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 March 31, 1995
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 May 10, 1995: Common Stock, $1 par 20,145,731
shares.
<PAGE>
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1995
LOMAS FINANCIAL CORPORATION AND SUBSIDIARIES
INDEX
Page No.
--------
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (Unaudited)
Consolidated Balance Sheet -- March 31, 1995 and
June 30, 1994 3
Statement of Consolidated Operations -- Quarter and
Nine Months Ended March 31, 1995 and 1994 4
Statement of Consolidated Cash Flows -- Nine Months
Ended March 31, 1995 and 1994 5
Notes to Consolidated Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations 11
Liquidity and Capital Resources 16
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 17
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 18
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
LOMAS FINANCIAL CORPORATION AND SUBSIDIARIES
(in thousands)
March 31, 1995 June 30, 1994
-------------- -------------
(Unaudited) (Note)
Assets
Cash and cash equivalents $ 36,336 $ 7,206
First mortgage loans held for
sale 321,887 257,534
Investments 282,526 117,452
Receivables 85,785 84,155
Foreclosed real estate 5,011 8,934
---------- ----------
695,209 468,075
Less allowance for losses (26,650) (12,262)
---------- ----------
668,559 455,813
Purchased future mortgage
servicing income rights--net 353,906 382,009
Fixed assets--net 84,276 89,154
Prepaid expenses and other
assets 23,900 30,133
Net assets of discontinued
operations 70,828 113,258
---------- ----------
$1,237,805 $1,077,573
========== ==========
Escrow, agency and fiduciary
funds--see contra $ 571,210 $ 603,163
========== ==========
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable and accrued
expenses $ 73,379 $ 71,862
Notes payable 582,990 341,047
Term notes payable 379,097 383,311
Senior convertible notes
payable 139,918 139,918
---------- ----------
1,175,384 936,138
---------- ----------
<PAGE>
Stockholders' Equity:
Common stock--20,146 and
20,100 shares issued
and outstanding,
respectively 20,146 20,100
Other paid-in capital 309,577 309,429
Retained earnings (deficit) (267,302) (188,094)
---------- ----------
62,421 141,435
---------- ----------
$1,237,805 $1,077,573
========== ==========
Liability for escrow, agency
and fiduciary funds--
see contra $ 571,210 $ 603,163
========== ==========
Note: The balance sheet at June 30, 1994 as presented is derived
from the audited financial statements at that date.
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 Nine Months Ended
March 31 March 31
------------------- --------------------
1995 1994 1995 1994
-------- -------- -------- ---------
Revenues
Mortgage servicing $ 33,357 $ 35,303 $100,642 $ 110,838
Commissions and fees 7,485 6,811 23,896 20,986
Interest 7,225 9,413 17,950 26,922
Investment 5,404 4,516 14,347 17,649
Gain (loss) on sales (2,080) 7,438 1,510 19,446
Management fees -- affiliates -- -- -- 2,952
Other -- affiliates -- -- -- 5,028
Other 925 352 5,443 5,837
-------- -------- -------- ---------
52,316 63,833 163,788 209,658
-------- -------- -------- ---------
Expenses
Interest 21,561 19,463 58,815 61,048
Personnel 14,076 17,164 44,681 56,961
Depreciation and amortization 14,575 10,102 46,439 137,245
Other operating 10,517 18,805 32,254 29,429
Provision for losses 2,136 3,045 33,207 6,352
Provision for restructuring 9,000 -- 9,000 5,570
-------- -------- -------- ---------
71,865 68,579 224,396 296,605
-------- -------- -------- ---------
Loss from continuing
operations (19,549) (4,746) (60,608) (86,947)
Loss from discontinued
operations (5,600) (12,923) (18,600) (28,427)
-------- -------- -------- --------
Net loss $(25,149) $(17,669) $(79,208) $(115,374)
======== ======== ======== ========
Earnings (loss) per share:
Loss from continuing
operations $(.97) $(.24) $(3.01) $(4.32)
Net loss $(1.25) $(.88) $(3.93) $(5.73)
Average number of shares 20,164 20,135 20,151 20,131
Note: Reclassifications have been made to March 31, 1994 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)
Nine Months Ended
March 31
-------------------
1995 1994
-------- --------
Operating activities:
Loss from continuing operations $(60,608) $(86,947)
Adjustments to reconcile loss from continuing
operations to net cash provided by operating
activities:
Depreciation and amortization 46,439 137,245
Provision for losses 33,207 6,352
Provision for restructuring 9,000 5,570
-------- --------
Cash provided by operations before working
capital changes 28,038 62,220
Net change in first mortgage loans held for sale (62,804) 21,107
Net change in sundry receivables, payables, and
other assets (22,041) (29,174)
-------- --------
Net cash provided (used) by operating
activities (56,807) 54,153
-------- --------
Investing activities:
Purchases of investments (188,268) (12,692)
Maturities/sales of investments 19,507 65,627
Purchases of loans from pools (4,957) (13,817)
Sales of foreclosed real estate 6,139 15,411
Net purchases of fixed assets (272) (20,590)
Purchases of future mortgage servicing income
rights (47,632) (90,962)
Sales of future mortgage servicing income rights 39,156 11,694
Other 194 (2,031)
-------- --------
Net cash used by investing activities (176,133) (47,360)
-------- --------
Financing activities:
Net borrowings of notes payable 241,943 5,590
Term debt repayments (4,215) (6,603)
-------- --------
Net cash provided (used) by financing
activities 237,728 (1,013)
-------- --------
<PAGE>
Net decrease in cash and cash equivalents 4,788 5,780
Net cash provided (used) by discontinued operations 24,342 (13,068)
Cash and cash equivalents at beginning of period 7,206 34,368
-------- --------
Cash and cash equivalents at end of period $ 36,336 $ 27,080
======== ========
See notes to consolidated financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
LOMAS FINANCIAL CORPORATION AND SUBSIDIARIES
MARCH 31, 1995
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 March 31, 1995 have been
included. Operating results for the nine months ended March 31, 1995 are not
necessarily indicative of the results that may be expected for the fiscal
year ended June 30, 1995. 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, 1994.
