UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- ----- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1993
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- ----- SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 1-6868
LOMAS FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 75-1043392
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1600 Viceroy Drive
Dallas, Texas 75235
(Address of principal executive offices) (Zip Code)
(214) 879-4000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. YES X NO
----- -----
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
YES X NO
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of each of the issuer's classes of
common stock as of February 10, 1994: Common Stock, $1 par value--
20,099,531 shares.
<PAGE>
FORM 10-Q
FOR THE QUARTER ENDED DECEMBER 31, 1993
LOMAS FINANCIAL CORPORATION AND SUBSIDIARIES
INDEX
Page No.
--------
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (Unaudited)
Consolidated Balance Sheet --
December 31, 1993 and June 30, 1993 3
Statement of Consolidated Operations --
Quarter and Six Months Ended
December 31, 1993 and 1992 4
Statement of Consolidated Cash Flows --
Six Months Ended December 31, 1993 and 1992 5
Notes to Consolidated Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations 10
Liquidity and Capital Resources 15
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 17
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 18
SIGNATURES 19
INDEX TO EXHIBITS 20
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
LOMAS FINANCIAL CORPORATION AND SUBSIDIARIES
(in thousands)
December 31, 1993 June 30, 1993
----------------- -------------
(Unaudited) (Note)
Assets
Cash and cash equivalents $ 9,849 $ 34,369
First mortgage loans held
for sale 515,268 368,266
Investments 204,066 245,860
Receivables 89,543 87,689
Foreclosed real estate 13,016 18,550
---------- ----------
821,893 720,365
Allowance for losses (9,631) (10,895)
---------- ----------
812,262 709,470
Purchased future mortgage
servicing income rights 381,879 436,487
Fixed assets--net 79,598 70,254
Capitalized computer
software--net 59,868 62,805
Prepaid expenses and other
assets 33,256 35,115
Net assets of discontinued
operations 107,125 110,393
---------- ----------
$1,483,837 $1,458,893
========== ==========
Escrow, agency and fiduciary
funds--see contra $ 984,170 $1,082,591
========== ==========
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable and accrued
expenses $ 82,527 $ 87,296
Notes payable 499,873 416,180
Repurchase agreements 147,510 99,140
Term notes payable 387,613 392,280
Senior convertible notes
payable 139,918 139,918
---------- ----------
1,257,441 1,134,814
---------- ----------
<PAGE>
Stockholders' Equity:
Common stock 20,100 20,097
Other paid-in capital 309,429 309,410
Retained earnings (deficit) (103,133) (5,428)
---------- ----------
226,396 324,079
---------- ----------
$1,483,837 $1,458,893
========== ==========
Liability for escrow, agency and
fiduciary funds--see contra $ 984,170 $1,082,591
========== ==========
Note: The balance sheet at June 30, 1993 as presented is derived
from the audited financial statements at that date as
adjusted for comparative purposes.
See notes to consolidated financial statements.<PAGE>
STATEMENT OF CONSOLIDATED OPERATIONS (Unaudited)
LOMAS FINANCIAL CORPORATION AND SUBSIDIARIES
(in thousands, except per share amounts)
Quarter Ended Six Months Ended
December 31 December 31
------------------ -------------------
1993 1992 1993 1992
-------- ------- -------- --------
Revenues
Mortgage servicing $ 37,704 $36,802 $ 75,535 $ 72,510
Commissions and fees 11,652 10,759 22,063 20,682
Interest 9,709 10,081 17,509 21,507
Investment 4,592 7,342 13,133 14,763
Gain on sales 5,205 3,004 12,038 6,157
Management fees--affiliates 100 2,633 2,952 5,582
Other--affiliates -- -- 5,028 5,537
Other 871 3,272 5,485 4,151
-------- ------- -------- --------
69,833 73,893 153,743 150,889
-------- ------- -------- --------
Expenses
Interest 21,412 19,659 41,585 38,678
Personnel 29,981 21,654 54,753 40,955
Depreciation and amortization 52,108 18,978 122,853 37,586
Other operating 12,690 9,268 24,927 21,875
Provision for losses 1,780 462 3,330 2,402
-------- ------- -------- --------
117,971 70,021 247,448 141,496
-------- ------- -------- --------
Income (loss) from continuing
operations before federal
income tax equivalent
provision (48,138) 3,872 (93,705) 9,393
Federal income tax equivalent
provision -- 648 -- 1,857
-------- ------- -------- --------
Income (loss) from continuing
operations (48,138) 3,224 (93,705) 7,536
Income (loss) from discontinued
operations net of federal
income tax equivalent
provision -- 86 (4,000) 183
-------- ------- -------- --------
Net income (loss) $(48,138) $ 3,310 $(97,705) $ 7,719
======== ======= ======== ========
Earnings (loss) per share:
Income (loss) from continuing
operations $(2.39) $.16 $(4.65) $.37
Net income (loss) $(2.39) $.16 $(4.85) $.38
Average number of shares 20,132 20,124 20,129 20,121
Note: Reclassifications have been made to December 31, 1992 financial
statements for comparative purposes.
See notes to consolidated financial statements.<PAGE>
STATEMENT OF CONSOLIDATED CASH FLOWS (Unaudited)
LOMAS FINANCIAL CORPORATION AND SUBSIDIARIES
(in thousands)
Six Months Ended
December 31
-------------------
1993 1992
-------- --------
Operating activities:
Income (loss) from continuing operations $(93,705) $ 7,536
Noncash items included in the determination of
income (loss) from continuing operations:
Depreciation and amortization 122,853 37,586
Provision for losses 3,330 2,402
Federal income tax equivalent provision -- 1,857
-------- --------
Cash provided by operations before working
capital changes 32,478 49,381
Net change in first mortgage loans held for sale (70,078) (22,566)
Increase in receivables relating to reverse
repurchase agreements (59,718) --
Net change in sundry receivables, payables,
and other assets (35,558) (49,420)
Net cash used by discontinued operations (4,068) (11,933)
-------- --------
Net cash used by operating activities (136,944) (34,538)
-------- --------
Investing activities:
Purchases of investments (9,335) (28,402)
Sales of investments 54,213 77,141
Expenditures on foreclosed real estate (526) (561)
Sales of foreclosed real estate 12,164 5,757
Net purchases of fixed assets (12,634) (4,320)
Net additions to capitalized computer software (1,224) (1,897)
Purchases of future mortgage servicing
income rights (59,209) (31,542)
Sales of future mortgage servicing income rights 327 6,696
Other (2,087) 62
Net cash provided by discontinued operations 45,477 77,792
-------- --------
Net cash provided by investing activities 27,166 100,726
-------- --------
Financing activities:
Net borrowings of notes payable 83,693 1,317
Net borrowings (repayments) of repurchase
agreements 48,370 (2,639)
Term debt borrowings -- 340,000
Term debt repayments (4,666) (330,544)
Net cash used by discontinued operations (42,403) (72,204)
-------- --------
Net cash provided (used) by financing
activities 84,994 (64,070)
-------- --------
<PAGE>
Net increase (decrease) in cash and cash
equivalents (24,784) 2,118
Net change in cash of discontinued operations 264 529
Cash and cash equivalents at beginning of period 34,369 23,472
-------- --------
Cash and cash equivalents at end of period $ 9,849 $ 26,119
======== ========
See notes to consolidated financial statements.<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
LOMAS FINANCIAL CORPORATION AND SUBSIDIARIES
December 31, 1993
NOTE A -- BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited consolidated financial statements of Lomas
Financial Corporation ("LFC") and its subsidiaries (collectively, the
"Company") have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. They do not
include all of the information or footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation at December 31, 1993 have been
included. Operating results for the six months ended December 31, 1993 are
not necessarily indicative of the results that may be expected for the fiscal
year ending June 30, 1994. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
annual report on Form 10-K of the Company for the fiscal year ended June 30,
1993.
NOTE B -- EARNINGS PER SHARE
Primary earnings per share data for the quarter and six months ended
December 31, 1993 and 1992 is computed using the weighted average number of
shares of common and, when dilutive, common stock equivalents outstanding
during the period. Common stock equivalents include units and shares granted
under the Lomas Financial Corporation 1991 Long Term Incentive Plan for
Nonemployee Directors and the 1991 Stock Incentive Program. Common stock
equivalents also include the assumed exercise of dilutive stock options.
Fully diluted per share data is computed on the same basis as primary, but it
also assumes (if dilutive) the conversion of senior convertible notes with
the related adjustments for interest and federal income tax expenses. For
the quarter and six months ended December 31, 1993 and 1992, the fully
diluted per share data is antidilutive.
NOTE C -- REVERSE INTEREST RATE SWAPS
The Company, through its wholly-owned subsidiary, Lomas Mortgage USA,
Inc. ("Lomas Mortgage"), enters into interest rate swap agreements. Under the
terms of the swap agreements, the Company receives an annual fixed rate of
interest and pays a floating rate of interest based on the 30-day average
A1/P1 commercial paper rate. The swaps reduced the Company's net interest
expense during the quarter and six months ended December 31, 1993 by $3.6
million and $8.4 million, respectively, up from $3.3 million and $5.2 million
in the quarter and six months ended December 31, 1992, respectively. At
December 31, 1993 interest rate swaps in the aggregate notional amount of
$800 million were outstanding.
NOTE D -- PURCHASED FUTURE MORTGAGE SERVICING INCOME RIGHTS ("PMSRs")
During the quarter and six months ended December 31, 1993, the Company
established provisions of $30.0 million and $80.0 million, respectively,
related to impairment in the carrying value of PMSRs. This provision results
from the unprecedented prepayments that the Company has experienced and the
related revision of estimated future prepayment speeds.
PMSRs at December 31, 1993, consisted of the following (in thousands):
Cost of PMSRs $ 502,006
Capitalized excess servicing fees 3,195
---------
505,201
Less: Accumulated amortization (123,322)
---------
$ 381,879
=========
Changes in PMSRs were as follows (in thousands):
Beginning balance at July 1, 1993 $ 436,487
Additions 61,646
Sales and writeoffs (1,087)
Amortization (35,167)
Impairment provision (80,000)
---------
Ending balance at December 31, 1993 $ 381,879
=========
NOTE E -- REVERSE REPURCHASE AGREEMENTS
The Company enters into reverse repurchase agreements with financially
responsible parties. Mortgage assets purchased under agreements to resell are
carried at the amounts of the original purchase price which is calculated at
a percentage of the market price. The reverse repurchase agreements generally
mature within 60 days and are covered 100 percent by binding purchase
commitments issued by responsible financial institutions. The other party is
obligated to repurchase the underlying mortgage assets at the Company's
purchase price plus interest differential. The Company finances the reverse
repurchase agreements primarily through a third party based on a percentage
of the repurchase commitments. At December 31, 1993 the Company had
outstanding reverse repurchase agreements of $59.7 million which was included
in first mortgage loans held for sale and related notes payable totaling
$58.7 million.
NOTE F -- REDUCTION IN FORCE
In January 1994 the Company announced a plan to restructure its
operations, with a view to decreasing expenses and enhancing productivity.
Under the plan, the Company's workforce was reduced by approximately
10 percent. In connection with the plan, the Company's continuing operations
recorded a charge of $5.6 million effective December 31, 1993.
NOTE G -- DISCONTINUED OPERATIONS
Discontinued operations include the Company's short-term lending
operations, which are conducted through a wholly-owned subsidiary, ST
Lending, Inc. ("STL"), and certain other real estate operations.
Discontinued operations reported $86,000 and $183,000 net income from
other real estate operations for the quarter and six months ended December
31, 1992, respectively. Discontinued operations also reported a $4.0 million
operating loss for the six months ended December 31, 1993. In fiscal 1992 and
1993 the Company provided a total of $15.4 in million reserves to cover
future operating losses of STL. The Company provided an additional $4.0
million of reserves in the six months ended December 31, 1993 to cover the
possibility of such losses. For the quarters and six months ended December
31, 1993 and 1992, operating losses of $3.7 million, $3.2 million,
$5.5 million and $6.1 million, respectively, were charged to these reserves.
The Company is currently reviewing its portfolio and projected operating
results through December 1995 of the discontinued real estate operations. If
this analysis results in any indicated future operating losses, the Company
will provide reserves to cover these losses. It is anticipated that the
review will be completed by the quarter ending March 31, 1994.
Net assets of discontinued operations at December 31, 1993 were as
follows (in thousands):
Mortgage notes receivable and foreclosed real estate,
net of allowance for losses of $27,405 $178,334
Cash and cash equivalents 8,774
Other assets 2,467
--------
189,575
Less: Secured notes payable (79,589)
Accrued interest payable and other (2,861)
--------
Net assets $107,125
========
The yield on STL's earning loans ($64.8 million) at December 31 was
approximately 7.55 percent, on its earning real estate ($36.3 million) was
approximately 9.71 percent, and on its cash (invested primarily in high-grade
commercial paper) was approximately 3.2 percent. The interest rate on STL's
debt outstanding at that date was 5.44 percent.
During the six months ended December 31, 1993, STL made principal
payments aggregating $42.4 million on its secured notes, thereby reducing the
balance thereof to $79.6 million. Subsequent to December 31, 1993, STL made
additional principal payments of $14.8 million. The outstanding balance of
the notes after application of these principal payments was $64.8 million.
The secured notes are without recourse to the Company or any subsidiary
thereof other than STL.
Loan commitments are made to accommodate the financial needs of the
Company's borrowers and are subject to the Company's normal credit policies.
Guarantees and other commitments include standby letters of credit, financial
guarantees and performance guarantees made by the Company to third parties on
behalf of borrowers in connection with the Company's short term lending
operations. Even though this segment of business is discontinued, the
guarantees remain in effect. The credit risk of these arrangements
essentially is the same as that involved in extending loans.
<PAGE>
Outstanding commitments and guarantees at December 31, 1993 were as
follows (in thousands):
Loan commitments on existing short term construction,
acquisition and development loans $3,091
Guarantees and other commitments $1,552
NOTE H -- CONTINGENT LIABILITIES
On September 17, 1990 plaintiffs purporting to represent a class of
single-family mortgagors having escrow deposits computed by Lomas Mortgage
filed a class-action complaint in Illinois. The complaint alleges that Lomas
Mortgage is in breach of mortgage contracts and is assessing excessive and
unlawful escrow deposits and, in addition, the complaint asks for punitive
damages. On October 4, 1990 this lawsuit was removed to the United States
District Court for the Northern District of Illinois. Mortgagors have filed
similar class-actions in California and Minnesota and class-action
counterclaims in two pending Illinois foreclosure actions. The state court
actions were removed to federal court and transferred to the Northern
District of Illinois where they are currently pending before the same judge
as the original action. The state court counterclaims are stayed.
Management believes that the calculation of escrow balances is in
accordance with mortgage contracts and Real Estate Settlement Procedures Act
("RESPA") regulations. Similar lawsuits based on escrow balances have also
been brought against other mortgage banking companies. The ultimate
liability with respect to this contingency is not presently determinable but
an adverse settlement or judgment may require the Company to repay escrow
monies to mortgagors or otherwise reduce the Company's escrow balances which
would also result in a higher cost of funds to the Company, potentially
negatively impacting the Company's results of operations. Assessment of
punitive damages in this litigation could also potentially negatively impact
the Company's results of operations. Management does not believe that any
losses incurred as a result of this litigation will have a material adverse
effect on the financial condition of Lomas Mortgage or the Company.
The Company is also involved in a number of other lawsuits considered to
be in the normal course of business. In management's opinion, the resolution
of these other disputes will not have a material adverse effect on the
financial condition of the Company.
<PAGE>
NOTE I -- SUPPLEMENTAL CASH FLOW INFORMATION
The following table provides certain cash and noncash information (in
thousands):
Six Months Ended
December 31
-------------------
1993 1992
-------- --------
Interest paid:
Continuing operations $39,750 $35,132
Discontinued operations 3,038 6,958
NOTE J -- LIQUIDITY
See "Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations--Liquidity and Capital Resources" for a discussion
regarding the Company's loan covenants.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The Company's operations resulted in a net loss for the quarter ended
December 31, 1993 of $48.1 million compared to net income of $3.3 million for
the December 31, 1992 quarter and for the six months ended December 31, 1993,
the net loss was $97.7 million compared to net income of $7.7 million for the
six months ended December 31, 1992. The Company established provisions of
$30.0 million and $80 million, respectively, for the quarter and six months
ended December 31, 1993 for impairment in the carrying value of its PMSRs in
response to the unprecedented level of mortgage prepayments. In addition, the
Company also established at December 31, 1993 a $5.6 million provision to
cover the cost of its reduction-in-force in January 1994.
The operating results of the Company during the quarters and six months
ended December 31, 1993 and 1992 were as follows (in thousands):
Quarter Ended Six Months Ended
December 31 December 31
------------------ -------------------
1993 1992 1993 1992
-------- ------- -------- -------
Continuing operations:
Mortgage banking (before
impairment provision) $ (953) $ 7,532 $ 9,222 $16,169
Information systems (5,635) (3,567) (11,504) (7,404)
Other (530) 4,628 4,972 10,134
-------- ------- -------- --------
(7,118) 8,593 2,690 18,899
General and administrative (2,200) (1,746) (4,287) (3,657)
Corporate interest (3,250) (2,975) (6,538) (5,849)
-------- ------- -------- --------
Income (loss) from
continuing operations
before special provisions (12,568) 3,872 (8,135) 9,393
Provision for reduction
in force (5,570) -- (5,570) --
Provision related to
impairment of PMSRs (30,000) -- (80,000) --
-------- ------- -------- --------
Income (loss) from continuing
operations before federal
income tax equivalent
provision (48,138) 3,872 (93,705) 9,393
Federal income tax equivalent
provision -- 648 -- 1,857
-------- ------- -------- --------
<PAGE>
Income (loss) from
continuing operations (48,138) 3,224 (93,705) 7,536
Income (loss) from
discontinued operations -- 86 (4,000) 183
-------- ------- -------- --------
Net income (loss) $(48,138) $ 3,310 $(97,705) $ 7,719
======== ======= ======== ========
Mortgage Banking
The mortgage banking division's operations during the December 1993
quarter generated $69.8 million in revenues, up from $68.2 million in the
same quarter last year. However, the Company's mortgage banking operations
resulted in a loss during the December 1993 quarter of approximately $1
million, before the special provisions, compared to pretax income of $7.6
million in the same quarter last year. The operating loss after the PMSR
impairment and reduction-in-force provisions was $36.1 million and $75.9
million for the quarter and six months ended December 31, 1993, respectively.
The mortgage banking division's revenues, expenses, and net
contributions for the quarters and six months ended December 31, 1993 and
1992 were derived from the following sources (in millions):
<PAGE>
<TABLE>
<CAPTION>
Quarter Ended December 31 Six Months Ended December 31
--------------------------------- ---------------------------------
1993 1992 1993 1992
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Loan administration
Primary servicing $ 35.0 $ 33.7 $ 69.1 $ 67.8
Master servicing 3.2 3.4 6.7 5.9
Expenses (16.2) (15.2) (33.3) (32.3)
Amortization (excluding
impairment provision) (18.6) $ 3.4 (15.3) $ 6.6 (35.2) $ 7.3 (30.2) $ 11.2
------ ------ ------ ------
Insurance
Agency 2.1 2.1 4.1 3.9
Mortgage plans 1.5 1.0 2.5 2.2
Expenses (1.2) 2.4 (1.0) 2.1 (2.3) 4.3 (2.3) 3.8
------ ------ ------ ------
Banking (including
warehousing and
investment income and
interest expense)
Revenues 11.8 12.2 24.3 23.0
Expenses (18.1) (6.3) (16.8) (4.6) (34.9) (10.6) (33.7) (10.7)
------ ------ ------ ------
Portfolio production
Revenues 11.3 7.5 23.5 15.4
Expenses (7.2) 4.1 (2.6) 4.9 (13.5) 10.0 (5.4) 10.0
------ ------ ------ ------
Field services
Revenues 3.8 3.8 7.5 7.7
Expenses (3.5) 0.3 (3.5) 0.3 (6.8) 0.7 (7.1) 0.6
------ ------ ------ ------
Fund and asset management
Revenues 0.4 3.3 8.3 12.1
Expenses -- 0.4 (1.0) 2.3 (2.1) 6.2 (2.4) 9.7
------ ------ ------ ------
Other departments
Revenues 0.7 1.2 1.0 1.9
Expenses (0.9) (0.2) (2.6) (1.4) (1.6) (0.6) (4.4) (2.5)
------ ------ ------ ------
General and
administrative expense (5.1) (2.6) (8.1) (5.9)
------ ------ ------ ------
Operating income
before special provisions (1.0) 7.6 9.2 16.2
Provision for reduction
in force (5.1) -- (5.1) --
Provision related to PMSR
impairment (30.0) -- (80.0) --
------ ------ ------ ------
Pretax income (loss) $(36.1) $ 7.6 $(75.9) $ 16.2
====== ====== ====== ======
<FN>
Note: Certain reclassifications have been made to the December 31, 1992 financial statement for
comparative purposes.
</TABLE>
<PAGE>
Loan administration operating income at December 31, 1993 was $3.4
million, down from $6.6 million for the same quarter last year, principally
because portfolio amortization at $18.6 million in the December 1993 quarter
before the $30.0 million provision for PMSR impairment was $3.3 million
higher than the December 1992 quarter. For the six months ended December 31,
1993 and 1992, loan administration operating income before the $80 million
provision for PMSR impairment was $7.3 million and $11.2 million,
respectively. The Company's portfolio runoff rate during the December 1993
quarter accelerated to 45.3 percent on an annualized basis, and runoff in
certain tranches of the portfolio exceeded an annualized rate of 50 percent.
The annualized runoff rate for the month of December 1993 was 48.7 percent
compared to 41.5 percent for the six months ended December 1993 and 37.8
percent for the first quarter of fiscal 1994. Portfolio production during the
quarter ended December 1993 was sufficient to cover the quarter's record
portfolio runoff. After the PMSR provision, the Company's booked investment
in its $32.7 billion primary mortgage servicing portfolio was approximately
$382 million at December 31, 1993.
The following is an analysis of servicing fee income for the quarters
and six months ended December 31, 1993 and 1992 (in thousands).
Quarter Ended Six Months Ended
December 31 December 31
------------------ ------------------
1993 1992 1993 1992
-------- -------- ------- -------
Servicing fee income:
Primary servicing portfolio $33,662 $33,036 $66,492 $66,647
Subservicing portfolio 1,336 671 2,677 1,120
-------- -------- ------- -------
34,998 33,707 69,169 67,767
Master servicing portfolio 3,136 3,435 6,653 5,936
-------- -------- ------- -------
Total $38,134 $37,142 $75,822 $73,703
======== ======== ======= =======
<PAGE>
The following table sets forth certain information regarding the
Company's servicing portfolio (dollars in millions):
December 31, 1993 June 30, 1993
------------------ -------------
Portfolio principal balances:
Primary servicing portfolio $28,227 $27,760
Subservicing portfolio 4,475 4,917
------- -------
32,702 32,677
Master servicing portfolio 9,856 12,539
------- -------
$42,558 $45,216
======= =======
Portfolio loan count:
Primary servicing portfolio 509,090 530,706
Subservicing portfolio 69,814 74,949
------- -------
578,904 605,655
Master servicing portfolio 148,798 169,302
------- -------
727,702 774,957
======= =======
The banking unit's net expense of $6.3 million for the quarter ended
December 31, 1993, was $1.7 million higher than the $4.6 million net expense
reported for the quarter ended December 31, 1992. Paid-in-full ("PIF")
interest, which is incurred when loans securing payment of mortgage-backed
securities in the Company's primary servicing portfolio are prepaid prior to
the end of a given month, at $6.5 million for the quarter ended December 31,
1993 was the highest quarterly total in the Company's history and was $1.4
million higher than the $5.1 million in the same quarter last year.
Net income from portfolio production for the quarter ended December 31,
1993 was $4.1 million, down from $4.9 million last year. Revenues were $3.8
million higher in the 1993 quarter than in 1992 and expenses were
$4.6 million higher in the 1993 quarter than in 1992. The principal reason
for the higher revenues and expenses in the 1993 quarter was because of the
higher portfolio production in the 1993 quarter. Portfolio production during
the December 1993 quarter totaled $4.3 billion, up from $3.5 billion in the
December 1992 quarter.
Income from the fund and asset management unit was $1.9 million less in
the December 1993 quarter than in 1992 because the management agreement with
Capstead Mortgage Corporation ("Capstead") terminated on September 30, 1993.
Amendments to the contractual relationship between the Company and Capstead
and related accelerations of payments to the Company by Capstead resulted in
revenues from the unit of $4.8 million for each of the six-month periods
ended December 31, 1993 and 1992.
Interest Rate Fluctuations and Market Factors
Lower long term interest rates normally increase new mortgage loan
production volume, which in turn increases fee income and the net interest
spread as a result of the higher average volume of mortgages held for sale.
Lower long term rates also increase prepayment speeds of mortgages on which
PMSRs are currently held, which lowers yields realized on the Company's
investment in PMSRs. Increased prepayment speeds also accelerate PIF
interest expense owed to certain investors. PIF interest is the partial
monthly interest in the month of payoff that is not payable by the mortgagor,
but is receivable by the mortgage security holder.
Higher long term interest rates normally decrease the general volume of
new mortgage originations, decreasing the volume of mortgages held for sale.
These conditions result in reduced fee income and reduced net interest
income. However, the Company's average net yield as a percentage of the
balance held may increase if short term rates do not change by a
corresponding degree. Higher long term rates also decrease the prepayment
speed of mortgages on which PMSRs are currently held, which in turn would
increase the yield on the Company's investment in PMSRs. Decreased
prepayment speeds will also decrease PIF interest expense due to loans which
payoff.
Lower short term interest rates increase the Company's net interest
spread on mortgages held for sale and higher short term interest rates
decrease the net yield on mortgages held for sale unless there is a
corresponding increase in long term interest rates.
The value of the Company's loan servicing portfolio may be adversely
affected if mortgage interest rates decline and loan prepayments increase.
Periods of accelerated prepayments may result in future declines of income
generated from the Company's loan servicing portfolio. Conversely, if
mortgage interest rates increase, the value of the Company's loan servicing
portfolio may be positively affected.
During periods of declining interest rates, mortgage loan prepayment
speeds tend to increase, which decreases the expected cash flow from the
servicing portfolio and reduces the yield and the value of PMSRs. Interest
rates declined throughout most of fiscal 1993 and the six-month period ended
December 31, 1993, resulting in historically high annualized runoff rates of
the Company's servicing portfolio. If the level of prepayments experienced
during fiscal 1993 and the first six months of fiscal 1994 continues or
accelerates, future increases to the scheduled amortization or additional
impairment adjustments may be necessary.
<PAGE>
Information Systems
The following table presents a summary of Lomas Information Systems
("LIS") revenues, expense and net operating results during the quarters and
six-month periods ended December 31, 1993 and 1992 (in thousands):
Quarter Ended Six Months Ended
December 31 December 31
------------------- -------------------
1993 1992 1993 1992
-------- -------- -------- --------
Revenues:
External $ 4,071 $ 3,228 $ 7,918 $ 6,528
Internal 5,290 5,277 10,308 10,472
-------- -------- -------- --------
9,361 8,505 18,226 17,000
-------- -------- -------- --------
Cash expenses:
Personnel and contract labor (4,996) (5,760) (9,974) (11,320)
Equipment/software rent and
maintenance (4,415) (4,113) (9,000) (8,905)
Voice communications (1,260) (1,013) (2,277) (1,944)
General and administrative (2,317) (2,877) (4,491) (5,084)
-------- -------- -------- --------
(12,988) (13,763) (25,742) (27,253)
-------- -------- -------- --------
Net cash requirement (3,627) (5,258) (7,516) (10,253)
Noncash items:
Depreciation and amortization (2,233) (2,122) (4,413) (4,233)
Enhancement capitalization 240 1,126 448 2,344
Charges to conversion
reserves -- 2,581 -- 4,654
Provision for losses (15) 106 (23) 84
-------- -------- -------- --------
Net pretax loss $ (5,635) $ (3,567) $(11,504) $ (7,404)
======== ======== ======== ========
LIS recorded a pretax loss in the quarter ended December 31, 1993 of
$5.6 million compared to $3.6 million for the same quarter last year. On a
net cash basis, the December 31, 1993 loss by LIS was $3.6 million compared
to $5.3 million in the quarter ended December 31, 1992.
Other
The other operations of the Company resulted in a loss of $530,000 for
the quarter ended December 31, 1993 and income of $4.6 million for the
quarter ended December 31, 1992. For the six months ended December 31, 1993
and 1992, other income was $4.6 million and $10.1 million, respectively.
During the quarter and six months ended December 31, 1993, the other
operating results included a loss of $900,000 and $1.5 million, respectively,
from the Company's image processing operations. During the six months ended
December 31, 1993, the Company recorded a gain of $1.4 million on the sale of
a promissory note, which had been received by the Company in connection with
the sale of its life insurance operations. Amendments to certain contractual
provisions related to the Company's 1991 sale of ELLCO Leasing Corporation
added $3.9 million in other income in the six months ended December 31, 1993.
Also, amendments to the Company's relationship with Capstead contributed $3.0
million in other income in the six months ended December 31, 1992.
Discontinued Operations
In fiscal 1992 and 1993 the Company provided $15.4 million of reserves
to cover future operating losses of STL and an additional $4.0 million during
the six months ended December 31, 1993. For the quarters and six months
ended December 31, 1993 and 1992, operating losses of $3.7 million, $3.2
million, $5.5 million and $6.1 million, respectively, were charged to these
reserves. The Company is currently reviewing its portfolio and projected
operating results through December 1995 of the discontinued real estate
operations. If this analysis results in any indicated future operating
losses, the Company will provide reserves to cover these losses. It is
anticipated that the review will be completed by the quarter ending March 31,
1994. Discontinued operations also reported a $4.0 million operating loss for
the six months ended December 31, 1993. Discontinued operations reported
$86,000 and $183,000 net income from other real estate operations for the
quarter and six months ended December 31, 1992, respectively. Operating
losses for the quarters ended December 31, 1993 and 1992 included,
respectively, $1.9 million and $1.8 million provisions for losses on loans
and foreclosed real estate. For the six months ended December 31, 1993 and
1992 these provisions totaled $2.2 million and $3.3 million, respectively.
Liquidity and Capital Resources
The capital and credit resources of the Company at December 31, 1993
included (in millions):
Short term debt (self-liquidating) of Lomas Mortgage:
--Secured by first mortgage loans pending delivery
to permanent investors $ 433.3
--Secured by reverse repurchase agreements 58.7
--Secured by high quality short term investments 154.3
--Other short term debt 1.1
--------
647.4
--------
Term debt of Lomas Mortgage:
--Notes due in 1997 150.0
--Notes due in 2002 190.0
--Other 47.6
--------
387.6
--------
<PAGE>
Term notes of STL due in 1996 79.6
Convertible notes of LFC due in 2003 139.9
Stockholders' equity 226.4
--------
$1,480.9
========
Short term debt ($433.3 million) at December 31, 1993 included $285.8
million principal amount of short term notes and $147.5 million principal
amount of repurchase agreements which are principally for the warehousing of
single-family mortgage loans pending delivery to permanent investors.
Investment lines of credit at December 31, 1993 totaled $154.3 million
secured by investments purchased with the proceeds of such lines of credit.
Short term notes payable under reverse repurchase agreements are secured by
mortgage assets purchased under agreements to resell. The short term notes
and repurchase agreements outstanding were secured by single-family mortgage
loans which at that date were committed for sale to institutional purchasers.
Such loans (and therefore the related warehouse indebtedness) normally
revolve every 30 to 60 days. Thus, the short term notes, repurchase
agreements and notes payable under reverse repurchase agreements are self-
liquidating and require no supplemental liquidity support from LFC or any of
its subsidiaries. The Company's aggregate warehouse line of credit was
increased to $580 million from $317.5 million during the six months ended
December 31, 1993, and total short term warehouse credit availability was
increased to $780 million. Commercial paper and bank certificates of deposit
of non-affiliated commercial banks are funded with proceeds from, and are
pledged as collateral for, investment lines of credit. The commercial paper
and bank certificates of deposit have fixed rates of interest and generally
mature within 31 days, at which time the investment lines of credit are paid
down. As a result, all short term indebtedness is self-liquidating and none
of it constitutes any burden on operating cash flow.
Coverage for the term notes payable of Lomas Mortgage is provided by
cash internally generated by that subsidiary. Lomas Mortgage's operations
during the six months ended December 31, 1993, after paying interest on its
short term debt, generated $41.8 million in cash available for (i) payment of
interest on the subsidiary's $387.6 million of term debt, (ii) investment in
portfolio maintenance and growth, (iii) intercompany advances or payment of
dividends to LFC (subject to restricted payment limitations described below),
and (iv) addition to Lomas Mortgage's working capital.
Lomas Mortgage believes, notwithstanding the liquidity requirements of
LFC, that it will have sufficient cash resources at this time to make
investments in additional mortgage servicing rights and to permit growth when
attractive opportunities arise, although the amount of growth in any given
period will be dependent upon market opportunities and Lomas Mortgage's
capital resources at the time.
Under the terms of the warehouse and investment lines of credit that
contain the most restrictive covenants, Lomas Mortgage is restricted from
making any intercompany advances or dividend payments to LFC if, after giving
effect thereto, the aggregate amount of such payments should exceed the sum
of (i) $25 million (less any intercompany advances); plus (ii) 50 percent of
Lomas Mortgage's accumulated consolidated income before tax since October 1,
1992; or reduced by 100 percent of consolidated loss before income taxes;
plus (iii) (a) before November 30, 1993 the fair market value of the
aggregate net proceeds received by Lomas Mortgage from the issuance or sale
after October 1, 1992 of its capital stock and warrants, options and rights
to purchase its capital stock (b) after November 30, 1993, the aggregate net
cash proceeds received from the issuance or sale after November 30, 1993, of
capital stock and warrants, options and rights to purchase its capital stock.
After the provisions related to PMSR impairment and reduction-in-force, the
amount available for dividends or intercompany advances from Lomas Mortgage
to LFC as of December 31, 1993 was $5.4 million or such lesser amount that
would not reduce the net worth, determined in accordance with Lomas
Mortgage's lines of credit, to less than $215 million.
Coverage for (i) interest payments on LFC's $140 million of convertible
notes due 2003, (ii) general corporate expenses and (iii) additional advances
to LIS to date have been and in the future are expected to be provided by (a)
LFC's current cash resources, (b) dividends or intercompany advances from
Lomas Mortgage, (c) cash dividends and interest income on other investments,
and (d) periodic liquidations of other assets.
Effective November 9, 1993, the determination date by the Company of a
$50 million provision in the financial statements of Lomas Mortgage related
to impairment in the carrying value of its PMSRs and the loss for the quarter
ended September 30, 1993, the Company took immediate steps to increase the
net worth of Lomas Mortgage by approximately $44 million by transferring a 49
percent interest in its wholly-owned subsidiary, STL, to Lomas Mortgage in
exchange for the issuance of common stock of Lomas Mortgage. For financial
statement purposes, Lomas Mortgage, as a result of recording the November 9,
1993 charge of $50 million as of September 30, 1993, thereby creating the
loss incurred in the quarter ended September 30, 1993, failed to meet certain
loan covenants regarding minimum net worth requirements of its warehouse and
other lines of credit. However, as a result of the STL transaction which also
was accomplished in early November, the Company's net worth was increased by
$44 million and the Company was not in violation of the minimum net worth
requirement as of November 9, 1993, which was the date of the decision to
record the $50 million provision related to impairment in the carrying value
of the PMSRs, nor was it in violation at December 31, 1993 after the
additional $30 million provision related to impairment in the carrying value
of the PMSRs. Under the most restrictive covenants of Lomas Mortgage's
warehouse and investment lines of credit, the minimum net worth requirement
of Lomas Mortgage is $215 million. After the PMSR impairment and reduction-
in-force charges at December 31, 1993, Lomas Mortgage's net worth, determined
in accordance with such lines of credit, was $219 million.
As of December 31, 1993, the Company's failure to meet certain ratio
requirements contained in the covenants of the Company's $140 million senior
convertible note indenture, while not an event of default, limits the
Company's ability to issue additional term debt.
STL's term notes are related to the Company's discontinued short term
lending operations and are without recourse to the general credit and
resources of LFC or its other subsidiaries. The STL notes are secured by
STL's investments in short term real estate loans and related assets and will
be self-liquidating as the collateral is retired or otherwise liquidated over
the next four years. At December 31, 1993 collateral securing payments of
STL's notes included $64.8 million of earning short term real estate loans,
$36.3 million of earning REO, $83.1 million of other REO and approximately
$8.7 million of cash. The collateral, net of reserves of $22.3 million and
including other assets of $1.1 million, was carried at December 31, 1993 on
STL's books at $171.7 million.
Subsequent to December 31, 1993, STL made a principal payment on the
outstanding notes totaling $14.8 million; the outstanding balance of the STL
notes after application of these principal payments was $64.8 million.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On September 17, 1990 the plaintiffs purporting to represent a class of
single-family mortgagors having escrow deposits computed by Lomas Mortgage
filed a class-action complaint in Illinois. The complaint alleges that Lomas
Mortgage is in breach of mortgage contracts and is assessing excessive and
unlawful escrow deposits and in addition the complaint asks for punitive
damages. On October 4, 1990 this lawsuit was removed to the United States
District Court for the Northern District of Illinois. Mortgagors have filed
similar class-actions in California and Minnesota and class-action
counterclaims in two pending Illinois foreclosure actions. The state court
actions were removed to federal court and transferred to the Northern
District of Illinois where they are currently pending before the same judge
as the original action. The state court counterclaims are stayed.
Management believes that the calculation of escrow balances is in
accordance with mortgage contracts and RESPA regulations. Similar lawsuits
based on escrow balances have also been brought against other mortgage
banking companies. The ultimate liability with respect to this contingency
is not presently determinable but an adverse settlement or judgment may
require the Company to repay escrow monies to mortgagors or otherwise reduce
the Company's escrow balances which would also result in a higher cost of
funds to the Company, potentially negatively impacting the Company's results
of operations. Assessment of punitive damages in connection with the
litigation could also potentially negatively impact the Company's results of
operations. Management does not believe that any losses incurred as a result
of this litigation will have a material adverse effect on the financial
condition of Lomas Mortgage or the Company.
The Company is involved from time to time in litigation incidental to
its business. Management believes that the outcome of current litigation
will not have a material adverse effect upon the financial condition of the
Company.
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit
Number
-------
(10.1) Agreement Regarding Delaware Law dated November 9, 1993
between the registrant and entities and individuals listed
therein as the Cold Spring Group.
(10.2) Amendment No. 2 to the Lomas Financial Corporation 1993
Intermediate and Long Term Incentive Plan.
(10.3) First Amendment to Restated Loan and Security Agreement dated
September 15, 1993 among Lomas Mortgage USA, Inc., the bank
signatories thereto and Bank One, Texas, N.A. and Texas
Commerce Bank National Association, as Agents.
(10.4) Second Amendment to Restated Loan and Security Agreement dated
September 30, 1993 among Lomas Mortgage USA, Inc., the bank
signatories thereto and Bank One, Texas, N.A. and Texas
Commerce Bank National Association, as Agents.
(10.5) Third Amendment to Restated Loan and Security Agreement dated
November 30, 1993 among Lomas Mortgage USA, Inc., the bank
signatories thereto and Bank One, Texas, N.A. and Texas
Commerce Bank National Association, as Agents.
(10.6) Sixth Amendment to Servicing Payments Loan and Security
Agreement dated July 8, 1993 among Lomas Mortgage USA, Inc.,
the bank signatories thereto and Bank One, Texas, N.A., as
Agent.
(10.7) Seventh Amendment to Servicing Payments Loan and Security
Agreement dated September 30, 1993 among Lomas Mortgage USA,
Inc., the bank signatories thereto and Bank One, Texas, N.A.,
as Agent.
(10.8) Eighth Amendment to Servicing Payments Loan and Security
Agreement dated November 30, 1993 among Lomas Mortgage USA,
Inc., the bank signatories thereto and Bank One, Texas, N.A.,
as Agent.
(10.9) Employment Agreement dated December 1, 1993 between the
registrant and David L. Chapman II.
(10.10) Employment Agreement dated September 1, 1993 between the
registrant and Gary H. Kell.
(10.11) Employment Agreement dated August 1, 1993 between the
registrant and Gary White.
(11) Computation of Earnings Per Share.
(b) Reports on Form 8-K:
Form 8-K dated January 12, 1994 reporting Mr. Gary H. Kell's promotion
to the office of president of the Company's mortgage banking subsidiary,
Lomas Mortgage USA, Inc., and Mr. Michael E. Patrick's resignation of
his position as executive vice president of the Company and president of
the mortgage banking unit. Also reported were the Company's plan to
reduce its work force and the Company's increased short term warehouse
credit availability. No financial statements were filed.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LOMAS FINANCIAL CORPORATION
Date: February 14, 1994 By: /s/JESS HAY
--------------------------
Jess Hay
Chairman and Chief
Executive Officer
Date: February 14, 1994 By: /s/GARY WHITE
--------------------------
Gary White
Senior Vice President and
Controller<PAGE>
LOMAS FINANCIAL CORPORATION
INDEX TO EXHIBITS
Sequentially
Numbered
Exhibit No. Page
- ----------- ------------
(10.1) Agreement Regarding Delaware Law dated 21
November 9, 1993 between the registrant
and entities and individuals listed therein
as the Cold Spring Group.
(10.2) Amendment No. 2 to the Lomas Financial 25
Corporation 1993 Intermediate and Long
Term Incentive Plan.
(10.3) First Amendment to Restated Loan and Security 26
Agreement dated September 15, 1993 among
Lomas Mortgage USA, Inc., the bank
signatories thereto and Bank One, Texas, N.A.
and Texas Commerce Bank National Association,
as Agents.
(10.4) Second Amendment to Restated Loan and Security 32
Agreement dated September 30, 1993 among
Lomas Mortgage USA, Inc., the bank
signatories thereto and Bank One, Texas, N.A.
and Texas Commerce Bank National Association,
as Agents.
(10.5) Third Amendment to Restated Loan and Security 37
Agreement dated November 30, 1993 among
Lomas Mortgage USA, Inc., the bank
signatories thereto and Bank One, Texas, N.A.
and Texas Commerce Bank National Association,
as Agents.
(10.6) Sixth Amendment to Servicing Payments Loan 51
and Security Agreement dated July 8, 1993
among Lomas Mortgage USA, Inc., the bank
signatories thereto and Bank One, Texas, N.A.,
as Agent.
(10.7) Seventh Amendment to Servicing Payments Loan 60
and Security Agreement dated September 30,
1993 among Lomas Mortgage USA, Inc., the bank
signatories thereto and Bank One, Texas, N.A.,
as Agent.
<PAGE>
(10.8) Eighth Amendment to Servicing Payments Loan 65
and Security Agreement dated November 30, 1993
among Lomas Mortgage USA, Inc., the bank
signatories thereto and Bank One, Texas, N.A.,
as Agent.
(10.9) Employment Agreement dated December 1, 1993 72
between the registrant and
David L. Chapman II.
(10.10) Employment Agreement dated September 1, 1993 74
between the registrant and Gary H. Kell.
(10.11) Employment Agreement dated August 1, 1993 77
between the registrant and Gary White.
(11) Computation of Earnings Per Share. 79
AGREEMENT REGARDING DELAWARE LAW
This Agreement Regarding Delaware Law (this "Agreement") is
entered into as of November 9, 1993 between Lomas Financial
Corporation (the "Company") and each of the entities and
individuals listed under the heading "The Cold Spring Group" on the
signature pages hereof (such entities and individuals being
referred to collectively herein as the "Cold Spring Group").
W I T N E S S E T H :
WHEREAS, the Company and the Cold Spring Group entered into
that certain Trigger Amendment dated as of June 9, 1992, pursuant
to which the Company agreed to, among other things, increase the
"Trigger Percentage" (as such term is defined in the Rights
Agreement, as amended, dated as of January 30, 1992 between the
Company and Ameritrust Company National Association, as Rights
Agent (the "Rights Agreement")), at which the Cold Spring Group
(together with all its "Associates" and "Affiliates" (as such terms
are defined in Rule 12b-2 under the Securities Exchange Act of
1934, as amended)) would become an "Acquiring Person" under the
Rights Agreement from 15% to 20%, subject to the terms and
conditions set forth therein;
WHEREAS, the Company and the Cold Spring Group entered into
that certain Trigger Amendment No. 2 dated as of August 18, 1992,
pursuant to which the Company agreed to, among other things,
increase the Trigger Percentage at which the Cold Spring Group
(together with all its Associates and Affiliates) would become an
Acquiring Person under the Rights Agreement from 20% to 21.9%
(provided that not more than 19.9% of the 21.9% shall have been
evidenced by the ownership of outstanding Common Stock of the
Company, exclusive of any exchangeable or convertible securities),
subject to the terms and conditions set forth therein;
WHEREAS, the Company and the Cold Spring Group entered into
that certain Trigger Amendment No. 3 dated as of October 5, 1993,
pursuant to which the Company agreed, among other things, to
increase the Trigger Percentage at which the Cold Spring Group
(together with all its Associates and Affiliates) would become an
Acquiring Person under the Rights Agreement from 21.9% to 24.9%
(provided that not more than 22.9% of the 24.9% shall have been
evidenced by the ownership of outstanding Common Stock of the
Company, exclusive of any exchangeable or convertible securities),
subject to the terms and conditions set forth therein;
WHEREAS, each of the Trigger Amendment, the Trigger Amendment
No. 2 and the Trigger Amendment No. 3 (collectively referred to
hereafter as, the "Trigger Amendment"), also provided that the
approval of the Company's Board of Directors under Section 203 of
the Delaware General Corporation Law be deemed as given to the Cold
Spring Group up to a certain percentage ownership level of the
Company's securities as provided in each such agreement;
WHEREAS, the Rights Agreement, as amended, has expired and
terminated in accordance with the terms thereof on November 2,
1993, the date of the Company's Annual Meeting of Stockholders; and
WHEREAS, the Company is willing to further address certain
matters relating to the investment of the Cold Spring Group
(together with all its Associates and Affiliates) in securities of
the Company and certain related matters regarding the approval of
the Company's Board of Directors pursuant to Section 203 of the
Delaware General Corporation Law, subject to the terms and
conditions set forth below;
NOW, THEREFORE, in consideration of the mutual agreements and
promises made in this Agreement by the parties, and other good and
valuable consideration, the receipt and sufficiency of which the
parties acknowledge, the parties hereto agree as follows:
1. Application of Section 203 of the Delaware General
Corporation Law. Pursuant to a resolution heretofore adopted by the
Board of Directors of the Company (the "Board"), so long as any
transaction contemplated or entered into by the Cold Spring Group
does not or would not result in the Cold Spring Group (together
with all its Affiliates and Associates) at any time (a)
beneficially owning 35% or more of the Common Stock, par value
$1.00 per share, of the Company (the "Common Stock") or (b) owning,
directly or indirectly, more than 33% of the Common Stock
outstanding at such time (excluding for the purposes of this clause
(b) all securities of the Company convertible into or exercisable
or exchangeable for Common Stock) (each of the events described in
clauses (a) and (b) of this Section 1 being hereinafter referred to
as "Termination Event"), such transaction is approved for purposes
of Section 203(a)(1) of the Delaware General Corporation Law
("Section 203(a)(1)"); provided, however, that if at any time a
Termination Event occurs, (i) this Agreement shall terminate
forthwith at such time and be null and void and of no further force
or effect and (ii) if the Cold Spring Group would at the time of
such Termination Event, in the absence of any Section 203(a)(1)
Board approval, otherwise be subject to Section 203 of the Delaware
General Corporation Law ("Section 203"), no approval by the Board
under Section 203(a)(1) shall be deemed to have been given, and the
Cold Spring Group shall be subject to Section 203 at such time.
Notwithstanding the foregoing, the Cold Spring Group may increase
its ownership of Common Stock in excess of the percentage levels
specified in this Section 1 as otherwise agreed in writing with the
Company or as otherwise permitted by Section 203(a)(2) as if the
Cold Spring Group were not an "Interested Stockholder" for purposes
of Section 203.
2. Investment Representation. Each member of the Cold Spring
Group hereby represents to the Company that the shares of Common
Stock currently or hereafter, as the case may be, beneficially
owned by the Cold Spring Group (i) have been and will be acquired
in the ordinary course of business, (ii) were not and will not be
acquired for the purpose of and do not have and will not have the
effect of changing or influencing the control of the Company, and
(iii) were not and will not be acquired in connection with or as a
participant in any transaction having such purpose or effect.
3. Counterparts. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same
instrument.
4. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
DELAWARE.
5. Entire Agreement; Modification; Waivers. This Agreement
constitutes the entire agreement between the parties hereto
pertaining to the subject matter hereof and supersedes all prior
and contemporaneous agreements (including, without limitation, the
Trigger Amendment, and except those contemplated hereunder),
understandings, negotiations and discussions, whether oral or
written, of the parties, and there are no warranties,
representations or agreements between the parties in connection
with the subject matter hereof except as set forth or referred to
herein. No supplement, modification or waiver of this Agreement or
any provision hereof shall be binding unless executed in writing by
the parties to be bound thereby. No waiver of any of the provisions
of this Agreement shall constitute a waiver of any other provisions
(whether or not similar), nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided.
6. Headings. Section headings are not to be considered part
of this Agreement and are included solely for convenience and are
not intended to be full or accurate descriptions of the content
thereof.
7. Successors; Assignment. Except as otherwise provided in
this Agreement, all of the terms, provisions, covenants,
representations, warranties and conditions of this Agreement shall
be binding upon, and shall inure to the benefit of, the parties
hereto and their respective successors. This Agreement is not
assignable by any member of or entity in the Cold Spring Group.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by
each of the parties hereto through their respective authorized
representatives, as of the day and year first above written.
LOMAS FINANCIAL CORPORATION
By: /s/JAMES L. CROWSON
------------------------------
James L. Crowson
Senior Vice President and
General Counsel
THE COLD SPRING GROUP:
COLD SPRING ASSOCIATES, L.P.
By: Cold Spring Management, Inc.
General Partner
By: /s/MARK M. FELDMAN
--------------------------
Mark M. Feldman, President
GREEN POND ASSOCIATES, L.P.
By: Green Pond Management, Inc.
General Partner
By: /s/MARK M. FELDMAN
--------------------------
Mark M. Feldman, President
RIVER ROAD INTERNATIONAL, L.P.
By: River Road Capital Management,
General Partner
By: /s/S. DONALD SUSSMAN
--------------------------
S. Donald Sussman
General Partner
<PAGE>
By: River Road Partners,
General Partner
By: /s/S. DONALD SUSSMAN
--------------------------
S. Donald Sussman,
General Partner
PALOMA SECURITIES
By: /s/ROBERT JONES
------------------------------
Robert Jones
General Partner
By: Paloma Partners Management
Company, General Partner
By: /s/S. DONALD SUSSMAN
------------------------------
S. Donald Sussman, President
/s/S. DONALD SUSSMAN
----------------------------------
S. DONALD SUSSMAN
/s/MARK M. FELDMAN
----------------------------------
MARK M. FELDMAN
/s/PAUL S. WOLANSKY
----------------------------------
PAUL S. WOLANSKY
AMENDMENT NO. 2
TO THE
LOMAS FINANCIAL CORPORATION
1993 INTERMEDIATE AND
LONG TERM
INCENTIVE PLAN
This Amendment No. 2 (this "Amendment") to the Lomas Financial
Corporation 1993 Intermediate and Long Term Incentive Plan, as
amended by Amendment No. 1 to the Lomas Financial Corporation 1993
Intermediate and Long Term Incentive Plan dated November 2, 1993
(collectively, the "Plan"), which shall be effective as of the 25th
day of January, 1994, amends the terms of the Plan as set forth
herein. Capitalized terms used herein but not defined shall have
the meaning as ascribed to them in the Plan.
1. The following section of the Plan is hereby amended to
read in its entirety as set forth below:
The definition of "Change in Control" in Section 2 of the
Plan shall be amended to read as follows:
"Change in Control" - It shall be deemed to be a
Change in Control of the Company if, after the effective
date of the Plan, (i) the occurrence of an event of a
nature that would be required to be reported in response
to Item 1 or Item 2 of a Form 8-K Current Report of the
Company promulgated pursuant to Sections 13 and 15(d) of
the Securities Exchange Act of 1934, as amended (the
"Exchange Act"); provided that, without limitation, such
a Change in Control shall be deemed to have occurred if
(a) any "person," as such term is used in Sections 13(d)
and 14(d) of the Exchange Act (other than the Company,
any trustee or other fiduciary holding securities under
any employee benefit plan of the Company, or any company
owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their
ownership of stock of the Company), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of
the Company representing thirty-five percent (35%) or
more of the combined voting power of the Company's then
outstanding securities or (b) during any period of two
consecutive years, individuals who at the beginning of
such period constitute the Board cease for any reason to
constitute at least a majority thereof, unless the
election by the Board or the nomination for election by
the Company's stockholders was approved by a vote of at
least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the
two-year period or whose election or nomination for
election was previously so approved; (ii) the
stockholders of the Company approve a merger or
consolidation of the Company with any other corporation,
other than a merger or consolidation that would result in
the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into
voting securities of the surviving entity) more than
eighty percent (80%) of the combined voting power of the
voting securities of the Company or such surviving entity
outstanding immediately after such merger or
consolidation; provided, however, that a merger or
consolidation effected to implement a reorganization or
recapitalization of the Company, or a similar transaction
(collectively, a "Reorganization"), in which no "person"
acquires more than twenty percent (20%) of the combined
voting power of the Company's then outstanding securities
shall not constitute a Change in Control of the Company;
or (iii) the stockholders of the Company approve a plan
of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or
substantially all of the Company's assets."
2. This Amendment No. 2 may be incorporated with and into
the Plan and the Plan may hereafter be restated to incorporate the
provisions of the Plan as amended by this Amendment No. 2 and any
other amendment to the Plan into one document which may be
collectively be referred to as the Plan.
FIRST AMENDMENT TO RESTATED LOAN AND SECURITY AGREEMENT
THIS AMENDMENT is entered into as of September 15, 1993, among LOMAS
MORTGAGE USA, INC., a Connecticut corporation (the "Company"), the banks
listed on the signature pages hereof ("Lenders"), BANK ONE, TEXAS, N.A., as
administrative agent (in that capacity "Administrative Agent"), and TEXAS
COMMERCE BANK NATIONAL ASSOCIATION, as syndication agent (together with
Administrative Agent "Agents").
The Company, Lenders, and Agents have entered into the Restated Loan and
Security Agreement dated as of July 8, 1993 (as renewed, extended, amended,
and restated, the "Loan Agreement") providing for loans to the Company on a
revolving basis. The Company has requested an amendment to the Loan
Agreement in order to approve the addition of Goldman, Sachs & Company as an
Investor under the Loan Agreement.
NOW THEREFORE, for valuable and acknowledged consideration, the parties
agree as follows:
1. Certain Definitions. Unless otherwise specified herein, all terms
defined in the Loan Agreement have the same meanings when used herein, and
all references to "Sections" and "Schedules" are references to sections and
schedules of or to the Loan Agreement.
2. Amendment. Schedule 1.1(b) is amended in its entirety in the form of
- -- and all references in the Loan Papers to it shall be to -- the attached
Amended Schedule 1.1(b).
3. Conditions Precedent. The foregoing is not effective until all of the
following are satisfied:
(a)Agents and Lenders shall have received a copy of this amendment
executed by the Company and Lenders; and
(b)The representations and warranties contained in this amendment and
in all other Loan Papers, as amended hereby, shall be true and correct as of
the date of this amendment as if made on the date of this amendment.
4. Ratifications. The terms and provisions of this amendment shall
modify and supersede all inconsistent terms and provisions of the Loan
Papers, and, except as expressly modified and superseded by this amendment,
the terms and provisions of the Loan Papers are ratified and confirmed and
shall continue in full force and effect. The Company, Lenders, and Agents
agree that the Loan Papers as amended hereby shall continue to be legal,
valid, binding, and enforceable in accordance with their respective terms.
Without limiting the generality of the foregoing, the Company hereby ratifies
and confirms that all Liens heretofore granted to Agents, on behalf of
Lenders, were intended to, do, and shall continue to secure the full and
complete payment and performance of the Obligations, and the Company agrees
to perform such acts and duly authorize, execute, acknowledge, deliver, file,
and record such additional assignments, security agreements, modifications or
amendments to any of the foregoing, and such other agreements, documents, and
instruments as either Agent or any Lender may reasonably request in order to
perfect and protect such Liens and preserve and protect the rights of Agents
and Lenders in respect of all present and future Collateral.
5. Representations and Warranties. The Company hereby represents and
warrants to Lenders and Agents that (a) this amendment and the Loan Papers to
be delivered hereunder have been duly authorized executed and delivered by
the Company, (b) no action of, or filing with, any Tribunal is required to
authorize, or is otherwise required in connection with, the execution,
delivery, and performance by the Company of this amendment and the Loan
Papers to be delivered hereunder, (c) this amendment and the Loan Papers to
be delivered hereunder are valid and binding upon the Company and are
enforceable against the Company in accordance with their respective terms,
except as limited by the Bankruptcy Code of the United States of America and
all other similar Laws affecting the rights of creditors generally, (d) the
execution, delivery and performance by the Company of this amendment and the
Loan Papers to be delivered hereunder do not require the consent of any other
Person and do not and will not constitute a violation of any laws, agreement,
or understanding to which the Company is a party or by which the Company is
bound, (e) the representations and warranties contained in the Loan
Agreement, as amended hereby, and any other Loan Paper are true and correct
in all material respects on and as of the date of execution hereof as though
made as of the date of execution hereof, and (f) as of the date of this
amendment, no Default has occurred and is continuing.
6. References. All references in the Loan Papers to the "Loan Agreement"
shall refer to the Loan Agreement as amended by this amendment, and, because
this amendment is a "Loan Paper" referred to in the Loan Agreement, then the
provisions relating to Loan Papers set forth in Section 10 are incorporated
herein by reference, the same as if set forth herein verbatim.
7. Counterparts. This amendment may be executed in any number of
counterparts with the same effect as if all signatories had signed the same
document, an all of those counterparts must be construed together to
constitute one and the same document.
8. Parties Bound. This amendment shall be binding upon and shall
inure to the benefit of the Company, Agents, and each Lender, and, subject to
Section 10.10, their respective successors and assigns.
9. ENTIRETY. THIS AMENDMENT, THE LOAN AGREEMENT AS AMENDED HEREBY,
AND THE OTHER LOAN PAPERS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
FOR THE TRANSACTIONS THEREIN, AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
EXECUTED AS OF THE DATE FIRST STATED.
Lomas Mortgage USA, Inc. LOMAS MORTGAGE USA, INC.,
1600 Viceroy Drive as the Company
Dallas, Texas 75235
Attn: Robert E. Byerley, Jr.,
Senior Vice President &
Treasurer By /s/PAUL D. FLETCHER
Telecopy 214/879-7018 --------------------
(Name) Paul D. Fletcher
(Title) Vice President
Third Floor, 1717 Main Street BANK ONE, TEXAS, N.A.,
Mortgage Finance Group as Administrative Agent and
Dallas, Texas 75201 a Lender
Attn: Kathleen C. Stewart,
Vice President
Telecopy 214/290-2275 By /s/KATHLEEN C. STEWART
----------------------
Kathleen C. Stewart,
Vice President
Texas Commerce Bank National Association TEXAS COMMERCE BANK
717 Travis Street NATIONAL ASSOCIATION,
Houston, Texas 77002 as Syndication Agent and
Attn: Abbie Tidmore a Lender
Vice President
Telecopy 713/216-2082 By /s/ABBIE TIDMORE
----------------------
Abbie Tidmore,
Vice President
First Bank Place FIRST BANK NATIONAL
601 2nd Ave. S. ASSOCIATION, as a Lender
Minneapolis, Minnesota 55402
Attn: Kathlyn Slater
Vice President
Telecopy 612/973-0826
By /s/KATHLYN SLATER
----------------------
Kathlyn Slater,
Vice President
8333 Douglas Avenue GUARANTY FEDERAL BANK,
Dallas, Texas 75255 F.S.B., as a Lender
Attn: James E. Robertson
Vice President
Telecopy 214/360-8948
By /s/JAMES E. ROBERTSON
-----------------------
James E. Robertson,
Vice President
<PAGE>
One Marine Midland Center, 15th Floor MARINE MIDLAND BANK, N.A.,
Buffalo, New York 14203 as a Lender
Attn: William Dentinger
Vice President
Telecopy 716/841-2707
By /s/WILLIAM DENTINGER
----------------------
William Dentinger
Vice President
100 Federal Street THE FIRST NATIONAL BANK OF
Boston, MA 02110 BOSTON, as a Lender
Attn: James Reuland,
Vice President
Telecopy: (617) 434-7108 By /s/JAMES REULAND
-----------------------
James Reuland,
Vice President
15 South 20th Street, 15th Floor CENTRAL BANK OF THE SOUTH,
Birmingham, Alabama 35233 as a Lender
Attn: John D. West, Mortgage
Banking Officer
Telecopy 205/715-7994
By /s/JOHN D. WEST
-----------------------
John D. West,
Mortgage Banking Officer
67th Floor, NationsBank Plaza NATIONSBANK OF TEXAS, N.A.,
901 Main Street as a Lender
Dallas, Texas 75202
Attn: Beth S. Sorensen
Vice President
Telecopy 214/508-0604 By /s/BETH S. SORENSEN
-----------------------
Beth S. Sorensen,
Vice President
1601 Elm Street, 2nd Floor COMERICA BANK - TEXAS,
Dallas, Texas 75201 as a Lender
Attn: Maureen Macan
Vice President
Telecopy 214/969-6096
By /s/MAUREEN MACAN
-----------------------
Maureen Macan,
Vice President
<PAGE>
AMENDED SCHEDULE 1.1(b)
Investors
I. Bond Programs
-------------
Program Trustee
------- -------
Bexar County Housing Finance Corp., Ameritrust Texas, N.A.
Series 1990
Brevard County Housing Finance Authority, Sun Bank, N.A.
Series 1991
East Texas Housing Finance Corp., Ameritrust Texas, N.A.
Series 1992A
Harris County Housing Finance Corporation, Texas Commerce Bank, N.A.
Series 1991
Housing Finance Authority of Manatee NationsBank Trust Co. (FL), N.A.
County, FL; Series 1991A
Housing Finance Authority of Palm Beach NationsBank Trust Co. (FL), N.A.
County, FL; Series 1992A
New Orleans Home Mortgage Authority, First National Bank of Commerce
Series 1991A
Travis County Housing Finance Corp., Ameritrust Texas, N.A.
Series 1991, A&B
Orange County Housing Finance Authority, Sun Bank, N.A.
Series 1992 A & B
Housing Finance Authority of Pinellas NationsBank Trust Co.
County, Series 1991 B (FL), N.A.
Central Texas Housing Finance Corp., NCNB Texas National Bank
Series 1991 Ft. Worth
Escambia County Housing Finance Authority, NationsBank Trust Co. (FL)
Series 1992
Northeast Texas Housing Finance Corp., NCNB Texas National Bank
Series 1991 Ft. Worth
Texas Dept. of Housing & Community Team Bank, Ft. Worth
Affairs; No.45
Texas Dept. of Housing & Community Team Bank, Ft. Worth
Affairs Bond Program No. 44, Series 1991
<PAGE>
II. Pension Funds
------------- Other
-----
California Public Employees Retirement not applicable
System
III. Investment Banks
----------------
Donaldson, Lufkin & Jenrette
Securities Corp.
Goldman, Sachs & Company
Paine Webber, Inc.
Rauscher Pierce Refsnes, Inc.
Salomon Brothers, Inc.
The First Boston Corporation
Shearson/Lehman Brothers, Inc.
Smith Barney Harris Hupham & Company, Inc.
IV. Other
-----
Veterans Land Board of the State of Texas
Prudential Securities Realty Funding Corporation
Guaranty Federal Bank, F.S.B.
SECOND AMENDMENT TO RESTATED LOAN AND SECURITY AGREEMENT
THIS AMENDMENT is entered into as of September 30, 1993, among LOMAS
MORTGAGE USA, INC., a Connecticut corporation (the "Company"), the banks
listed on the signature pages hereof ("Lenders"), BANK ONE, TEXAS, N.A., as
administrative agent (in that capacity "Administrative Agent"), and TEXAS
COMMERCE BANK NATIONAL ASSOCIATION, as syndication agent (together with
Administrative Agent "Agents").
The Company, Lenders, and Agents have entered into the Restated Loan and
Security Agreement dated as of July 8, 1993 (as amended as of September 15,
1993, and as further renewed, extended, amended, and restated, the "Loan
Agreement") providing for loans to the Company on a revolving basis. The
Company has requested an amendment to the Loan Agreement in order to provide
a temporary cure period for a certain covenant.
NOW THEREFORE, for valuable and acknowledged consideration, the parties
agree as follows:
1. Certain Definitions. Unless otherwise specified herein, all terms
defined in the Loan Agreement have the same meanings when used herein, and
all references to "Sections" are references to sections of the Loan
Agreement.
2. Amendments.
(a) A new sentence is added to the end of Section 7.2 as follows:
For purposes of clauses (b) and (c) above, only 50% of the equity
investment shown on the Company's balance sheet attributable to
the stock of ST Lending, Inc. shall be included in the calculation
of the Company's Consolidated Net Worth.
(b) Sections 7.3(b)(ii) and (iii) are entirely amended as
follows:
(ii) 50% of the Consolidated Net Income (or, in the event
Consolidated Net Income is a deficit, then 100% of that
deficit) of the Company and its Consolidated Subsidiaries for
the period (taken as one accounting period) commencing on
October 1, 1992, and including the last day of the fiscal
quarter ended immediately prior to the date of such
calculation, plus (iii) the aggregate net proceeds, including
the fair market value of property other than cash (as
determined in good faith by the Board of Directors, evidenced
by a resolution of the Board of Directors), received by the
Company from the issuance or sale after October 1, 1992
(other than to a Subsidiary of the Company), of its capital
stock and warrants, options, and rights to purchase its
capital stock but excluding the net proceeds from the
issuance, sale, exchange, conversion, or other disposition of
its capital stock convertible into or exchangeable for any
security other than its capital stock at the option of the
holder thereof or upon the happening of any event.
(c) A new Section 7.8(i) is added as follows:
(i) The acquisition of 490 shares of the stock of ST
Lending, Inc. from Lomas Financial Corporation in
exchange for the issuance of 200 shares of the
Company's stock.
(d) Section 7.12 (b) is entirely amended as follows:
(b) Debt for which the Company is required to deliver the
notes evidencing mortgage loans securing that Debt to
Administrative Agent as custodian.
(e) Effective as of the date of this amendment through November
29, 1993, Section 8.1(e) is entirely amended as follows:
(e) The failure on the part of the Company to observe or
perform (i) any of its covenants or agreements
contained in Section 7 other than Section 7.4 or (ii)
the covenant contained in Section 7.4 for a period of
45 days after the date on which notice of such failure
has been delivered by the Company to either Agent.
3. Conditions Precedent. The foregoing is not effective until all of
the following are satisfied: (a) Agents and Lenders shall have received a
copy of this amendment executed by the Company and Lenders and (b) the
representations and warranties contained in this amendment and in all other
Loan Papers, as amended by this amendment, shall be true and correct as of
the date of this amendment as if made on the date of this amendment.
4. Ratifications. The terms and provisions of this amendment shall
modify and supersede all inconsistent terms and provisions of the Loan
Papers, and, except as expressly modified and superseded by this amendment,
the terms and provisions of the Loan Papers are ratified and confirmed and
shall continue in full force and effect. The Company, Lenders, and Agents
agree that the Loan Papers as amended by this amendment shall continue to be
legal, valid, binding, and enforceable in accordance with their respective
terms. Without limiting the generality of the foregoing, the Company
ratifies and confirms that all Liens heretofore granted to Agents, on behalf
of Lenders, were intended to, do, and shall continue to secure the full and
complete payment and performance of the Obligations, and the Company agrees
to perform such acts and duly authorize, execute, acknowledge, deliver, file,
and record such additional assignments, security agreements, modifications or
amendments to any of the foregoing, and such other agreements, documents, and
instruments as either Agent or any Lender may reasonably request in order to
perfect and protect such Liens and preserve and protect the rights of Agents
and Lenders in respect of all present and future Collateral.
5. Representations and Warranties. The Company hereby represents and
warrants to Lenders and Agents that (a) this amendment and the Loan Papers to
be delivered under this amendment have been duly authorized, executed and
delivered by the Company, (b) no action of, or filing with, any Tribunal is
required to authorize, or is otherwise required in connection with, the
execution, delivery, and performance by the Company of this amendment and the
Loan Papers to be delivered hereunder, (c) this amendment and the Loan Papers
to be delivered hereunder are valid and binding upon the Company and are
enforceable against the Company in accordance with their respective terms,
except as limited by the Bankruptcy Code of the United States of America and
all other similar Laws affecting the rights of creditors generally, (d) the
execution, delivery and performance by the Company of this amendment and the
Loan Papers to be delivered hereunder do not require the consent of any other
Person and do not and will not constitute a violation of any laws, agreement,
or understanding to which the Company is a party or by which the Company is
bound, (e) the representations and warranties contained in the Loan
Agreement, as amended by this amendment, and any other Loan Paper are true
and correct in all material respects on and as of the date of execution
hereof as though made as of the date of execution hereof, and (f) as of the
effective date of this amendment, no Default exists.
6. References. All references in the Loan Papers to the "Loan
Agreement" shall refer to the Loan Agreement as amended by this amendment,
and, because this amendment is a "Loan Paper" referred to in the Loan
Agreement, then the provisions relating to Loan Papers set forth in Section
10 are incorporated herein by reference, the same as if set forth herein
verbatim.
7. Counterparts. This amendment may be executed in any number of
counterparts with the same effect as if all signatories had signed the same
document, and all of those counterparts must be construed together to
constitute one and the same document.
8. Parties Bound. This amendment shall be binding upon and shall
inure to the benefit of the Company, Agents, and each Lender, and, subject to
Section 10.10, their respective successors and assigns.
9. ENTIRETY. THIS AMENDMENT, THE LOAN AGREEMENT AS AMENDED HEREBY,
AND THE OTHER LOAN PAPERS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
FOR THE TRANSACTIONS THEREIN, AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
EXECUTED ON OR AROUND NOVEMBER 18, 1993, BUT EFFECTIVE AS OF
FIRST STATED.
Lomas Mortgage USA, Inc. LOMAS MORTGAGE USA, INC.,
1600 Viceroy Drive as the Company
Dallas, Texas 75235
Attn: Robert E. Byerley, Jr.,
Senior Vice President &
Treasurer By /s/ROBERT E. BYERLEY, JR.
Telecopy 214/879-7018 -----------------------------
(Name) Robert E. Byerley, Jr.
-------------------------
(Title) Senior Vice President
& Treasurer
-----------------------
Third Floor, 1717 Main Street BANK ONE, TEXAS, N.A.,
Mortgage Finance Group as Administrative Agent and
Dallas, Texas 75201 a Lender
Attn: Kathleen C. Stewart,
Vice President
Telecopy 214/290-2275 By /s/KATHLEEN C. STEWART
----------------------
Kathleen C. Stewart,
Vice President
Texas Commerce Bank National Association TEXAS COMMERCE BANK
717 Travis Street NATIONAL ASSOCIATION,
Houston, Texas 77002 as Syndication Agent and
Attn: Abbie Tidmore a Lender
Vice President
Telecopy 713/216-2082 By /s/ABBIE TIDMORE
----------------------
Abbie Tidmore,
Vice President
First Bank Place FIRST BANK NATIONAL
601 2nd Ave. S. ASSOCIATION, as a Lender
Minneapolis, Minnesota 55402
Attn: Kathlyn Slater
Vice President
Telecopy 612/973-0826
By /s/KATHLYN SLATER
----------------------
Kathlyn Slater,
Vice President
8333 Douglas Avenue GUARANTY FEDERAL BANK,
Dallas, Texas 75255 F.S.B., as a Lender
Attn: James E. Robertson
Vice President
Telecopy 214/360-8948
By /s/JAMES E. ROBERTSON
-----------------------
James E. Robertson,
Vice President
One Marine Midland Center, 15th Floor MARINE MIDLAND BANK, N.A.,
Buffalo, New York 14203 as a Lender
Attn: William Dentinger
Vice President
Telecopy 716/841-2707
By /s/WILLIAM DENTINGER
----------------------
William Dentinger
Vice President
100 Federal Street THE FIRST NATIONAL BANK OF
Boston, MA 02110 BOSTON, as a Lender
Attn: Corinne M. Barrett
Vice President
Telecopy: (617) 434-7108 By /s/CORINNE M. BARRETT
-----------------------
Corinne M. Barrett
Vice President
15 South 20th Street, 15th Floor COMPASS BANK (formerly Central
Birmingham, Alabama 35233 Bank of the South),
Attn: John D. West, Mortgage as a Lender
Banking Officer
Telecopy 205/715-7994
By /s/JOHN D. WEST
-----------------------
John D. West,
Mortgage Banking Officer
67th Floor, NationsBank Plaza NATIONSBANK OF TEXAS, N.A.,
901 Main Street as a Lender
Dallas, Texas 75202
Attn: Elizabeth Kurilecz
Vice President
Telecopy 214/508-0604 By /s/ELIZABETH KURILECZ
-----------------------
Elizabeth Kurilecz
Vice President
1601 Elm Street, 2nd Floor COMERICA BANK - TEXAS,
Dallas, Texas 75201 as a Lender
Attn: Maureen Macan
Vice President
Telecopy 214/969-6096
By /s/MAUREEN MACAN
-----------------------
Maureen Macan,
Vice President
THIRD AMENDMENT TO RESTATED LOAN AND SECURITY AGREEMENT
THIS AMENDMENT is entered into as of November 30, 1993, among LOMAS
MORTGAGE USA, INC., a Connecticut corporation (the "Company"), the banks
listed on the signature pages hereof ("Lenders"), BANK ONE, TEXAS, N.A., as
administrative agent (in that capacity "Administrative Agent"), and TEXAS
COMMERCE BANK NATIONAL ASSOCIATION, as syndication agent (together with
Administrative Agent "Agents").
The Company, Lenders, and Agents have entered into the Restated Loan
and Security Agreement dated as of July 8, 1993 (as amended as of September
15, 1993, September 30, 1993, and as further renewed, extended, amended, and
restated, the "Loan Agreement") providing for loans to the Company on a
revolving basis. The Company has requested an amendment to the Loan
Agreement in order to extend the "Termination Date," amend certain covenants
and add certain financial institutions as "Lenders" under the Loan Agreement.
NOW THEREFORE, for valuable and acknowledged consideration, the parties
agree as follows:
1. Certain Definitions. Unless otherwise specified in this
amendment, all terms defined in the Loan Agreement have the same meanings
when used in this amendment, and all references to "Sections" and "Schedules"
are references to sections and schedules of or to the Loan Agreement.
2. Amendments.
(a) The following definitions in Section 1.1 are entirely
amended as follows:
"Note Payment Account" means the non-interest bearing
demand deposit account number 0100072735 established by
the Company with Administrative Agent and controlled by
Administrative Agent to be used for (a) the deposit of
proceeds of Borrowings and payments constituting the
proceeds of Collateral (other than principal and interest
payments on the Mortgage Collateral); (b) the payment of
the Obligations; (c) the release of proceeds of Borrowings
by Administrative Agent to the Company for the purposes
described in Section 6.1, and (d) the release of Cash other
than proceeds of Borrowings by Administrative Agent to the
Company.
"Termination Date" means the earlier of (a) November 29,
1994, and (b) the date that all Lenders' commitments to
lend terminate or are cancelled under this agreement.
(b) Section 2.8(b)(i) is entirely amended as follows:
(i) clause (a)(iii) above, other than interest at the Default
Rate, and
(c) A new Section 2.6(j) is added as follows:
(j) All payments to be made hereunder shall be made free
and clear of, and without deduction or withholding on account of,
any present or future domestic or foreign taxes, levies, imposts,
duties, charges or any other deduction or withholding whatsoever
other than taxes, levies, imposts, duties, charges or any other
deductions imposed on the basis of net income. In the event that
the Company is required to withhold or deduct any sum from
payments required hereunder or under any Note, the Company shall
increase the amount paid to Lenders as may be necessary so that
each Lender shall receive an amount, which after payment of any
sum withheld or deducted, shall be equal to the amount that each
such Lender would have received had such sum not been withheld or
deducted, and the Company shall pay the full amount of all such
taxes. Furthermore, the Company hereby indemnifies Lenders to the
extent that Lenders effect any of the foregoing payments.
(d) Section 7.3(b)(iii) is entirely amended as follows:
(iii) (A) before November 30, 1993, the aggregate net proceeds,
including the fair market value of property other than cash (as
determined in good faith by the Board of Directors, evidenced by
a resolution of the Board of Directors), received by the Company
from the issuance or sale after October 1, 1992 (other than to a
Subsidiary of the Company), of its capital stock and warrants,
options, and rights to purchase its capital stock but excluding
the net proceeds from the issuance, sale, exchange, conversion,
or other disposition of its capital stock convertible into or
exchangeable for any security other than its capital stock at the
option of the holder thereof or upon the happening of any event,
and (B) after November 30, 1993, the aggregate net cash proceeds,
received by the Company from the issuance or sale after November
30, 1993 (other than to a Subsidiary of the Company), of its
capital stock and warrants, options, and rights to purchase its
capital stock but excluding the net proceeds from the issuance,
sale, exchange, conversion, or other disposition of its capital
stock convertible into or exchangeable for any security other
than its capital stock at the option of the holder thereof or
upon the happening of any event.
(e) Section 7.9(d) is entirely amended as follows:
(d) Grant, create, incur, assume, permit or suffer to
exist any Lien upon any Collateral except for Liens granted to
Agents to secure the Notes and Obligations and such non-
consensual Liens as may be deemed to arise as a matter of law
pursuant to any Take-Out Commitment.
(f) Section 8.1(e) is entirely amended as follows:
(e) The failure on the part of the Company to observe or
perform (i) any of its covenants or agreements contained in
Section 7 other than Section 7.4 or (ii) the covenant contained
in Section 7.4 for a period of 30 days after the earlier of the
date on which notice of such failure has been delivered by the
Company to Agents, or the date on which notice of such failure
has been delivered by any Lender to the Company.
(g) Section 10.5(b) is entirely amended as follows:
(b) to the extent federal Laws pertaining in any way to national
banking associations or any other federally insured depository
otherwise govern the validity, construction, enforcement, and
interpretation of all or any part of the Loan Papers.
(h) Section 10.7(c) is entirely amended as follows:
(c) Subject to the provisions of this section, any Lender
may, in the ordinary course of its commercial banking business
and in accordance with applicable law, at any time sell to one or
more Persons (each a "Participant") participating interests in
its portion of the Obligations. No Lender shall sell any
participating interest (other than to Affiliates of that Lender)
in an amount such that the remaining unsold Commitment of that
Lender equals less than the lesser of (a) 50% of that Lender's
Commitment and (b) $10,000,000. In the event of any such sale to
a Participant, (i) such Lender shall remain a "Lender" under this
agreement and the Participant shall not constitute a "Lender"
under this agreement, (ii) such Lender's obligations under this
agreement shall remain unchanged, (iii) such Lender shall remain
solely responsible for the performance thereof, (iv) such Lender
shall remain the holder of its Borrowings outstanding from time
to time for all purposes under this agreement, and (v) the
Company and Agents shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and
obligations under the Loan Papers. Participants shall have no
rights under the Loan Papers, other than certain voting rights as
provided below. Each Lender shall be entitled to obtain (on
behalf of its Participants) the benefits of this agreement with
respect to all participations in its Borrowings outstanding from
time to time; provided, however, the Company shall not be
obligated to pay any amount in excess of the amount that would be
due to such Lender under this agreement calculated as though no
participation had been made. At the option of the Lender selling
a participation, a Participant with a participating interest that
has been approved by Agents and the Company (which approval may
not be unreasonably withheld) may be entitled to approve any
amendment, modification, or waiver to the extent such amendment,
modification, or waiver extends the due date for payment of any
amount in respect of principal, interest, or fees due under the
Loan Papers, releases any Collateral (except such releases as are
contemplated and permitted to be made by Agents under this
agreement) or reduces the interest rate or the rate used to
calculate any fees, or the amount of principal, interest, or fees
applicable to the Obligations (except such reductions as are
contemplated by this agreement). In those cases where a
Participant has a participating interest which has not been
approved by Agents and the Company, the Lender selling that
participation may grant rights to that Participant to approve
amendments, modifications, or waivers of any Loan Paper
respecting only the matters described in the preceding sentence
so long as the relevant participation agreement includes a voting
mechanism controlling the vote for all that Lender's portion of
the Obligations (whether held by that Lender or participated).
Except in the case of the sale of a participating interest to a
Lender, the relevant participation agreement shall not permit the
Participant to transfer, pledge, assign, sell participation in,
or otherwise encumber its portion of the Obligations.
(i) The first sentence of Section 10.7(f) is entirely amended
as follows:
(f) Subject to the provisions of this Section 10.7, any
Lender may -- in the ordinary course of its commercial banking
business, in accordance with applicable law, and upon the written
consent (which consent may not be unreasonably withheld) of
Agents and (unless that Lender is a Terminating Lender or the
Termination Date has occurred) the Company -- sell, assign, or
transfer to one or more financial institutions, other
corporations, or mutual funds that lend money to businesses or
acquire business loans in the ordinary course of their businesses
(each being an "Assignee"), a proportionate part in an amount
such that the remaining Commitment (if greater than zero) of the
transferor Lender at least equals the lesser of (a) 50% of the
transferor Lender's Commitment and (b) $10,000,000, of all of the
transferor Lender's rights and obligations under the Loan Papers,
and such Assignee shall assume such rights and obligations,
pursuant to an assignment agreement in form and substance
acceptable to the Company and Administrative Agent.
(j) The financial institutions listed on the attached
Annex A to this amendment have become "Lenders" under the Loan
Agreement with a Commitment described on the attached Amended
Schedule 1.1(a) and agree to perform all the obligations of --
and to be bound by all the provisions applicable to -- Lenders
under the Loan Papers. Therefore, Schedule 1.1(a) to the Loan
Agreement is entirely amended in the form of -- and all
references to that schedule in the Loan Papers -- are changed to
-- the attached Amended Schedule 1.1(a).
3. Adjustments. In order to add the new Lenders ratably -- on a
Commitment Percentage basis --with the other Lenders, on November 30, 1993
(a) by 10:00 a.m., Dallas, time, Administrative Agent shall notify Lenders
and the Company of the amount that each Lender must pay or receive, as the
case may be, so that each Lender is owed its Commitment Percentage of the
Principal Debt, (b) by 1:00 p.m., Dallas, time, each Lender shall pay to
Administrative Agent the amount required by it to be paid according to that
notice, (c) by 3:00 p.m., Dallas, time, to the extent those payments are
received by Administrative Agent, it shall distribute the amounts to be
received by each Lender designated to receive funds according to that notice,
and (d) any payment made by a Lender under clause (b) shall constitute a
Ratable Borrowing and bear interest at the rate specified in Section 2.10(a)
of the Loan Agreement or an Alternative Rate selected by the Company in a
Notice of Interest Rate delivered by the Company to Administrative Agent by
no later than 1:00 p.m. on November 29, 1993.
4. Conditions Precedent. The foregoing is not effective until (a)
Agents and Lenders have received all fees under the Loan Papers due and
payable on the date of this amendment and (b) Agents and Lenders have
received a copy of this amendment executed by all of the parties named below
and all of the agreements, documents, instruments, and other items described
on the attached Annex B, in form and substance and such number of
counterparts as may be satisfactory to Agents and their counsel.
5. Ratifications. The terms and provisions of this amendment shall
modify and supersede all inconsistent terms and provisions of the Loan
Papers, and, except as expressly modified and superseded by this amendment,
the terms and provisions of the Loan Papers are ratified and confirmed and
shall continue in full force and effect. The Company, Lenders, and Agents
agree that the Loan Papers as amended hereby shall continue to be legal,
valid, binding, and enforceable in accordance with their respective terms.
Without limiting the generality of the foregoing, the Company hereby ratifies
and confirms that all Liens heretofore granted to Agents, on behalf of
Lenders, were intended to, do, and shall continue to secure the full and
complete payment and performance of the Obligations, and the Company agrees
to perform such acts and duly authorize, execute, acknowledge, deliver, file,
and record such additional assignments, security agreements, modifications or
amendments to any of the foregoing, and such other agreements, documents, and
instruments as either Agent or any Lender may reasonably request in order to
perfect and protect such Liens and preserve and protect the rights of Agents
and Lenders in respect of all present and future Collateral.
6. Representations and Warranties. The Company hereby represents
and warrants to Lenders and Agents that (a) this amendment and the Loan
Papers to be delivered hereunder have been duly authorized, executed and
delivered by the Company, (b) no action of, or filing with, any Tribunal is
required to authorize, or is otherwise required in connection with, the
execution, delivery, and performance by the Company of this amendment and the
Loan Papers to be delivered hereunder, (c) this amendment and the Loan Papers
to be delivered hereunder are valid and binding upon the Company and are
enforceable against the Company in accordance with their respective terms,
except as limited by the Bankruptcy Code of the United States of America and
all other similar Laws affecting the rights of creditors generally, (d) the
execution, delivery and performance by the Company of this amendment and the
Loan Papers to be delivered hereunder do not require the consent of any other
Person and do not and will not constitute a violation of any Laws, agreement,
or understanding to which the Company is a party or by which the Company is
bound, (e) the representations and warranties contained in the Loan
Agreement, as amended hereby, and any other Loan Paper are true and correct
in all material respects on and as of the date of execution hereof as though
made as of the date of execution hereof, and (f) as of the date of this
amendment, no Default or Potential Default has occurred and is continuing.
7. References. All references in the Loan Papers to the "Loan
Agreement" shall refer to the Loan Agreement as amended by this amendment,
and, because this amendment is a "Loan Paper" referred to in the Loan
Agreement, then the provisions relating to Loan Papers set forth in Section
10 are incorporated herein by reference, the same as if set forth herein
verbatim.
8. Counterparts. This amendment may be executed in any number of
counterparts with the same effect as if all signatories had signed the same
document, and all of those counterparts must be construed together to
constitute one and the same document.
9. Parties Bound. This amendment shall be binding upon and shall
inure to the benefit of the Company, Agents, and each Lender, and, subject to
Section 10.10, their respective successors and assigns.
10. ENTIRETY. THIS AMENDMENT, THE LOAN AGREEMENT AS AMENDED HEREBY,
AND THE OTHER LOAN PAPERS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
FOR THE TRANSACTIONS THEREIN, AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
EXECUTED AS OF THE DATE FIRST STATED.
Lomas Mortgage USA, Inc. LOMAS MORTGAGE USA, INC.,
1600 Viceroy Drive as the Company
Dallas, Texas 75235
Attn: Robert E. Byerley, Jr.,
Senior Vice President &
Treasurer By /s/ROBERT E. BYERLEY, JR.
Telecopy 214/879-7018 --------------------------------------
(Name) Robert E. Byerley, Jr.
----------------------------------
(Title) Senior Vice President
& Treasurer
--------------------------------
Third Floor, 1717 Main Street BANK ONE, TEXAS, N.A.,
Mortgage Finance Group as Administrative Agent and a Lender
Dallas, Texas 75201
Attn: Kathleen C. Stewart,
Vice President
Telecopy 214/290-2275 By /s/KATHLEEN C. STEWART
-------------------------------------
Kathleen C. Stewart, Vice President
Texas Commerce Bank National TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
Association as Syndication Agent and a Lender
717 Travis Street
Houston, Texas 77002
Attn: Abbie Tidmore
Vice President
Telecopy 713/216-2082 By /s/ABBIE TIDMORE
-------------------------------------
Abbie Tidmore, Vice President
First Bank Place FIRST BANK NATIONAL ASSOCIATION,
601 2nd Ave. S. as a Lender
Minneapolis, Minnesota 55402
Attn: Kathlyn Slater
Vice President
Telecopy 612/973-0826
By /s/KATHLYN SLATER
-------------------------------------
Kathlyn Slater, Vice President
8333 Douglas Avenue GUARANTY FEDERAL BANK, F.S.B.,
Dallas, Texas 75255 as a Lender
Attn: James E. Robertson
Vice President
Telecopy 214/360-8948
By /s/JAMES E. ROBERTSON
--------------------------------------
James E. Robertson, Vice President
<PAGE>
280 Park Avenue, 23 West BANKERS TRUST COMPANY, as a Lender
New York, New York 10017
Attn: Matthew C. Bernstein
Vice President
Telecopy: 212/454-3821
By /s/MATTHEW C. BERNSTEIN
--------------------------------------
Matthew C. Bernstein, Vice President
313 Carondelet HIBERNIA NATIONAL BANK, as a Lender
Suite 1400
New Orleans, Louisiana 70130
Attn: Michael Tennyson,
Vice President
Telecopy: 504/584-2042
By /s/MICHAEL TENNYSON
--------------------------------------
Michael Tennyson, Vice President
6222 Wilshire Blvd. BANK HAPOALIM, B.M., LOS ANGELES BRANCH,
Los Angeles, California 90048 as a Lender
Attn: Robert Pollak,
Vice President
Telecopy: 213/937-1439
By /s/ROBERT POLLAK
--------------------------------------
Robert Pollak, Vice President
By /s/SHURNEL SHAKKED
--------------------------------------
Name Shurnel Shakked
-----------------------------------
Title Senior Vice President
----------------------------------
75 Wall Street DRESDNER BANK, AG, NEW YORK BRANCH,
New York, New York 10005-2889 as a Lender
Attn: Charles H. Hill,
Vice President
Telecopy: 212/574-0129
By /s/CHARLES H. HILL
--------------------------------------
Name Charles H. Hill
-----------------------------------
Title Vice President
----------------------------------
By /s/PETER BECKER
--------------------------------------
Name Peter Becker
-----------------------------------
Title Vice President
----------------------------------
<PAGE>
100 Federal Street 01-32-041 THE FIRST NATIONAL BANK OF BOSTON,
Boston, MA 02110 as a Lender
Attn: Corinne M. Barrett,
Vice President
Telecopy: (617) 434-7108 By /s/CORINNE M. BARRETT
------------------------------------
Corinne M. Barrett, Vice President
One Marine Midland Center, MARINE MIDLAND BANK, N.A.,
15th Floor as a Lender
Buffalo, New York 14203
Attn: William F. Dentinger
Vice President
Telecopy: 716/841-2707
By /s/WILLIAM F. DENTINGER
------------------------------------
William F. Dentinger, Vice President
66th Floor, NationsBank Plaza NATIONSBANK OF TEXAS, N.A.,
901 Main Street as a Lender
Dallas, Texas 75202
Attn: Elizabeth Kurilecz
Vice President
Telecopy: 214/508-0604 By /s/ELIZABETH KURILECZ
------------------------------------
Elizabeth Kurilecz, Vice President
380 Madison Avenue BANK OF SCOTLAND,
New York, New York 10017 as a Lender
Attn: Elizabeth Wilson
Vice President
Telecopy: 713/651-9714
By /s/ELIZABETH WILSON
------------------------------------
Elizabeth Wilson, Vice President
& Branch Manager
<PAGE>
1601 Elm Street, 2nd Floor COMERICA BANK - TEXAS,
Dallas, Texas 75201 as a Lender
Attn: W. James Meintjes,
Banking Officer
Telecopy: 214/979-8344
By /s/W. JAMES MEINTJES
------------------------------------
W. James Meintjes, Banking Officer
1230 Peachtree Street NE, COMMERZBANK AKTIENGESELLSCHAFT,
Suite 3500 ATLANTA AGENCY, as a Lender
Atlanta, Georgia 30309
Attn: Harry P. Yergey,
Vice President
Telecopy: 404/888-6539
By /s/HARRY P. YERGEY
------------------------------------
Harry P. Yergey, Vice President
By /s/CLAUDIA ROST
------------------------------------
Claudia Rost, Assistant Cashier
499 Thornall Street MIDLANTIC NATIONAL BANK,
Edson, New Jersey 08837 as a Lender
Attn: Glenn Hedde,
Vice President
Telecopy: 908/321-2094
By /s/GLENN HEDDE
------------------------------------
Glenn Hedde, Vice President
7485 New Horizon Way THE PRUDENTIAL HOME MORTGAGE
Frederick, Maryland 21701 COMPANY, INC., as a Lender
Attn: Russell R. Anderson,
Vice President
Telecopy: 301/696-7405
By /s/RUSSELL R. ANDERSON
------------------------------------
Russell R. Anderson, Vice President
640 Fifth Avenue, 15th Floor BANK OF IRELAND GRAND CAYMAN BRANCH,
New York, New York 10019 as a Lender
Attn: Roger Burns,
Vice President
Telecopy: 212/586-7752
By /s/ROGER BURNS
------------------------------------
Roger Burns, Vice President
<PAGE>
15 South 20th Street, 15th Floor COMPASS BANK,
Birmingham, Alabama 35233 as a Lender
Attn: John D. West,
Mortgage Banking Officer
Telecopy: 205/715-7994
By /s/JOHN D. WEST
--------------------------------------
John D. West, Mortgage Banking Officer
1 Mercantile Center MERCANTILE BANK OF ST. LOUIS NATIONAL
7th & Washington ASSOCIATION, as a Lender
St. Louis, Missouri 63101
Attn: Michael P. Waters,
Vice President
Telecopy: 314/425-2162
By /s/MICHAEL P. WATERS
--------------------------------------
Michael P. Waters, Vice President
7700 Wisconsin Avenue SIGNET BANK/MARYLAND,
Suite 400 as a Lender
Bethesda, Maryland 20814
Attn: David H. Olson,
Vice President
Telecopy: 301/652-1174
By /s/DAVID H. OLSON
--------------------------------------
David H. Olson, Vice President
231 South LaSalle Street CONTINENTAL BANK N.A.,
Chicago, Illinois 60697 as a Lender
Attn: Mary Jo Hoch,
Vice President
Telecopy: 312/987-5833
By /s/MARY JO HOCH
--------------------------------------
Mary Jo Hoch, Vice President
<PAGE>
ANNEX A
Lenders
1. Bankers Trust Company
2. Bank Hapoalim, B.M.
3. Bank of Ireland Grand Cayman Branch
4. Bank of Scotland
5. Commerzbank Aktiengesellschaft, Atlanta Agency
6. Continental Bank N.A.
7. Hibernia National Bank
8. Mercantile Bank of St. Louis, N.A.
9. Midlantic National Bank
10. The Prudential Home Mortgage Company, Inc.
11. Signet Bank/Maryland
12. Dresdner Bank AG, New York Branch
<PAGE>
ANNEX B
Closing Documents
(all dated as of November 30, 1993, unless otherwise specified)
J&G [1.] THIRD AMENDMENT TO RESTATED LOAN AND SECURITY AGREEMENT (the "Third
Amendment"), between Lomas Mortgage USA, Inc. (the "Company"),
certain lenders (the "Lenders") Bank One, Texas, N.A. as
administrative agent (in that capacity, "Administrative Agent"),
and Texas Commerce Bank National Association as syndication agent
(in that capacity "Syndication Agent,") and with Administrative
Agent, "Agents").
J&G [2.] PROMISSORY NOTES executed by the Company in the following original
principal amounts, and payable to the following Lenders:
Payee Principal
Guaranty Federal Bank, F.S.B. $30,000,000
Bankers Trust Company $30,000,000
Hibernia National Bank $30,000,000
Bank Hapoalim, B.M. $25,000,000
Dresdner Bank AG, New York Branch $25,000,000
Bank of Scotland $20,000,000
Comerica Bank - Texas $20,000,000
Commerzbank Aktiengesellschaft,
Atlanta Agency $20,000,000
Midlantic National Bank $20,000,000
The Prudential Home Mortgage
Company, Inc. $20,000,000
Bank of Ireland Grand Cayman Branch $15,000,000
Compass Bank $15,000,000
Continental Bank N.A. $15,000,000
Mercantile Bank of St. Louis
National Association $15,000,000
NationsBank of Texas, N.A. $15,000,000
Signet Bank/Maryland $15,000,000
J&G [3.] AGENCY FEES AGREEMENT executed by the Company and agreed to by
Administrative Agent.
J&G [4.] AGENCY FEES AGREEMENT executed by the Company and agreed to by
Syndication Agent.
______________
[ ] items not complete at the time of this draft of the Third Amendment,
together with responsibility for each.
<PAGE>
LM [5.] OFFICERS CERTIFICATE for the Company executed by its Assistant
Secretary with respect to the due incumbency of its officers
authorized to execute or attest to the Third Amendment, the
resolutions adopted by its directors approving and authorizing the
Third Amendment, and changes, if any, to the bylaws, or corporate
charter, since July 8, 1993, to which the following is attached:
Exhibit A - Resolutions
Exhibit B - Changes to Bylaws, if any
Exhibit C - Changes to Corporate Charter, if any
LM [6.] OPINION of General Counsel to the Company in form and substance
acceptable to Agents.
[7.] U.S. INTERNAL REVENUE SERVICE FORM 4224 or FORM 1001, as the
case may be, for the following Lenders:
Bank Hapoalim, B.M.
Dresdner Bank AG, New York Branch
Marine Midland Bank, N.A.
Bank of Scotland
Commerzbank Aktiengesellschaft, Atlanta Agency
Midlantic National Bank
Bank of Ireland Grand Cayman Branch
[8.] Such other agreements, documents, or instruments as Agents may
require.
<PAGE>
AMENDED SCHEDULE 1.1(a)
Payee Principal
Bank One, Texas, N.A. $75,000,000
Texas Commerce Bank National Association $75,000,000
First Bank National Association $50,000,000
Guaranty Federal Bank, F.S.B. $30,000,000
Bankers Trust Company $30,000,000
Hibernia National Bank $30,000,000
Bank Hapoalim, B.M. $25,000,000
Dresdner Bank AG, New York Branch $25,000,000
The First National Bank of Boston $25,000,000
Marine Midland Bank, N.A. $25,000,000
Bank of Scotland $20,000,000
Comerica Bank - Texas $20,000,000
Commerzbank Aktiengesellschaft, Atlanta Agency $20,000,000
Midlantic National Bank $20,000,000
The Prudential Home Mortgage Company, Inc. $20,000,000
Bank of Ireland Grand Cayman Branch $15,000,000
Compass Bank $15,000,000
Continental Bank N.A. $15,000,000
Mercantile Bank of St. Louis National
Association $15,000,000
NationsBank of Texas, N.A. $15,000,000
Signet Bank/Maryland $15,000,000
Total Commitment $580,000,000
SIXTH AMENDMENT TO SERVICING PAYMENTS
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT is entered into as of July 8, 1993, between LOMAS
MORTGAGE USA, INC., a Connecticut corporation (the "Company"), the banks
listed on the signature pages of this amendment ("Banks"), and BANK ONE,
TEXAS, N.A., as agent for Banks (in that capacity "Agent").
The Company, Banks, and Agent have entered into the Servicing Payments
Loan and Security Agreement dated as of February 11, 1992 (as amended through
the date of this amendment, and as further renewed, extended, amended, and
restated, the "Loan Agreement") providing for loans to the Company on a
revolving basis up to $25,000,000 outstanding at any time. The Company has
requested amendments to the Loan Agreement in order to amend certain
definitions and covenants of the Loan Agreement. Accordingly, for valuable
and acknowledged consideration, the Company, Banks, and Agent agree as
follows:
1. Certain Definitions. Unless otherwise specified in this
amendment, all terms defined in the Loan Agreement have the same meanings
when used in this amendment, and all references to "Sections" and "Exhibits"
are references to sections and exhibits of or to the Loan Agreement.
2. Amendments. The Loan Agreement is amended as follows:
(a) Section 1 is amended by adding or entirely amending the
following terms:
"Affiliate" means, for any Person, any other individual or
entity that controls or is controlled by, or is under common
control with, that Person; provided that in all instances other
than in Sections 7.5 and 9.2, a non-consolidated, publicly-held
corporation or other entity whose sole relationship with the
Company is that of being managed by the Company or any of its
Affiliates -- including, without limitation, Liberte Investors (a
Massachusetts business trust) and Capstead Mortgage Corporation (a
Maryland corporation), -- shall be deemed not to be affiliated
with or controlled by, or under common control with, the Company.
"Consolidated Adjusted Tangible Net Worth" means, at any
time, the sum (without duplication) of (a) the Company's
Consolidated Net Worth, plus (b) the principal balance of the
Subordinated Debt, plus (c) the lesser of (i) 1.25% of the
principal balance of all Mortgage Loans in the Servicing Portfolio
and (ii) the most recent valuation (as defined in basis points) of
the Servicing Portfolio as prepared annually by the Company and
audited by Ernst & Young, or another accounting firm reasonably
acceptable to Agents, minus (d) the book value of the assets
reflected on the Company's then-most-current consolidated balance
sheet that are properly treated under GAAP as intangible assets --
including, without limitation, goodwill, trademarks, trade names,
service marks, copyrights, patents, licenses, purchased servicing,
deferred excess servicing, rights with respect to the foregoing,
unamortized debt discount and expense, and the excess of the
purchase price over the net assets of businesses acquired by the
Company and its Subsidiaries, minus (e) the Company's direct and
indirect guaranties of Debt of any other Person, minus (f) the
Company's obligation with respect to letters of credit,
acceptances, or similar obligations.
"Consolidated Net Worth" means, at any time, the excess of
the consolidated total assets of the Company and its Consolidated
Subsidiaries -- excluding the outstanding principal of any loans
or advances by the Company or any of its Subsidiaries to Lomas
Financial Corporation permitted under Section 7.8 (e) -- over the
consolidated total liabilities of the Company (including the
Company's Debt under Investment Facilities) and its Consolidated
Subsidiaries, each to be determined in accordance with GAAP.
"Investment Facilities" means any credit facility now or
hereafter extended to the Company by any one or more of the Banks,
in their individual capacities, or any other financial
institution, to enable the Company to purchase short-term Treasury
Bills, Certificates of Deposit, certificates of deposit securing
Investments (as defined in Section 7.8) in connection with which
the Company has a right of offset, or commercial paper obligations
of certain domestic corporations in accordance with Section
7.8(a), as any of those facilities may be now or hereafter
renewed, extended, amended, and supplemented from time to time.
"Net Income" means, with respect to any Person for any
period, the net income or loss of that Person for that period plus
any tax expense recorded on the books of the Company for that
period which will never be required to be paid in cash and which
has arisen solely from the application of net operating loss
carry-forwards of the consolidated tax group of which Lomas
Financial Corporation was the common parent for taxable years
ending on or before October 1, 1992, determined in accordance with
GAAP, except that extraordinary and non-recurring gains and losses
as determined in accordance with GAAP shall be excluded.
"Total Liabilities" means, as of a date of determination,
all of the Company's consolidated liabilities that, under GAAP,
should be reflected on the liabilities portion of the Company's
consolidated balance sheet, other than the Company's Debt under
Investment Facilities.
"Warehouse Facility" means the Restated Loan and Security
Agreement dated as of July 8, 1993, among the Company as borrower,
the lenders from time to time party thereto, Bank One, Texas,
N.A., as administrative agent, and Texas Commerce Bank National
Association, as syndication agent, as renewed, extended, amended,
or restated from time to time.
(b) Section 6.2(c) is amended in its entirety as follows:
(c) As soon as available, and in any event within 30 days
after the last day of each calendar month (including the last
calendar month of the Company's fiscal year), of its consolidating
and consolidated Financial Statements of and for such month all in
reasonable detail, accompanied by a Compliance Certificate.
(c) Section 7.1 is amended in its entirety as follows:
7.1 Change of Control. Effect or permit to be effected a
Change of Control.
(d) Section 7.3 is amended in its entirety as follows:
7.3 Dividends. Directly or indirectly pay -- whether or
not otherwise declared -- dividends (a) at any time while a
Potential Default or Default is continuing or would occur as a
result of that payment (as provided in Section 10.4 which is
applicable to all covenants) or (b) if, after giving effect
thereto, the aggregate amount of all dividends paid by the Company
(the amount thereof for such purposes, if other than cash, to be
valued at its fair market value as determined in good faith by the
Board of Directors, whose determination shall be conclusive and
evidenced by a resolution of the Board of Directors) from and
after October 1, 1992, shall exceed the sum (without duplication)
of (i) $25,000,000 as reduced by the outstanding principal of any
advances or loans (at any date of determination) by the Company or
any of its Subsidiaries to Lomas Financial Corporation permitted
under Section 7.8(e), plus (ii) 50% of the Consolidated Net Income
of the Company and its Consolidated Subsidiaries for the period
(taken as one accounting period) commencing on January 31, 1992,
and including the last day of the fiscal quarter ended immediately
prior to the date of such calculation, plus (iii) the aggregate
net proceeds, including the fair market value of property other
than cash (as determined in good faith by the Board of Directors,
evidenced by a resolution of the Board of Directors), received by
the Company from the issuance or sale after January 31, 1992
(other than to a Subsidiary of the Company), of its capital stock
and warrants, options, and rights to purchase its capital stock
but excluding the net proceeds from the issuance, sale, exchange,
conversion, or other disposition of its capital stock convertible
into or exchangeable for any security other than its capital stock
at the option of the holder thereof or upon the happening of any
event.
(e) Section 7.4 is amended in its entirety as follows:
7.4 Consolidated Net Worth. Permit its Consolidated Net
Worth to be less than the greater of (i) the amount required by
FHA, FHLMC, FNMA, VA, and GNMA at any and all times for
maintaining the Company's status as an approved mortgagee,
seller/servicer, or issuer, or (ii) $215,000,000.
(f) Section 7.5 is amended in its entirety as follows:
7.5 Transactions with Affiliates.
(a) Incur any Debt to any Affiliate or otherwise
undertake or engage in any other transaction with an
Affiliate except upon fair and reasonable terms no less
favorable than could be obtained in a comparable arms-length
transaction with a Person not an Affiliate.
(b) Guarantee, or permit its Property to secure
directly or indirectly, any indebtedness of Lomas Financial
Corporation, or any Debt of any other Affiliate.
(c) Make any advances, loans, or distributions to (i)
Lomas Financial Corporation except as permitted in Sections
7.3 and 7.8(e), or (ii) any officers or employees of the
Company except in the ordinary course of business.
(d) Use any Advances under this agreement to fund,
finance or acquire any construction or commercial loans.
(g) Section 7.8 is amended in its entirety as follows:
7.8 Loans, Advances, and Investments. Make or hold any
loan, advance, or capital contribution to, or investment in
(including any investment in Lomas Financial Corporation or any of
its Subsidiaries -- other than a Subsidiary of the Company), or
purchase or otherwise acquire any of the capital stock,
securities, or evidences of indebtedness of, any Person
(collectively, "Investments"), or otherwise acquire any interest
in, or control of, another Person, except for the following:
(a) Investments having a maturity of one year or less
in (i) commercial paper either (A) given a rating by Standard
& Poor's Corporation of no lower than A1 or by Moody's
Investors Service, Inc. of no lower than P1 or (B) in the
case of commercial paper bought under the investment credit
facility extended to the Company by Texas Commerce Bank
National Association, rated at least A2 or P2 by Standard &
Poor's Corporation or Moody's Investors Service, Inc.,
respectively, (ii) United States Governmental obligations,
(iii) Certificates of Deposit, bankers acceptances, and
repurchase agreements issued by any commercial bank or
federal savings bank having a combined capital and surplus in
excess of $250,000,000 and having (or if owned by a bank
holding company, such bank holding company having) a rating
of C or better by Thomson Bank Watch, Inc., a Standard &
Poor's Corporation short-term deposit rating of at least A-1,
a Moody's Investors Service, Inc. short-term deposit rating
of at least P-1, or an IDC Financial Publishing Rating of at
least 75, and (iv) certificates of deposit issued by any
financial institution that is owned by a bank holding company
with a rating of C or better by Thomson Bank Watch, Inc.,
securing Investments in connection with which the Company has
a right of offset.
(b) Any acquisition of securities or evidences of
indebtedness of others when acquired by the Company in
settlement of accounts receivable or other debts arising in
the ordinary course of business, so long as the aggregate
amount of any such securities or evidences of indebtedness is
not material to the Company's financial condition;
(c) The acquisition in the ordinary course of business
of (i) servicing portfolios and related assets, (ii) mortgage
banking companies, or other companies whose business and
operations are similar to the Company's, and assets relating
to such mortgage banking companies or such other companies,
(iii) Mortgage-Backed Securities, or (iv) Mortgage Notes;
(d) Subject to Section 7.5(a), the acquisition or
receipt of all or a portion of the options (the "Options") to
purchase 750,000 shares of the common stock (the "Stock") of
Capstead Mortgage Corporation, a Maryland corporation,
granted to Lomas Financial Corporation pursuant to that
certain Stock Option Agreement by and between Lomas Financial
Corporation and Capstead Mortgage Corporation, dated as of
June 16, 1992, and, upon prior written notice to the Lenders,
any securities, evidences of indebtedness, Stock or other
Property issued in respect of or acquired or received in
exchange for the Options;
(e) While no Potential Default or Default exists,
advances or loans to Lomas Financial Corporation by the
Company that never exceed a total of $25,000,000 principal --
as that amount is reduced by dividends made to Lomas
Financial Corporation as permitted under Section 7.3(b)(i);
(f) Other loans made in the ordinary course of its
business as a mortgage company to any Person other than Lomas
Financial Corporation;
(g) In addition to the Options described in (d) above,
an investment of $10,000,000 in Capstead Mortgage
Corporation; and
(h) Advances, loans, or distributions pursuant to
Section 7.5(c).
(h) A new Section 7.14 is added in its entirety as follows:
7.14 Other Indebtedness. Incur any Debt to any financial
institution which is secured by mortgage loans for which the notes
that evidence such mortgage loans have not been delivered to that
financial institution other than (a) Debt for wet borrowings under
the Warehouse Facility and (b) Debt for which the Company is
required to deliver the notes evidencing mortgage loans securing
that Debt to Administrative Agent as custodian.
(i) A new Section 8.1(p) is added in its entirety as follows:
(p) The cancellation with cause of an aggregate amount of
$500,000,000 or more at any one time of mortgage loan servicing
rights of the Company.
(j) Amended Schedule 1.1 is amended in its entirety -- and all
references in the Loan Papers to them shall be to -- the attached
Second Amended Schedule 1.1.
(k) All references in the Loan Papers to First City, Texas -
Dallas shall be to Texas Commerce Bank, National Association.
3. Conditions Precedent. Paragraph 2 is not effective until Agent
and Banks (a) receive counterparts of this amendment executed by each party
listed below and (b) each agreement, document, instrument, and other item
listed on Annex A.
4. Ratifications. The terms and provisions of this amendment shall
modify and supersede all inconsistent terms and provisions of the Loan
Papers, and, except as expressly modified and superseded by this amendment,
the terms and provisions of the Loan Papers are ratified and confirmed xand
shall continue in full force and effect. The Company, Banks, and Agent agree
that the Loan Papers as amended by this amendment shall continue to be legal,
valid, binding, and enforceable in accordance with their respective terms.
Without limiting the generality of the foregoing, the Company hereby ratifies
and confirms that all Liens (except as amended by this amendment) heretofore
granted to Agent, on behalf of Banks, were intended to, do, and shall
continue to secure the full and complete payment and performance of the
Obligations, and the Company agrees to perform such acts and duly authorize,
execute, acknowledge, deliver, file, and record such additional assignments,
security agreements, modifications or amendments to any of the foregoing, and
such other agreements, documents, and instruments as Agent or any Bank may
reasonably request in order to perfect and protect such Liens and preserve
and protect the rights of Agent and Banks in respect of all present and
future Collateral.
5. Representations and Warranties. The Company hereby represents and
warrants to Banks and Agent that (a) this amendment and the Loan Papers to be
delivered under this amendment have been duly executed and delivered by the
Company, (b) no action of, or filing with, any Tribunal is required to
authorize, or is otherwise required in connection with, the execution,
delivery, and performance by the Company of this amendment and the Loan
Papers to be delivered under this amendment, (c) this amendment and the Loan
Papers to be delivered under this amendment are valid and binding upon the
Company and are enforceable against the Company in accordance with their
respective terms, except as limited by the Bankruptcy Code of the United
States of America and all other similar Laws affecting the rights of
creditors generally, (d) the execution, delivery and performance by the
Company of this amendment and the Loan Papers to be delivered under this
amendment do not require the consent of any other Person and do not and will
not constitute a violation of any laws, agreement, or understanding to which
the Company is a party or by which the Company is bound, (e) the
representations and warranties contained in the Loan Agreement, as amended by
this amendment, are true and correct in all material respects except to the
extent that (i) the representations and warranties speak to a specific date
or (ii) the facts on which the representations and warranties were based have
been changed by transactions contemplated or permitted by the Loan Agreement
as of the date of this amendment, (f) as of the date of this amendment, no
Event of Default or Potential Default has occurred and is continuing, and (g)
no change in the financial condition or prospect of the Company which could
reasonably be expected to be a Material Adverse Event has or will have
occurred.
6. References. All references in the Loan Papers to the "Loan
Agreement" shall refer to the Loan Agreement as amended by this amendment,
and, because this amendment is a "Loan Paper" referred to in the Loan
Agreement, then the provisions relating to Loan Papers set forth in Section
10 are incorporated herein by reference, the same as if set forth herein
verbatim.
7. Counterparts. This amendment may be executed in any number of
counterparts with the same effect as if all signatories had signed the same
document. All counterparts must be construed together to constitute one and
the same instrument.
8. Parties Bound. This amendment shall be binding upon and shall
inure to the benefit of the Company, Agent, and each Bank, and, subject to
Section 10.10, their respective successors and assigns.
9. ENTIRETY. THIS AMENDMENT, THE LOAN AGREEMENT AS AMENDED HEREBY,
AND THE OTHER LOAN PAPERS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
FOR THE TRANSACTIONS THEREIN, AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[THE REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
EXECUTED as of the day and year first stated above.
Lomas Mortgage USA, Inc. LOMAS MORTGAGE USA, INC.,
1600 Viceroy Drive as the Company
Dallas, Texas 75235
Attn: Robert E. Byerley, Jr.,
Senior Vice President &
Treasurer By /s/ROBERT E. BYERLEY, JR.
Telecopy 214/879-7018 -------------------------------------
(Name) Robert E. Byerley, Jr.
----------------------------------
(Title) Senior Vice President & Treasurer
---------------------------------
Third Floor, 1717 Main Street BANK ONE, TEXAS, N.A.,
Mortgage Finance Group as Agent and a Bank
Dallas, Texas 75201
Attn: Kathleen C. Stewart,
Vice President
Telecopy 214/290-2275 By /s/KATHLEEN C. STEWART
-------------------------------------
Kathleen C. Stewart, Vice President
2200 Ross Avenue TEXAS COMMERCE BANK, NATIONAL
Dallas, Texas, 75201-4618 ASSOCIATION, as a Bank
Attn: Barry J. Olson,
Vice President
Telecopy 214/939-7938
By /s/BARRY J. OLSON
-------------------------------------
Barry J. Olson, Vice President
8333 Douglas Avenue GUARANTY FEDERAL BANK, F.S.B.,
Dallas, Texas 75255 as a Bank
Attn: James Robertson
Vice President
Telecopy 214/360-8948 By /s/JAMES E. ROBERTSON
-------------------------------------
James E. Robertson, Vice President
<PAGE>
ANNEX A
CLOSING CONDITIONS
(All documents dated as of July 8, 1993, unless otherwise specified)
1. SIXTH AMENDMENT TO CREDIT AGREEMENT executed by LOMAS MORTGAGE USA,
INC. (the "Company"), certain lenders ("Banks"), and BANK ONE, TEXAS,
N.A., as agent for itself and the other Banks ("Agent").
Annex A - Certain Loan Papers
Second Amended Schedule 1.1 - Banks and Committed Sums
2. OFFICERS' CERTIFICATE executed by the Assistant Secretary of the
Company, certifying resolutions adopted by the Company's directors,
incumbency of certain officers of the Company, and the Company's
corporate charter and bylaws, attached to which are:
Annex A - Resolutions
Annex B - Corporate Charter
Annex C - Bylaws
3. OPINION of General Counsel to the Company, in form and substance
acceptable to Agent.
<PAGE>
SECOND AMENDED SCHEDULE 1.1
Bank Committed Sums
Bank One, Texas, N. A. $10,000,000
Texas Commerce Bank, National Association $ 7,500,000
Guaranty Federal Bank, F.S.B. $ 7,500,000
SEVENTH AMENDMENT TO SERVICING PAYMENTS
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT is entered into as of September 30, 1993, between LOMAS
MORTGAGE USA, INC., a Connecticut corporation (the "Company"), the banks
listed on the signature pages of this amendment ("Banks"), and BANK ONE,
TEXAS, N.A., as agent for Banks (in that capacity "Agent").
The Company, Banks, and Agent have entered into the Servicing Payments
Loan and Security Agreement dated as of February 11, 1992 (as amended through
the date of this amendment, and as further renewed, extended, amended, and
restated, the "Loan Agreement") providing for loans to the Company on a
revolving basis up to $25,000,000 outstanding at any time. The Company has
requested amendments to the Loan Agreement in order to amend certain
definitions and covenants of the Loan Agreement. Accordingly, for valuable
and acknowledged consideration, the Company, Banks, and Agent agree as
follows:
1. Certain Definitions. Unless otherwise specified in this
amendment, all terms defined in the Loan Agreement have the same meanings
when used in this amendment, and all references to "Sections" and "Exhibits"
are references to sections and exhibits of or to the Loan Agreement.
2. Amendments. The Loan Agreement is amended as follows:
(a) A new sentence is added to the end of Section 7.2 as
follows:
For purposes of clauses (b) and (c) above, only 50% of the equity
investment shown on the Company's balance sheet attributable to
the stock of ST Lending, Inc. shall be included in the calculation
of the Company's Consolidated Net Worth.
(b) Sections 7.3(b)(ii) and (iii) is amended in its entirety
as follows:
(ii) 50% of the Consolidated Net Income (or, in the event
Consolidated Net Income is a deficit, then 100% of that deficit)
of the Company and its Consolidated Subsidiaries for the period
(taken as one accounting period) commencing on October 1, 1992,
and including the last day of the fiscal quarter ended immediately
prior to the date of such calculation, plus (iii) the aggregate
net proceeds, including the fair market value of property other
than cash (as determined in good faith by the Board of Directors,
evidenced by a resolution of the Board of Directors), received by
the Company from the issuance or sale after October 1, 1992 (other
than to a Subsidiary of the Company), of its capital stock and
warrants, options, and rights to purchase its capital stock but
excluding the net proceeds from the issuance, sale, exchange,
conversion, or other disposition of its capital stock convertible
into or exchangeable for any security other than its capital stock
at the option of the holder thereof or upon the happening of any
event.
(c) A new Section 7.8(i) is added as follows:
(i) The acquisition of 490 shares of the stock of ST
Lending, Inc. from Lomas Financial Corporation in exchange for the
issuance of 200 shares of the Company's stock.
(d) Effective as of the date of the amendment through November
29, 1993, Section 8.1(e) is entirely amended as follows:
(e) The failure on the part of the Company to observe or
perform (i) any of its covenants or agreements contained in
Section 7 other than Section 7.4 or (ii) the covenant contained in
Section 7.4 for a period of 45 days after the date on which notice
of such failure has been delivered by the Company to either Agent.
3. Conditions Precedent. Paragraph 2 is not effective until Agent
and Banks (a) receive counterparts of this amendment executed by each party
listed below and (b) each agreement, document, instrument, and other item
listed on Annex A.
4. Ratifications. The terms and provisions of this amendment shall
modify and supersede all inconsistent terms and provisions of the Loan
Papers, and, except as expressly modified and superseded by this amendment,
the terms and provisions of the Loan Papers are ratified and confirmed and
shall continue in full force and effect. The Company, Banks, and Agent agree
that the Loan Papers as amended by this amendment shall continue to be legal,
valid, binding, and enforceable in accordance with their respective terms.
Without limiting the generality of the foregoing, the Company hereby ratifies
and confirms that all Liens (except as amended by this amendment) heretofore
granted to Agent, on behalf of Banks, were intended to, do, and shall
continue to secure the full and complete payment and performance of the
Obligations, and the Company agrees to perform such acts and duly authorize,
execute, acknowledge, deliver, file, and record such additional assignments,
security agreements, modifications or amendments to any of the foregoing, and
such other agreements, documents, and instruments as Agent or any Bank may
reasonably request in order to perfect and protect such Liens and preserve
and protect the rights of Agent and Banks in respect of all present and
future Collateral.
5. Representations and Warranties. The Company hereby represents
and warrants to Banks and Agent that (a) this amendment and the Loan Papers
to be delivered under this amendment have been duly executed and delivered by
the Company, (b) no action of, or filing with, any Tribunal is required to
authorize, or is otherwise required in connection with, the execution,
delivery, and performance by the Company of this amendment and the Loan
Papers to be delivered under this amendment, (c) this amendment and the Loan
Papers to be delivered under this amendment are valid and binding upon the
Company and are enforceable against the Company in accordance with their
respective terms, except as limited by the Bankruptcy Code of the United
States of America and all other similar Laws affecting the rights of
creditors generally, (d) the execution, delivery and performance by the
Company of this amendment and the Loan Papers to be delivered under this
amendment do not require the consent of any other Person and do not and will
not constitute a violation of any laws, agreement, or understanding to which
the Company is a party or by which the Company is bound, (e) the
representations and warranties contained in the Loan Agreement, as amended by
this amendment, are true and correct in all material respects except to the
extent that (i) the representations and warranties speak to a specific date
or (ii) the facts on which the representations and warranties were based have
been changed by transactions contemplated or permitted by the Loan Agreement
as of the date of this amendment, (f) as of the date of this amendment, no
Event of Default or Potential Default has occurred and is continuing, and (g)
no change in the financial condition or prospect of the Company which could
reasonably be expected to be a Material Adverse Event has or will have
occurred.
6. References. All references in the Loan Papers to the "Loan
Agreement" shall refer to the Loan Agreement as amended by this amendment,
and, because this amendment is a "Loan Paper" referred to in the Loan
Agreement, then the provisions relating to Loan Papers set forth in Section
10 are incorporated herein by reference, the same as if set forth herein
verbatim.
7. Counterparts. This amendment may be executed in any number of
counterparts with the same effect as if all signatories had signed the same
document. All counterparts must be construed together to constitute one and
the same instrument.
8. Parties Bound. This amendment shall be binding upon and shall
inure to the benefit of the Company, Agent, and each Bank, and, subject to
Section 10.10, their respective successors and assigns.
9. ENTIRETY. THIS AMENDMENT, THE LOAN AGREEMENT AS AMENDED HEREBY,
AND THE OTHER LOAN PAPERS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
FOR THE TRANSACTIONS THEREIN, AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
[THE REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK]
<PAGE>
EXECUTED on or about November 29, 1993, but effective as of the date
first stated above.
Lomas Mortgage USA, Inc. LOMAS MORTGAGE USA, INC.,
1600 Viceroy Drive as the Company
Dallas, Texas 75235
Attn: Robert E. Byerley, Jr.,
Senior Vice President &
Treasurer By /s/ROBERT E. BYERLEY, JR.
Telecopy 214/879-7018 -------------------------------------
Robert E. Byerley, Jr.
Senior Vice President and Treasurer
Third Floor, 1717 Main Street BANK ONE, TEXAS, N.A.,
Mortgage Finance Group as Agent and a Bank
Dallas, Texas 75201
Attn: Kathleen C. Stewart,
Vice President
Telecopy 214/290-2275 By /s/KATHLEEN C. STEWART
-------------------------------------
Kathleen C. Stewart, Vice President
2200 Ross Avenue TEXAS COMMERCE BANK, NATIONAL
Dallas, Texas, 75201-4618 ASSOCIATION, as a Bank
Attn: Barry J. Olson,
Vice President
Telecopy 214/939-7938
By /s/BARRY J. OLSON
-------------------------------------
Barry J. Olson, Vice President
8333 Douglas Avenue GARANTY FEDERAL BANK, F.S.B.,
Dallas, Texas 75255 as a Bank
Attn: James E. Robertson
Vice President
Telecopy 214/360-8948 By /s/JAMES E. ROBERTSON
-------------------------------------
James E. Robertson, Vice President
<PAGE>
ANNEX A
CLOSING CONDITIONS
(All documents dated as of September 30, 1993, unless otherwise specified)
1. SEVENTH AMENDMENT TO CREDIT AGREEMENT executed by LOMAS MORTGAGE USA,
INC. (the "Company"), certain lenders ("Banks"), and BANK ONE, TEXAS,
N.A., as agent for itself and the other Banks ("Agent").
Annex A - Certain Loan Papers
Second Amended Schedule 1.1 - Banks and Committed Sums
2. OFFICERS' CERTIFICATE executed by the Assistant Secretary of the
Company, certifying resolutions adopted by the Company's directors,
incumbency of certain officers of the Company, and changes, if any, to
the Company's corporate charter and bylaws since July 8, 1993, attached
to which are:
Annex A - Resolutions
Annex B - Changes to Corporate Charter, if any
Annex C - Changes to Bylaws, if any
EIGHTH AMENDMENT TO SERVICING PAYMENTS
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT is entered into as of November 30, 1993, between LOMAS
MORTGAGE USA, INC., a Connecticut corporation (the "Company"), the banks
listed on the signature pages of this amendment ("Banks"), and BANK ONE,
TEXAS, N.A., as agent for Banks (in that capacity "Agent").
The Company, Banks, and Agent have entered into the Servicing Payments
Loan and Security Agreement dated as of February 11, 1992 (as amended through
the date of this amendment, and as further renewed, extended, amended, and
restated, the "Loan Agreement") providing for loans to the Company on a
revolving basis up to $25,000,000 outstanding at any time. The Company has
requested an amendment to the Loan Agreement in order to extend the
Termination Date and to replace Texas Commerce Bank, National Association as
a Bank with Texas Commerce Bank National Association. Accordingly, for
valuable and acknowledged consideration, the Company, Banks, and Agent agree
as follows:
1. Certain Definitions. Unless otherwise specified in this
amendment, all terms defined in the Loan Agreement have the same meanings
when used in this amendment, and all references to "Sections" are references
to sections of the Loan Agreement.
2. Amendments.
(a) The following definition in Section 1 is entirely amended
as follows:
"Termination Date" means the earlier of (a) November 29,
1994, and (b) the date Banks' commitments to lend terminate or are
cancelled under this agreement.
(b) Section 2.11(a) is entirely amended as follows:
(a) The Company shall pay to Agent for the Pro Rata account of
each Bank an aggregate facility fee of $63,194.44, payable in four
installments of $15,798.61 on November 30, 1993, $15,972.22 on
March 1, 1994, $15,972.22 on June 1, 1994, and $15,451.39 on
September 1, 1994.
(c) Section 7.3(b)(iii) is entirely amended as follows:
(iii) (A) before November 30, 1993, the aggregate net proceeds,
including the fair market value of property other than cash (as
determined in good faith by the Board of Directors, evidenced by
a resolution of the Board of Directors), received by the Company
from the issuance or sale after October 1, 1992 (other than to a
Subsidiary of the Company), of its capital stock and warrants,
options, and rights to purchase its capital stock but excluding
the net proceeds from the issuance, sale, exchange, conversion, or
other disposition of its capital stock convertible into or
exchangeable for any security other than its capital stock at the
option of the holder thereof or upon the happening of any event,
and (B) after November 30, 1993, the aggregate net cash proceeds,
received by the Company from the issuance or sale after November
30, 1993 (other than to a Subsidiary of the Company), of its
capital stock and warrants, options, and rights to purchase its
capital stock but excluding the net proceeds from the issuance,
sale, exchange, conversion, or other disposition of its capital
stock convertible into or exchangeable for any security other than
its capital stock at the option of the holder thereof or upon the
happening of any event.
(d) Section 8.1(e) is entirely amended as follows:
(e) The failure on the part of the Company to observe or
perform (i) any of its covenants or agreements contained in
Section 7 other than Section 7.4 or (ii) the covenant contained in
Section 7.4 for a period of 30 days after the earlier of the date
on which notice of such failure has been delivered by the Company
to Agent, or the date on which notice of such failure has been
delivered by any Bank to the Company.
(e) Schedule 1.1 is amended in its entirety -- and all
references in the Loan Papers to it shall be -- to the attached Second
Amended Schedule 1.1.
3. Conditions Precedent. Paragraph 2 is not effective until Agent
and Banks (a) receive counterparts of this amendment executed by each party
listed below and (b) each agreement, document, instrument, and other item
listed on Annex A.
4. Ratifications. The terms and provisions of this amendment shall
modify and supersede all inconsistent terms and provisions of the Loan
Papers, and, except as expressly modified and superseded by this amendment,
the terms and provisions of the Loan Papers are ratified and confirmed and
shall continue in full force and effect. The Company, Banks, and Agent agree
that the Loan Papers as amended by this amendment shall continue to be legal,
valid, binding, and enforceable in accordance with their respective terms.
Without limiting the generality of the foregoing, the Company hereby ratifies
and confirms that all Liens (except as amended by this amendment) heretofore
granted to Agent, on behalf of Banks, were intended to, do, and shall
continue to secure the full and complete payment and performance of the
Obligations, and the Company agrees to perform such acts and duly authorize,
execute, acknowledge, deliver, file, and record such additional assignments,
security agreements, modifications or amendments to any of the foregoing, and
such other agreements, documents, and instruments as Agent or any Bank may
reasonably request in order to perfect and protect such Liens and preserve
and protect the rights of Agent and Banks in respect of all present and
future Collateral.
5. Representations and Warranties. The Company hereby represents
and warrants to Banks and Agent that (a) this amendment and the Loan Papers
to be delivered under this amendment have been duly executed and delivered by
the Company, (b) no action of, or filing with, any Tribunal is required to
authorize, or is otherwise required in connection with, the execution,
delivery, and performance by the Company of this amendment and the Loan
Papers to be delivered under this amendment, (c) this amendment and the Loan
Papers to be delivered under this amendment are valid and binding upon the
Company and are enforceable against the Company in accordance with their
respective terms, except as limited by the Bankruptcy Code of the United
States of America and all other similar Laws affecting the rights of
creditors generally, (d) the execution, delivery and performance by the
Company of this amendment and the Loan Papers to be delivered under this
amendment do not require the consent of any other Person and do not and will
not constitute a violation of any laws, agreement, or understanding to which
the Company is a party or by which the Company is bound, (e) the
representations and warranties contained in the Loan Agreement, as amended by
this amendment, are true and correct in all material respects except to the
extent that (i) the representations and warranties speak to a specific date
or (ii) the facts on which the representations and warranties were based have
been changed by transactions contemplated or permitted by the Loan Agreement
as of the date of this amendment, (f) as of the date of this amendment, no
Event of Default or Potential Default has occurred and is continuing, and (g)
no change in the financial condition or prospect of the Company which could
reasonably be expected to be a Material Adverse Event has or will have
occurred.
6. References. All references in the Loan Papers to the "Loan
Agreement" shall refer to the Loan Agreement as amended by this amendment,
and, because this amendment is a "Loan Paper" referred to in the Loan
Agreement, then the provisions relating to Loan Papers set forth in Section
10 are incorporated herein by reference, the same as if set forth herein
verbatim.
7. Counterparts. This amendment may be executed in any number of
counterparts with the same effect as if all signatories had signed the same
document. All counterparts must be construed together to constitute one and
the same instrument.
8. Parties Bound. This amendment shall be binding upon and shall
inure to the benefit of the Company, Agent, and each Bank, and, subject to
Section 10.10, their respective successors and assigns.
<PAGE>
9. ENTIRETY. THIS AMENDMENT, THE LOAN AGREEMENT AS AMENDED HEREBY,
AND THE OTHER LOAN PAPERS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
FOR THE TRANSACTIONS THEREIN, AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
<PAGE>
EXECUTED as of the date first stated above.
Lomas Mortgage USA, Inc. LOMAS MORTGAGE USA, INC.,
1600 Viceroy Drive as the Company
Dallas, Texas 75235
Attn: Robert E. Byerley, Jr.,
Senior Vice President &
Treasurer By /s/ROBERT E. BYERLEY, JR.
Telecopy 214/879-7018 -------------------------------------
Robert E. Byerley, Jr.,
Senior Vice President and Treasurer
Third Floor, 1717 Main Street BANK ONE, TEXAS, N.A.,
Mortgage Finance Group as Agent and a Bank
Dallas, Texas 75201
Attn: Kathleen C. Stewart,
Vice President
Telecopy 214/290-2275 By /s/KATHLEEN C. STEWART
-------------------------------------
Kathleen C. Stewart, Vice President
8333 Douglas Avenue GUARANTY FEDERAL BANK, F.S.B.,
Dallas, Texas 75255 as a Bank
Attn: James E. Robertson
Vice President
Telecopy 214/360-8948 By /s/JAMES E. ROBERTSON
-------------------------------------
James E. Robertson, Vice President
2200 Ross Avenue TEXAS COMMERCE BANK, NATIONAL
Dallas, Texas, 75201-4618 ASSOCIATION, as a Bank
Attn: Barry J. Olson,
Vice President
Telecopy 214/939-7938
By /s/BARRY J. OLSON
-------------------------------------
Barry J. Olson, Vice President
717 Travis Street TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
Houston, Texas 77002 as a Bank
Attn: Abbie Tidmore,
Vice President
Telecopy 713/216-2082
By /s/ABBIE TIDMORE
-------------------------------------
Abbie Tidmore, Vice President
<PAGE>
ANNEX A
CLOSING CONDITIONS
(All documents dated as of November 30, 1993, unless otherwise specified)
J&G [1.] EIGHTH AMENDMENT TO CREDIT AGREEMENT executed by LOMAS
MORTGAGE USA, INC. (the "Company"), certain lenders
("Banks"), and BANK ONE, TEXAS, N.A., as agent for itself
and the other Banks ("Agent").
Annex A - Certain Loan Papers
[2.] PROMISSORY NOTE in the stated principal amount of
$7,500,000 executed by the Company and payable to the
order of Texas Commerce Bank National Association.
[3.] PAYMENT AND PRICING AGREEMENT executed by the Company and
Texas Commerce Bank National Association.
LM [4.] OFFICERS' CERTIFICATE executed by the Assistant Secretary
of the Company, certifying resolutions adopted by the
Company's directors, incumbency of certain officers of
the Company, and changes, if any, to the Company's
corporate charter and bylaws since July 8, 1993, attached
to which are:
Annex A - Resolutions
Annex B - Changes to Corporate Charter, if any
Annex C - Changes to Bylaws, if any
LM [5.] GNMA POOL ADVANCE AGREEMENT executed by Banks, the
Company, and GNMA.
J&G [6.] GNMA SUPPLEMENTAL AGREEMENT executed by the Company and
GNMA.
J&G [7.] TERMINATION AGREEMENT executed by the Company, Banks, and
GNMA.
J&G [8.] GNMA POWER OF ATTORNEY (GNMA) executed by the Company.
LM [9.] FHLMC ACKNOWLEDGMENT AGREEMENT executed by the Company,
Banks, and FHLMC.
J&G [10.] POWER OF ATTORNEY (FHLMC) executed by the Company.
LM [11.] AMENDMENTS TO FINANCING STATEMENTS executed by the
Company as Debtor, and filed in the following
jurisdictions as of the following dates:
Orig. Amendment
Jurisdiction Secured Party File No. Date
------------ ------------- -------- ---------
Secretary of State of Texas Greenwich Capital 90-00115650 1/11/93
Secretary of State of Texas File Net Corp. 91-00057195 1/11/93
Dallas County, Texas Greenwich Capital 00491 and 90005-0225
<PAGE>
LM [12.] Such other agreements, documents, or instruments as Agent
may require in form and substance satisfactory to Agent.<PAGE>
SECOND AMENDED SCHEDULE 1.1
Bank Committed Sums
---- --------------
Bank One, Texas, N.A. $10,000,000
Texas Commerce Bank National Association $7,500,000
Guaranty Federal Bank, F.S.B. $7,500,000
December 1, 1993
David L. Chapman II
Lomas Mortgage USA, Inc.
1600 Viceroy
Dallas, Texas 75235
Dear David:
As you are aware, Lomas Financial Corporation (the "Parent")
established on June 30, 1990, an Employee Protection Plan (the
"Plan") for certain officers and employees of the Lomas Financial
Group of affiliated companies. You were a participant in the Plan,
which by its terms expired July 31, 1993, eighteen months after the
Company's final emergence from Chapter 11 proceedings on January
31, 1992. However, I am pleased to report to you that Lomas
Mortgage USA, Inc. (the "Company") has decided to provide you on an
individual basis with protection comparable to that provided by the
Plan through June 30, 2008.
Specifically, should you be involuntarily terminated (for any
reason other than for cause or by reason of a transfer to a
position with another entity within the Lomas Financial Group), you
will receive in addition to all otherwise accrued and vested
benefits, a lump sum cash payment equal to 200% of your then
current annual base salary. The foregoing severance benefit will
also be paid in the event of your "constructive discharge,"
"mutually agreed to early retirement" or at your election, upon a
"change-in-control."
"Constructive Discharge" is defined as termination of employment
due to (a) a reduction in your base salary of 10 percent or more in
any calendar year or an aggregate reduction in your base salary of
20 percent or more in any four calendar years, (b) a material
reduction in your job function, duties or responsibilities, or (c)
a required relocation of more than 100 miles from your current
location of employment. Provided, however, that if you elect to
continue to be employed after an event of "constructive discharge,"
you may not receive benefits under this letter.
"Change-in-Control" is defined as a change in control, without your
concurrence, of a nature that would be required to be reported in
response to Item 1 or Item 2 of the Form 8-K Current Report
promulgated pursuant to Sections 13 and 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); provided
that, without limitation, such a Change-in-Control shall be deemed
to have occurred if (y) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes a
"beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Parent
representing twenty-five percent (25%) or more of the combined
voting power of the Parent's then outstanding securities, and (z)
individuals who, at the date of this letter, constituted the Board
of Directors of the Parent cease for any reason to constitute at
least a majority thereof, unless the election of each director who
was not a director at the date of this letter has, prior to such
election, been approved by directors who both represent at least
two-thirds (2/3) of the directors in office at the time of such
approval and who were also directors at the date of this letter.
"Mutually agreed to early retirement" is defined as early
retirement under any preexisting retirement plan of the Company
agreed to by the Company. If the Company and you mutually agree to
an early retirement you will receive payment as if involuntarily
terminated and may, in the sole discretion of the chief executive
officer of the Company, be granted up to three additional years of
credited service for purposes of calculation of benefits under any
retirement plan in effect at the time of severance.
If, as a result of your involuntary termination prior to attaining
age 55, you receive payment of the severance benefit provided in
this letter, you also will receive, upon payment of any plan-
required employee contributions, an enhanced retirement benefit
derived by crediting you with additional years of pay and service
through your fifty-fifth birthday for purposes of calculating
benefits under the Management Security Plan.
In addition, the Company will continue your coverage under the
Company's group medical plan on the same terms as provided for an
active employee for two years following any involuntary termination
of your employment which results in payment of the severance
benefits described above.
Finally, you will forfeit the benefits described in this letter if
you voluntarily terminate your employment or if your employment is
"terminated for cause" by the Company.
"Terminated for cause" is defined as termination of employment due
to any of the following circumstances:
(1) gross incompetence, insubordination, excessive absences,
negligence or dishonesty in the performance of Company
duties; or
(2) actions which cause the Company to lose any license or
certification necessary for the operation of the Company;
or
(3) conviction of fraud, theft or embezzlement or conviction
of any felony.
The severance benefits provided in this letter are in recognition
of your past and anticipated future valuable contributions to the
Company and are governed entirely by the terms of this letter.
Sincerely,
Jess Hay
September 1, 1993
Gary Kell
Lomas Mortgage USA, Inc.
1820 Regal Row
Dallas, Texas 75235
Dear Gary:
As you are aware, Lomas Financial Corporation (the "Parent")
established on June 30, 1990, an Employee Protection Plan (the
"Plan") for certain officers and employees of the Lomas Financial
Group of affiliated companies. You were a participant in the Plan,
which by its terms expired July 31, 1993, eighteen months after the
Company's final emergence from Chapter 11 proceedings on January
31, 1992. However, I am pleased to report to you that Lomas
Mortgage USA, Inc. (the "Company") has decided to provide you on an
individual basis with protection comparable to that provided by the
Plan through December 31, 2005.
Specifically, should you be involuntarily terminated (for any
reason other than for cause or by reason of a transfer to a
position with another entity within the Lomas Financial Group), you
will receive in addition to all otherwise accrued and vested
benefits, a lump sum cash payment equal to 200% of your then
current annual base salary. The foregoing severance benefit will
also be paid in the event of your "constructive discharge",
"mutually agreed to early retirement" or at your election, upon a
"change-in-control."
"Constructive Discharge" is defined as termination of employment
due to (a) a reduction in your base salary of 10 percent or more in
any calendar year or an aggregate reduction in your base salary of
20 percent or more in any four calendar years, (b) a material
reduction in your job function, duties or responsibilities, or (c)
a required relocation of more than 100 miles from your current
location of employment. Provided, however, that if you elect to
continue to be employed after an event of "constructive discharge,"
you may not receive benefits under this letter.
"Change-in-Control" is defined as a change in control, without your
concurrence, of a nature that would be required to be reported in
response to Item 1 or Item 2 of the Form 8-K Current Report
promulgated pursuant to Sections 13 and 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); provided
that, without limitation, such a Change-in-Control shall be deemed
to have occurred if (y) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes a
"beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Parent
representing twenty-five percent (25%) or more of the combined
voting power of the Parent's then outstanding securities, and (z)
individuals who, at the date of this letter, constituted the Board
of Directors of the Parent cease for any reason to constitute at
least a majority thereof, unless the election of each director who
was not a director at the date of this letter has, prior to such
election, been approved by directors who both represent at least
two-thirds (2/3) of the directors in office at the time of such
approval and who were also directors at the date of this letter.
"Mutually agreed to early retirement" is defined as early
retirement under any preexisting retirement plan of the Company
agreed to by the Company. If the Company and you mutually agree to
an early retirement you will receive payment as if involuntarily
terminated and may, in the sole discretion of the chief executive
officer of the Company, be granted up to three additional years of
credited service for purposes of calculation of benefits under any
retirement plan in effect at the time of severance.
If, as a result of your involuntary termination prior to attaining
age 55, you receive payment of the severance benefit provided in
this letter, you also will receive an enhanced retirement benefit
derived by crediting you with additional years of pay and service
through your fifty-fifth birthday for purposes of calculating
benefits under The Lomas Financial Group Pension Plan, and, upon
payment of any plan-required employee contributions, under the
Management Security Plan.
As you know, a portion of your incentive compensation for the
fiscal years ended June 30, 1991, 1992 and 1993 has been deferred
pursuant to letter agreements between the Company and you dated
August 22, 1991, July 1, 1992 and August 24, 1993 (collectively,
the "Deferred Incentive Compensation Agreements"). Pursuant to the
Deferred Incentive Compensation Agreements, you will be paid,
subject to continued employment as described below, the following
amounts on the dates indicated:
Payment Date Amount
July 1, 1994 $ 138,770
July 1, 1995 131,205
July 1, 1996 123,640
July 1, 1997 82,075
July 1, 1998 42,400
If you die before payment in full under the Deferred Incentive
Compensation Agreements, all unpaid installments will be paid to
your wife, if she survives you, or to your estate if she does not
survive you, at the time and in the manner set forth above. If you
are involuntarily terminated (for any reason other than for cause
or by reason of transfer to a position with another entity within
the Lomas Financial Group) or in the event of your "constructive
discharge" or "mutually agreed to early retirement" (as such
phrases are defined above) the remaining unpaid installments under
the Deferred Incentive Compensation Agreements will be paid to you
upon the effective date of your termination. In addition, the
Company will continue your coverage under the Company's group
medical plan on the same terms as provided for an active employee
for two years following any involuntary termination of your
employment which results in payment of the severance benefits
described above.
<PAGE>
Finally, you will forfeit the benefits described in this letter and
any unpaid installments under the Deferred Incentive Compensation
Agreements if you voluntarily terminate your employment or if your
employment is "terminated for cause" by the Company.
"Terminated for cause" is defined as termination of employment due
to any of the following circumstances:
(1) gross incompetence, insubordination, excessive absences,
negligence or dishonesty in the performance of Company
duties; or
(2) actions which cause the Company to lose any license or
certification necessary for the operation of the Company;
or
(3) conviction of fraud, theft or embezzlement or conviction
of any felony.
The severance benefits provided in this letter and the deferred
payments under the Deferred Incentive Compensation Agreements are
in recognition of your past and anticipated future valuable
contributions to the Company and are governed by the terms of this
letter and, to the extent consistent with this letter, by the
Deferred Incentive Compensation Agreements.
Sincerely,
Jess Hay
August 1, 1993
Gary White
Lomas Financial Corporation
1600 Viceroy Drive
Dallas, Texas 75235
Dear Gary:
As you are aware, Lomas Financial Corporation (the "Company")
established on June 30, 1990, an Employee Protection Plan (the
"Plan") for certain officers and employees of the Lomas Financial
Group of affiliated companies. You were a participant in the Plan,
which by its terms expired July 31, 1993, eighteen months after the
Company's final emergence from Chapter 11 proceedings on January
31, 1992. However, I am pleased to report to you that the Company
has decided to provide you on an individual basis with protection
comparable to that provided by the Plan through July 31, 2000.
Specifically, should you be involuntarily terminated (for any
reason other than for cause or by reason of a transfer to a
position with another entity within the Lomas Financial Group), you
will receive in addition to all otherwise accrued and vested
benefits, a lump sum cash payment equal to 200% of your then
current annual base salary. The foregoing severance benefit will
also be paid in the event of your "constructive discharge,"
"mutually agreed to early retirement" or at your election, upon a
"change-in-control."
"Constructive Discharge" is defined as termination of employment
due to (a) a reduction in your base salary of 10 percent or more in
any calendar year or an aggregate reduction in your base salary of
20 percent or more in any four calendar years, (b) a material
reduction in your job function, duties or responsibilities, or (c)
a required relocation of more than 100 miles from your current
location of employment. Provided, however, that if you elect to
continue to be employed after an event of "constructive discharge,"
you may not receive benefits under this letter.
"Change-in-Control" is defined as a change in control, without your
concurrence, of a nature that would be required to be reported in
response to Item 1 or Item 2 of the Form 8-K Current Report
promulgated pursuant to Sections 13 and 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); provided
that, without limitation, such a Change-in-Control shall be deemed
to have occurred if (y) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes a
"beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company
representing twenty-five percent (25%) or more of the combined
voting power of the Company's then outstanding securities, and (z)
individuals who, at the date of this letter, constituted the Board
of Directors of the Company cease for any reason to constitute at
least a majority thereof, unless the election of each director who
was not a director at the date of this letter has, prior to such
election, been approved by directors who both represent at least
two-thirds (2/3) of the directors in office at the time of such
approval and who were also directors at the date of this letter.
"Mutually agreed to early retirement" is defined as early
retirement under any pre-existing retirement plan of the Company
agreed to by the Company. If the Company and you mutually agree to
an early retirement you will receive payment as if involuntarily
terminated and may, in the sole discretion of the chief executive
officer of the Company, be granted up to three (3) additional years
of credited service for purposes of calculation of benefits under
any retirement plan in effect at the time of severance.
In addition, the Company will continue your coverage under the
Company's group medical plan on the same terms as provided for an
active employee for two (2) years following any involuntary
termination of your employment which results in payment of the
severance benefit described above.
Finally, you will forfeit the benefits described in this letter if
you voluntarily terminate your employment or if your employment is
"terminated for cause" by the Company.
"Terminated for cause" is defined as termination of employment due
to any of the following circumstances:
(1) gross incompetence, insubordination, excessive absences,
negligence or dishonesty in the performance of Company
duties; or
(2) actions which cause the Company to lose any license or
certification necessary for the operation of the Company;
or
(3) conviction of fraud, theft or embezzlement or conviction
of any felony.
The severance benefits provided in this letter are in recognition
of your past and anticipated future valuable contributions to the
Company and are governed entirely by the terms of this letter.
Sincerely,
Jess Hay
EXHIBIT 11
LOMAS FINANCIAL CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS (LOSS) PER SHARE
(in thousands, except per share amounts)
Quarter Ended Six Months Ended
December 31 December 31
------------------ -------------------
1993 1992 1993 1992
-------- ------- -------- --------
Primary earnings (loss) per
share:
Average common shares
outstanding 20,100 20,092 20,099 20,089
Common stock equivalents under
Nonemployee Directors Long
Term Incentive Plan 32 32 30 32
-------- ------- -------- --------
Total shares 20,132 20,124 20,129 20,121
======== ======= ======== ========
Income (loss) from continuing
operations $(48,138) $ 3,224 $(93,705) $ 7,536
Income (loss) from discontinued
operations -- 86 (4,000) 183
-------- ------- -------- --------
Net income (loss) $(48,138) $ 3,310 $(97,705) $ 7,719
======== ======= ======== ========
Primary earnings (loss) per share:
Income (loss) from continuing
operations $(2.39) $.16 $(4.65) $.37
Income (loss) from
discontinued operations -- -- (.20) .01
------ ---- ------ ----
Net income (loss) $(2.39) $.16 $(4.85) $.38
====== ==== ====== ====
Fully diluted earnings (loss)
per share:
Average common shares
outstanding 20,100 20,092 20,099 20,089
Common stock equivalents
under Nonemployee Directors
Long Term Incentive Plan 32 32 30 32
-------- ------- -------- --------
Total shares 20,132 20,124 20,129 20,121
======== ======= ======== ========
Income (loss) from continuing
operations $(48,138) $ 3,224 $(93,705) $ 7,536
Income (loss) from discontinued
operations -- 86 (4,000) 183
-------- ------- -------- --------
Net income (loss) $(48,138) $ 3,310 $(97,705) $ 7,719
======== ======= ======== ========
<PAGE>
Fully diluted earnings (loss)
per share:
Income (loss) from continuing
operations $(2.39) $.16 $(4.65) $.37
Income (loss) from
discontinued operations -- -- (.20) .01
------ ---- ------ ----
Net income (loss) $(2.39) $.16 $(4.85) $.38
====== ==== ====== ====
