be unimpaired
and (iii) not take any action that would reasonably be expected to materially adversely affect or
materially delay the receipt of any approvals of any Governmental Entity required to consummate the
transactions contemplated hereby or by the other Transaction Agreements or materially adversely
affect or materially delay the consummation of the transactions contemplated hereby or by the other
Transaction Agreements.

          SECTION 5.2 Company Forbearances. Except (i) as otherwise expressly contemplated or
permitted by the terms of this Agreement, (ii) as set forth in Section 5.1-2 of the Company
Disclosure Schedule or (iii) with the prior written consent of the Purchaser (which consent shall
not be unreasonably withheld, conditioned or delayed), during the Pre-Closing Period, the Company
shall not, and shall not permit any of its Subsidiaries to:

          (a) (i) adjust, split, combine or reclassify any of its capital stock other than in connection
with any reverse stock split affecting the Common Stock, the terms of which shall be subject to the
prior written consent of the Purchaser (which consent shall not be unreasonably withheld,
conditioned or delayed) (a “Reverse Stock Split”); (ii) set any record or payment dates for
the payment of any dividends or distributions on its capital stock or make, declare or pay any
dividend or make any other distribution on, or directly or indirectly redeem, purchase or otherwise
acquire, any shares of its capital stock or any securities or obligations convertible into or
exercisable or exchangeable for any shares of its capital stock or
stock appreciation rights or grant any Person any right to acquire any shares of its capital
stock, other than, to the extent permitted by the Specified Regulatory Agreements, (A) regular
quarterly or monthly cash dividends on the Company Preferred Stock as required by the terms thereof
in effect as of the date hereof and with record and payment dates consistent with past practice;
(B) dividends paid by any of the Subsidiaries of the Company so long as such dividends are only
paid to the Company or any of its other wholly-owned Subsidiaries; and (C) dividends by the Company
at a rate not in excess of the rate in effect during the last fiscal quarter preceding the date
hereof; provided that no such dividend shall cause Doral Bank or Doral Bank, FSB to cease
to qualify as a “well capitalized” institution under the prompt corrective action provisions of the
Federal Deposit Insurance Corporation Improvement Act of 1991, as amended, and the applicable
regulations thereunder; or (iii) issue or commit to issue any additional shares of capital stock
(except pursuant to the exercise of Company Stock Options and restricted stock unit grants

 

27

outstanding as of the date hereof and disclosed in Section 3.3(a) of the Company Disclosure
Schedule or upon conversion of the Convertible Preferred Stock in accordance with its terms),
Voting Debt or any securities convertible into or exercisable or exchangeable for, or any rights,
warrants or options to acquire, any additional shares of capital stock (including Company Options)
or Voting Debt;

          (b) enter into any new line of business or change its lending, investment, risk and
asset-liability management and other material banking or operating policies in any material
respect, except as required by Law or by policies imposed by a Governmental Entity;

          (c) other than in the ordinary course of business consistent with past practice or as
expressly required by the terms of any contracts or agreements in force at the date of this
Agreement and set forth in Section 5.2(c) of the Company Disclosure Schedule, sell, lease,
transfer, mortgage, encumber or otherwise dispose of any of its assets or properties to any Person
(other than to a wholly-owned Subsidiary of the Company and other than disposals of obsolete
equipment), provided that any sales of Loans permitted on the basis that they are effected
in the ordinary course of business consistent with past practice shall only be permitted if such
sales are made on a non-recourse basis;

          (d) make any acquisition of or investment in any other Person, by purchase or other
acquisition of stock or other equity interests (other than in a fiduciary capacity in the ordinary
course of business consistent with past practice), by merger, consolidation, asset purchase or
other business combination, or by formation of any joint venture, partnership or other business
organization or by contributions to capital; or make any purchases or other acquisitions of any
debt securities, property or assets (including any investments or commitments to invest in real
estate or any real estate development project) in or from any Person other than a wholly-owned
Subsidiary of the Company, except for (i) foreclosures and other similar acquisitions in connection
with debts previously contracted in the ordinary course of business consistent with past practice,
(ii) purchases of U.S. government and U.S. government agency securities which are investment grade
rated and have a final maturity of five years or less and (iii) transactions that, together with
all other such transactions, are not material to the Company, in each case, in the ordinary course
of business consistent with past practice;

          (e) enter into, renew, extend or terminate any lease, license, contract or other agreement
or arrangement, other than Loans made in accordance with paragraph (i) below or the
incurrence of indebtedness for borrowed money in accordance with paragraph (j) below, that
calls for aggregate annual payments of $500,000 or more (including the Settlement Agreement), or
make any material change in or waive any material provision of any of such leases, licenses,
contracts or other agreements or arrangements, other than renewals of such leases, licenses,
contracts or other agreements or arrangements for a term of one year or less without material
changes to the terms thereof;

          (f) (i) increase the compensation or benefits of any Company Employee (except (x) for
increases in salary or wages of Company Employees in the ordinary course of business consistent
with past practice, provided that no such increase shall result in an annual adjustment of
more than 5% of the aggregate base salary and wages payable by the Company and its Subsidiaries
during 2006 and (y) pursuant to the Company’s Key Employee Incentive Plan as

 

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described in Section
5.2(f) of the Company Disclosure Schedule; (ii) except as required by Law, grant any severance or
termination pay to any Company Employee except pursuant to the terms of any Plan in effect on the
date of this Agreement and which was made available to the Purchaser prior to the date of this
Agreement and disclosed in Section 3.19(a) of the Company Disclosure Schedule; (iii) loan or
advance any money or other property to any Company Employee other than in the ordinary course of
business consistent with past practice; (iv) (x) establish, adopt, enter into, amend or terminate,
or (y) grant (other than in the ordinary course of business consistent with past practice), any
waiver or consent under any Plan (including any waiver referenced in Section 3.18) or any plan,
agreement, program, policy, trust, fund or other arrangement that would be a Plan if it were in
existence as of the date of this Agreement; or (v) grant any equity or equity-based awards
(including Company Stock Options and restricted stock units);

          (g) make or authorize any capital expenditures in excess of (A) $250,000 per project or
related series of projects or (B) $1 million in the aggregate, other than expenditures budgeted in
the capital expenditure budget made available to the Purchaser prior to the date of this Agreement;

          (h) except as required by Law, make application for the opening, relocation or closing of
any, or open, relocate or close any, branch office, loan production or servicing facility;

          (i) except for Loans or commitments for Loans that have previously been approved by the
Company prior to the date of this Agreement, (i) make or acquire any Loan or issue a commitment (or
renew or extend an existing commitment) for any Loan other than Loans and commitments made or Loans
acquired in each case in the ordinary course of business consistent with past practice which have
(x) in the case of commercial and commercial real estate Loans, (A) a principal balance not in
excess of $15 million and (B) involve aggregate borrowings by the applicable borrower or group of
related borrowers not in excess of $30 million, or (y) in the case of any other Loans, a principal
balance not in excess of $1 million, without in each such case submitting to the Purchaser, at
least four (4) Business Days prior to taking such action, a copy of the Loan write up containing
the information customarily submitted to the Company’s Board of Directors or the applicable
authorizing or reviewing body for such Loans in connection with obtaining approval for such action;
provided that the Company may nevertheless make such Loan or Loan commitment or renewal or
extension thereof or such acquisition after providing such notice and obtaining the approval of a
majority of the members
of its Board of Directors or the applicable authorizing or reviewing body for such Loans; or
(ii) take any action that would result in any discretionary releases of collateral or guarantees or
otherwise restructure any Loan or commitment for any Loan with a principal balance in excess of the
respective amounts set forth in clause (i) above;

          (j) (A) incur any indebtedness for borrowed money, other than (x) deposit liabilities, FHLB
advances and reverse repurchase agreements, in each case entered into in the ordinary course of
business consistent with past practice and, in the case of reverse repurchase agreements, with a
final maturity of five years or less or (y) indebtedness incurred in the ordinary course of
business consistent with past practice in order to finance working capital (subject in the case of
this clause (y) to an aggregate maximum amount of $150 million), (B) guarantee, endorse or assume
responsibility for, the obligations of any Person other than any wholly-owned

 

29

Subsidiary of the
Company (other than the endorsement of checks and other negotiable instruments in the normal
process of collection) or (C) redeem, repurchase, prepay, defease, or cancel, or modify in any
material respect the terms of, indebtedness for borrowed money, other than (x) deposit liabilities,
FHLB advances and reverse repurchase agreements in each case in the ordinary course of business
consistent with past practice or (y) in accordance with the terms of the applicable instrument as
in effect on the date hereof or (z) on or after June 15, 2007 (and then only if the Company has a
reasonable good faith belief that the Closing will not occur by July 20, 2007 and following
consultation with the Purchaser), solely to effect a Short-Term Maturity Extension for the purpose
of facilitating the consummation of the transactions contemplated by this Agreement;

          (k) settle any Action involving monetary damages or other payments in excess of $250,000
(except as contemplated by the Settlement Agreement), agree or consent to the issuance of any Order
restricting or otherwise affecting its business or operations, or release or dismiss any material
claim against any other Person;

          (l) amend its certificate of incorporation, bylaws or similar governing documents (other
than in connection with a Reverse Stock Split), or enter into a plan of consolidation, merger,
share exchange, reorganization or complete or partial liquidation with any Person (other than
consolidations, mergers or reorganizations solely among wholly-owned Subsidiaries of the Company),
or a letter of intent or agreement in principle with respect thereto;

          (m) except as required by Law, materially change its investment securities portfolio policy,
or the manner in which the portfolio is classified or reported;

          (n) except as required by Law, make any material changes in its policies and practices with
respect to (i) underwriting, pricing, originating, acquiring, selling, servicing, or buying or
selling rights to service Loans or (ii) its hedging practices and policies;

          (o) make any changes in its accounting methods or method of Tax accounting, practices or
policies, except as may be required under Law or GAAP, in each case following consultation with the
Company’s independent public accountants;

          (p) enter into any securitizations of any Loans or create any special purpose funding or
variable interest entity other than in the ordinary course of business consistent with past
practice;

          (q) introduce any material new products or services, any material marketing campaigns or any
material new sales compensation or incentive programs or arrangements;

          (r) except as required by Law, make or change any Tax election, file any amended Tax
Returns, settle or compromise any material Tax liability of the Company or any of its Subsidiaries,
agree to an extension or waiver of the statute of limitations with respect to the assessment or
determination of Taxes of the Company or any of its Subsidiaries, enter into any closing agreement
with respect to any Tax or surrender any right to claim a Tax refund; or

          (s) agree to, or make any commitment to, take any of the actions prohibited by this Section
5.2.

 

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          SECTION 5.3 Access. (a) During the Pre-Closing Period, the Company shall, and
shall cause its Subsidiaries, and its and its Subsidiaries’ officers, directors, employees,
accountants and other agents and representatives (collectively, the “Company
Representatives”) to (i) afford the directors, officers, employees, partners, members,
advisors, agents, and representatives of the Purchaser (collectively, the “Purchaser
Representatives”), reasonable access during normal business hours to its properties, offices,
branches and other facilities, to the Company Representatives and to all books and records of the
Company and its Subsidiaries, (ii) furnish the Purchaser with a copy of each report, schedule,
registration statement and other document filed or received by it during such period pursuant to
the requirements of any federal, state, local or foreign securities, banking, mortgage lending,
real estate or consumer finance or protection Law (other than reports or documents which the
Company is not permitted to disclose under applicable Law) and all financial, operating and other
data and information as the Purchaser may from time to time reasonably request, and (iii) afford
the Purchaser the opportunity to discuss the Company’s affairs, finances and accounts with the
Company’s officers on a regular basis.

          (b) During the Pre-Closing Period, the Purchaser shall use all non-public information
delivered by or on behalf of the Company pursuant to Section 5.3(a) or delivered before the date of
this Agreement, and all notes, reports, analyses, compilations, studies, files or other documents
or material, whether prepared by the Purchaser or the Purchaser Representatives, to the extent the
same are based on, contain or otherwise reflect such information (collectively, the
“Confidential Information”), solely in connection with the transactions contemplated by
this Agreement and will keep the Confidential Information strictly confidential and shall not,
without the Company’s prior written consent, disclose such Confidential Information to any Person,
except that Confidential Information (or any portion thereof) may be disclosed to those of the
Purchaser Representatives who need to know such Confidential Information in connection with the
transactions contemplated by this Agreement and who are advised of the confidential nature of the
Confidential Information and obligated to maintain the same in confidence. Notwithstanding the
foregoing, the term “Confidential Information” shall not include, and the provisions of this
Section 5.3(b) shall not apply to, information that (i) at the time of disclosure or thereafter is
generally known by or available to the public (other than as a result of disclosure by the
Purchaser or the Purchaser Representatives in violation of this Section 5.3(b)); (ii) was or
becomes available to the Purchaser on a non-confidential basis from a Person not otherwise known to
the Purchaser to be bound by a confidentiality agreement with the Company or the Company’s
Representatives or prohibited from transmitting the information to the Purchaser by a contractual,
legal or fiduciary obligation owed to the Company, (iii) was available to the Purchaser or any of
the Purchaser Representatives prior to its disclosure by or on behalf of the Company or (iv) has
been or is independently conceived or discovered by the Purchaser or the Purchaser Representatives.
In the event that the Purchaser or any of the Purchaser Representatives are requested or required
to disclose all or any part of the information contained in the Confidential Information pursuant
to the terms of a valid and effective subpoena or order issued by a Governmental Entity or pursuant
to a civil investigative demand or other similar judicial process, the Purchaser will, to the
fullest extent legally permissible, promptly notify the Company of the existence, terms and
circumstances surrounding such a request or requirement so that the Company may seek a protective
order or other appropriate remedy and consult with the Company on the advisability of taking
legally available steps to resist or narrow such request or requirement and use reasonable

 

31

best
efforts, at the Company’s request and expense, to cooperate with the Company if the Company
determines to seek a protective order or other remedy. If disclosure of such information is
required, the Purchaser or the Purchaser Representatives may disclose any of such information which
the Purchaser or the Purchaser Representatives are advised by legal counsel is legally required to
be disclosed and the Purchaser will exercise its reasonable best efforts, at the Company’s request
and expense, to obtain an order or other reliable assurance that confidential treatment will be
accorded to such information. In addition, the Purchaser and the Purchaser Representatives may
disclose Confidential Information (x) in the course of inspections, examinations or inquiries by
Governmental Entities that have requested or required the inspection of records that contain the
Confidential Information and will exercise reasonable efforts to obtain reliable assurances that
confidential treatment will be accorded to such information and (y) to the extent that the Company
so agrees in writing. The provisions of this Section 5.3(b) (i) shall survive any termination of
this Agreement but shall terminate 18 months following the date hereof, and (ii) shall not survive
the Closing.

          (c) No investigation by either of the parties or their respective Representatives shall
constitute a waiver of or otherwise affect the representations, warranties, covenants or agreements
of the other party set forth herein.

          SECTION 5.4 Use of Proceeds. The Company shall use all of the proceeds of the
issuance and sale of the Purchased Stock and Additional Proceeds (i) to pay, upon maturity thereof,
all outstanding principal and accrued and unpaid interest on the Floating Rate Senior Notes due
July 20, 2007 of the Company (the “2007 Notes”), and (ii) to pay the settlement
consideration, and to pay or reimburse fees and expenses, in each case pursuant to the terms of the
Settlement Agreement.

          SECTION 5.5 Proxy Statement.

          (a) As promptly as reasonably practicable following the date of this Agreement, the Company
shall prepare and shall cause to be filed with the SEC a proxy statement (together with any
amendments thereof or supplements thereto, the “Proxy Statement”) relating to the meeting
of the Company’s shareholders to be held to consider, among other things, the approval of the
Charter Amendment and the issuance of the Purchased Stock to the Purchaser and, if so determined by
the Company, the Reverse Stock Split (the “Company Shareholders Meeting”). The Company
shall include in the Proxy Statement the recommendation of the Board of Directors of the Company in
favor of approval of the Charter Amendment and the issuance of the Purchased Stock to the Purchaser
(the “Company Recommendation”), except that the Company shall not be obligated to so
include the Company Recommendation if the Company has effected a Change in Recommendation in
accordance with Section 5.7. None of the information with respect to the Company or its
subsidiaries to be included in the Proxy Statement will, at the time of the mailing of the Proxy
Statement or any amendments or supplements thereto, and at the time of the Company Shareholders
Meeting, contain any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Proxy Statement will comply as to
form in all material respects with the provisions of the Exchange Act and the rules and regulations
promulgated thereunder.

 

32

          (b) None of the information with respect to the Purchaser or its Subsidiaries to be
included in the Proxy Statement will, at the time of the mailing of the Proxy Statement or any
amendments or supplements thereto, and at the time of the Company Shareholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the circumstances under
which they were made, not misleading.

          (c) The Company and the Purchaser shall cooperate and consult with each other in the
preparation of the Proxy Statement. The Company shall cooperate and provide the Purchaser with a
reasonable opportunity to review and comment on the draft of the Proxy Statement (including each
amendment or supplement thereto) prior to filing with the SEC. Without limiting the generality of
the foregoing, the Purchaser will furnish to the Company the information relating to it required by
the Exchange Act and the rules and regulations promulgated thereunder to be set forth in the Proxy
Statement. Each of the Company and the Purchaser shall promptly (i) notify the other of the
receipt of any comments from the SEC with respect to the Proxy Statement and of any request by the
SEC for amendments of, or supplements to, the Proxy Statement, and (ii) provide the other with
copies of all filings made with the SEC and correspondence between it and the SEC with respect to
the Proxy Statement. Each of the Company and the Purchaser shall use its reasonable best efforts
to respond to and resolve all comments from the SEC with respect to the Proxy Statement as promptly
as practicable.

          (d) The Company shall mail, as promptly as practicable after filing, the definitive Proxy
Statement to the holders of Common Stock as of the record date established for the Company
Shareholders Meeting. If at any time prior to the Closing any event or circumstance relating to
the Company or the Purchaser or any of their respective Affiliates, officers or directors, should
be discovered by the Company or the Purchaser, respectively, which, pursuant to the Exchange Act
and the rules and regulations promulgated thereunder should be set forth in an amendment or a
supplement to the Proxy Statement, such party shall promptly inform the other. Each of the
Purchaser and the Company agrees to correct any information provided by it for use in the Proxy
Statement which shall have become false or misleading in any material respect. All documents that
each of the Company and the Purchaser is responsible for filing with the SEC in connection with the
transactions contemplated hereby will comply as to form in all material respects with the
applicable requirements of the Exchange Act and the rules and regulations promulgated thereunder.

          SECTION 5.6 Company Shareholders Meeting. The Company shall, as promptly as
reasonably practicable following the date of this Agreement, establish a record date for, duly
call, give notice of, convene and hold the Company Shareholders Meeting. At such Company
Shareholders Meeting, the Company shall make the Company Recommendation to its shareholders, and
the Company shall use all reasonable best efforts to solicit from its shareholders proxies in favor
of the approval of the Charter Amendment and the issuance of the Purchased Stock; provided,
however, that the Company shall not be obligated to recommend to its shareholders the
approval of the Charter Amendment and the issuance of the Purchased Stock at the Company
Shareholders Meeting or solicit proxies in favor of such approval to the extent that the Board of
Directors of the Company has duly made a Change in Recommendation in accordance with Section 5.7.

 

33

          SECTION 5.7 No Solicitation of Competing Proposal.

          (a) From and after the date of this Agreement until the earlier of the Closing and the date,
if any, on which this Agreement is terminated pursuant to Section 7.1, the Company agrees that,
except as provided in Section 5.7 of the Company Disclosure Schedule, neither it nor any of its
Subsidiaries shall, and that it shall direct and use its reasonable best efforts to cause the
Company Representatives not to, directly or indirectly: (i) solicit, initiate or knowingly
facilitate or encourage (including by providing information) any inquiries, proposals or offers
with respect to, or the making or completion of, a Competing Proposal, (ii) engage or participate
in any negotiations regarding, or furnish or cause to be furnished to any Person any nonpublic
information relating to the Company or any of its Subsidiaries in connection with, or have any
discussions with any Person relating to, an actual or proposed Competing Proposal, or otherwise
knowingly encourage or facilitate any effort or attempt to make or implement any Competing
Proposal, (iii) engage in discussions with any Person with respect to any Competing Proposal, (iv)
approve, endorse or recommend or propose publicly to approve, endorse or recommend any Competing
Proposal, (v) approve, endorse or recommend, or publicly announce an intention to approve, endorse
or recommend, or enter into, any letter of intent or similar document or any agreement or
commitment providing for or relating to any Competing Proposal or requiring the Company to abandon,
terminate or fail to consummate the transactions contemplated hereby or breach its obligations
hereunder, or (vi) amend, terminate, waive or fail to enforce, or grant any consent under, any
confidentiality, standstill or similar agreement with a third party. Without limiting the
foregoing, it is understood that any violation of the foregoing restrictions by any Subsidiary of
the Company or any Company Representative shall be deemed to be a breach of this Section 5.7 by the
Company.

          (b) Except as provided in Section 5.7 of the Company Disclosure Schedule, the Company shall,
and shall cause each of its Subsidiaries to, and shall direct and use its reasonable best efforts
to cause each of the Company Representatives to, immediately cease any existing solicitations,
discussions or negotiations with any Person with respect to a Competing Proposal.

          (c) Notwithstanding the limitations set forth in Section 5.7(a) and (b), if after the date
of this Agreement the Company receives an unsolicited Competing Proposal which did not result from
or arise in connection with a breach of Sections 5.7(a) or 5.7(b), and which (i) constitutes a
Superior Proposal or (ii) which the Board of Directors of the Company determines in good faith,
after consultation with the Company’s outside legal and financial advisors, could reasonably be
expected to result, after the taking of any of the actions referred to in either of clause (x) or
(y) below, in a Superior Proposal, the Company may take the following actions: (x) furnishing
nonpublic information with respect to the Company and its Subsidiaries to the third party making
such Competing Proposal, if, and only if, prior to so furnishing such information, the Company and
such third party enter into a confidentiality agreement that is no less restrictive of and no more
favorable to such third party than the terms of the confidentiality agreement, dated January 23,
2007, between the Company and Bear Stearns Merchant Manager III, L.P. are to Bear Stearns Merchant
Manager III, L.P. and (y) engaging in discussions or negotiations with the third party with respect
to the Competing Proposal; provided, however, that as promptly as reasonably
practicable following the Company taking such actions as described in clauses (x) or (y) above, the
Company shall provide written notice to the Purchaser of such Superior Proposal or the
determination of the Board of Directors of the Company as provided for

 

34

in clause (ii) above, as applicable, and the Company shall promptly provide to the Purchaser an executed copy
of such confidentiality agreement and provide or make available to the Purchaser any non-public
information concerning the Company or any of its Subsidiaries that is provided to the Person making
such Competing Proposal or its representatives which was not previously provided or made available
to the Purchaser.

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

          (e) Except as provided in Section 5.7 of the Company Disclosure Schedule, the Company
promptly (and in any event within 24 hours) shall advise the Purchaser orally and in writing of the
receipt of (i) any Competing Proposal or indication or inquiry with respect to or that could
reasonably be expected to lead to any Competing Proposal, (ii) any request for non-public
information relating to the Company or its Subsidiaries, other than requests for information that
could not reasonably be expected to relate to or result in a Competing Proposal, and (iii) any
inquiry or request for discussions or negotiations regarding a Competing Proposal, including in
each case the identity of the Person making any such Competing Proposal or indication, inquiry or
request and the material terms of any such Competing Proposal or

 

35

indication, inquiry or request (including copies of any document or correspondence evidencing
such Competing Proposal or indication, inquiry or request). The Company shall keep the Purchaser
informed on a reasonably current basis of any material change to the terms of any such Competing
Proposal or indication, inquiry or request.

          (f) Notwithstanding the limitations set forth in Section 5.7(a) and (b), if the Board of
Directors of the Company has effected a Change in Recommendation in compliance with the
requirements of Section 5.7(d), then the Board of Directors of the Company may, prior to the later
of June 12, 2007 and the date on which the condition set forth in Section 6.1(j) is satisfied and
concurrently with such Change in Recommendation, cause the Company to enter into a binding written
agreement with respect to such Superior Proposal and terminate this Agreement in accordance with
Section 7.1(i); provided, however, that the Company shall not terminate this
Agreement pursuant to this Section 5.7(f), and any purported termination pursuant to this Section
5.7(f) shall be void and of no force or effect, unless prior to or concurrently with such
termination the Company pays the Termination Fee payable pursuant to Section 7.2(c).

          (g) Nothing contained in this Agreement shall prohibit the Company or the Board of Directors
of the Company from disclosing to the Company’s shareholders a position contemplated by Rules 14d-9
and 14e-2(a) promulgated under the Exchange Act; (or any similar communication to shareholders);
provided that any disclosure other than a “stop-look-and-listen” communication to the
shareholders of the Company pursuant to Rule 14d-9(f) promulgated under the Exchange Act shall be
deemed to be a Change in Recommendation unless the Board of Directors of the Company expressly
rejects the applicable Competing Proposal and expressly reaffirms the Company Recommendation
contemporaneously with such disclosure.

          (h) As used in this Agreement, “Competing Proposal” shall mean any inquiry, proposal
or offer from any Person other than the Purchaser or any of its Subsidiaries involving, in a single
transaction or a series of transactions, (i) a merger, reorganization, share exchange,
consolidation, business combination, recapitalization, dissolution, liquidation, or similar
transaction involving the Company or any of its Significant Subsidiaries, (ii) the issuance by the
Company or any of its Significant Subsidiaries of securities representing 20% or more of its
outstanding voting securities (including upon the conversion, exercise or exchange of securities
convertible into or exercisable or exchangeable for such voting securities) or (iii) the
acquisition in any manner, directly or indirectly, of (x) 20% or more of the outstanding voting
securities of the Company or any of its Significant Subsidiaries (including through the acquisition
of securities convertible into or exercisable or exchangeable for such voting securities), (y) 20%
or more of the consolidated total assets of the Company and its Subsidiaries, taken as a whole or
(z) one or more businesses or divisions that constitute 20% or more of the revenues or net income
of the Company and its Subsidiaries, taken as a whole.

          (i) As used in this agreement, “Superior Proposal” shall mean a bona fide written
Competing Proposal not solicited or initiated in violation of Section 5.7(a) or 5.7(b), that (i)
relates to (x) the issuance by the Company of securities representing more than 50% of its
outstanding voting securities (including upon the conversion, exercise or exchange of securities
convertible into or exercisable or exchangeable for such voting securities) or (y) the acquisition
by any Person of any of (A) more than 50% of the outstanding Common Stock, by tender or exchange
offer, merger or otherwise or (B) all or substantially all of the consolidated total assets

 

36

of the Company and its Subsidiaries, (ii) is not subject to any financing contingency or
qualification and provides for the repayment or refinancing in full of the 2007 Notes upon their
scheduled maturity date as of the date of this Agreement, (iii) is otherwise on terms that the
Board of Directors of the Company determines in good faith, after consultation with the Company’s
financial and legal advisors and taking into account all the terms and conditions of such proposal
and this Agreement, are more favorable to the Company, its shareholders and any other constituency
of the Company to which the Board of Directors of the Company then determines it owes fiduciary
duties under applicable Law than the transactions contemplated by this Agreement and (iv) is, in
the reasonable judgment of the Board of Directors of the Company, reasonably capable of being
completed on its stated terms, taking into account all financial, regulatory, legal and other
aspects of such inquiry, proposal or offer.

          SECTION 5.8 Efforts. (a) Subject to the terms and conditions of this Agreement,
each of the Company and the Purchaser shall, and the Company shall cause its Subsidiaries to, use
their reasonable best efforts (i) to take, or cause to be taken, all actions necessary, proper or
advisable to consummate the transactions contemplated by this Agreement and the other Transaction
Agreements and (ii) to obtain (and to cooperate with the other party to obtain) any consent,
authorization, confirmation, determination, order or approval of, or any exemption by, any
Governmental Entity and any other third party which is required to be obtained by the Company, any
of its Subsidiaries or the Purchaser, Bear Stearns or any of the members of Doral GP Ltd. listed in
Section 6.1(d)(ii) of the Purchaser Disclosure Schedule in connection with the transactions
contemplated by this Agreement and the other Transaction Agreements; provided,
however, that the Purchaser shall not be required to take any action pursuant to the
foregoing sentence if the taking of such action or the obtaining of such consents, authorizations,
orders, approvals or exemptions is reasonably likely to result in a condition or restriction having
an effect of the type referred to in the last sentence of Section 6.1(d)(i).

          (b) Subject to the terms and conditions of this Agreement (including the proviso in Section
5.8(a)), each of the Company and the Purchaser agrees to use reasonable best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective, as soon as practicable after the date of this
Agreement, the transactions contemplated hereby and by the other Transaction Agreements, including
using reasonable best efforts to (i) lift or rescind any injunction or restraining order or other
Order adversely affecting the ability of the parties to consummate the transactions contemplated
hereby or by the other Transaction Agreements, and (ii) defend any litigation seeking to enjoin,
prevent or delay the consummation of the transactions contemplated hereby or by the other
Transaction Agreements or seeking material damages.

          (c) The Company agrees that as promptly as practicable after the date hereof it shall give
stop transfer instructions to the transfer agent for the Common Stock with respect to shares of
Common Stock held by the shareholders party to that certain Voting Agreement, dated as of the date
hereof (the “Voting Agreement”), by and among the Purchaser and the shareholders of the
Company signatories thereto.

          SECTION 5.9 Notification of Certain Matters. (a) During the Pre-Closing Period,
the Company shall give prompt notice to the Purchaser of the occurrence or non-occurrence of any
event known to the Company the occurrence or non-occurrence of which

 

37

would reasonably be expected to cause the condition in Section 6.1(a) not to be satisfied;
provided, however, that the delivery of any notice pursuant to this Section 5.9(a)
shall not cure any breach of any representation or warranty requiring disclosure of such matter
prior to the date of this Agreement or otherwise limit or affect the remedies available hereunder
to the Purchaser.

          (b) During the Pre-Closing Period, the Purchaser shall give prompt notice to the Company of
the occurrence or non-occurrence of any event known to the Purchaser the occurrence or
non-occurrence of which would reasonably be expected to cause the condition in Section 6.2(a) not
to be satisfied; provided, however, that the delivery of any notice pursuant to
this Section 5.9(b) shall not cure any breach of any representation or warranty requiring
disclosure of such matter prior to the date of this Agreement or otherwise limit or affect the
remedies available hereunder to the Company.

          SECTION 5.10 Regulatory and Other Authorizations; Notices and Consents.
(a) Subject to the other provisions of this Agreement (including the proviso in Section
5.8(a)), the parties hereto shall cooperate with each other and use reasonable best efforts to
promptly prepare and file all necessary documentation, to effect all applications, notices,
petitions and filings, to obtain as promptly as practicable all permits, consents, approvals and
authorizations of all third parties and Governmental Entities which are necessary or advisable to
consummate the transactions contemplated by this Agreement and by the other Transaction Agreements
and to comply with the terms and conditions of all such permits, consents, approvals and
authorizations of all such third parties and Governmental Entities.

          (b) Each of the parties hereto shall, upon request, furnish each other with all information
concerning themselves, their Subsidiaries, directors, officers and shareholders or other equity
holders (to the extent applicable) and such other matters as may be reasonably necessary or
advisable in connection with any statement, filing, notice or application made by or on behalf of
the Company, any of its Subsidiaries or the Purchaser to any Governmental Entity in connection with
the transactions contemplated by this Agreement.

          (c) The parties hereto shall promptly advise each other upon receiving any communication
from any Governmental Entity whose consent or approval is required for consummation of the
transactions contemplated by this Agreement which causes such party to believe that there is a
reasonable likelihood that any Requisite Regulatory Approval will not be obtained or that the
receipt of any such approval will be materially delayed or conditioned.

          SECTION 5.11 Shareholder Litigation. The Company shall give the Purchaser the
opportunity to participate in, subject to a customary joint defense agreement, but not control, the
defense and/or settlement of the Shareholder Litigation and any litigation against the Company or
any of its directors or officers relating to or arising from the transactions contemplated hereby
or by the other Transaction Agreements; provided, however, that no settlement of
the Shareholder Litigation (other than as contemplated by the Settlement Agreement) or any other
such litigation shall be agreed to or effected without the Purchaser’s prior written consent, which
consent shall not be unreasonably withheld, conditioned or delayed. The Company shall use its
reasonable best efforts to take, or cause to be taken, all actions necessary, proper or advisable
to satisfy all conditions to, and to finalize as promptly as

 

38

reasonably practicable, the settlement of the Shareholder Litigation contemplated by the
Settlement Agreement.

          SECTION 5.12 Appointment of Directors. Prior to the Closing and effective as of the
Closing, the Company shall (i) take all necessary action to cause the Board of Directors of each of
the Company, Doral Bank and Doral Bank, FSB to be comprised of eleven directors (or, in the case of
the Boards of Directors of Doral Bank and Doral Bank, FSB, such other number specified by the
Purchaser) specified by the Purchaser (subject to applicable stock exchange requirements),
including the CEO of the Company and Dennis Buchert (assuming each is willing to so serve)
(provided that, in the case of the Boards of Directors of Doral Bank and Doral Bank, FSB,
such designated directors shall satisfy all requirements of applicable Law), (ii) enter into an
agreement with each such designated director (to the extent described in Section 5.12 of the
Purchaser Disclosure Schedule) in the form set forth in Section 5.12 of the Purchaser Disclosure
Schedule (assuming such designated director is willing to enter into such agreement) and (iii) take
any necessary action to amend its bylaws to authorize the transactions contemplated by the
agreements referenced in clause (ii).

          SECTION 5.13 Termination of Company Stock Options; Employee Benefits. (a) Prior to
the Closing and effective as of the Closing, the Company shall take all necessary action to ensure
that all Company Stock Options shall terminate, without any liability to the Purchaser, the Company
or any of its Subsidiaries on or after the Closing.

          (b) From and after the Closing, the Purchaser will cause the Company and its Subsidiaries to
honor, in accordance with their terms, all existing employment, severance, retention and bonus
agreements between the Company or any of its Subsidiaries and any officer, director or employee of
the Company or any of its Subsidiaries (as modified pursuant to those certain letter agreements
executed by the individuals listed in Section 3.18(b) of the Company Disclosure Schedule that are
listed on Annex M of the Company Disclosure Schedule) that are employment agreements or agreements
entered into pursuant to the Plans described in Section 3.19(a) of the Company Disclosure Schedule.

          (c) Purchaser shall cause the Company and each of its Subsidiaries, for the period
commencing on the Closing Date and ending on the one-year anniversary thereof, to maintain for the
Company Employees at the Closing Date (other than those individuals who have entered into or will
enter into an individual employment agreement with the Company or any of its Subsidiaries, as to
which such agreement shall govern) (the “Current Employees”) annual rate of base salary or
wages, cash incentive compensation opportunities, severance protections and retirement and welfare
benefits provided under Plans which are substantially comparable in the aggregate to the annual
rate of base salary or wages, cash incentive compensation opportunities, severance protections and
retirement and welfare benefits, in the aggregate, maintained for and provided to Current Employees
as a group immediately prior to the Closing; provided, however, subject to the
foregoing, that nothing herein shall be construed as an amendment to any Plan or prevent the
amendment or termination of any Plan or interfere with the right or obligation of the Company or
any Subsidiary thereof to make such changes as are necessary to conform with applicable Law so long
as the foregoing covenant is satisfied. Nothing in this Section 5.13 shall limit the right of the
Purchaser, the Company or any of their Subsidiaries to terminate the employment of any Current
Employee at any time, subject to any existing agreement.

 

39

          (d) The provisions of clauses (b)-(d) of this Section 5.13 are solely for the benefit of the
parties to this Agreement, and no current or former employee or any other individual associated
therewith shall be regarded for any purpose as a third party beneficiary of clauses (b)-(d) of this
Section 5.13 and nothing herein shall be construed as an amendment to any Plan for any purpose.

          SECTION 5.14 Directors’ and Officers’ Indemnification and Insurance.

          (a) The Purchaser agrees that all rights to exculpation and indemnification for acts or
omissions occurring at or prior to the Closing, whether asserted or claimed prior to, at or after
the Closing (including any matters arising in connection with the transactions contemplated by this
Agreement), now existing in favor of the current or former directors or officers of the Company or
its Subsidiaries in their capacities as such (the “Indemnitees”) as provided in the
respective certificates of incorporation or by-laws (or equivalent organization documents) of the
Company and its Subsidiaries or in any agreement set forth in Section 5.14(a) of the Company
Disclosure Schedule, in each case as in effect as of the date of this Agreement (the
“Indemnification Provisions”), shall survive the Closing and shall continue in full force
and effect. Following the Closing, the Purchaser (for so long as it holds a majority of the
outstanding voting securities of or otherwise controls the Company) shall cause the Company to
indemnify, defend and hold harmless, and advance expenses to, the Indemnitees with respect to all
acts or omissions by them in their capacities as such at any time prior to the Closing, to the
fullest extent required by the Indemnification Provisions.

          (b) The Purchaser (for so long as it holds a majority of the outstanding voting securities
of or otherwise controls the Company) shall cause the Company to provide, for a period of not less
than six years after the Closing Date, the Indemnitees who are insured under the Company’s
directors’ and officers’ insurance and indemnification policies set forth in Section 5.14(b) of the
Company Disclosure Schedule (the “Current D&O Policies”) with insurance coverage under
renewals of the Current D&O Policies and/or under separate “tail policies” with insurers reasonably
believed by the Purchaser to be reputable and financially sound for events occurring at or prior to
the Closing Date (the “D&O Insurance”) that is at least as favorable, in the aggregate, to
the Indemnitees than the Current D&O Policies; provided, however, that the
Purchaser shall not be required to cause the Company to pay an annual premium for the D&O Insurance
in excess of 350% (the “Specified Percentage”) of the last annual premium paid by the
Company prior to the date hereof for the Current D&O Policies; provided, further,
that if the annual premiums of such insurance coverage exceed such amount, the Purchaser (for so
long as it holds a majority of the outstanding voting securities of or otherwise controls the
Company) shall cause the Company to obtain a policy with the greatest coverage available for a cost
not exceeding such amount.

          (c) The Indemnitees to whom this Section 5.14 applies shall be third party beneficiaries of
this Section 5.14. The provisions of this Section 5.14 are intended to be for the benefit of and
enforceable by each Indemnitee and his or her successors, heirs or representatives. The
indemnification and insurance rights provided for herein shall not be deemed exclusive of any other
rights to which an Indemnitee is entitled, whether pursuant to Law, contract or otherwise.

 

40

          (d) If the Company or the Purchaser or any of their respective successors or assigns shall
(i) consolidate with or merge into any other corporation or entity and shall not be the continuing
or surviving corporation or entity of such consolidation or merger or (ii) transfer all or
substantially all of its properties and assets to any individual, corporation or other entity,
then, and in each such case, proper provisions shall be made so that the successors and assigns of
the Company or the Purchaser, as the case may be, shall assume all of the obligations set forth in
this Section 5.14.

          (e) The Purchaser acknowledges that the Company currently is negotiating, and expects to
enter into shortly, new directors’ and officers’ insurance and indemnification policies. Promptly
thereafter, the Company and the Purchaser shall negotiate in good faith to amend the provisions of
Section 5.14(b) to take into account the terms and premiums of such new policies, including
adjustment of the Specified Percentage to take into account any increase in the premiums payable
for such new policies.

          SECTION 5.15 Financing. (a) Prior to the Closing, the Company shall, and shall
cause its Subsidiaries to, and shall use its reasonable best efforts to cause the Company
Representatives to, provide all cooperation reasonably requested by the Purchaser in connection
with obtaining the Additional Equity Commitments, including (i) participation in a reasonable
number of meetings, presentations and due diligence sessions, (ii) assisting with the preparation
of materials for offering documents, private placement memoranda and similar documents required in
connection with obtaining the Additional Equity Commitments (collectively, “Offering
Materials”) and (iii) providing any interim financial information provided to management of the
Company and its Subsidiaries in the ordinary course of business. Any Offering Materials which
include any information provided by or on behalf of the Company or its Subsidiaries shall include a
disclaimer to the effect that the Company and its Subsidiaries and their respective employees have
no responsibility for the content of such Offering Materials and disclaim all responsibility
therefor other than with respect to information provided by or on behalf of the Company or based on
the SEC Reports or other documents filed publicly by the Company or its Subsidiaries.

          (b) The Purchaser and Parent shall use their commercially reasonable efforts to obtain, on
or prior to June 12, 2007 or as soon as possible thereafter, but in any event prior to the date
specified in Section 7.1(c), binding subscription agreements (or comparable documentation) for the
investment in Parent of not less than $215 million in additional equity at or prior to the
Closing on terms and conditions comparable to those contained in the Existing Equity Commitments,
provided that the Purchaser and Parent shall have sole discretion to determine whether, and
in what percentages, to obtain such commitments for Class A, Class B or Class C limited partnership
interests of Parent (the “Additional Equity Commitments” and, together with the Existing
Equity Commitments, the “Equity Commitments”). The Purchaser and Parent shall use their
reasonable best efforts to cause the Persons who are or become party to Equity Commitments to
comply with the terms thereof in order to consummate the purchase of the Purchased Stock prior to
the date specified in Section 7.1(c) (including by taking reasonable enforcement action to cause
such Persons providing such Equity Commitments to fund the amounts contemplated thereby in
accordance with the terms thereof). In the event any portion of the financing contemplated by any
Equity Commitment becomes unavailable on the terms and conditions contemplated thereby, the
Purchaser and Parent shall use their commercially

 

41

reasonable efforts to obtain alternative financing from alternative sources on terms no less
favorable, taken as a whole, to Parent (as determined in the sole good faith judgment of the
Purchaser) and the Company as promptly as practicable following the occurrence of such event. The
Purchaser and Parent shall consult with the Company regarding the process of obtaining the
Additional Equity Commitments, shall keep the Company reasonably apprised of material developments
relating to the Additional Equity Commitments and shall provide the Company with executed copies of
any Additional Equity Commitments received by Parent or the Purchaser. The Purchaser and Parent
shall use their reasonable best efforts to satisfy on a timely basis the conditions that are within
their control of the Equity Commitments, or any alternative financing commitments. The Parent
shall not amend or alter, or agree to amend or alter, any Equity Commitment in any manner that
would materially impair, materially delay or prevent the transactions contemplated by this
Agreement without the prior written consent of the Company. Parent will contribute to the
Purchaser proceeds of the Equity Commitments received by Parent at Closing, up to the Purchase
Price.

          SECTION 5.16 Takeover Statutes. The parties shall use their respective
reasonable best efforts (i) to take all action necessary so that no Takeover Statute is or becomes
applicable to the issuance and sale of the Purchased Stock to the Purchaser or any of the other
transactions contemplated by this Agreement, the other Transaction Agreements or the Voting
Agreement and (ii) if any such Takeover Statute is or becomes applicable to any of the foregoing,
to take all action necessary so that the issuance and sale of the Purchased Stock to the Purchaser
or any of the other transactions contemplated by this Agreement, the other Transaction Agreements
and the Voting Agreement may be consummated as promptly as practicable on the terms contemplated by
this Agreement, the other Transaction Agreements and the Voting Agreement and otherwise to minimize
the effect of such Takeover Statute on the issuance and sale of the Purchased Stock to the
Purchaser and the other transactions contemplated by this Agreement, the other Transaction
Agreements and the Voting Agreement.

          SECTION 5.17 Deferred Tax Confirmation. The parties agree to cooperate in good
faith and use their reasonable best efforts to obtain the Deferred Tax Confirmation as promptly as
practicable after the date of this Agreement; provided that the Purchaser shall prepare any and all
written correspondence with the Department of the Treasury of Puerto Rico with respect to the
Deferred Tax Confirmation.

          SECTION 5.18 Stock Exchange Listing. The Company shall use its reasonable best
efforts to cause the Purchased Stock to be approved for listing on the NYSE, subject to official
notice of issuance, prior to the Closing.

          SECTION 5.19 Public Announcements. The Purchaser and the Company shall consult with
each other before issuing any press release or making any other public statement with respect to
the transactions contemplated by this Agreement and the other Transaction Agreements, and shall not
issue any such press release or make any such other public statement without the other party’s
prior consent, provided that the Company may, without the consent of the Purchaser (but after prior
consultation, to the extent practicable in the circumstances) make such public disclosures as may
be required upon the advice of outside counsel by applicable Law or the rules and regulations of
the NYSE. The parties agree that the initial press release or releases to be issued with respect
to the transactions contemplated by this

 

42

Agreement shall be mutually agreed upon prior to the issuance thereof. In addition, the
Company and its Subsidiaries shall in accordance with Law (a) consult with the Purchaser regarding
communications with customers, shareholders and employees related to the transactions contemplated
hereby, (b) provide the Purchaser with shareholder lists of the Company and (c) allow and
facilitate contact by the Purchaser with shareholders of the Company.

ARTICLE VI

CONDITIONS TO CLOSING

          SECTION 6.1 Conditions to the Obligations of the Purchaser. The Purchaser’s
obligation to purchase the Purchased Stock at the Closing is subject to the satisfaction (or waiver
by the Purchaser), on or prior to the Closing Date, of the following conditions:

          (a) Representations and Warranties; Performance of Obligations. (i) Except as set
forth in clause (ii) below, the representations and warranties of the Company contained in this
Agreement (without giving effect to any materiality or Material Adverse Effect qualifications set
forth therein) shall be true and correct as of the Closing Date as though made on and as of such
date and time (except to the extent that any such representation and warranty expressly speaks as
of an earlier date, in which case such representation and warranty shall be true and correct as of
such earlier date) except where any failures of any such representations and warranties to be so
true and correct, individually or in the aggregate, have not had and would not reasonably be
expected to have a Material Adverse Effect; and (ii) the representations and warranties set forth
in (x) Sections 3.3 and 3.4(a) shall be true and correct in all but de minimis respects and (y)
Section 3.8(i) shall be true and correct in all respects. The Company shall have performed in all
material respects all of its agreements, obligations, covenants and conditions herein required to
be performed or observed by it on or prior to the Closing Date.

          (b) Legal Investment. On the Closing Date, there shall not be in effect any Law or
Order directing that the purchase and sale of the Purchased Stock or any of the other transactions
contemplated by this Agreement and the other Transaction Agreements not be consummated or which has
the effect of rendering it unlawful to consummate such transactions.

          (c) Proceedings and Litigation. (i) No Action by any Governmental Entity shall be
pending against any party hereto seeking to restrain or prohibit the purchase and sale of the
Purchased Stock or the consummation of any of the other transactions contemplated by this Agreement
or the other Transaction Agreements.

     (ii) No event shall have occurred that would give the Company the right to
terminate the Settlement Agreement pursuant to paragraph 14 thereof.

     (iii) The U.S. District Court for the Southern District of New York shall
have entered an order or orders approving the settlement of the Shareholder
Litigation on substantially the terms set forth in the Settlement Agreement, and
such order or orders shall be in full force and effect and shall not have been
stayed or reversed as a result of an appeal or other proceeding.

 

43

     (iv) There shall not have occurred any of the following events or
developments with respect to the investigation by the U.S. Attorney’s Office for the
Southern District of New York referenced in the SEC Reports (or any other
substantially similar federal criminal investigation): (x) notification (whether
oral or written) that the Company, any of its Subsidiaries, or any of their
respective current officers or directors, is a target of such investigation or such
other investigation, (y) notification (whether oral or written) that the Company,
any of its Subsidiaries, or any of their respective current officers or directors is
a subject of such investigation or such other investigation and a determination by
the Purchaser (in its sole good faith judgment) that such development could
reasonably be expected to materially and adversely affect the Company and its
Subsidiaries, taken as a whole or (z) an indictment (or threat of an imminent
indictment) of the Company, any of its Subsidiaries, or any of their respective
current officers or directors.

          (d) Regulatory Matters. (i) All approvals, consents, permits and waivers of the
Governmental Entities specified in Section 6.1(d)(i) of the Company Disclosure Schedule
(collectively, the “Requisite Regulatory Approvals”), shall have been obtained and shall be
in full force and effect, and all waiting periods required by Law in connection therewith
(including under the HSR Act) shall have expired or been terminated. No such approval, consent,
permit or waiver shall contain or impose any condition or restriction that the Purchaser
determines, in its reasonable good faith judgment, is materially and unreasonably burdensome or
would reduce the benefits of its investment in the Company to such a degree that the Purchaser
would not have entered into this Agreement had such condition or restriction been known to it at
the date hereof.

     (ii) (A) Each of the Bear Stearns Companies Inc. (“Bear Stearns”) and
each of the investors in Doral GP Ltd. listed in Section 6.1(d)(ii) of the Purchaser
Disclosure Schedule shall have received written confirmation, satisfactory to it in
its reasonable good faith judgment, from the Federal Reserve Board to the effect
that neither it, nor any of its Affiliates (which for purposes of this paragraph
shall include all “affiliates” as defined in the BHC Act or Regulation Y of the
Federal Reserve Board) shall be deemed to “control” Doral GP Ltd., Parent, the
Purchaser or any of its Subsidiaries after the Closing (including the Company, Doral
Bank and Doral Bank, FSB) for purposes of Sections 3 or 4 of the BHC Act by reason
of the purchase of the Purchased Stock by the Purchaser and the consummation of the
other transactions contemplated by this Agreement and the other Transaction
Agreements or the Purchaser Organizational Documents; (B) Bear Stearns shall have
received written confirmation, satisfactory to it in its reasonable good faith
judgment, from the Federal Reserve Board that neither it nor any of its Affiliates
(which for purposes of this paragraph shall include all “affiliates” as defined in
the BHC Act or Regulation Y of the Federal Reserve Board) will cease to be entitled
to the exemption set forth in Section 4(f)(1) of the BHC Act by reason of the
purchase of the Purchased Stock by the Purchaser and the other transactions
contemplated by this Agreement and the other Transaction Agreements or the Purchaser
Organizational Documents; and (C) the Purchaser shall have received a written
administrative determination, satisfactory to it in its reasonable good faith
judgment, from the Commissioner to the effect that the provisions of change in

 

44

control of Section 12 of the Puerto Rico Banking Law (7 LPRA 39) are only
applicable to the direct change in control of Doral Financial Corporation as
provided in the Resolution and Basis of Approval In the Matter of Doral Federal
Savings Bank (OCIF 97-98-D-CR1) issued by the Commissioner on September 24, 1997,
which direct change in control shall be effected by the acquisition of the Purchased
Stock by the Purchaser, and therefore the requirements under such change of control
provisions do not extend to, and are not applicable to (I) the members of the
Purchaser, (II) Parent or any of its limited partners, (III) Doral GP Ltd. or any of
its members or (IV) any of their respective successors or assigns. For purposes of
this Agreement, “Purchaser Organizational Documents” means the limited
liability company agreement of the Purchaser, the limited partnership agreement of
Parent, the memorandum and articles of association of the general partner of Parent
and the members agreement among the members of the general partner of Parent.

          (e) Board of Directors. The Company shall have taken all actions required by
Section 5.12 hereof.

          (f) Requisite Shareholder Approvals. The Requisite Shareholder Approvals shall have
been obtained in accordance with the laws of Puerto Rico and the rules and regulations of the NYSE.

          (g) Certificate. The Company shall have delivered to the Purchaser a certificate,
executed on behalf of the Company by the Chief Executive Officer of the Company and the Chief
Financial Officer of the Company, dated the Closing Date, to the effect that the conditions
specified in paragraph (a) have been satisfied.

          (h) Listing Qualification of Purchased Stock. The Purchased Stock shall have been
approved for listing on the New York Stock Exchange, subject to official notice of issuance.

          (i) Other Agreements. The other Transaction Agreements shall have been duly
authorized, executed and delivered by the Company.

          (j) Additional Equity Commitments. Parent or the Purchaser shall have received the
Additional Equity Commitments (it being agreed that if Parent or the Purchaser receives the
Additional Equity Commitments, this condition shall remain satisfied even if any such Additional
Equity Commitment subsequently fails to be available for any reason).

          (k) Additional Funding. (i) The sale of Doral Bank, FSB’s New York City branches,
substantially on the terms set forth in the Purchase and Assumption Agreement, dated as of March
15, 2007, between Doral Bank FSB and New York Commercial Bank shall have been consummated, (ii) the
Company shall have received, or shall have received all regulatory approvals with respect to
(subject only to the occurrence of the Closing) and shall have provided the Purchaser with written
confirmation of its Chief Executive Officer that it will receive no later than one Business Day
following the Closing, at least $150,000,000 in cash, in the aggregate (the “Additional
Proceeds”) from (x) the distribution of excess capital by Doral Bank, FSB and (y)

 

45

the transfer of mortgage servicing rights from the Company to Doral Bank, and (iii) such
Additional Proceeds shall, upon receipt thereof, be available for use as provided in Section 5.4.

          (l) Deferred Tax Confirmation. The Company shall have received written
confirmation, reasonably satisfactory to the Purchaser, from the Department of the Treasury of
Puerto Rico substantially in the form attached hereto as Exhibit E (the “Deferred Tax
Confirmation”) that (i) the Deferred Tax Agreement will remain in full force and effect with
respect to the Company and each of its Subsidiaries following the transactions contemplated by this
Agreement and any future change of control of the Company, (ii) each Subsidiary of the Company has
the right to enforce the Deferred Tax Agreement as if it were a party to such agreement and (iii)
the claim or utilization of the Amortization Deductions by the Company or by its Subsidiaries for
Puerto Rican income tax purposes will not give rise to the realization or recognition of any income
by the Company or by the Subsidiaries.

          SECTION 6.2 Conditions to Obligations of the Company. The Company’s obligation to
issue and sell the Purchased Stock at the Closing is subject to the satisfaction (or waiver by the
Company), on or prior to the Closing Date, of the following conditions:

          (a) Representations and Warranties; Performance of Obligations. The representations
and warranties of the Purchaser set forth in this Agreement shall be true and correct in all
material respects as of the Closing Date as though made on and as of such date and time (except to
the extent that any such representation and warranty expressly speaks as of an earlier date, in
which case such representation and warranty shall be true and correct in all material respects as
of such earlier date) except where any failures to be so true and correct would not prevent
consummation of the transactions contemplated by this Agreement. The Purchaser shall have
performed in all material respects all of its agreements, obligations, covenants and conditions
herein required to be performed or observed by it on or prior to the Closing Date.

          (b) Legal Investment. On the Closing Date, there shall not be in effect any Law or
Order directing that the purchase and sale of the Purchased Stock or any of the other transactions
contemplated by this Agreement or the other Transaction Agreements not be consummated or which has
the effect of rendering it unlawful to consummate such transactions.

          (c) Regulatory Matters. The Requisite Regulatory Approvals shall have been obtained
and shall be in full force and effect, and all waiting periods required by Law in connection
therewith (including under the HSR Act) shall have expired or been terminated.

          (d) Requisite Shareholder Approvals. The Requisite Shareholder Approvals shall have
been obtained in accordance with the laws of Puerto Rico and the rules and regulations of the NYSE.

          (e) Certificate. The Purchaser shall have delivered to the Company a certificate,
executed on behalf of the Purchaser by an authorized signatory thereof, dated the Closing Date, to
the effect that the conditions specified in paragraph (a) have been satisfied.

          (f) Other Agreements. The Securityholders Agreement shall have been duly authorized,
executed and delivered by the Purchaser.

 

46

ARTICLE VII

TERMINATION AND AMENDMENT

          SECTION 7.1 Termination. This Agreement may be terminated at any time prior to the
Closing:

          (a) by mutual written consent of the Company and the Purchaser;

          (b) by (i) either the Company or the Purchaser if (x) any Governmental Entity which must
grant a Requisite Regulatory Approval has denied such approval and such denial has become final and
nonappealable, or (y) any Governmental Entity of competent jurisdiction shall have issued a final,
nonappealable Order enjoining or otherwise prohibiting the consummation of the transactions
contemplated by this Agreement or, in the case of termination by the Purchaser, any of the other
Transaction Agreements or (ii) the Purchaser if (x) Bear Stearns, the Purchaser, any of the other
investors referred to in Section 6.1(d)(ii), or any of their respective Affiliates receives final
written notice from the Federal Reserve Board or the Commissioner that it will not grant any of the
written confirmations or determinations described in Section 6.1(d)(ii) or (y) any Governmental
Entity which must grant any approval required in order for the condition set forth in Section
6.1(k) to be satisfied has denied such approval and such denial has become final and nonappealable;

          (c) by either the Company or the Purchaser if the Closing shall not have occurred on or
before September 30, 2007, unless the failure of the Closing to occur by such date shall be due to
the failure of the party seeking to terminate this Agreement to perform or observe the covenants
and agreements of such party set forth herein;

          (d) by either the Company or the Purchaser (provided that the terminating party is not then
in material breach of any representation, warranty, covenant or other agreement contained herein),
if the other party shall have breached any of the covenants, agreements, representations or
warranties made by such other party herein, and such breach (x) is not cured within 30 days
following written notice to the party committing such breach, or which breach, by its nature,
cannot be cured prior to the Closing and (y) would entitle the non-breaching party not to
consummate the transactions contemplated hereby under Article VI hereof;

          (e) by either the Company or the Purchaser if the Requisite Shareholder Approvals shall not
have been obtained upon a vote taken thereon at the Company Shareholders Meeting or at any
adjournment or postponement thereof;

          (f) by the Purchaser, if (i) the Board of Directors of the Company shall have failed to
recommend in the Proxy Statement and at the Company Shareholders Meeting the approval of the
issuance of the Purchased Stock and the Charter Amendment by the shareholders of the Company or
shall have effected a Change in Recommendation (or shall have resolved to do so), whether or not
permitted by this Agreement, (ii) the Company shall have materially breached its obligations under
Section 5.6 by failing to call, give notice of, convene and hold the Company Shareholders Meeting
in accordance with Section 5.6 or (iii) the Company shall have breached its obligations under
Section 5.7 in any material respect;

 

47

          (g) by the Purchaser if there is a final non-appealable judgment of the U.S. District Court
for the Southern District of New York disapproving settlement of the Shareholder Litigation on
substantially the terms set forth in the Settlement Agreement;

          (h) by the Company if the Additional Equity Commitments shall not have been received by June
12, 2007;

          (i) by the Company in accordance with, and subject to the terms and conditions of, Section
5.7(f); or

          (j) by the Purchaser if:

     (i) the Company or a Significant Subsidiary of the Company (x) pursuant to or
within the meaning of any Bankruptcy Law: (A) commences a voluntary case; (B)
consents to the entry of an order for relief against it in an involuntary case; (C)
consents to the appointment of a Custodian of it; or (D) makes a general assignment
for the benefit of its creditors; or (y) takes, under any foreign laws relating to
insolvency, any action comparable to the actions set forth in clause (x);

     (ii) a court of competent jurisdiction enters an Order under any Bankruptcy
Law that: (A) is for relief against the Company or any Significant Subsidiary of the
Company in an involuntary case; (B) appoints a Custodian of the Company or any
Significant Subsidiary of the Company; or (C) orders the winding up or liquidation
of the Company or any Significant Subsidiary of the Company; or (D) grants similar
relief under any foreign laws and the order, decree or relief remains unstayed and
in effect for 60 days; or

     (iii) (A) the FDIC (or other competent Governmental Entity having regulatory
authority over Doral Bank or Doral Bank, FSB) appoints, under any applicable
federal, state or local banking Law or Bankruptcy Law, a Custodian for Doral Bank or
Doral Bank, FSB or for all or substantially all of the assets of Doral Bank or Doral
Bank, FSB, or (B) Doral Bank or Doral Bank, FSB files with the FDIC (or other
competent Governmental Entity having regulatory authority over Doral Bank or Doral
Bank, FSB) a notice of voluntary liquidation or other similar action under any
applicable federal, state or local banking Law, Bankruptcy Law or other similar Law.

          SECTION 7.2 Effect of Termination.

          (a) In the event of termination of this Agreement by either the Company or the Purchaser as
provided in Section 7.1, this Agreement shall forthwith become void and have no effect, and none of
the Company, the Purchaser, any of their respective officers, directors, or Affiliates (or, in the
case of the Purchaser, any of the Purchaser Related Parties) shall have any liability of any nature
whatsoever hereunder, or in connection with the transactions contemplated hereby, except that (i)
the Limited Guaranty (only to the extent reflected therein) and Section 5.3(b), this Section 7.2,
Section 8.10 and Section 8.12 shall survive any termination of this Agreement and (ii)
notwithstanding anything to the contrary contained in this Agreement (other than Section 8.12
hereof), neither the Company nor the Purchaser shall be relieved or released

 

48

from any liabilities or damages arising out of its willful breach of any provision of this
Agreement.

          (b) In the event that this Agreement is terminated (i) by either the Company or the
Purchaser pursuant to Section 7.1(e) or (ii) by the Purchaser pursuant to Section 7.1(d), Section
7.1(f), Section 7.1(g) or Section 7.1(j) (or, in any such case, is terminated pursuant to another
paragraph of Section 7.1 at a time when this Agreement was terminable pursuant to one of the
foregoing specified provisions and by the party specified above), then the Company shall reimburse
the Purchaser for all expenses reasonably incurred by or on its behalf in connection with the
transactions contemplated by this Agreement, including all reasonable expenses of counsel,
accountants, investment bankers, experts and other consultants retained by the Purchaser, Parent,
Parent’s limited partners and their respective Affiliates, in connection with the transactions
contemplated hereby (and not theretofore paid or reimbursed by the Company) (the “Purchaser
Expenses”) within two Business Days after the receipt by the Company of an invoice therefor;
provided that the payment by the Company of such expenses shall not relieve the Company of
any subsequent obligation to pay the Termination Fee pursuant to Section 7.2(d), except to the
extent expressly provided therein.

          (c) The Company shall pay to or as directed by the Purchaser the sum of $25 million (the
“Termination Fee”) prior to or concurrently with, and as a condition to, the termination of
this Agreement by the Company pursuant to Section 7.1(i).

          (d) The Company shall pay to or as directed by the Purchaser the Termination Fee, less any
Purchaser Expenses theretofore paid to the Purchaser pursuant to Section 7.2(b), upon the execution
and delivery by the Company or any of its Subsidiaries of a definitive agreement with respect to,
or consummation of, a Qualifying Competing Proposal referred to in clause (iii) below if (i) this
Agreement is terminated by (A) the Purchaser pursuant to Section 7.1(d) because of the Company’s
willful breach of any representation, warranty, covenant or agreement under this Agreement, (B) by
the Purchaser pursuant to Section 7.1(f), (C) by either the Company or the Purchaser pursuant to
Section 7.1(e) or (D) by either the Company or the Purchaser pursuant to Section 7.1(c) without a
vote of the shareholders of the Company contemplated by this Agreement at the Company Shareholders
Meeting having occurred (or, in any such case, is terminated pursuant to another paragraph of
Section 7.1 at a time when this Agreement was terminable pursuant to one of the foregoing specified
provisions and by the party specified above), (ii) in any such case a Triggering Competing Proposal
shall have been publicly announced or otherwise communicated or made known to the senior management
or Board of Directors of the Company (or any Person shall have publicly announced, communicated or
made known an intention, whether or not conditional on the termination of this Agreement or
otherwise, to make a Triggering Competing Proposal) at any time after the date of this Agreement
and on or prior to the date of the Company Shareholders Meeting, in the case of clause (i)(C), or
the date of termination, in the case of clauses (i)(A), (i)(B) or (i)(D), and (iii) prior to the
Outside Date the Company or any of its Subsidiaries enters into a definitive agreement with respect
to, or consummates, a Qualifying Competing Proposal. For purposes of this Section 7.2(d), (x) the
term “Triggering Competing Proposal” means a Competing Proposal, provided that (I)
for purposes of the definition of “Triggering Competing Proposal,” references to 20% in the
definition of “Competing Proposal” shall be deemed to be references to “33%”, (II) such Competing
Proposal allows for the repayment, refinancing, extension, amendment or

 

49

restructuring of all of the 2007 Notes (including any transaction that involves the receipt by
any holder of 2007 Notes (in its capacity as such) of any shares of capital stock, or any
securities or obligations convertible into or exercisable or exchangeable for shares of capital
stock, of the Company or any of its Subsidiaries or the contribution by any such holder of cash to
the Company or any of its Subsidiaries) and (III) a Competing Proposal that would result in the
reorganization or liquidation of the Company pursuant to any Bankruptcy Law in which holders of
Common Stock do not receive any value for their shares or the placement of Doral Bank under
receivership by the FDIC shall not constitute a Triggering Competing Proposal, (y) a
“Qualifying Competing Proposal” means a Triggering Competing Proposal, provided that a
Qualifying Competing Proposal shall not include any transaction that involves (in one transaction
or a series of related transactions) solely a one-time extension of the maturity of (or a
forbearance of the right to demand payment at maturity, or of any other related enforcement rights,
under) all or a portion of the 2007 Notes, in any such case for an aggregate of six months or less
in which no holder of 2007 Notes (in its capacity as such) receives any shares of capital stock, or
any securities or obligations convertible into or exercisable or exchangeable for shares of capital
stock, of the Company or any of its Subsidiaries or contributes cash to the Company or any of its
Subsidiaries (any such excluded transaction, a “Short-Term Maturity Extension”) (it being
understood that if a definitive agreement is executed with respect to a Short-Term Maturity
Extension or a Short-Term Maturity Extension is consummated, any other transaction for which a
definitive agreement is executed or which is consummated prior to the Outside Date may constitute a
Qualifying Competing Proposal) and (z) “Outside Date” means the later of (I) 12 months
following a termination of this Agreement as provided in clause (i) of this Section 7.2(d) and (II)
if the Company enters into one or more definitive agreements with respect to or consummates a
Short-Term Maturity Extension prior to the date which is 12 months following such termination, the
date which is one month following the latest date to which the maturity of any of the 2007 Notes is
extended in connection with such Short-Term Maturity Extension.

          (e) Any expenses that become payable pursuant to Section 7.2(b) and any Termination Fee or
portion thereof that becomes payable pursuant to Section 7.2(c) or Section 7.2(d) shall be paid by
wire transfer of immediately available funds to an account designated by the Purchaser in writing
to the Company.

          (f) The Company acknowledges that the agreements contained in paragraphs (b), (c) and (d)
above are an integral part of the transactions contemplated by this Agreement, that without such
agreement by the Company, the Purchaser would not have entered into this Agreement, and that such
amounts do not constitute a penalty. If the Company fails to pay any amounts due under paragraph
(b), (c) or (d) above within the time periods specified in such paragraphs, the Company shall pay
the reasonable costs and expenses (including reasonable legal fees and expenses) incurred by the
Purchaser in connection with any action, including the filing of any lawsuit, taken to collect
payment of such amounts, together with interest on the amount of any such unpaid amounts at the
prime rate of JPMorgan Chase Bank, N.A. from the date such amounts were required to be paid until
the date of actual payment.

 

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ARTICLE VIII

MISCELLANEOUS

          SECTION 8.1 Other Definitions; Terms Generally. (a) The following terms as used in
this Agreement shall have the following meanings:

     (i) “Affiliate” means, with respect to any Person, any other Person
that, directly or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with such specified Person, for so long as
such Person remains so associated to the specified Person.

     (ii) “Bankruptcy Law” means Title 11, United States Code, or any
similar federal, state, local or foreign law providing for the insolvency,
reorganization, receivership, dissolution, winding up or liquidation of a debtor.

     (iii) “Business Day” means any day other than a Saturday, Sunday or
any other day on which banks in New York, New York or San Juan, Puerto Rico are
required or authorized to close.

     (iv) “control” (including the terms “controlled by” and
“under common control with”), with respect to the relationship between or
among two or more Persons, means the possession, directly or indirectly, of the
power to direct or cause the direction of the affairs or management and policies of
a Person, whether through the ownership of voting securities, as trustee or
executor, by contract or otherwise.

     (v) “Custodian” means any receiver, trustee, conservator, assignee,
liquidator, custodian or similar official under any Bankruptcy Law or banking Law.

     (vi) Fee Agreements” means those agreements (as they may be amended,
modified or supplemented) set forth in Section 8.1 of the Purchaser Disclosure
Schedule.

     (vii) “Person” means any individual, corporation, limited liability
company, limited or general partnership, joint venture, association, joint-stock
company, trust, unincorporated organization, government or any agency or political
subdivisions thereof or any group (within the meaning of Section 13(d)(3) of the
Exchange Act) comprised of two or more of the foregoing.

     (viii) “Significant Subsidiary” shall have the meaning ascribed
thereto in Rule 1.02 of Regulation S-X promulgated by the SEC.

     (ix) “Subsidiary” means (i) any corporation of which a majority of
the securities entitled to vote generally in the election of directors thereof, at
the time as of which any determination is being made, are owned by another entity,
either directly or indirectly, and (ii) any joint venture, general or limited
partnership,

 

51

limited liability company or other legal entity in which an entity is
the record or beneficial owner, directly or indirectly, of a majority of the voting
interests or the general partner.

     (x) “to the knowledge of the Company” or similar expressions means
the actual knowledge of the senior executive officers of the Company and its
Subsidiaries and, without duplication, those executive officers or other employees
in charge of environmental, tax, labor, employee benefits or real estate matters, in
each case after reasonable investigation and inquiry.

          (b) Terms Generally. The definitions in Section 8.1(a) shall apply equally to both
the singular and plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase “without limitation”,
unless the context expressly provides otherwise. All references herein to Sections, paragraphs,
subparagraphs, clauses, Exhibits or Schedules shall be deemed references to Sections, paragraphs,
subparagraphs or clauses of, or Exhibits or Schedules to this Agreement, unless the context
requires otherwise. Unless otherwise expressly defined, terms defined in this Agreement have the
same meanings when used in any Exhibit or Schedule hereto, including the Company Disclosure
Schedule and the Purchaser Disclosure Schedule. Unless otherwise specified, the words “this
Agreement”, “herein”, “hereof”, “hereto” and “hereunder” and other words of similar import refer to
this Agreement as a whole (including the Schedules, Exhibits, the Company Disclosure Schedule and
the Purchaser Disclosure Schedule) and not to any particular provision of this Agreement. The term
“or” is not exclusive. The word “extent” in the phrase “to the extent” shall mean the degree to
which a subject or other thing extends, and such phrase shall not mean simply “if”. Any Law
defined or referred to herein means such Law as from time to time amended, modified or
supplemented, including by succession of comparable successor Laws and references to all
attachments thereto and instruments incorporated therein. References to a Person are also to its
permitted successors and assigns.

          SECTION 8.2 Representations and Warranties. None of the representations,
warranties, covenants and agreements in this Agreement or in any instrument delivered pursuant to
this agreement shall survive the Closing, except for those covenants and agreements contained
herein and therein which by their terms apply in whole or in part after the Closing and then only
to such extent. Each of the Company and the Purchaser acknowledges and agrees that, except for the
representations and warranties expressly set forth in this Agreement (a) no party makes, and has
not made, any representations or warranties relating to itself or its businesses or otherwise in
connection with the transactions contemplated by this Agreement and (b) no Person has been
authorized by any party to make any representation or warranty relating to itself or its businesses
or otherwise in connection with the transactions contemplated by this Agreement and, if made, such
representation or warranty must not be relied upon as having been authorized by such party.

          SECTION 8.3 Governing Law; Jurisdiction; Waiver of Jury Trial. (a) This Agreement
shall be governed in all respects by the laws of the State of New York except, in the case of the
Company, to the extent that the PRGCL is mandatorily applicable.

 

52

          (b) Each of the Company and the Purchaser hereby irrevocably and unconditionally consents to
submit to the exclusive jurisdiction and venue of the United States District Court for the Southern
District of New York and in the courts hearing appeals therefrom unless no basis for federal
jurisdiction exists, in which event each party hereto irrevocably consents to the exclusive
jurisdiction and venue of the Supreme Court of the State of New York, New York County, and the
courts hearing appeals therefrom, for any action, suit or proceeding arising out of or relating to
this Agreement and the transactions contemplated hereby. Each of the Company and the Purchaser
irrevocably and unconditionally waives, and agrees not to assert, by way of motion, as a defense,
counterclaim or otherwise, in any such action, suit or proceeding, any claim that is not personally
subject to the jurisdiction of the aforesaid courts for any reason, other than the failure to serve
process in accordance with this Section 8.3, that it or its property is exempt or immune from
jurisdiction of any such court or from any legal process commenced in such courts (whether through
service of notice, attachment prior to judgment, attachment in aid of execution of judgment,
execution of judgment or otherwise), and to the fullest extent permitted by applicable law, that
the action, suit or proceeding in any such court is brought in an inconvenient forum, that the
venue of such action, suit or proceeding is improper, or that this Agreement, or the subject matter
hereof, may not be enforced in or by such courts and further irrevocably waives, to the fullest
extent permitted by applicable law, the benefit of any defense that would hinder, fetter or delay
the levy, execution or collection of any amount to which the party is entitled pursuant to the
final judgment of any court having jurisdiction. Each of the Company and the Purchaser expressly
acknowledges that the foregoing waivers are intended to be irrevocable under the laws of the State
of New York and of the United States of America; provided that consent by the parties
hereto to jurisdiction and service contained in this Section 8.3 is solely for the purpose referred
to in this Section 8.3 and shall not be deemed to be a general submission to said courts or in the
State of New York other than for such purpose.

          (c) The Company hereby irrevocably designates Doral Bank, FSB, located at 387 Park Avenue
South, New York, New York 10016-8810, Attention: Paul Mak (in such capacity, the “Company
Process Agent”) its designee, appointee and agent to receive, for and on its behalf, service of
process in such jurisdiction in any action, suit or proceeding arising out of or relating to this
Agreement and such service shall be deemed complete upon delivery thereof to the Company Process
Agent; provided that in the case of any such service upon the Company Process Agent, the
party effecting such service shall also deliver a copy thereof to the Company in the manner
provided in Section 8.9. In addition, each of the Company and the Purchaser irrevocably consents
to the service of process out of any of the aforementioned courts in any such action, suit or
proceeding by the mailing of copies thereof by registered mail, postage prepaid, to such party at
its address specified pursuant to Section 8.9, such service of process to be effective upon
acknowledgment of receipt of such registered mail.

          (d) Each of the parties hereto hereby irrevocably and unconditionally waives trial by jury
in any legal action or proceeding in relation to this Agreement or the other Transaction Agreements
and for any counterclaim therein.

          SECTION 8.4 Successors and Assigns; Assignment; No Third Party Beneficiaries.
Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of,
and be binding upon, the successors, permitted assigns, heirs, executors and administrators of the
parties hereto. This Agreement may not be assigned by a

 

53

party without the prior written consent of the other party (and any purported assignment without such consent shall be void and without
effect), except that the Purchaser may assign all or any of its rights and obligations hereunder to
any Affiliate or Affiliates, provided that no such assignment shall relieve the Purchaser of its
obligations hereunder. Except as otherwise specifically provided in Section 5.14 and Section 8.12,
this Agreement is not intended to and shall not confer upon any Person other than the parties
hereto any rights or remedies hereunder.

          SECTION 8.5 Entire Agreement. This Agreement (including the Exhibits and Schedules
hereto, which constitute part of this Agreement as if fully set forth herein), the other
Transaction Agreements, the Fee Agreements and the Limited Guaranty constitute the full and entire
understanding and agreement between the parties with regard to the subjects hereof and no party
shall be liable or bound to any other in any manner by any representations, warranties, covenants
and agreements except as specifically set forth herein and therein. The Fee Agreements shall
remain in full force and effect in accordance with their respective terms, but such letter
agreement included in the Fee Agreements shall terminate upon the termination of this Agreement,
except with respect to fees and expenses accrued on or prior to the date of such termination, with
respect to which it shall survive until the payment or reimbursement in full thereof. The Company
agrees that any confidentiality agreements between any of the members of the general partner of
Parent, or any of their respective Affiliates, shall be terminated effective upon the Closing.

          SECTION 8.6 Severability. In case any provision of this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially adverse to any party.
Upon such determination that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable manner so that the
transactions contemplated hereby are fulfilled to the extent possible.

          SECTION 8.7 Amendment and Waiver. This Agreement may be amended by the parties
hereto (in the case of the Company, by action taken by or on behalf of its Board of Directors) at
any time prior to the Closing, whether before or after receipt of the Requisite Shareholder
Approvals; provided, however, that, after receipt of the Requisite Shareholder
Approvals, no amendment may be made which under applicable Law requires the further approval of the
shareholders of the Company without such further approval. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto. At any time prior to the Closing,
any party hereto may (i) extend the time for the performance of any of the obligations or other
acts of the other parties hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (iii) subject to the requirements
of applicable Law, waive compliance with any of the agreements or conditions contained for the
benefit of such party contained herein. Any such
extension or waiver shall be valid if set forth in an instrument in writing signed by the
party or parties to be bound thereby.

          SECTION 8.8 Delays or Omissions. It is agreed that no delay or omission to exercise
any right, power or remedy accruing to any party, upon any breach, default or

 

54

noncompliance by
another party under this Agreement or the other Transaction Agreements shall impair any such right,
power or remedy, nor shall it be construed to be a waiver of any such breach, default or
noncompliance, or any acquiescence therein, or of or in any similar breach, default or
noncompliance thereafter occurring. All remedies, either under this Agreement or the other
Transaction Agreements, by law, or otherwise afforded to any party, shall be cumulative and not
alternative.

          SECTION 8.9 Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given (i) upon personal delivery to the party to be
notified, (ii) when sent by confirmed facsimile if sent during normal business hours of the
recipient, if not, then on the next Business Day or (iii) one Business Day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with written verification of
receipt. All communications shall be sent to the addresses set forth below or such other address
or facsimile number as a party may from time to time specify by notice to the other parties hereto:

If to the Company:

Doral Financial Corporation

1451 Franklin D. Roosevelt Avenue

San Juan, Puerto Rico 00920

Telephone: (787) 474-6381

Fax: (787) 474-6817

Attn: Glen Wakeman

          Enrique Ubarri

with a copy (which shall not constitute notice) to:

Cleary Gottlieb Steen & Hamilton LLP

One Liberty Plaza

New York, N.Y. 10006

Telephone: (212) 225-2000

Fax: (212) 225-3999

Attn: Victor Lewkow

          Jaime El Koury

          Francisco Cestero

Latham & Watkins LLP

885 Third Avenue

New York, N.Y. 10022

Telephone: (212) 906-1200

Fax: (212) 751-4864

Attn: Barry Bryer

          David Kurzweil

 

55

If to the Purchaser:

Doral Holdings Delaware, LLC

c/o Bear Stearns Merchant Banking

383 Madison Avenue

New York, NY 10179

Telephone: (212) 272-2000

Fax: (212) 881-9516

Attn: David E. King

          Robert Juneja

with a copy (which shall not constitute notice) to:

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, N.Y. 10017

Telephone: (212) 455-2000

Fax: (212) 455-2502

Attn: Lee Meyerson

          Ellen Patterson

and

Kirkland & Ellis LLP

153 East 53rd Street

New York, N.Y. 10022

Telephone: (212) 446-4800

Fax: (212) 446-6460

Attn: Michael T. Edsall

          SECTION 8.10 Expenses. Except as provided in Section 7.2 or in the Fee Agreements,
all costs and expenses incurred in connection with this Agreement, the other Transaction Agreements
and the transactions contemplated hereby and thereby shall be paid by the party incurring such
expense.

          SECTION 8.11 Titles and Subtitles. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be considered in construing
this Agreement.

          SECTION 8.12 Remedies.

          (a) Notwithstanding any other provision of this Agreement or any rights of the Company at
law or in equity, the Company agrees that to the extent it has incurred losses or damages in
connection with this Agreement or any of the transactions contemplated hereby, the
maximum liability of the Purchaser for such losses and damages shall be limited to $25,000,000
and, without duplication, the maximum liability of each Guarantor, directly or indirectly, shall be
limited to such Guarantor’s Pro Rata Share (as defined in the Limited Guaranty) of the Maximum
Amount (as defined in the Limited Guaranty) in accordance with its express

 

56

obligations under the
Limited Guaranty. In no event shall the Company seek to recover any money damages in excess of
$25,000,000 in the aggregate from the Purchaser or the Guarantors in connection therewith. In
addition, the Company agrees that no recourse under this Agreement, any documents or instruments
delivered in connection with this Agreement, any other Transaction Agreement or any of the
transactions contemplated hereby or thereby shall be had against any (x) former, current or future
director, officer, employee, partner (limited or general) (other than the Guarantors, solely to the
extent expressly provided in the Limited Guaranty), member, manager, shareholder, Affiliate or
controlling Person of the Purchaser or (y) former, current or future director, officer, employee,
partner (limited or general), member, manager, shareholder, Affiliate or controlling Person of any
partner (limited or general) (other than the Guarantors, solely to the extent expressly provided in
the Limited Guaranty), member, manager, shareholder, Affiliate or controlling Person of the
Purchaser (the “Purchaser Related Parties”) whether by the enforcement of any assessment or
by any legal or equitable proceeding, or by virtue of any Law, it being expressly agreed and
acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise be
incurred by any of the Purchaser Related Parties, as such (other than, for the avoidance of doubt,
the Guarantors, solely to the extent expressly provided in the Limited Guaranty), for any
obligation of Parent or the Purchaser under this Agreement or any documents or instruments
delivered in connection with this Agreement, any other Transaction Agreement or any of the
transactions contemplated hereby or thereby or for any claim based on, in respect of or by reason
of such obligations, documents, instruments or transactions.

          (b) The parties hereto agree that irreparable damage would occur in the event that any
provision of this Agreement were not performed by the Company in accordance with the terms hereof
and that, prior to the termination of this Agreement pursuant to Section 7.1, the Purchaser shall
be entitled to specific performance of the terms hereof, in addition to any other remedy at law or
equity. The parties acknowledge that the Company shall not be entitled to an injunction or
injunctions to prevent breaches of this Agreement by Parent or the Purchaser or to enforce
specifically the terms and provisions of this Agreement and that the Company’s sole and exclusive
remedy with respect to any such breach shall be the remedy set forth in Section 8.12(a);
provided, however, that the Company shall be entitled to specific performance
against the Purchaser to prevent any breach or threatened breach by the Purchaser of Section
5.3(b).

          (c) The Purchaser Related Parties shall be third party beneficiaries of this Section 8.12
and the provisions of this Section 8.12 are intended to be for the benefit of and enforceable by
each Purchaser Related Party and his or her successors, heirs or representatives.

          SECTION 8.13 Counterparts; Execution by Facsimile Signature. This Agreement may be
executed in any number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument. This Agreement may be executed by facsimile
signature(s).

 

 

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

	 	 	 	 	 
	 	DORAL FINANCIAL CORPORATION

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

By: Doral Holdings, L.P.

Its: Managing Member

By: Doral GP Ltd.

Its: General Partner

 	 
	 	By:  	/s/ David
E. King	 
	 	 	Name:  	David
E. King	 
	 	 	Title:  	Director	 
	 
	 	For purposes of Section 5.15 only:

DORAL HOLDINGS, L.P.

By: Doral GP Ltd.

Its: General Partner

 	 
	 	By:  	/s/ David
E. King	 
	 	 	Name:  	David
E. King	 
	 	 	Title:  	Director	 
	 

[Stock Purchase Agreement]exv10w1

 

Exhibit 10.1

AMENDMENT NO. 1

TO

CONTACT CENTER SERVICES AGREEMENT

This Amendment No. 1, (“Amendment No. 1”), effective May 13, 2007, is made and entered into
by and between Expedia, Inc., a Washington corporation (“Expedia”) and PeopleSupport
(Philippines), Inc., a corporation created under the laws of the Republic of the Philippines
(“PeopleSupport”), with reference to the Contact Center Services Agreement between them,
dated September 29, 2006 (the “Agreement”). Capitalized terms, where not defined in this
Amendment No. 1, shall have the meanings set forth in the Agreement. Expedia and PeopleSupport
desire to amend the Agreement as follows:

1. A new Section 7.4 of the Agreement is hereby added to the Agreement as follows:

7.4 Yearly Pricing Adjustment. Not less than *** days prior to the
end of each calendar year, PeopleSupport may give Expedia written notice
that it intends to increase its Service Fees under any (or all) Statements of Work
for the following calendar year; provided, that the Service Fees for the next
calendar year may not exceed the then-current Service Fees by more than
*** percent. Such revised pricing will become effective on January 1 and will
apply to all applicable Services performed in that calendar year.

2. Section 7.2.1(a) of the Agreement is hereby deleted in its entirety and replaced with
the following:

	 	(a)	 	With respect to each calendar month for which PeopleSupport
is to provide Services (such month to be referred to as the “Subject Month”),
PeopleSupport will invoice Expedia on or before the first (1st) day of the
calendar month *** calendar months prior to the Subject Month. The amount for which
PeopleSupport shall invoice Expedia for such Services shall be equal to:

	 	(i)	 	in the case of any Subject Month prior to July 2008, *** percent of the Service Fees based
on the then-current Preliminary Projections provided by Expedia to PeopleSupport; or
	 
	 	(ii)	 	in the case of any Subject Month after and including
July 2008 *** percent of the Service Fees based on the
then-current Preliminary Projections provided by Expedia to PeopleSupport, (in either case,
such amount shall be known as the “Prepayment Amount”) or
	 
	 	(iii)	 	in the case of any Subject Month after and including
October 2008, no Prepayment Amount will be payable by Expedia and the
remainder of this Section 7.2.1 shall be inapplicable.

3. The year “2008” is hereby inserted after the first occurrence of the word “June” in the
first sentence of the example listed in Section 7.2(g) of the Agreement.

4. Section 7.2.4 of the Agreement is hereby deleted in its entirety and replaced with the
following:

	 	7.2.4	 	As of October 1, 2008, Expedia’s obligation to make prepayment in
accordance with Section 7.2.1 will automatically expire. For the
month of October 2008 and each calendar month thereafter, PeopleSupport will
invoice Expedia for Services after the end of the calendar month and
Expedia will pay such invoices within *** days after receipt.

5. Section 7.2.5 of the Agreement is hereby deleted in its entirety.

6. Section 7.2.6 of the Agreement is hereby deleted in its entirety.

 

 

7. Section 22.2 of the Agreement is hereby deleted in its entirety and replaced with the
following:

22.2 No Exclusivity; No Minimums. The Parties agree that nothing in this
Agreement will be deemed or construed to prohibit either Party from engaging in or
participating with one or more third parties in business arrangements similar to or
competitive with those described herein in any territory worldwide. Additionally,
except as expressly set forth in a Statement of Work, nothing herein will be
construed as creating a minimum commitment for business on the part of Expedia to
PeopleSupport.

8. The Parties hereby acknowledge and agree that (1) that certain letter dated
*** from *** titled *** regarding reporting metric and (2)
that certain letter dated *** from *** titled *** are hereby
rescinded and nullified from their inception in their entirety and shall be given
no effect whatsoever. The Parties hereby acknowledge and agree that that certain letter dated
*** from *** titled *** regarding *** shall be
deemed rescinded and nullified from its inception in its entirety and shall be
given no effect whatsoever upon *** of a *** from *** (or an
equivalent, mutually-agreed qualified ***) confirming that PeopleSupport has met
all applicable *** requirements pertaining to ***.
For avoidance of doubt, upon the rescission of such letters, notice of the
*** in these letters shall be deemed to have ***, and will have no
effect for purposes of creating a *** under *** of the Agreement.

9. Except as expressly set amended by this Amendment No. 1, the terms and conditions of the
Agreement will continue in full force and effect.

	 	 	 	 	 	 	 	 	 	 	 
	PEOPLESUPPORT (PHILIPPINES), INC.	 	 	 	EXPEDIA, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/S/ Caroline Rook
	 	 	 	By:
	 	/S/ Paul Brown	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	 	 	Title: Authorized Signatory	 	 	 	 	 	Title: President	 	 
	 	 	Date: 5/8/07	 	 	 	 	 	Date: 5/13/07

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