NOTE B -- EARNINGS (LOSS) PER SHARE
Primary earnings (loss) per share data for the quarter and nine months
ended March 31, 1995 and 1994 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, the 1991 Stock Incentive Program and the 1993
Intermediate and Long Term Incentive Plan. 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
nine months ended March 31, 1995 and 1994, 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 as a means
of managing its exposure to changes in interest rates. Interest rate swaps
that reduce the exposure of the Company, as a whole, to changes in interest
rates are designated as hedges of the Company's fixed rate debt and treated
as hedges of the debt. Swap agreements that do not reduce the Company's
exposure to changes in interest rates are not considered to be hedges. The
interest differential to be paid or received on swap agreements that are
treated as hedges is accrued over the life of the agreements as an adjustment
to the interest expense of the related debt. Gains or losses on early
termination of interest rate swap agreements designated as hedges are
recognized over the remaining term of the swap agreement. Interest rate
swaps that are not considered hedges, and losses where the fixed rate debt
associated with the swap is reduced below the notional amount of the swap,
are marked to market with the unrealized gain or loss, together with the
accrued interest differential, treated as a gain or loss on such swaps.
Under the terms of the swap agreements in existence at March 31, 1995, 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
Company has not entered into any additional interest rate swap agreements
since October 1993.
The swap agreements contain certain default and termination provisions
whereby the counterparty can terminate the agreements prior to their
maturity, including a provision which permits the counterparty to terminate,
if, in its reasonable business judgment, there has been a material adverse
change in the business, assets, operations or financial condition of Lomas
Mortgage since April 1, 1994. The terms of the swaps also provide that the
counterparty, under certain circumstances, can demand collateral from the
Company to protect against mark-to-market exposure attributable to the
agreements. During fiscal 1994, as a result of increases in interest rates,
the Company, at the request of the counterparty, pledged servicing rights
related to approximately $4.8 billion of mortgage loans as collateral.
During the nine months ended March 31, 1995, the Company pledged additional
servicing rights related to approximately $2.0 billion of mortgage loans.
At March 31, 1995 interest rate swaps in the aggregate notional amount
of $800 million were outstanding, all of which were designated as hedges.
The Company's notes payable, investment credit lines and certain of the
warehouse debt totaling $800 million were hedged by the interest rate swaps.
The Company receives an average fixed interest rate of 4.765 percent on these
swaps. The floating interest rate, which the Company pays, at March 31, 1995
was 6.140 percent. During the quarter and nine months ended March 31, 1995,
the Company incurred interest expense of $1,238,000 and $971,000,
respectively, from the swaps. In the same periods of fiscal 1994, the
interest rate swaps reduced the Company's interest expense by $3.6 million
and $12.0 million, respectively.
Since its inception in July 1992 and through March 31, 1995, the
interest rate swap program has generated net cash of $38.8 million, including
cash related deferred gains of $9.0 million which currently is being
amortized as an offset to future net interest expense at a rate of $3.3
million a year.
At the beginning of the second quarter of fiscal 1995, the amount of
fixed rate debt dropped below the notional amount of the swaps ($800
million), the Company recorded a loss of approximately $7.4 million which is
included in provision for losses. The fixed rate debt increased over the
notional amount of the swaps during the second and third quarters and the
entire $800 million amount of swaps is accounted for as a hedge at March 31,
1995. The liability resulting from the loss is being amortized over the
remaining life of the swaps.
Based on the current interest rates and the current credit worthiness of
the counterparty, if the swap agreements had been terminated as of May 9,
1995, Lomas Mortgage would have incurred a liability (net of $15.1 million
deferred credits) of approximately $23.6 million. However, the Company does
not intend to terminate these swaps until their maturity in October 1998, and
assuming the A1/P1 commercial paper interest rate remains at 6.0 percent for
the next 43 months, the cash to be paid by the Company as interest on the
swaps to maturity of the swaps would be $35.4 million and the discounted
present value would be approximately $30.7 million.
NOTE D -- PURCHASED FUTURE MORTGAGE SERVICING INCOME RIGHTS ("PMSRs")
Since April 1993 the Company had been using a simulation methodology to
estimate the future prepayments of the Company's servicing portfolio.
Effective July 1, 1994, the Company changed its estimates of prepayment
speeds from this simulation methodology to using published Constant
Prepayment Rates ("CPRs"). This change in estimate did not have a material
adverse effect on the financial statements of the Company as of July 1, 1994
or for the nine months ended March 31, 1995.
PMSRs at March 31, 1995, consisted of the following (in thousands):
Cost of PMSRs $ 547,503
Capitalized excess servicing fees 3,055
---------
550,558
Less: Accumulated amortization (196,652)
---------
$ 353,906
=========
Changes in PMSRs were as follows (in thousands):
Beginning balance at July 1, 1994 $ 382,009
Additions 48,865
Sales and writeoffs (36,553)
Amortization (40,415)
---------
Ending balance at March 31, 1995 $ 353,906
=========
NOTE E -- RESTRUCTURING AND REDUCTION IN FORCE
In January 1995 the Company announced a restructuring and reduction-in-
force plan (the "1995 Plan"). Under this plan, the Company is planning to
reduce its staff by approximately 200 employees which should be completed by
June 30, 1995. The 1995 Plan is expected to produce annual savings of
approximately $6.6 million when completed. In connection with the 1995 Plan,
the Company recorded a charge of $6.0 million in the March 1995 quarter, of
which approximately $1.6 million was the estimated pension plan curtailment
loss (noncash charge) related to the involuntary enhanced pension benefit.
Also during the March quarter, the Company's mortgage banking division
recorded a $3 million provision for the reduction in the carrying value of
one of its office buildings which is being vacated and is being held for
sale.
NOTE F -- DISCONTINUED OPERATIONS
Discontinued operations include the Company's short term lending
operations and information systems operations ("LIS").
On December 16, 1994, the Company completed the sale of substantially
all of the assets of LIS to a subsidiary of an insurance company (the
"Purchaser"). As consideration for the sale, the Company received $2.5
million in cash; an $8.0 million note due five years after closing and
accruing interest at a rate per annum of 8 percent payable at maturity, which
note can be adjusted based on the future financial performance of the
Purchaser; and a contingent interest equal to 35 percent of the Purchaser's
adjusted gross revenues in excess of $55 million per year generated during
the seven years ending December 31, 2001. The calculation of the present
value of the estimated discounted cash flow considerations from this
transaction is approximately $40 million using a discount factor of 20
percent. The Company does not retain operational or management control of
the successor entity. A loss of $2.0 million was recorded on this
transaction for the nine months ended March 31, 1995 and a $33.5 million loss
at June 30, 1994. The Company believes that during the period involved, it
will recover its remaining investment, however, there is no assurance that
the projected revenues used in the calculation of the remaining investment
will be achieved. The Company will apply all subsequent receipts related to
the transaction to reduce its remaining book basis. After full recovery of
the remaining basis, all subsequent revenues will be recorded as income as
they are received.
In March 1995, the parent of the Purchaser announced its intention to
sell its mortgage banking business which includes the Purchaser. According
to the agreement between the Company and the Purchaser and under the scenario
that the Purchaser's parent is selling the information systems business
either with or separately from its mortgage banking business, the Company
would have the right to accelerate the $8.0 million promissory note. The
Company's contingent earn-out interest in the future revenues of the
information systems business could be adversely affected by the future
performance of the Purchaser.
The following table presents a summary of LIS' revenues, expenses and
net operating results during the quarter and nine months ended March 31, 1995
and 1994 (in thousands):
Quarter Ended Nine Months Ended
March 31 March 31
---------------- ------------------
1995 1994 1995 1994
------- ------- -------- --------
Revenues $ -- $ 9,869 $ 16,050 $ 28,095
Expenses -- 15,792 27,889 45,522
------- ------- -------- --------
Loss prior to reserve application -- (5,923) (11,839) (17,427)
Reserve application -- -- 11,839 --
------- ------- -------- --------
Net loss $ -- $(5,923) $ -- $(17,427)
======= ======= ======== ========
The Company's discontinued short term lending operations include ST
Lending, Inc. ("STL"), Lomas Management, Inc. ("LMI"), which manages the
assets of STL, and certain other real estate operations. STL was owned 51% by
LFC and 49% by Lomas Mortgage at March 31, 1995. During the quarter and nine
months ended March 31, 1995, the Company provided reserves totaling
$5.6 million and $16.6 million, respectively, for the discontinued short term
lending operations. These reserves are to cover projected operating losses
($3.2 million) through the disposition of all assets. The provision for
losses on properties were $2.4 million and $13.4 million, respectively, for
the quarter and nine months Ended March 31, 1995. For the quarter and nine
months ended March 31, 1995 and 1994, losses of $2.2 million, $3.2 million,
$11.5 million and $8.7 million respectively, were charged to the reserves.
At March 31, 1995, the Company had reserves in the amount of $6.0 million to
cover future operating losses through the disposition of all properties.
<PAGE>
Net assets of discontinued short term lending operations at March 31,
1995 were as follows (in thousands):
Assets:
Mortgage notes receivable and foreclosed real estate, net of
allowance for losses of $16,708 $38,304
Cash and cash equivalents 7,468
Other assets 1,118
--------
46,890
Less:
Accounts payable and accrued expenses (927)
Future operating loss reserves (6,045)
--------
$39,918
NOTE G -- CONTINGENT LIABILITIES
Reference is made to NOTE F -- CONTINGENT LIABILITIES in the Company's
Quarterly Report on Form 10-Q for the quarterly period ended September 30,
1994 and NOTE I -- CONTINGENT LIABILITIES in the Company's Quarterly Report
on Form 10-Q for the quarterly period ended December 31, 1994 for a
description of various lawsuits involving the Company. There have been no
material developments or changes to any of these lawsuits.
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 position of the Company.
NOTE H -- PENDING ADOPTION OF AUTHORITATIVE STATEMENTS
In March 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of."
This statement, which is effective for financial statements for fiscal years
beginning after December 31, 1995, provides guidance for recognition and
measurement of impairment of long-lived assets, certain identifiable
intangibles and goodwill related both to assets to be held and used and
assets to be disposed of. Management is currently evaluating the impact, if
any, of the implementation of this statement on the Company's consolidated
financial statements.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The Company's continuing operations, after provisions of $9.0 million
for restructuring, recorded a loss for the quarter ended March 31, 1995 of
$19.5 million compared to a loss of $4.7 million for the same period in 1994.
For the nine months ended March 31, 1995 and 1994, operating losses from
continuing operations were $60.6 million and $86.9 million, respectively.
Discontinued operations incurred losses of $5.6 million and $18.6 million in
the quarter and nine months ended March 31, 1995, respectively, compared to
losses of $12.9 million and $28.4 million for the same periods in fiscal
1994.
The operating results of the Company during the quarter and nine months
ended March 31, 1995 and 1994 were as follows (in thousands):
Quarter Ended Nine Months Ended
March 31 March 31
------------------- -------------------
1995 1994 1995 1994
------ ------ ------ -------
Operating Income (Loss)
Mortgage banking $(12,386) $ 209 $(41,959) $ (75,659)
Other 100 303 2,016 5,275
-------- -------- -------- ---------
(12,286) 512 (39,943) (70,384)
Corporate Expenses
General and administrative (1,138) (2,058) (5,426) (6,345)
Provision for losses -- -- (1,900) --
Provision for restructuring (2,800) -- (2,800) (480)
Corporate interest (3,325) (3,200) (10,539) (9,738)
-------- -------- -------- ---------
Loss from continuing
operations (19,549) (4,746) (60,608) (86,947)
Loss from discontinued
operations (5,600) (12,923) (18,600) (28,427)
-------- -------- -------- ---------
Net loss $(25,149) $(17,669) $(79,208) $(115,374)
======== ======== ======== =========
Restructuring and Reduction in Force
In January 1995 the Company announced a restructuring and reduction-in-
force plan (the "1995 Plan"). Under this plan, the Company is planning to
reduce its staff by approximately 200 employees which should be completed by
June 30, 1995. The 1995 Plan is expected to produce annual savings of
approximately $6.6 million when completed. In connection with the 1995 Plan,
the Company recorded a charge of $6.0 million in the March 1995 quarter, of
which approximately $1.6 million was the estimated pension plan curtailment
loss (noncash charge) related to the involuntary enhanced pension benefit.
Also during the March quarter, the Company's mortgage banking division
recorded a $3 million provision for the reduction in the carrying value of
one of its office buildings which is being vacated and is being held for
sale.
Mortgage Banking
Mortgage banking divisions revenues, expenses and contributions/loss
from continuing operations for the quarter and nine months ended March 31,
1995 and 1994 were derived from the following sources (in millions):
<PAGE>
<TABLE>
<CAPTION>
Quarter Ended March 31 Nine Months Ended March 31
--------------------------------- ---------------------------------
1995 1994 1995 1994
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Loan administration
Revenues $ 30.8 $ 33.0 $ 93.0 $ 102.4
Expenses (13.0) (15.1) (36.8) (44.2)
Amortization (including
$80 million impairment
provisions in the 1994
period) (12.4) $ 5.4 (16.9) $ 1.0 (39.1) $ 17.1 (131.8) $(73.6)
------ ------ ------ -------
Master servicing
Revenues 2.5 2.6 8.2 9.3
Expenses (1.9) (1.9) (5.1) (6.1)
Amortization (0.2) 0.4 (0.1) 0.6 (1.2) 1.9 (0.4) 2.8
------ ------ ------ -------
Insurance
Agency 2.2 2.0 7.1 6.1
Mortgage plans 1.7 1.2 4.6 3.7
Expenses (1.4) 2.5 (1.2) 2.0 (4.3) 7.4 (3.5) 6.3
------ ------ ------ -------
Banking (including
warehousing and
investment income and
interest expense)
Revenues 10.3 10.6 27.0 34.9
Expenses (18.5) (8.2) (16.1) (5.5) (49.0) (22.0) (51.0) (16.1)
------ ------ ------ -------
Portfolio production
Revenues 0.7 14.2 11.3 38.6
Expenses (3.2) (2.5) (7.4) 6.8 (12.9) (1.6) (23.4) 15.2
------ ------ ------ -------
Field services
Revenues 2.8 3.6 8.7 10.9
Expenses (3.0) (0.2) (4.1) (0.5) (9.1) (0.4) (10.0) 0.9
------ ------ ------ -------<PAGE>
Fund and asset management
Revenues -- -- -- 8.3
Expenses -- -- -- -- -- -- (2.1) 6.2
------ ------ ------ -------
General and
administrative expense (3.6) (4.2) (10.5) (12.3)
------ ------ ------ ------
Income (loss) before special
provisions (6.2) 0.2 (8.1) (70.6)
Provision for losses -- -- (27.7) --
Provision for restructuring (6.2) -- (6.2) (5.1)
------ ------ ------ ------
Operating income (loss) $(12.4) $ 0.2 $(42.0) $(75.7)
====== ====== ====== ======
</TABLE>
<PAGE>
The loan administration unit generated operating income of $17.1 million
in the nine months ended March 31, 1995 compared to income of $6.4 million
before an $80 million provision for PMSR impairment in the same period in
fiscal 1994. For the quarter ended March 31, 1995, income was $5.4 million
compared to $1.0 million for the quarter ended March 31, 1994 principally
because of a reduction in amortization cost.
The improved operating results reflected a significant decline in the
Company's servicing portfolio runoff rate from an annualized 29.3 percent in
the quarter ended March 31, 1994 to an annualized rate of 10.3 percent in the
March 1995 quarter. The annualized runoff rates for the nine months ended
March 31, 1995 and 1994 were 12.6 percent and 37.5 percent, respectively. As
a consequence of this improvement, portfolio amortization expenses declined
from $51.8 million (before an $80 million PMSR impairment) in the nine
months ended March 31, 1994 to $39.1 million in the same period of 1995. For
the quarter ended March 31, 1995 and 1994, amortization expenses were $12.4
million and $16.9 million, respectively. The runoff rate for the month of
April 1995 increased to 11 percent and projected runoff rates for the fourth
quarter of fiscal 1995 will increase amortization expense as long-term
interest rates have declined recently.
Loan administration related expenses decreased from $15.1 million and
$44.2 million in the quarter and nine months ended March 31, 1994 to $13.0
million and $36.8 million in the same periods in fiscal 1995, respectively,
reflecting the cost reduction methods implemented at the Company. Related
revenues decreased from $33.0 million and $102.4 million in the quarter and
nine months ended December 31, 1994 to $30.8 million and $93.0 million in the
same periods in 1995, respectively. The decrease in revenues is principally
due to a reduction in the Company-owned servicing portfolio from $28.7
billion at March 31, 1994 to $26.4 billion at March 31, 1995. During the
quarter ended March 31, 1995, the Company sold, from its primary servicing
portfolio, mortgage servicing rights on $2.3 billion unpaid principal balance
of mortgages loans. The Company continues to subservice these loans but
receives lower servicing fees. At March 31, 1995 and 1994, the Company's
servicing portfolio including subservicing totaled $33.3 billion and $34.4
billion, respectively.
Master servicing operations generated income of $1.9 million during the
nine months ended March 31, 1995 compared to income of $2.8 million in the
same period of 1994. The decrease in income is primarily attributable to a
decrease in the master servicing portfolio as a result of the termination of
the management contract with Capstead Mortgage Corporation in September 1993.
The master servicing portfolios totaled $8.1 billion and $8.9 billion at
March 31, 1995 and 1994, respectively.
<PAGE>
The following is an analysis of servicing fee income for the quarter and
nine months ended March 31, 1995 and 1994 (in thousands):
Quarter Ended Nine Months Ended
March 31 March 31
----------------- ------------------
1995 1994 1995 1994
------- ------- ------- -------
Servicing fee income:
Primary:
Directly owned $29,194 $31,308 $87,495 $98,093
Servicing for others 1,573 1,630 5,498 4,307
------- ------- ------- -------
30,767 32,938 92,993 102,400
Master servicing portfolio 2,495 2,643 8,196 9,296
------- ------- ------- -------
Total $33,262 $35,581 $101,189 $111,696
======= ======= ======= =======
The following table sets forth certain information regarding the
Company's servicing portfolio (dollars in millions):
March 31, 1995 June 30, 1994
-------------- -------------
Portfolio principal balances:
Primary servicing portfolio $26,446 $28,455
Subservicing portfolio 6,890 5,535
------- -------
33,336 33,990
Master servicing portfolio 8,068 8,445
------- -------
$41,404 $42,435
======= =======
Portfolio loan count:
Primary servicing portfolio 473,140 495,524
Subservicing portfolio 71,569 70,007
------- -------
544,709 565,531
Master servicing portfolio 136,856 136,609
------- -------
681,565 702,140
======= =======
Weighted average interest rate 8.5% 8.3%
Insurance agency and optional mortgage insurance operations contributed
income of $2.5 million in the quarter ended March 31, 1995 compared to income
of $2.0 million in the same quarter of fiscal 1994. For the nine months
ended March 31, 1995 and 1994, such income was $7.4 million and $6.3 million,
respectively. The improved results during the fiscal 1995 periods is
primarily due to an increase in the volume of insurance policies.
The banking unit of the mortgage banking division recorded net expenses
of $8.2 million and $22.0 million in the quarter and nine months ended March
31, 1995, respectively, which were $2.7 million and $5.9 million higher than
the $5.5 million and $16.1 million net expenses reported for the quarter and
nine months ended March 31, 1994, respectively. Banking revenues decreased
by $7.9 million from $34.9 million in the nine months ended March 31, 1994 to
$27.0 million in the same period of fiscal 1995. The decrease in revenues is
attributable primarily to the fact that the average amount of the first
mortgage loans held in warehouse pending delivery to permanent investors was
substantially lower in the fiscal 1995 period than in the 1994 period as a
result of lower production volumes caused by higher interest rates. In
addition, banking revenues for the nine months ended March 31, 1994 included
a $2.3 million interest rate swap termination fee which was not treated as a
hedge. Banking expenses increased by $2.4 million to $18.5 million in the
quarter ended March 31, 1995. For the nine months ended March 31, 1995,
total banking expenses decreased by $2.0 million from $51.0 million in 1994
to $49.0 million in 1995. 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,
totaled $1.2 million and $3.7 million the quarter and nine months ended March
31, 1995, respectively, and were $4.0 million and $16.4 million,
respectively, in the 1994 periods. The positive variance on PIF interest was
offset by the interest rate swap program during the fiscal 1995 periods.
During the quarter and nine months ended March 31, 1994, the interest rate
swap program reduced the Company's interest expense by $3.6 million and
$9.7 million, respectively. During fiscal 1995 periods, the Company incurred
interest expense on the interest rate swaps of $1.2 million and $971,000 for
the quarter and nine months ended March 31, 1995, respectively.
The portfolio production unit recorded losses of $2.5 million and $1.6
million in the quarter and nine months ended March 31, 1995, respectively,
compared to income of $6.8 million and $15.2 million in the same periods in
fiscal 1994. Portfolio production through flow acquisitions was $1.7 billion
and $4.9 billion in the quarter and nine months ended March 31, 1995,
respectively compared to $4.4 billion and $10.7 billion in the same periods
of fiscal 1994. The production volumes in fiscal 1995 were affected by
higher interest rates. Portfolio production revenues for the quarter and
nine months ended March 31, 1994 included $7.5 million and $19.2 million,
respectively, of gains from the sale of first mortgage loans and related
servicing rights. Production revenues, during the March quarter and nine
months of fiscal 1995, included net losses of $1.8 million and net gains of
$1.8 million from the sales of first mortgage loans and servicing rights,
respectively. Included in these net gains and losses was a $2.1 million loss
recorded on the sale of a servicing portfolio of $2.3 billion in unpaid
principal balance of mortgage loans of which the Company received $21.9
million of cash.
Fund and asset management operation was discontinued and transferred to
Capstead Mortgage Corporation ("Capstead") during fiscal 1994 when Capstead
became self-administered at September 30, 1993. Accordingly, the unit, which
contributed $6.2 million of income in the nine months ended March 31, 1994,
contributed nothing in the 1995 period.
<PAGE>
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 normally
would increase the yield on and value of the Company's investment in PMSRs.
Decreased prepayment speeds also will decrease PIF interest expense due to
loans which payoff.
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.
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.
Other
The Company's other operations during the quarter and nine months ended
March 31, 1995 generated income of $100,000 and $2.0 million, respectively,
compared to income of $300,000 and $5.3 million , respectively, in the 1994
periods.
During the quarter and nine months ended March 31, 1995 and 1994, the
other operating results included losses of $600,000, $900,000 and $2.6
million and $2.4 million, respectively, from the Company's image processing
operations. During the nine months ended March 31, 1995 and 1994, the
Company recorded gains of $2.8 million and $3.9 million, respectively, from
settlements of certain contractual provisions related the Company's 1991 sale
of ELLCO Leasing Corporation.
Discontinued Operations
On December 16, 1994, the Company completed the sale of substantially
all of the assets of LIS to a subsidiary of an insurance company. In March
1995 the Purchaser's parent announced its intention to sell the mortgage
banking-related business. For more information, see NOTE F - DISCONTINUED
OPERATIONS on page 8.
During the quarter and nine months ended March 31, 1995, the Company
provided reserves totaling $5.6 million and $16.6 million, respectively, for
the discontinued short term lending operations. These reserves are to cover
projected operating losses ($3.2 million) through the disposition of all
assets. The provision for losses on properties were $2.4 million and $13.4
million, respectively, for the quarter and nine months Ended March 31, 1995.
For the quarter and nine months ended March 31, 1995 and 1994, losses of $2.2
million, $3.2 million and $11.5 million and $8.7 million, respectively, were
charged to the reserves.
Liquidity and Capital Resources
The outstanding capital and credit resources of the Company at March 31,
1995 included (in millions):
Short term debt of Lomas Mortgage:
--Secured by first mortgage loans pending delivery
to permanent investors $ 313.5
--Secured by high quality short term investments 253.8
--Borrowings under working capital line of credit 10.0
--Other short term debt 5.7
--------
583.0
--------
Term debt of Lomas Mortgage:
--Notes due in 1997 150.0
--Notes due in 2002 190.0
--Other 39.1
--------
379.1
--------
Convertible notes of LFC due in 2003 139.9
Stockholders' equity 62.4
--------
$1,164.4
========
Short term debt was $583.0 million at March 31, 1995, including $253.8
million principal amount borrowed under investment lines of credit and $313.5
million principal amount of warehouse debt and repurchase agreement
borrowings secured by single-family mortgage loans pending delivery to
permanent investors. Investment lines of credit were secured by high quality
short term investments purchased with the proceeds of such lines of credit.
The short term notes payable and repurchase agreements are secured by single-
family mortgage loans which, at that date, were committed for sale to
institutional investors. Such short term notes (and therefore the related
warehouse indebtedness) normally are self-liquidating and require no
supplemental liquidity support from LFC or any of its subsidiaries.
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 except short term working capital debt is self-
liquidating and none of it constitutes any burden on operating cash flow.
<PAGE>
Lomas Mortgage had outstanding at March 31, 1995 interest rate swaps in
the aggregate notional amount of $800 million, all of which were designated
as hedges. For more information on the interest rate swaps, see NOTE C --
REVERSE INTEREST RATE SWAPS on page 6.
Semi-annual interest payments in the amount of $17.1 million on Lomas
Mortgage's senior notes and $6.3 million on LFC's senior convertible notes
will be due in October 1995. In addition, a final payment in the amount of
$37.9 million along with accrued interest related to a mortgage note on the
Company's headquarters is due in March 1996 and Lomas Mortgage's $150 million
senior notes are due on October 1, 1997. LFC is required to make annual
deposits of $10 million beginning October 31, 1997 to a sinking fund for the
redemption of LFC's senior convertible notes.
Coverage for the term notes payable of Lomas Mortgage is provided by
cash internally generated by that subsidiary. Lomas Mortgage's operations
during the nine months ended March 31, 1995, after paying interest on its
short term debt, generated $70.0 million in cash available for (i) payment of
interest on the subsidiary's $379.4 million term debt, (ii) investment in
portfolio maintenance, (iii) intercompany advances or payment of dividends to
LFC (subject to restricted payment limitations described below), and (iv) for
Lomas Mortgage's working capital.
Under the terms of the warehouse agreement, servicing payment agreement
and working capital line of credit that contains the most restrictive
covenants, Lomas Mortgage is restricted from making dividend payments to LFC
if, after giving effect thereto, the aggregate amount of such payments should
exceed the sum of (i) $10 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 value of the
aggregate net proceeds received by Lomas Mortgage from the issuance or sale
after October 1, 1992 of its capital stock (b) after November 30, 1993, the
aggregate net cash proceeds received from the issuance or sale by Lomas
Mortgage of its capital stock and warrants, options and rights to purchase
its capital stock. The minimum net worth requirement, as defined, under
these covenants was changed effective December 31, 1994 to $150 million.
Lomas Mortgage's net worth as defined at March 31, 1995 was $155.4 million
and the Company was in compliance with all covenants at March 31, 1995. At
March 31, 1995, under these agreements, Lomas Mortgage could transfer as
intercompany advances to LFC approximately $3.0 million.
Coverage for interest payments on LFC's $140 million of convertible
notes due 2003 and general corporate expenses have been provided by (a)
dividends (if available) and intercompany advances (see above restrictions)
from Lomas Mortgage, (b) advances from STL and (c) periodic liquidation or
transfers of other assets. Because of the sale of LIS, LFC will not be
required to fund LIS' cash losses.
At May 1, 1995, LFC's advances from STL amounted to $35.6 million which
also represented 51% of STL's equity. As of that date, LFC's ownership in
STL was canceled with a return of capital in the amount of the advances and,
therefore, STL is now owned 100% by Lomas Mortgage and excess funds of STL
will flow to Lomas Mortgage. See NOTE F -- DISCONTINUED OPERATIONS on page
8.
As of March 31, 1995, the Company's failure to meet certain ratio
requirements contained in the covenants of the Company's $140 million senior
convertible note indenture and Lomas Mortgage's $340 million note indenture,
while not events of default, limits the Company's ability to issue additional
term debt.
For the effect of the implementation of SFAS No. 121, see NOTE H --
PENDING ADOPTION OF AUTHORITATIVE STATEMENTS on page 10.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to NOTE F -- CONTINGENT LIABILITIES in the Company's
Quarterly Report on Form 10-Q for the quarterly period ended September 30,
1994 and NOTE I -- CONTINGENT LIABILITIES in the Company's Quarterly Report
on Form 10-Q for the quarterly period ended December 31, 1994 for a
description of various lawsuits involving the Company. There have been no
material developments or changes to any of these lawsuits.
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 position of the Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit
Number
-------
(3.1) Restated Bylaws of the registrant.
(10.1) Employment Agreement dated as of January 3, 1995 by and
between the registrant and W. Joseph Dryer.
(10.2) Employment Agreement dated as of February 1, 1995 between
INTELLIFILE, Inc. and Charles Kight.
(10.3) Termination Agreement effective March 2, 1995 by and between
the registrant and Jess Hay.
(10.4) Consulting Agreement dated as of March 29, 1995 by and between
the registrant and Robert E. Byerley, Jr.
(10.5) Amendment to Employment Agreement dated as of March 31, 1995
between LMUSA and Gary H. Kell.
(10.6) Termination Agreement effective April 30, 1995 by and between
the registrant and Ramona Taylor.
(10.7) Employment Agreement dated as of August 1, 1993 between Lomas
Information Systems, Inc. and Thomas J. Clooney.
(10.8) Commitment Agreement dated as of April 24, 1995 between Lomas
Mortgage USA, Inc. ("LMUSA"), as Lender, and Federal National
Mortgage Association ("Fannie Mae") (certain confidential
portions of information have been omitted from this agreement
and are subject to a request for confidential treatment).
(10.9) As Soon As Pooled Option II Agreement dated April 24, 1995
between LMUSA, as Lender, and Fannie Mae.
(10.10) Lomas Financial Corporation Success Bonus Arrangement.
(10.11) Lomas Financial Corporation Stock Based Incentive Compensation
Plan.
(10.12) First Amendment to Employment Agreement dated as of May 11,
1995 by and between the registrant and Eric D. Booth.
(10.13) First Amendment to Employment Agreement dated as of May 11,
1995 by and between the registrant and Robert R. Denton.
11 Computation of Earnings (Loss) Per Share.
27 Financial Data Schedule.
(b) Reports on Form 8-K:
None.
<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: May 12, 1995 By: /s/ ERIC D. BOOTH
--------------------------
Eric D. Booth
President, Chief Executive
Officer and Director
Date: May 12, 1995 By: /s/ GARY WHITE
--------------------------
Gary White
Chief Financial Officer and
Senior Vice President
<PAGE>
LOMAS FINANCIAL CORPORATION
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
No. Page
- ------- ------------
(3.1) Restated Bylaws of the registrant. 22
(10.1) Employment Agreement dated as of January 3, 1995 30
by and between the registrant and W. Joseph Dryer.
(10.2) Employment Agreement dated as of February 1, 1995 41
between INTELLIFILE, Inc. and Charles Kight.
(10.3) Termination Agreement effective March 2, 1995 by 53
and between the registrant and Jess Hay.
(10.4) Consulting Agreement dated as of March 29, 1995 by 60
and between the registrant and Robert E. Byerley, Jr.
(10.5) Amendment to Employment Agreement dated as of 79
March 31, 1995 between Lomas Mortgage USA, Inc.
("Lomas Mortgage") and Gary H. Kell.
(10.6) Termination Agreement effective April 30, 1995 by 81
and between the registrant and Ramona Taylor.
(10.7) Employment Agreement dated as of August 1, 1993 87
between Lomas Information Systems, Inc. and
Thomas J. Clooney.
(10.8) Commitment Agreement dated as of April 24, 1995 88
between Lomas Mortgage, as Lender, and Federal
National Mortgage Association ("Fannie Mae")
(certain confidential portions of information have
been omitted from this agreement and are subject to
a request for confidential treatment).
(10.9) As Soon As Pooled Option II Agreement dated 93
April 24, 1995 between Lomas Mortgage, as Lender,
and Fannie Mae.
(10.10) Lomas Financial Corporation Success Bonus 103
Arrangement.
(10.11) Lomas Financial Corporation Stock Based Incentive 106
Compensation Plan.
(10.12) First Amendment to Employment Agreement dated as of 111
May 11, 1995 by and between the registrant and
Eric D. Booth.
(10.13) First Amendment to Employment Agreement dated as of 113
May 11, 1995 by and between the registrant and
Robert R. Denton.
11 Computation of Earnings (Loss) Per Share. 115
27 Financial Data Schedule.
EXHIBIT 3.1
RESTATED BYLAWS
OF
LOMAS FINANCIAL CORPORATION
* * * * *
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office shall be
in the City of Wilmington, County of New Castle, State of Delaware.
Section 2. Other Offices. The Corporation may also have
offices at such other places both within and without the State of
Delaware as the Board of Directors may from time to time determine
or the business of the Corporation may require.
Section 3. Books. The books of the Corporation may be kept
within or without of the State of Delaware as the Board of
Directors may from time to time determine or the business of the
Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Time and Place of Meetings. All meetings of
stockholders shall be held in Dallas, on such date and at such time
as may be determined from time to time by the Board of Directors
(or the Chairman in the absence of a designation by the Board of
Directors).
Section 2. Annual Meetings. Annual meetings of stockholders,
commencing with the year 1993, shall be held to elect the Board of
Directors and transact such other business as may properly be
brought before the meeting.
Section 3. Special Meetings. Special meetings of
stockholders may be called by the Board of Directors or the
Chairman of the Board of Directors of the Corporation and may not
be called by any other person.
Section 4. Notice of Meetings and Adjourned Meetings; Waivers
of Notice. (a) Whenever stockholders are required or permitted to
take any action at a meeting, a written notice of the meeting shall
be given which shall state the place, date and hour of the meeting,
and, in the case of a special meeting, the purpose or purposes for
which the meeting is called. Unless otherwise provided by the
General Corporation Law of the State of Delaware as the same exists
or may hereafter be amended ("Delaware Law"), such notice shall be
given not less than 10 nor more than 60 days before the date of the
meeting to each stockholder of record entitled to vote at such
meeting. Unless these restated bylaws otherwise require, when a
meeting is adjourned to another time or place (whether or not a
quorum is present), notice need not be given of the adjourned
meeting if the time and place thereof are announced at the meeting
at which the adjournment is taken. At the adjourned meeting, the
Corporation may transact any business which might have been
transacted at the original meeting. If the adjournment is for more
than 30 days, or after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall
be given to each stockholder of record entitled to vote at the
meeting.
(b) A written waiver of any such notice signed by the person
entitled thereto, whether before or after the time stated therein,
shall be deemed equivalent to notice. