<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
Amendment No. 4
Doral Financial Corporation
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(NAME OF ISSUER)
Common Stock, $1.00 Par Value
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(TITLE OF CLASS OF SECURITIES)
25811P100
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(CUSIP NUMBER)
Salomon Levis, F.D. Roosevelt Avenue 1159, Puerto Nuevo, Puerto Rico 00920
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(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS)
February 19, 1998
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(DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box [ ].
Check the following box if a fee is being paid with the statement [ ].
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent of
the class of securities described in Item 1: and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent or less of
such class.) (See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that
section of the Act but shall be subject to all other provisions of the Act
(however, see the Notes).
<PAGE> 2
CUSIP No. 25811P100 Page 2 of 9 Pages
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<TABLE>
<S> <C> <C>
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Salomon Levis
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ]
(b)[X]
See Item 6 and Schedule A
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
No shares are being purchased currently
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(E) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
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7 SOLE VOTING POWER
543,280
NUMBER OF --------------------------------------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 25,404
EACH --------------------------------------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 543,280
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10 SHARED DISPOSITIVE POWER
25,404
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
568,684
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.81%
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14 TYPE OF REPORTING PERSON*
IN
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</TABLE>
* SEE INSTRUCTION BEFORE FILLING OUT!
<PAGE> 3
CUSIP No. 25811P100 Page 3 of 9 Pages
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<TABLE>
<S> <C> <C>
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
David Levis
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ]
(b)[X]
See Item 6 and Schedule A
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
PF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(E) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
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7 SOLE VOTING POWER
227,506
NUMBER OF --------------------------------------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 0
EACH --------------------------------------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 227,506
-------------------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
227,506
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.13%
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14 TYPE OF REPORTING PERSON*
IN
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</TABLE>
* SEE INSTRUCTION BEFORE FILLING OUT!
<PAGE> 4
CUSIP No. 25811P100 Page 4 of 9 Pages
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<TABLE>
<S> <C> <C>
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Mario S. Levis
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ]
(b)[X]
See Item 6 and Schedule A
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
00
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(E) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
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7 SOLE VOTING POWER
310,906
NUMBER OF --------------------------------------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 300
EACH --------------------------------------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 310,906
-------------------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
300
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
311,206
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.54%
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14 TYPE OF REPORTING PERSON*
IN
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</TABLE>
* SEE INSTRUCTION BEFORE FILLING OUT!
<PAGE> 5
CUSIP No. 25811P100 Page 5 of 9 Pages
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<TABLE>
<S> <C> <C>
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Zoila Levis
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[ ]
(b)[X]
See Item 6 and Schedule A
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
00
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(E) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
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7 SOLE VOTING POWER
181,472
NUMBER OF --------------------------------------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 0
EACH --------------------------------------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH 181,472
-------------------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- -----------------------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
181,472
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.89%
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14 TYPE OF REPORTING PERSON*
IN
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</TABLE>
* SEE INSTRUCTION BEFORE FILLING OUT!
<PAGE> 6
Page 6 of 9 pages
SCHEDULE 13D ITEMS
The original filing to which this Amendment No. 4 relates was dated
October 5, 1995 and was amended by an Amendment No. 1 dated December 15, 1995
("Amendment No. 1"), Amendment No. 2 dated September 3, 1996 ("Amendment No.2")
and Amendment No. 3 dated September 9, 1997.
ITEM 1. SECURITY AND ISSUER
This Schedule 13D relates to the Common Stock, $1.00 par value (the
"Common Stock"), of Doral Financial Corporation, formerly First Financial
Caribbean Corporation (the "Company"), a Puerto Rico corporation, having its
principal executive offices at 1159 Franklin D. Roosevelt Avenue, Puerto Nuevo,
Puerto Rico 00920 and is being filed by the persons identified in Item 2 below.
ITEM 2. IDENTIFY AND BACKGROUND
See Schedule A attached hereto.
None of the persons filing this Schedule 13D has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors)
during the past 5 years or was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violations with respect to such
laws. All individuals are citizens of the United States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The amount of Funds used by Zoila Levis, David Levis and Mario S.
Levis to purchase the shares of Common Stock reflected in the table under Item
5 below was $240,000, $494,400 and $240,000 respectively. David Levis used
personal funds to make such acquisition. Zoila Levis financed the purchase of
the shares acquired by her by borrowing funds under a master repurchase
agreement with Doral Securities (formerly AAA Financial Services Corp) pursuant
to which she pledged unrelated debt securities to secure the borrowing. Mario
S. Levis financed the purchase of shares acquired by him through his margin
account with Smith Barney, Inc.
<PAGE> 7
Page 7 of 9 pages
ITEM 4. PURPOSE OF TRANSACTION
The shares of Common Stock described in Item 5 were purchased by Zolia
Levis, David Levis and Mario S. Levis for personal investment in order to
increase their investment in the Company.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) See Schedule A hereto and cover pages for each individual filing
this Schedule. All share information contained in this Amendment No. 4,
including this Item 5, has been adjusted to reflect a two-for-one stock split
effective August 28, 1997.
(b) The spouses of Messrs. Salomon Levis and Mario S. Levis own
25,404 and 300 shares, respectively, of the Company's Common Stock which have
been included in the total amount of shares owned by such persons. The
inclusion of such shares of Common Stock in this Schedule 13D shall not be
construed as an admission by Salomon Levis or Mario S. Levis that they are the
beneficial owners of such shares for purposes of Section 13(d) of the
Securities Exchange Act of 1934.
Furthermore, the filing of this Schedule 13D by each of the reporting
persons shall not be construed as an admission that the shares of any such
person are beneficially owned by any of the other individuals reporting
hereunder for purposes of Section 13(d) of the Securities Exchange Act of 1934.
Except for the shares of Common Stock owned by their spouses, each of the
persons filing this Schedule has the sole power to vote or direct the vote and
the sole power to dispose or direct the disposition of all shares of Common
Stock owned by him or her, subject to the community property laws of the
Commonwealth of Puerto Rico.
Since none of the individuals filing this Schedule individually own 5%
of the outstanding shares of the Company's Common Stock, the persons filing
this Schedule disclaim that the provision of Section 13(d) of the Securities
Exchange Act of 1934 and the Rules and Regulations promulgated by the
Securities and Exchange Commission thereunder are applicable to their
respective holdings of the Company's Common Stock.
(c) On February 19, 1998, Zoila Levis, David Levis and Mario S. Levis
purchased 10,000 shares, 20,600 shares and 10,000 shares, respectively, at a
price of $24.00 per share in connection with a public underwritten offering
managed by the underwriting firm of Brean Murray & Co.
<PAGE> 8
Page 8 of 9 pages
ITEM 6. CONTRACT, ARRANGEMENT OR UNDERSTANDING WITH RESPECT TO SECURITIES OF
THE ISSUER
None other than an informal understanding that the persons
listed in Schedule A attached hereto will consult with each other regarding
the disposition and voting of the shares of the Company's Common Stock owned by
each of them. Furthermore, the persons listed in Schedule A may acquire
additional shares of the Company's Common Stock.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 7(a) - Master Repurchase Agreement between Zoila Levis and
Doral Securities, Inc. (formerly AAA Financial Services Corp).
Each of the undersigned hereby certifies after reasonable inquiry, that
to the best of his/her knowledge and belief, the information set forth in this
statement is true, complete and correct.
Date: March 2, 1998
/s/ Salomon Levis
---------------------------------------
Salomon Levis
/s/ David Levis
---------------------------------------
David Levis
/s/ Zoila Levis
---------------------------------------
Zoila Levis
/s/ Mario S. Levis
---------------------------------------
Mario S. Levis
<PAGE> 9
Page 9 of 9 Pages
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Schedule A
Doral Financial Corporation
Amendment No. 4 to Schedule 13D
Item 2. Identity and Background and
Item 5. Interest in Securities of the Issuer
<TABLE>
<CAPTION>
(4)
(Item 5)
--------------------------------------
(3)
Present Principal occupation or
employment and the name,
principal business and address
of any corporation or other Total number of
(1) (2) organization in which such shares of Common Percentage of
Name Business Address employment is conducted. Stock owned on the Class of Common
(Item 2(a) and (5) (Item 2(b)) (Item 2(c)) date hereof(1) Stock (1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Salomon Levis 1159 F.D. Roosevelt Ave. Chairman of the Board and Chief
Puerto Nuevo, Puerto Rico 00920 Executive Officer of the Company, 568,684 2.81%
a corporation engaged principally
in the origination, servicing,
purchase and sale of mortgages on
single-family houses, and the
issuance and sale of various
mortgage-backed securities.
2. David Levis 1159 F.D. Roosevelt Ave. Private investor and 227,506 1.13%
Puerto Nuevo, Puerto Rico 00920 Director Emeritus of the Company
3. Zoila Levis 1159 F.D. Roosevelt Ave. President of the Company 181,472 0.89%
Puerto Nuevo, Puerto Rico 00920
4. Mario S. Levis 1159 F.D. Roosevelt Ave. Executive Vice President and
Puerto Nuevo, Puerto Rico 00920 Treasurer of the Company 311,206 1.54%
--------- ----
Total 1,288,868 6.38%
</TABLE>
- ------------------
(1) Based on 20,214,460 shares of Common Stock of the Company outstanding
as of February 19, 1998.
<PAGE> 10
Hato Rey Tower Suite 1803 [AAA LOGO]
268 Munoz Rivera Avenue FINANCIAL SERVICES CORP.
Hato Rey, PR 00918
MASTER REPURCHASE AGREEMENT
Between: ZOILA LEVIS GOLDSTEIN Dated as of 12/12/96
--------------------- --------
- -------------------------------
and
AAA FINANCIAL SERVICES CORP.
- -------------------------------
1. APPLICABILITY
From time to time the parties hereto may enter into transactions in
which one party ("Seller") agrees to transfer to the other ("Buyer") securities
or financial instruments ("Securities") against the transfer of funds by Buyer,
with a simultaneous agreement by Buyer to transfer to Seller such Securities at
a date certain or on demand, against the transfer of funds by Seller. Each such
transaction shall be referred to herein as a "Transaction" and shall be governed
by this Agreement, including any supplemental terms or conditions contained in
Annex I hereto, unless otherwise agreed in writing.
2. DEFINITIONS
(a) "Act of Insolvency", with respect to any party, (i) the
commencement by such party as debtor of any case or proceeding under any
bankruptcy, insolvency, reorganization, liquidation, dissolution or similar law,
or such party seeking the appointment of a receiver, trustee, custodian or
similar official for such party or any substantial part of its property, or (ii)
the commencement of any such case or proceeding against such party, or another
seeking such an appointment, or the filing against a party of an application for
a protective decree under the provisions of the Securities Investor Protection
Act of 1970, which (A) is consented to or not timely contested by such party,
(B) results in the entry of an order for relief, such an appointment, the
issuance of such a protective decree or the entry of an order having a similar
effect, or (C) is not dismissed within 15 days, (iii) the making by a party of a
general assignment for the benefit of creditors, or (iv) the admission in
writing by a party of such party's inability to pay such party's debts as they
become due:
(b) "Additional Purchased Securities". Securities provided by Seller to
Buyer pursuant to Paragraph 4(a) hereof;
(c) "Buyer's Margin Amount", with respect to any Transaction as of any
date, the amount obtained by application of a percentage (which may be equal to
the percentage that is agreed to as the Seller's Margin Amount under
subparagraph (q) of this Paragraph), agreed to by Buyer and Seller prior to
entering into the Transaction, to the Repurchase Price for such Transaction as
of such date;
(d) "Confirmation", the meaning specified in paragraph 3(b) hereof;
(e) "Income", with respect to any Security at any time, any principal
hereof then payable and all interest, dividends or other distributions thereon;
(f) "Margin Deficit", the meaning specified in Paragraph 4(a) hereof;
(g) "Margin Excess", the meaning specified in Paragraph 4(b) hereof;
(h) "Market Value", with respect to any Securities as of any date, the
price for such Securities on such date obtained from a generally recognized
source agreed to by the parties or the most recent closing bid quotation from
such a source, plus accrued income to the extent not included therein (other
than any income credited or transferred to, or applied to the obligations of,
Seller pursuant to Paragraph 5 hereof) as of such date (unless contrary to
market practice for such Securities);
<PAGE> 11
(i) "Price Differential", with respect to any Transaction
hereunder as of any date, the aggregate amount obtained by daily application of
the Pricing Rate for such Transaction to the Purchase Price for such Transaction
on a 360 day per year basis for the actual number of days during the period
commencing on (and including) the Purchase Date for such Transaction and ending
on (but excluding) the date of determination (reduced by any amount of such
Price Differential previously paid by Seller to Buyer with respect to such
Transaction);
(j) "Pricing Rate", the per annum percentage rate for
determination of the Price Differential;
(k) "Prime Rate", the prime rate of U.S. money center commercial
banks as published in The Wall Street Journal:
(l) "Purchase Date", the date on which Purchased Securities are
transferred by Seller to Buyer;
(m) "Purchase Price", (i) on the Purchase Date, the price at which
Purchased Securities are transferred by Seller to Buyer, and (ii) thereafter,
such price increased by the amount of any cash transferred by Buyer to Seller
pursuant to Paragraph 4(b) hereof and decreased by the amount of any cash
transferred by Seller to Buyer pursuant to Paragraph 4(a) hereof or applied to
reduce Seller's obligations under clause (ii) of Paragraph 5 hereof;
(n) "Purchased Securities", the Securities transferred by Seller
to Buyer in a Transaction hereunder, and any Securities substituted therefor in
accordance with Paragraph 9 hereof. The term "Purchased Securities" with respect
to any Transaction at any time also shall include Additional Purchased
Securities delivered pursuant to paragraph 4(a) and shall exclude Securities
returned pursuant to Paragraph 4(b);
(o) "Repurchased Date", the date on which Seller is to repurchase
the Purchased Securities from Buyer, including any date determined by
application of the provisions of Paragraphs 3(c) or 11 hereof;
(p) "Repurchase Price", the price at which Purchased Securities
are to be transferred from Buyer to Seller upon termination of a Transaction,
which will be determined in each case (including Transactions terminable upon
demand) as the sum of the Purchase Price and the Price Differential as of the
date of such determination, increased by any amount determined by the
application of the provisions of Paragraph 11 hereof;
(q) "Seller's Margin Amount", with respect to any Transaction as
of any date, the amount obtained by application of a percentage (which may be
equal to the percentage that is agreed to as the Buyer's Margin Amount under
subparagraph (c) of this Paragraph), agreed to by Buyer and Seller prior to
entering into the Transaction, to the Repurchase Price for such Transaction as
of such date.
3. INITIATION; CONFIRMATION; TERMINATION
(a) An agreement to enter into a Transaction may be made orally or
in writing at the initiation of either Buyer or Seller. On the Purchase Date for
the Transaction, the Purchased Securities shall be transferred to Buyer or its
agent against the transfer of the Purchase Price to an account of Seller.
(b) Upon agreeing to enter into a Transaction hereunder, Buyer or
Seller (or both), as shall be agreed, shall promptly deliver to the other party
a written confirmation of each Transaction (a "Confirmation"). The Confirmation
shall describe the Purchased Securities (including CUSIP number, if any),
identify Buyer and Seller and set forth (i) the Purchase Date, (ii) the Purchase
Price, (iii) the Repurchase Date, unless the Transaction is to be terminable on
demand, (iv) the Pricing Rate or Repurchase Price applicable to the transaction,
and (v) any additional terms or conditions of the Transaction not inconsistent
with this Agreement, The Confirmation, together with this Agreement, shall
constitute conclusive evidence of the terms agreed between Buyer and Seller with
respect to the Transaction to which the Confirmation relates, unless with
respect to the Confirmation specific objection is made promptly after receipt
thereof. In the event of any conflict between the terms of such Confirmation and
this Agreement, this Agreement shall prevail.
(c) In the case of Transactions terminable upon demand, such
demand shall be made by Buyer or Seller, no later than such time as is customary
in accordance with market practice, by telephone or otherwise on or prior to the
business day on which such termination will be effective. On the date specified
in such demand, or on the date fixed for termination in the case of Transactions
having a fixed term, termination of the Transaction will be effected by transfer
to Seller or its agent of the Purchased Securities and any income in respect
thereof received by Buyer (and not previously credited or transferred
<PAGE> 12
to, or applied to the obligations of Seller pursuant to Paragraph 5 hereof)
against the transfer of the Repurchase Price to an account of Buyer.
4. MARGIN MAINTENANCE
(a) If at any time the aggregate Market Value of all Purchased
Securities subject to all Transactions in which a particular party hereto is
acting as Buyer is less than the aggregate Buyer's Margin amount for all such
Transactions (a "Margin Deficit"), then Buyer may by notice to Seller require
Seller in such Transactions, at Seller's option, to transfer cash or additional
Securities reasonably acceptable to Buyer ("Additional Purchased Securities"),
so that the cash and aggregate Market Value of the Purchased Securities,
including any such Additional Purchased Securities, will thereupon equal or
exceed such aggregate Buyer's Margin Amount (decreased by the amount of any
Margin Deficit as of such date arising from any Transactions in which such Buyer
is acting as Seller).
(b) If at any time the aggregate Market Value of all Purchased
Securities subject to all Transactions in which a particular party hereto is
acting as Seller exceeds the aggregate Seller's Margin Amount for all such
Transactions at such time (a "Margin Excess"), then Seller may by notice to
Buyer require Buyer in such Transactions, at Buyer's option, to transfer cash or
Purchased Securities to Seller, so that the aggregate Market Value of the
Purchased Securities, after deduction of any such cash or any Purchased
Securities so transferred, will thereupon not exceed such aggregate Seller's
Margin Amount (increased by the amount of any Margin Excess as of such date
arising from any Transactions in which such Seller is acting as Buyer).
(c) Any cash transferred pursuant to this Paragraph shall be
attributed to such Transactions as shall be agreed upon by Buyer and Seller.
(d) Seller and Buyer may agree, with respect to any or all
Transactions hereunder, that the respective rights of Buyer or Seller (or both)
under subparagraphs (a) and (b) of this Paragraph may be exercised only where
a Margin Deficit or Margin Excess exceeds a specified dollar amount or a
specified percentage of the Repurchase Prices for such Transactions (which
amount or percentage shall be agreed to by Buyer and Seller prior to entering
into any such Transactions).
(e) Seller and Buyer may agree, with respect to any or all
Transactions hereunder that the respective rights of Buyer and Seller under
subparagraphs (a) and (b) of this Paragraph to require the elimination of a
Margin Deficit or a Margin Excess, as the case may be, may be exercised
whenever such a Margin Deficit or Margin Excess exists with respect to any
single Transaction hereunder (calculated without regard to any other
Transaction outstanding under this Agreement).
5. INCOME PAYMENTS
Where a particular Transaction's terms extends over an income payment
date on the Securities subject to that Transaction, Buyer shall, as the parties
may agree with respect to such Transaction (or, in the absence of any agreement,
as Buyer shall reasonably determine in its discretion), on the date such income
is payable either (i) transfer to or credit to the account of Seller an amount
equal to such income payment or payments with respect to any Purchased
Securities subject to such Transaction or (ii) apply the income payment or
payments to reduce the amount to be transferred to Buyer by Seller upon
termination of the Transaction. Buyer shall not be obligated to take any action
pursuant to the preceding sentence to the extent that such action would result
in the creation of a Margin Deficit, unless prior thereto or simultaneously
therewith Seller transfers to Buyer cash or Additional Purchased Securities
sufficient to eliminate such Margin Deficit.
6. SECURITY INTEREST
Although the parties intend that all Transactions hereunder be sales
and purchases and not loans, in the event any such Transactions are deemed to be
loans, Seller shall be deemed to have pledged to Buyer as security for the
performance by Seller of its obligations under each such Transaction, and shall
be deemed to have granted to Buyer a security interest in, all of the Purchased
Securities with respect to all Transactions hereunder and all proceeds thereof.
<PAGE> 13
7. PAYMENT AND TRANSFER
Unless otherwise mutually agreed, all transfers of funds hereunder shall
be immediately available funds. All Securities transferred by one party hereto
to the other party (i) shall be in suitable form for transfer or shall be
accompanied by duly executed instruments of transfer or assignment in blank and
such other documentation as the party receiving possession may reasonably
request, (ii) shall be transferred on the book-entry system of a Federal
Reserve Bank, or (iii) shall be transferred by any other method mutually
acceptable to Seller and Buyer. As used herein with respect to Securities,
"transfer" is intended to have the same meaning as when used in Section 8-313
of the New York Uniform Commercial Code or, where applicable, in any federal
regulation governing transfers of the Securities.
8. SEGREGATION OF PURCHASED SECURITIES
To the extent required by applicable law, all Purchased Securities in the
possession of Seller shall be segregated from other securities in its
possession and shall be identified as subject to this Agreement. Segregation
may be accomplished by appropriate identification on the books and records of
the holder, including a financial intermediary or a clearing corporation. Title
to all Purchased Securities shall pass to Buyer and, unless otherwise agreed by
Buyer and Seller, nothing in this Agreement shall preclude Buyer from engaging
in repurchase transactions with the Purchased Securities or otherwise pledging
or hypothecating the Purchased Securities, but no such transaction shall
relieve Buyer of its obligations to transfer Purchased Securities to Seller
pursuant to Paragraphs 3, 4 or 11 hereof, or of Buyer's obligation to credit or
pay income to, or apply income to the obligations of, Seller pursuant to
Paragraph 5 hereof.
REQUIRED DISCLOSURE FOR TRANSACTIONS IN WHICH THE SELLER RETAINS CUSTODY OF THE
PURCHASED SECURITIES.
Seller is not permitted to substitute other securities for those subject
to this Agreement and therefore must keep Buyer's securities segregated at all
times, unless in this Agreement Buyer grants Seller the right to substitute
other securities. If Buyer grants the right to substitute, this means that
Buyer's securities will likely be commingled with Seller's own securities
during the trading day. Buyer is advised that, during any trading day that
Buyer's securities are commingled with Seller's securities, they [will]*
[may]** be subject to liens granted by Seller to [its clearing bank]* [third
parties]** and may be used by Seller for deliveries on other securities
transactions. Whenever the securities are commingled, Seller's ability to
resegregate substitute securities for Buyer will be subject to Seller's ability
to satisfy [the clearing]* [any]** lien or to obtain substitute securities.
* Language to be used under 17 C.F.R. ss.403.4(e) if Seller is a government
securities broker or dealer other than a financial institution.
** Language to be used under 17 C.F.R. ss.403.5(d) if Seller is a financial
institution.
9. SUBSTITUTION
(a) Seller may, subject to agreement with any acceptance by Buyer,
substitute other Securities for any Purchased Securities. Such substitution
shall be made by transfer to Buyer of such other Securities and transfer to
Seller of such Purchased Securities. After substitution, the substituted
Securities shall be deemed to be Purchased Securities.
(b) In Transactions in which the Seller retains custody of Purchased
Securities, the parties expressly agree that Buyer shall be deemed, for
purposes of subparagraph (a) of this Paragraph, to have agreed to and accepted
in this Agreement substitution by Seller of other Securities for Purchased
Securities; provided, however, that such other Securities shall have a Market
Value at least equal to the Market Value of the Purchased Securities for which
they are substituted.
10. REPRESENTATIONS
Each of Buyer and Seller represents and warrants to the other that (i) it
is duly authorized to execute and deliver this Agreement, to enter into the
Transactions contemplated hereunder and to perform its obligations hereunder
and has taken all necessary action to authorize such execution, delivery and
performance (ii) it will engage in such Transactions as principal (or, if
agreed in writing in advance of any Transaction by the other party hereto, as
agent for a disclosed principal), (iii) the person signing this
<PAGE> 14
Agreement on its behalf is duly authorized to do so on its behalf (or on behalf
of any such disclosed principal), (iv) it has obtained all authorizations of
any governmental body required in connection with this Agreement and the
Transactions hereunder and such authorizations are in full force and effect and
(v) the execution, delivery and performance of this Agreement and the
Transactions hereunder will not violate any law, ordinance, charter, by-law or
rule applicable to it or any agreement by which it is bound or by which any of
its assets are affected. On the Purchase Date for any Transaction Buyer and
Seller shall each be deemed to repeat all the foregoing representations made by
it.
11. EVENTS OF DEFAULT
In the event that (i) Seller fails to repurchase or Buyer fails to
transfer Purchased Securities upon the applicable Repurchase Date, (ii) Seller
or Buyer fails, after one business day's notice, to comply with Paragraph 4
hereof, (iii) Buyer fails to comply with Paragraph 5 hereof, (iv) and Act of
Insolvency occurs with respect to Seller or Buyer, (v) any representation made
by Seller or Buyer shall have been incorrect or untrue in any material respect
when made or repeated or deemed to have been made or repeated, or (vi) Seller
or Buyer shall admit to the other its inability to, or its intention not to,
perform any of its obligations hereunder (each and "Event of Default"):
(a) At the option of the nondefaulting party, exercised by written
notice to the defaulting party (which option shall be deemed to have been
exercised, even if no notice is given, immediately upon the occurrence of an
Act of Insolvency), the Repurchase Date for each Transaction hereunder shall be
deemed immediately to occur.
(b) In all Transactions in which the defaulting party is acting as
Seller, if the nondefaulting party exercises or is deemed to have exercised the
option referred to in subparagraph (a) of this Paragraph, (i) the defaulting
party's obligations hereunder to repurchase all Purchased Securities in such
Transactions shall thereupon become immediately due and payable, (ii) to the
extent permitted by applicable law, the Repurchase Price with respect to each
such Transaction shall be increased by the aggregate amount obtained by daily
application of (x) the greater of the Pricing Rate for such transaction or the
prime Rate to (y) the Repurchase Price for such Transaction as of the Repurchase
Date as determined pursuant to subparagraph (a) of this Paragraph (decreased as
of any day by (A) any amounts retained by the nondefaulting party with respect
to such Repurchase Price pursuant to clause (iii) of this subparagraph, (B) any
proceeds from the sale of Purchased Securities pursuant to subparagraph (d) (i)
of this Paragraph, and (C) any amounts credited to the account of the defaulting
party pursuant to subparagraph (e) of this Paragraph) on a 360 day per year
basis for the actual number of days during the period from and including the
date of the Event of Default giving rise to such option to but excluding the
date of payment of the Repurchase Price as so increased, (iii) all income paid
after such exercise or deemed exercise shall be retained by the nondefaulting
party and applied to the aggregate unpaid Repurchase Price owed by the
defaulting party, and (iv) the defaulting party shall immediately deliver to the
nondefaulting party any Purchased Securities subject to such Transactions then
in the defaulting party's possession.
(c) In all Transactions in which the defaulting party is acting as
Buyer, upon tender by the nondefaulting party of payment of the aggregate
Repurchase Prices for all such Transactions, the defaulting party's right,
title and interest in all Purchased Securities subject to such Transactions
shall be deemed transferred to the nondefaulting party, and the defaulting
party shall deliver all such Purchased Securities to the nondefaulting party.
(d) After one business day's notice to the defaulting party (which
notice need not be given if an Act of Insolvency shall have occurred, and which
may be the notice given under subparagraph (a) of this Paragraph or the notice
referred to in clause (ii) of the first sentence of this Paragraph), the
nondefaulting party may:
(i) as to Transactions in which the defaulting party is acting as
Seller, (A) immediately sell, in a recognized market at such price or
prices as the nondefaulting party may reasonably deem satisfactory, any or
all Purchased Securities subject to such Transactions and apply the
proceeds thereof to the aggregate unpaid Repurchase Prices and any other
amounts owing by the defaulting party hereunder or (B) in its sole
discretion elect, in lieu of selling all or a portion of such Purchased
Securities, to give the defaulting party credit for such Purchased
Securities in an amount equal to the price therefor on such date, obtained
from a generally recognized source or
<PAGE> 15
the most recent closing bid quotation from such a source, against the
aggregate unpaid Repurchase Prices and any other amounts owing by the
defaulting party hereunder, and
(ii) as to Transactions in which the defaulting party is acting
as Buyer, (A) purchase securities ("Replacement Securities") of the same
class and amount as any Purchased Securities that are not delivered by the
defaulting party to the nondefaulting party as required hereunder or (B)
in its sole discretion elect, in lieu of purchasing Replacement
Securities, to be deemed to have purchased Replacement Securities at the
price therefor on such date, obtained from a generally recognized source
or the most recent closing bid quotation from such a source.
(e) As to Transactions in which the defaulting party is acting as Buyer,
the defaulting party shall be liable to the nondefaulting party (i) with respect
to Purchased Securities (other than Additional Purchased Securities), for any
excess of the price paid (or deemed paid) by the nondefaulting party for
Replacement Securities therefor over the Repurchase Price for such Purchased
Securities and (ii) with respect to Additional Purchased Securities, for the
price paid (or deemed paid) by the nondefaulting party for the Replacement
Securities therefor, in addition, the defaulting party shall be liable to the
nondefaulting party for interest on such remaining liability with respect to
each such purchase (or deemed purchase) of Replacement Securities from the date
of such purchase (or deemed purchase) until paid in full by Buyer. Such interest
shall be at a rate equal to the greater of the Pricing Rate for such Transaction
or the Prime Rate.
(f) For purposes of this Paragraph 11, the Repurchase Price for each
Transaction hereunder in respect of which the defaulting party is acting as
Buyer shall not increase above the amount of such Repurchase Price for such
Transaction determined as of the date of the exercise or deemed exercise by the
nondefaulting party of its option under subparagraph (a) of this Paragraph.
(g) The defaulting party shall be liable to the nondefaulting party for
the amount of all reasonable legal or other expenses incurred by the
nondefaulting party in connection with or as a consequence of an Event of
Default, together with interest thereon at a rate equal to the greater of the
Pricing Rate for the relevant Transaction or the Prime Rate.
(h) The nondefaulting party shall have, in addition, to its rights hereunder
any rights otherwise available to it under any other agreement of applicable
law.
12. SINGLE AGREEMENT
Buyer and Seller acknowledge that, and have entered hereinto and will
enter into each Transaction hereunder in consideration of and in reliance upon
the fact that, all Transactions hereunder constitute a single business and
contractual relationship and have been made in consideration of each other.
Accordingly, each of Buyer and Seller agrees (i) to perform all of its
obligations in respect of each Transaction hereunder, and that a default in the
performance of any such obligations shall constitute a default by it in respect
of all Transactions hereunder, (ii) that each of them shall be entitled to set
off claims and apply property held by them in respect of any Transaction
against obligations owing to them in respect of any other Transactions
hereunder and (iii) that payments, deliveries and other transfers made by
either of them in respect of any Transaction shall be deemed to have been made
in consideration of payments, deliveries and other transfers in respect of any
other Transactions hereunder, and the obligations to make any such payments,
deliveries and other transfers may be applied against each other and netted.
13. NOTICES AND OTHER COMMUNICATIONS
Unless another address is specified in writing by the respective party to
whom any notice or other communication is to be given hereunder, all such
notices or communications shall be in writing or confirmed in writing and
delivered at the respective address set forth in Annex II attached hereto.
14. ENTIRE AGREEMENT; SEVERABILITY
This Agreement shall supersede any existing agreements between the
parties containing general terms and conditions for repurchase transactions.
Each provision and agreement herein shall be treated as separate and
independent from any other provision or agreement herein and shall be
enforceable notwithstanding the unenforceability of any such other provision or
agreement.
<PAGE> 16
15. NON-ASSIGNABILITY; TERMINATION
The rights and obligations of the parties under this Agreement and
under any Transaction shall not be assigned by either party without the prior
written consent of the other party. Subject to the foregoing, this Agreement
and any Transactions shall be binding upon and shall inure to the benefit of
the parties and their respective successors and assigns. This Agreement may be
canceled by either party upon giving written notice to the other, except that
this Agreement shall, notwithstanding such notice, remain applicable to any
Transactions then outstanding.
16. GOVERNING LAW
This Agreement shall be governed by the laws of the State of New York
without giving effect to the conflict of law principles thereof.
17. NO WAIVERS, ETC.
No express or implied waiver of any Event of Default by either party
shall constitute a waiver of any other Event of Default and no exercise of any
remedy hereunder by any party shall constitute a waiver of its right to
exercise any other remedy hereunder. No modification or waiver of any
provision of this Agreement and no consent by any party to a departure
herefrom shall be effective unless and until such shall be in writing and duly
executed by both of the parties hereto. Without limitation on any of the
foregoing, the failure to give a notice pursuant to subparagraphs 4(a) or 4(b)
hereof will not constitute a waiver of any right to do so at a later date.
18. USE OF EMPLOYEE PLAN ASSETS
(a) If assets of an employee benefit plan subject to any provision of
the Employee Retirement Income Security Act of 1974 ("ERISA") are intended to
be used by either party hereto (the "Plan Party") in a Transaction, the Plan
Party shall so notify the other party prior to the Transaction. The Plan Party
shall represent in writing to the other party that the Transaction does not
constitute a prohibited transaction under ERISA or is otherwise exempt
therefrom, and the other party may proceed in reliance thereon but shall not be
required so to proceed.
(b) Subject to the last sentence of subparagraph (a) of this
Paragraph, any such Transaction shall proceed only if Seller furnishes or has
furnished to Buyer its most recent available audited statement of its financial
condition and its most recent subsequent unaudited statement of its financial
condition.
(c) By entering into a Transaction pursuant to this Paragraph, Seller
shall be deemed (i) to represent to Buyer that since the date of Seller's
latest such financial statements, there has been no material adverse change in
Seller's financial condition which Seller has not been disclosed to Buyer, and
(ii) to agree to provide Buyer with future audited and unaudited statements of
its financial condition as they are issued, so long as it a Seller in any
outstanding Transaction involving a Plan Party.
19. INTENT
(a) The parties recognize that each Transaction is a "repurchase
agreement" as that term is defined in Section 101 of Title 11 of the United
States Code, as amended (except insofar as the type of Securities subject to
such Transaction or the term of such Transaction would render such definition
inapplicable), and a "securities contract" as that term is defined in Section
741 of Title 11 of the United States Code, as amended.
(b) if is understood that either party's right to liquidate
Securities delivered to it in connection with Transactions hereunder or to
exercise any other remedies pursuant to Paragraph 11 hereof, is a contractual
right to liquidate such Transaction as described in Sections 555 and 559 of
Title 11 of the United States Code, as amended.
20. DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS
The parties acknowledge that they have been advised that:
(a) in the case of Transactions in which one of the parties is a
broker or dealer registered with the Securities and Exchange
Commission ("SEC") under Section 15 of the Securities Exchange Act of
1934 ("1934 Act"), the Securities Investor Protection Corporation has
taken the
<PAGE> 17
position that the provisions of the Securities Investor Protection
Act of 1970 ("SIPA") do not protect the other party with respect
to any Transaction hereunder;
(b) in the case of Transactions in which one of the parties is a
government securities broker or a government securities dealer
registered with the SEC under Section 15C of the 1934 Act, SIPA will
not provide protection to the other party with respect to any
Transaction hereunder; and
(c) in the case of Transactions in which one of the parties is a
financial institution, funds held by the financial institution
pursuant to a Transaction hereunder are not a deposit and therefore
are not insured by the Federal Deposit Insurance Corporation, the
Federal Savings and Loan Insurance Corporation or the National Credit
Union Share Insurance Fund, as applicable
AAA FINANCIAL SERVICES CORP ZOILA LEVIS GOLDSTEIN
By /s/ Nydia Vega By /s/ Zoila Levis Goldstein
----------------------------- -----------------------------
Nydia Vega Zoila Levis Goldstein
Title Senior Financial Consultant Title
-------------------------- ------------------------
Date 12/12/96 Date 12/12/96
--------------------------- ------------------------
<PAGE> 18
ANNEX II
SUPPLEMENTAL TERMS AND CONDITIONS
MASTER REPURCHASE AGREEMENT
Date as of 12/12/96
------------------
Between:
AAA FINANCIAL SERVICES CORPORATION
and
Zoila Levis Goldstein ("Counterparty")
- ---------------------
1. The parties agree that the following supplemental terms shall govern each
Transaction:
(a) With reference to Paragraph 2(h), the source for determining the
Market Value of any security listed on a national securities exchange
shall be The Wall Street Journal or other nationally recognized
financial publication or quotation system. In the case of unlisted
Securities, their Market Value shall be equal to the average bid
price of such Securities obtained from at least two recognized
securities dealers in Puerto Rico.
(b) With reference to Paragraph 3, upon entering into a Transaction AAA
Financial Services Corporation, shall promptly deliver to the other
party a Confirmation. If the Confirmation does not specify a
Repurchase Date, the Transaction shall be terminable on demand. If
a Transaction is terminable on demand, demand shall be made no later
than 10:00 A.M. Eastern standard time on the business day on which
such termination is to be effective.
(c) With reference to Paragraph 4(d), the respective rights of Buyer
or Seller under subparagraphs (a) and (b) of Paragraph 4 may be
exercised only where the Margin Deficit or Margin Excess exceeds
($1,000.00).
(d) With reference to Paragraph 4(c), in the event any cash is
transferred pursuant to Paragraph 4(c) hereof. Such cash shall be
attributed to the Transactions with the earliest Repurchase Date.
(e) With reference to Paragraph 5, unless there exists an Event of
Default in which the defaulting party is the Seller, all Income
payments with respect to any Purchased Securities subject to a
Transaction shall be transferred to Seller's account on the payable
date and shall not be applied to reduce the amount payable upon
termination of the Transaction.
<PAGE> 19
2
(f) With reference to Paragraph 2(k), the "Prime Rate" shall be the
rate charged by Citibank N.A. as its prime rate or base rate.
2. SECURITY INTEREST:
Supplementing Paragraph 6, if delivery of the Purchased Securities shall
take place in the Commonwealth of Puerto Rico, such security interest shall
take the form of a pledge evidenced by a notarized instrument in the form
attached hereto and market "Exhibit A". The creation, perfection and
enforcement of such security interest shall be governed by the laws of the
Commonwealth of Puerto Rico. If delivery of any Purchased Securities shall
take place outside of Puerto Rico (or if for any reason the Purchased
Securities shall not be delivered by Seller to Buyer), the granting of such
security interest shall be governed by the laws of the State of New York
and the phrase "security interest" shall have the meaning given to said
phrase by the Uniform Commercial Code, as adopted by said State.
3. REPRESENTATIONS AND WARRANTIES:
(a) Each party acting as Seller hereby represents and warrants with
respect to each Transaction that Seller either owns or has possession
and control of the Purchased Securities, with all right to sell or
pledge the same, free and clear of any lien or security interest,
other than the security interest created by this Agreement and the
rights of any third party which are subordinate to Buyer's rights
under this Agreement. For each Transaction Seller hereby appoints
Buyer as its attorney-in-fact and authorizes Buyer to pledge the
Purchased Securities to any third party, as permitted by applicable
law, on behalf of Seller with such pledge being superior to the
security interest granted to Buyer hereunder.
AAA Financial Services Corporation Zoila Levis Goldstein
By /s/ Nydia Vega By /s/ Zoila Levis Goldstein
------------------------------- ---------------------------
Nydia Vega
Title: Senior Financial Consultant Title: Zoila Levis Goldstein
---------------------------- -----------------------
Date: 12/12/96 Date: 12/12/96
----------------------------- --------------------
<PAGE> 20
ANNEX III
Names and Addresses for Communications Between Parties
Company Zoila Levis Goldstein
-----------------------------------------
Address Condado Ashford #1000 PH
-----------------------------------------
Attention Zoila Levis Goldstein
-----------------------------------------
Company AAA Financial Services Corporation
-------------------------------------------
Address 268 Munoz Rivera Avenue
Suite 1803
San Juan, PR 00918
Attention Nydia Vega
-----------------------------------------
Title Senior Financial Consultant
-----------------------------------------
