Document:

<PAGE>

                                                                    EXHIBIT 10.4

                                           BLUE RHINO CORPORATION
                                           ID: 56-1870472
                                           104 CAMBRIDGE PLAZA DRIVE
                                           WINSTON-SALEM, NC 27104

NOTICE OF GRANT OF STOCK OPTIONS
AND OPTION AGREEMENT

D. SCOTT COWARD
3760 BURBANK LANE
WINSTON-SALEM, NC USA 27106

Effective 12/16/2003, you have been granted a(n) Non-Qualified Stock Option to
buy 50,000.00 shares of Blue Rhino Corporation (the Company) stock at $12.99000
per share.

The total option price of the shares granted is $649,500.00.

Shares in each period will become fully vested on the date shown.

<TABLE>
<CAPTION>
 Shares         Vest Type         Full Vest     Expiration
<S>           <C>                <C>            <C>
10,000.00     On Vest Date       12/16/2004     12/16/2013
10,000.00     On Vest Date       12/16/2005     12/16/2013
10,000.00     On Vest Date       12/16/2006     12/16/2013
10,000.00     On Vest Date       12/16/2007     12/16/2013
10,000.00     On Vest Date       12/16/2008     12/16/2013
</TABLE>

By your signature and the Company's signature below, you and the Company agree
that these options are granted under and governed by the terms and conditions of
the Company's Stock Option Plan as amended and the Option Agreement, all of
which are attached and made a part of this document.

/s/ Blue Rhino Corporation                               Date  December 17, 2003

/s/ D. Scott Coward                                      Date  December 17, 2003

                                     - 1 -
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                             STOCK OPTION AGREEMENT

         STOCK OPTION AGREEMENT, made as of the date indicated on Notice of
Grant of Stock Options and Option Agreement (the "Grant Letter") attached hereto
(the "Grant Date"), is between Blue Rhino Corporation, a Delaware Corporation
(the "Company") and the undersigned individual, an employee of the Company (the
"Participant").

         WHEREAS, the Company desires, by affording the Participant an
opportunity to purchase shares of the Company's Common Stock as hereinafter
provided, to carry out the purposes of the Blue Rhino Corporation 1998 Employee
Stock Incentive Plan, as amended (the "Plan"); and

         WHEREAS, the Compensation Committee (the "Committee") of Board of
Directors (the "Board") has duly made all determinations necessary or
appropriate to the grants hereunder;

         NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto have agreed, and do hereby
agree, as follows:

1.       Grant of Option, Option Price and Term.

         (a)      The Company hereby grants to the Participant the right and
         option (the "Option") to purchase a certain number (see attached Grant
         Letter(s)) of shares of the Common Stock of the Company (the "Option
         Shares") on the terms and conditions herein set forth.

         (b)      For each of the Option Shares purchased, the Participant shall
         pay

                                     - 2 -
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         to the Company a certain amount (see attached Grant Letter) per share
         (the "Option Price"). Accordingly, the aggregate Option Price to
         exercise all of the Option is set forth on the Grant Letter attached
         hereto (the "Aggregate Option Price").

         (c)      The term of this Option shall be a period of ten (10) years
         from the Grant Date (the "Option Period"). The termination of the
         Option Period shall result in the termination and cancellation of the
         Option. In no event shall the Option be exercisable for any period
         greater than the Option Period. Subject to further terms of this
         Section 1, during the Option Period, the Option shall be exercisable in
         accordance with the following schedule:

<TABLE>
<CAPTION>
                                             Percentage of Option
      Grant Date Anniversary                  Shares Exercisable
      ----------------------                  ------------------
<S>                                          <C>
Prior to the first anniversary                         0%
         of the Grant Date

On or after the first anniversary                     20%
         of the Grant Date

On or after the second anniversary                    40%
         of the Grant Date

On or after the third anniversary                     60%
         of the Grant Date

On or after the fourth anniversary                    80%
         of the Grant Date

On or after the fifth anniversary                    100%
         of the Grant Date
</TABLE>

         The termination of a Participant's employment due to death or
         Disability will result in the Option being fully exercisable. The
         termination of a

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         Participant's employment other than due to death or Disability will not
         accelerate the percentage of Option Shares otherwise exercisable with
         respect to the Participant. Any portion of the Option which is not
         exercisable as of the termination of the Participant's employment other
         than due to death or Disability will be canceled simultaneously with
         the date of such termination of employment.

         (d)      Notwithstanding any other provision in this Agreement to the
         contrary, the Option shall become fully exercisable immediately upon a
         Change in Control. A "Change in Control" shall mean:

                  (1)      The acquisition by any individual entity or group
         (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the
         Securities Exchange Act of 1934, as amended (the "1934 Act")) or
         beneficial ownership (within the meaning of Rule 13d-3 promulgated
         under the 1934 Act) of 50% or more of the combined voting power of the
         then outstanding voting securities of the Company entitled to vote
         generally in the election of directors (the "Outstanding Voting
         Securities"); provided, however, that the following acquisitions shall
         not constitute a Change in Control: (A) any acquisition directly from
         the Company or any of its subsidiaries, (B) any acquisition by the
         Company of any of its subsidiaries, (C) any acquisition by any employee
         benefit plan (or related trust) sponsored or maintained by the Company
         or any of its subsidiaries, (D) any acquisition by any corporation with
         respect to which, following such acquisition, more than 50% of,
         respectively, the then outstanding shares

                                     - 4 -
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         of common stock of such corporation and the combined voting power of
         the then outstanding voting securities of such corporation entitled to
         vote generally in the election of directors is then beneficially owned,
         directly or indirectly, by individuals, entities or groups who were the
         beneficial owners, respectively, of at least 50% of the Outstanding
         Voting Securities immediately prior to such acquisition in
         substantially the same proportions as their ownership, immediately
         prior to such acquisition, of the Outstanding Voting Securities, or (E)
         the acquisition by any individual, entity or group which on the date
         this Plan was adopted by the Board owned 50% or more of the Outstanding
         Voting Securities;

                  (2)      Approval by the stockholders of the Company of a
         reorganization, merger or consolidation, in each case, with respect to
         which all or substantially all of the individuals and entities who were
         the beneficial owners, respectively, of the Outstanding Voting
         Securities immediately prior to such reorganization, merger or
         consolidation do not, following such reorganization, merger or
         consolidation, beneficially own, directly or indirectly, more than 50%
         of the combined voting power of the then outstanding voting securities
         entitled to vote generally in the election of directors, as the case
         may be, of the corporation resulting from such reorganization, merger
         or consolidation in substantially the same proporations as their
         ownership, immediately prior to such reorganization, merger or
         consolidation, of the Outstanding Voting Securities; or

                                     - 5 -
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                  (3)      Approval by the stockholders of the Company of (A) a
         complete liquidation or dissolution of the Company or (B) the sale or
         other disposition of all or substantially all of the assets of the
         Company other than to a corporation, with respect to which following
         such sale or other disposition, more than 50% of, respectively, the
         then outstanding shares of common stock of such corporation and the
         combined voting power for the then outstanding voting securities of
         such corporation entitled to vote generally in the election of
         directors is then beneficially owned, directly or indirectly, by all or
         substantially all of the individuals and entities who were the
         beneficial owners, respectively, of the Outstanding Voting Securities
         immediately prior to such sale or other disposition in substantially
         the same proportion as their ownership, immediately prior to such sale
         or other disposition, of the Outstanding Voting Securities.

         (e)      The Option is designated as a nonqualified stock option.

         (f)      The Company shall not be required to issue any fractional
         Option Shares.

2.       Termination of Option.

         (a)      If the Participant's employment terminates due to death, any
         unexpired and unexercised portion of the Option held by the Participant
         shall thereafter be fully exercisable by the Participant for the period
         of ninety (90) days immediately following the date of the appointment
         of a Representative or until the expiration of the Option Period,
         whichever

                                     - 6 -
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         period is shorter.

         (b)      If the Participant's employment terminates due to a
         Disability, any unexpired and unexercised Option held by the
         Participant shall thereafter be fully exercisable by the Participant
         for the Period of ninety (90) days immediately following the date of
         such termination or until the expiration of the Option Period,
         whichever period is shorter.

         (c)      If the Participant's employment terminates due to Retirement
         or by reason of the termination of the Participant's services which is
         involuntary on the part of the Participant (but is not due to death,
         disability or with Cause), any Option held by the Participant shall
         thereupon terminate, except that such Option, to the extent then
         exercisable, may be exercised by the Participant for the period of
         ninety (90) days immediately following the date of such termination of
         employment or until the expiration of the Option Period, whichever
         period is shorter.

         (d)      If the Participant's employment terminates for any reason
         other than as provided in Section 2(a), 2(b) and 2(c) above, the Option
         shall terminate immediately.

The death or Disability of the Participant after the termination of the
Participant's employment otherwise provided herein shall not extend the time
permitted to exercise an Option. If at the time the Participant's employment is
terminated for a reason provided in Section 2 (a), 2 (b) or 2 (c) above, the
Participant is subject to Section 16 of the Exchange Act, any time period

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provided for in this Paragraph 2 shall be suspended or delayed during the period
the Participant would be subject to liability for engaging in "short-swing"
transactions under Section 16 of the Exchange Act, but such suspension or delay
shall not extend such time period more than six (6) months and one (1) day nor
beyond the original Option Period.

3.       Exercise.

         (a)      The Option shall be exercisable during the Participant's
         lifetime only by the Participant (or his or her guardian or legal
         representative), and after the Participant's death only by a
         Representative. The Option may only be exercised by the delivery to the
         Company of a properly completed written notice, in form satisfactory to
         the Board or Committee, which notice shall specify the number of whole
         Option Shares to be purchased and the aggregate Option Price for such
         shares, together with payment in full of such aggregate Option Price.
         Payment shall be made to the Company:

                  (i)      in cash or by check.

                  The Option shall not be exercised unless there has been
         compliance with all the preceding provisions of this Paragraph 3(a),
         and, for all purposes of this Stock Option Agreement, the date of the
         exercise of the Option shall be the date upon which there is compliance
         with all such requirements.

         (b)      Upon receipt of written notice of exercise, the
         Committee may elect

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         to cash out all or part of the portion of any Option to be exercised by
         paying the Participant an amount, in cash or Common Stock, equal to the
         excess of the Fair Market Value of the Common Stock that is subject to
         the Option over the Option Price times the number of shares of common
         stock subject to the Option on the effective date of such cash out.

4.       Payment of Withholding Taxes. If the Company is obligated to withhold
an amount on account of any Federal, state, local or foreign tax imposed as
result of the exercise of the Option, the Participant shall pay such amount to
the Company, or make arrangements satisfactory to the Company regarding the
payment of such amount, as provided in the Plan.

5.       Requirements of Law; Registration and Transfer Requirements. The
Company shall not be required to sell or issue any shares under the Option if
the issuance of such shares shall constitute a violation of any provision of any
law or regulation of any governmental authority. Specifically, in connection
with the Securities Act, upon exercise of the Option, unless a registration
statement under the Securities Act is in effect with respect to the shares of
Common Stock covered by the Option, the Company shall not be required to issue
such shares unless the Company has received evidence reasonably satisfactory to
it to the effect that the Participant is acquiring such shares for investment
and not with a view to the distribution thereof, and unless the

                                     - 9 -
<PAGE>

certificate issued representing the shares of Common Stock bears the following
or similar legend:

                  "The shares of stock represented by this certificate (1) have
         not been registered under the Securities Act of 1933, as amended, or
         under the securities laws of any state and may not be sold or
         transferred except upon such registration or upon receipt by the
         Company of an opinion of counsel satisfactory to the Company, in form
         and substance satisfactory to the Company, that registration is not
         required for such sale or transfer; and (2) are subject to certain
         restrictions upon the transfer thereof, and to certain rights and
         obligations, all as more specifically set forth in a certain Blue Rhino
         Corporation 1998 Employee Stock Incentive Plan, as amended, and in this
         Stock Option Agreement, a copy of either of which is available for
         inspection at the registered office of the Company."

Any reasonable determination in this connection by the Company shall be final,
binding and conclusive. At such time as, in the opinion of counsel for the
Company, the above or similar legend is no longer required for compliance with
applicable securities laws or otherwise, then the holders of such certificates
shall be entitled to exchange such certificates for certificates representing a
like number of shares but without such legend. The Company shall not be
obligated to deliver any shares of Common Stock upon exercise of the Option
until there has been compliance with any tax withholding requirements,
securities exchange listing or other requirements the Board or Committee deems
appropriate or as provided in this Agreement or in the Plan.

6.       Adjustment/Change in Control. In the event of a Change in Control or
other corporate restructuring provided for in the Plan, the Participant shall
have such rights, and the Board or Committee shall take such actions, as are
provided for in the Plan and in this Stock Option Agreement.

                                     - 10 -
<PAGE>

7.       Non-transferability. Except as provided in the Plan, the Option and any
interest in the Option may not be sold, assigned, conveyed, gifted, pledged,
hypothecated or otherwise transferred in any manner other than by will or the
laws of descent and distribution. Notwithstanding any other provision of this
Stock Option Agreement, any such attempted sale, assignment, conveyance, gift,
pledge, hypothecation or transfer shall be null and void and shall nullify the
Option immediately.

8.       Plan. The Option is granted pursuant to the Plan, as in effect on the
date hereof, and is subject to all terms and conditions of the Plan, as the same
may be amended from time to time; provided, however, that no such amendment
shall deprive the Participant, without the Participant's consent, of the Option
or of any of the Participant's rights under this Stock Option Agreement. The
interpretation and construction by the Board or Committee of the Plan, this
Stock Option Agreement and the Option, and such rules and regulations as may be
adopted by the Board or Committee for the purpose of administering the Plan,
shall be final and binding upon the Participant.

9.       Stockholder Rights. Until the Option shall have been duly exercised to
purchase Option Shares and such shares have been officially recorded as issued
on the Company's official stockholder records, no person or entity shall be
entitled to vote, receive dividends or be deemed for any purpose the holder of
any Option Shares, and adjustments for dividends or otherwise shall be made only
if the record date therefor is subsequent to the date such shares are

                                     - 11 -
<PAGE>

recorded and after the date of exercise and without duplication of any
adjustment.

10.      Employee Rights. No provision of this Stock Option Agreement or of the
Option granted hereunder shall give the Participant any right to continue as an
employee of the Company, create any inference as to the length of employment of
the Participant, or give the Participant any right to participate in any
employee welfare or benefit plan or other program (other than the Plan) of the
Company.

11.      Disclosure Rights. The Company shall have no duty or obligation to
affirmatively disclose to the Participant or a Representative, and the
Participant or Representative shall have no right to be advised of, any material
information regarding the Company at any time prior to, upon or in connection
with the exercise of an Option or the Company's issuance of Common Stock in
accordance with the terms of this Stock Option Agreement.

12.      Changes in Company's Capital Structure. The existence of the Option
shall not affect in any way the right or authority of the Company or its
stockholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or any issue of Common
Stock, bonds, debentures, preferred or prior preference stock ahead of or
affecting the Common Stock or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its

                                     - 12 -
<PAGE>

assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.

13.      Investment Representation and Agreement. If, in the opinion of counsel
for the Company, a particular representation by the Participant is required
under the Securities Act or any other applicable federal or state law, or any
regulation or rule of any governmental agency, the Company may require the
Participant to make such representation and such other representations as the
Company reasonably may determine to be necessary.

14.      Offset. Any amounts owed to the Company or an Affiliate by the
Participant of whatever nature may be offset by the Company from the value of
any shares of Common Stock, cash or other thing of value under this Stock Option
Agreement to be transferred to the Participant, and no shares of Common Stock or
other thing of value under this Stock Option Agreement will be transferred
unless and until all disputes between the Company and the Participant have been
fully and finally resolved and the Participant has waived all claims to such
against the Company or an Affiliate.

15.      Governing Law. This Stock Option Agreement and the Option granted
hereunder shall be governed by, and construed and enforced in accordance with,
the laws of the State of Delaware (other than its laws respecting choice of
law).

16.      Entire Agreement. This Stock Option Agreement, together with the Plan,
constitute the entire obligation of the parties hereto with respect to the
subject matter hereof, provided that in the event of any inconsistency between
the Plan

                                     - 13 -
<PAGE>

and this Stock Option Agreement, the terms and conditions of this Stock Option
Agreement shall control.

17.      Definitions. Capitalized terms used but not defined in this Stock
Option Agreement shall have the meanings ascribed to such terms in the Plan.

18.      Amendment. No amendment to this Stock Option Agreement shall be
effective unless in writing and signed by the Company.

19.      Waiver; Cumulative Rights. The failure or delay of either party to
require performance by the other party of any provision hereof shall not affect
its right to require performance of such provision unless and until such
performance has been waived in writing. Each and every right hereunder is
cumulative and may be exercised in part or in whole from time to time.

20.      Counterparts. This Stock Option Agreement may be signed in two
counterparts, each of which shall be an original, but both of which shall
constitute but one and the same instrument.

21.      Notices. Any notice which either party hereto may be required or
permitted to give the other shall be in writing and may be delivered personally
or by mail, postage prepaid, addressed to the Treasurer of the Company, 104
Cambridge Park, Winston-Salem, North Carolina 27104 (or to such other address as
the Board or Committee may designate), and the Participant at his address as
shown on the Company's records, or to such other address as the Participant, by
notice to the Company, may designate in writing from time to time.

                                     - 14 -
<PAGE>

22.      Headings. The headings contained in this Stock Option Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Stock Option Agreement.

23.      Severability. If any provision of this Stock Option Agreement shall for
any reason be held to be invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provision hereof, and this Stock
Option Agreement shall be construed as if such invalid or unenforceable
provision were omitted.

24.      Successors and Assigns. This Stock Option Agreement shall inure to the
benefit of and be binding upon each successor and assign of the Company. All
obligations imposed hereunder upon the Participant or a Representative, and all
rights granted to the Company hereunder, shall be binding upon the Participant's
or the Representative's heirs, legal representatives and successors.

25.      Tax Consequences. The Participant agrees to undertake to determine and
be responsible for any and all tax consequences to himself with respect to the
Option.

                                     - 15 -
<PAGE>

         IN WITNESS WHEREOF, the Company has caused this Stock Option Agreement
to be duly executed by an officer thereunto duly authorized, and the Participant
has hereunto set his hand, all as of the day and year first above written.

                                             BLUE RHINO CORPORATION:

                                             By: /s/ Billy D. Prim

                                             Title: CEO

                                             PARTICIPANT

                                             D. Scott Coward

                                             /s/ D. Scott Coward
                                             [signature]

                                     - 16 -<PAGE>

                                                                   EXHIBIT 10.31

                           DORAL FINANCIAL CORPORATION
                           1451 F.D. Roosevelt Avenue
                        San Juan, Puerto Rico 00920-2717

                              As of January 1, 2004

Mr. Salomon Levis
Doral Financial Plaza
1451 F.D. Roosevelt Avenue
San Juan, Puerto Rico 00920-2717

Dear Mr. Levis:

         You are currently employed pursuant to an Agreement (the "Prior
Employment Agreement") dated as March 5, 2002 by Doral Financial Corporation, a
Puerto Rico corporation ("DFC") which expired on December 31, 2003. You have had
wide experience during your employment by DFC in the financial services
industry, have been employed by DFC or its predecessors since 1983, and have
served as Chairman of the Board of Directors and Chief Executive Officer of DFC
since February 1, 1990. Because of your experience, DFC deems it in its best
interests to continue to have the benefit of your services as Chairman of the
Board and Chief Executive Officer.

         It is expected that in such capacity, in addition to your duties as
Chairman and Chief Executive Officer of DFC you will continue to manage the
business of DFC substantially in the manner in which you have prior to the date
hereof. The Board of Directors of DFC has authorized the execution of this
Agreement with regard to your employment on the conditions outlined in the
following sections of this letter. With respect to any period of service after
December 31, 2003, this Agreement supersedes and cancels all prior employment,
personal service, consulting or similar agreement between you and DFC and its
subsidiaries, divisions and ventures, including the Prior Employment Agreement.

         1.       TERM OF EMPLOYMENT

                  The term of this Agreement shall be for a period commencing on
January 1, 2004 and ending December 31, 2005, unless sooner terminated as herein
provided.

         2.       POSITION AND RESPONSIBILITIES

<PAGE>

Mr. Salomon Levis
As of January 1,2004
Page 2

                  You will serve as Chairman and Chief Executive Officer of DFC.
By your acceptance of this Agreement, you undertake to accept such employment
and to devote your full time and attention to DFC, and to use your best efforts,
ability and fidelity in the performance of the duties attaching to such
employment. During the term of your employment hereunder, you shall not perform
any services for any other company, which services conflict in any way with your
obligations under the two preceding sentences of this Section 2, whether or not
such company is competitive with the businesses of DFC, provided, however, that
nothing in this Agreement shall preclude you from devoting reasonable periods
required for

                           (a)      serving as a director or member of a
committee of any organization involving no conflict or potential conflict of
interest with the interests of DFC;

                           (b)      delivering lectures, fulfilling speaking
engagements, teaching at educational institutions;

                           (c)      engaging in charitable and community
activities; and

                           (d)      managing your personal and family
investments, provided that such activities do not interfere with the regular
performance of your duties and responsibilities under this Agreement.

                  You shall, at all times during the term hereof, be subject to
the supervision and direction of the Board of Directors of DFC with respect to
your duties, responsibilities and the exercise of your powers.

         3.       COMPENSATION

                  (a)      During the term of this Agreement you shall receive
an annual salary of $2,400,000 annually, payable no less often than monthly in
accordance with corporate policy.

                  (b)      (i)      During the term of this Agreement, you
shall also be entitled to receive an annual incentive bonus (commencing with the
year ended December 31, 2004) equal to 15% of the amount of Adjusted Net Income
in excess of a 15% Return on Equity Capital (as hereinafter defined); provided,
however, that the total salary and incentive compensation payable to you
pursuant to this Agreement shall not exceed $4.8 million per annum; and

                           (ii)     The incentive bonus shall be payable
annually by DFC within 30 days following the date on which its Annual Report on
Form 10-K for the fiscal year ended the prior December 31 shall have been filed
with the United States Securities and Exchange Commission; provided that such
amount shall only be payable if you shall have served as Chairman of the Board
and Chief Executive Officer to DFC pursuant to this Agreement for the entire
fiscal year

<PAGE>

Mr. Salomon Levis
As of January 1,2004
Page 3

to which such payments relate. As used in this Section 3, "Adjusted Net Income"
means the annual consolidated net income by DFC and its subsidiaries after all
taxes (including net income from equity interests held by DFC in any other
venture and net income of any successor of DFC which may be formed by merger,
consolidation or sale of substantially all of the assets of DFC) during the
calendar year preceding the payment as determined in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved and as shown by DFC's published consolidated financial
statements audited by its independent accountants (hereinafter referred to as
"GAAP"), such net income to be adjusted (A) by adding back to such net income
any payments made pursuant to Section 3(b)(i) hereof and payments of similar
incentive compensation to other executive officers of DFC, (B) by deducting from
such net income dividends on shares of preferred stock that are excluded from
the definition of "Equity Capital" set forth below and (C) by adjusting such net
income by any extraordinary items of income and expense such as merger related
expenses. As used in Section 3, (1) "Equity Capital" means DFC's consolidated
Stockholders Equity (excluding preferred stock or other similar instruments that
are not convertible into shares of Common Stock) at the December 31 immediately
preceding the beginning of the fiscal year for which the calculation is being
made, determined in accordance with GAAP and (2) "Return on Equity Capital" for
any fiscal year means the percentage determined by dividing DFC's consolidated
net income after all taxes determined in accordance with GAAP for such fiscal
year by Equity Capital for such preceding December 31; provided that such
calculation shall be adjusted as set forth in the immediately succeeding
sentence. If DFC sells securities that constitute Equity Capital during the
fiscal year, Equity Capital shall be increased by the net proceeds to DFC (after
expenses) of such sale multiplied by a fraction the numerator of which shall be
the number of days in such fiscal year which had elapsed from the date of the
closing of such sale to the end of such fiscal year and the denominator of which
shall be 365.

                  (c)      You shall be entitled to receive stock options to
acquire 600,000 shares of DFC's Common Stock subject to the terms and conditions
of DFC's 1997 Employee Stock Option Plan and of the stock option awards granted
as of January 2, 2004 by DFC's Compensation Committee.

                  (d)      You shall be entitled to participate in the other
benefit plans of DFC upon the terms and conditions on which such benefits are
made available to other officers of DFC. Nothing herein shall obligate DFC to
continue any existing benefit plan or to establish any replacement benefit plan.

                  (e)      You shall be entitled to reimbursement for reasonable
travel and entertainment expenses incurred in connection with the rendering of
your services hereunder in compliance with DFC policy. Nothing contained herein
shall authorize you to make any political contributions, including but not
limited to payments for dinners and advertising in any political party program
or any other payment to any person which might be deemed a bribe,

<PAGE>

Mr. Salomon Levis
As of January 1,2004
Page 4

kickback or otherwise and improper payment under corporate policy or practice
and no portion of the compensation payable hereunder is for any such purpose.

                  (f)      Payments under this Agreement shall be subject to
reduction by the amount of any applicable federal, Commonwealth, state or
municipal income, withholding, social security, state disability insurance, or
similar or other taxes or other items which may be required or authorized to be
deducted by law or custom.

                  (g)      No additional compensation shall be due to you for
services performed or offices held in any subsidiary, division, affiliate, or
venture of DFC.

         4.       MISCELLANEOUS PROVISIONS RELATING TO THE BONUS AND OTHER
                  MATTERS

                  (a)      Your acceptance of this Agreement will confirm that
you understand and agree that the granting of the incentive compensation
referred to in Section 3(b) and the receipt of any incentive bonus thereunder
(the "incentive compensation") and of the stock options referred in Section
3(c), and any action thereunder, does not involve any statement or
representation of any kind by DFC as to its business, affairs, earnings or
assets, or as to the tax status of the incentive compensation or stock options
or the tax consequences of any payment or exercise thereof, or otherwise. You
further agree that any action at any time taken by or on behalf of DFC or by its
directors or any committee thereof, which might or shall at any time adversely
affect you or the incentive compensation, may be freely taken notwithstanding
any such adverse effect without your being thereby or otherwise entitled to any
right or claim against DFC or any other person or party by reason thereof.

                  (b)      The incentive compensation is personal to you and,
except as provided or contemplated in Section 3(b) above, in the event of your
death or incapacity, is not transferable or assignable either by your act or by
operation of law, and no assignee, trustee in bankruptcy, receiver or other
party whosoever shall have any right to demand any incentive compensation or any
other right with respect to it. If, in the event of your death or incapacity,
your legal representative shall be entitled to demand the incentive compensation
under any of the provisions hereof then, unless otherwise indicated by the
context or otherwise required by any term hereof, references to "you" shall
apply to said representative.

                  (c)      If and when questions arise from time to time as to
the intent, meaning or application of any one or more of the provisions hereof
such questions will be decided by the Compensation Committee of the Board of
Directors of DFC or any other Committee appointed to consider such matters, or,
in the event DFC is merged into or consolidated with any other corporation, by
the Board of Directors (or a Committee appointed by it) of the surviving or
resulting corporation, and the decision of such Board of Directors or Committee,
as the case may be, as to what is a fair and equitable settlement of each such
question or as to what is a fair and

<PAGE>

Mr. Salomon Levis
As of January 1,2004
Page 5

proper interpretation of any provision hereof or thereof, whatever the effect of
such a decision may be, beneficial or adverse, upon the incentive compensation,
shall be conclusive and binding and you hereby agree that the incentive
compensation is granted to and accepted by you subject to such condition and
understanding. You understand that the incentive compensation is not held or set
aside in trust and (1) DFC may seek to retain, offset, attach or similarly place
a lien on such funds in circumstances where you have been discharged for cause
and shall be entitled to do so for (x) malfeasance damaging to DFC, (y)
conversion to you of an DFC opportunity, or (z) a violation of DFC's Code of
Business Conduct and Ethics, in each case as determined in the sole discretion
of the Compensation Committee of the Board of Directors, and (2) in the event
DFC is unable to make any payment under this Agreement because of insolvency,
bankruptcy or similar status or proceedings, you will be treated as a general
unsecured creditor of DFC and may be entitled to no priority under applicable
law with respect to such payments.

         5.       RESTRICTIONS ON COMPETITION

                  During the term of this Agreement and for a period of one year
after you cease to be an employee of DFC or an affiliate of DFC, you will not,
without the prior written consent of DFC, (a) accept employment or render
service to any person, firm or corporation, directly or indirectly, in
competition with DFC, or any affiliate thereof for any purpose which would be
competitive with the business of DFC and its affiliates within the Commonwealth
of Puerto Rico or any other geographic area in which DFC or any affiliate of DFC
by which you were employed, conducted operations (the "Restricted Area") or any
business as to which studies or preparations relating to the entry into which
were made by DFC or any affiliate of DFC by which you were employed within one
year prior thereto (collectively, the "Restricted Businesses") or (b) directly
or indirectly, enter into or in any manner take part in or lend your name,
counsel or assistance to any venture, enterprise, business or endeavor, wither
as proprietor, principal, investor, partner, director, officer, employee,
consultant, adviser, agent, independent contractor or in any other capacity
whatsoever for any purpose which would be competitive with the Restricted
Businesses in the Restricted Area. An investment not exceeding 5% of the
outstanding stock in any corporation regularly traded on any national securities
exchange or in the over-the-counter market shall not be deemed to violate this
provision, provided that you shall not render any services for such corporation.

         6.       TERMINATION OF EMPLOYMENT

                  (a)      Your employment hereunder may be terminated for
dishonesty, death, incapacity, or inability to perform the duties of your
employment on a daily basis, resulting from physical or mental disability caused
by illness, accident or otherwise or refusal to perform the duties and
responsibilities of you employment hereunder, or breach of fidelity to DFC.

<PAGE>

Mr. Salomon Levis
As of January 1,2004
Page 6

                  (b)      At any time following a "Change in Control" of DFC,
this Agreement may be terminated by DFC or you on 30 days' written notice to you
or DFC, as the case may be, such termination to be effective as of the end of
the calendar year during which such notice is given. As used herein, a "Change
in Control" shall be deemed to have occurred at such time as (i) any person or
group becomes the beneficial owner of more than 50% of the voting power of DFC's
voting stock, or (ii) DFC consolidates with or merges into any other corporation
or conveys or otherwise disposes of all or substantially all of its assets to
any person.

                  (c)      If at any time you shall voluntarily terminate your
employment, then this Agreement, except for Section 5 hereof, shall terminate
and all further obligations of DFC hereunder shall cease, provided that in any
termination pursuant to subsection (b) of this Section 6 you shall be entitled
to receive all compensation due to pursuant to Section 3 hereof for the calendar
year in which such date of termination occurs.

                  You agree that this Section 6 shall create no additional
rights in you to direct the operations of DFC.

         7.       WAIVERS AND MODIFICATIONS

                  No waiver by either party of any breach by the other of any
provisions hereof shall be deemed to be a waiver of any later or other breach
thereof, or as a waiver of any such or other provision of this Agreement. This
Agreement sets forth all of the terms of the understandings between the parties
with reference to the subject matter set forth herein and may not be waived,
changed, discharged or terminated orally or by any course of dealing between the
parties, but only by an instrument in writing signed by the party against whom
any waiver, change, discharge or termination is sought.

         8.       SEVERABILITY

                  Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective under applicable law. In the event
that any provision, or any portion of any provision, of this Agreement shall be
held to be void and unenforceable, the remaining provisions of this Agreement,
and the remaining portion of any provision found void or unenforceable in part
only, shall continue in full force and effect.

         9.       ARBITRATION

                  Any dispute arising under this Agreement shall be submitted to
arbitration in San Juan, Puerto Rico under the rules of the American Arbitration
Association.

         10.      NOTICES

<PAGE>

Mr. Salomon Levis
As of January 1,2004
Page 7

                  Any notice or communication required or permitted to be given
hereunder shall be deemed duly given if delivered personally or sent by
registered or certified mail, return receipt requested, to the address of the
intended recipient as herein set forth or to such other address as a party may
theretofore have specified in writing to the other by delivering or mailing in a
similar manner. Any notice or communication intended for DFC shall be addressed
to the attention of the Chairman of the Compensation Committee of DFC's Board of
Directors.

         11.      GOVERNING LAW

                  This Agreement shall be construed in accordance with the laws
of the Commonwealth of Puerto Rico.

         12.      MISCELLANEOUS

                  This Agreement shall be binding upon the successors and
assigns of DFC. This Agreement is personal to you, and you therefore may not
assign your duties under this Agreement. The headings of the Sections of this
Agreement are inserted for convenience only and shall not be deemed to
constitute a part thereof or to affect the meaning hereof.

                  If the foregoing terms and conditions correctly embody your
mutual understanding with DFC, kindly endorse your acceptance and agreement
therewith in the space below provided, whereupon this shall become a binding
agreement.

                           Very truly yours,

                           DORAL FINANCIAL CORPORATION

                           By:  /s/ John Ernst
                               -------------------------------------------------
                           Name: John Ernst
                           Title: Chairman Compensation Committee

Accepted and Agreed to as of the
date first above set forth:

    /s/ Salomon Levis
--------------------------
      Salomon Levis

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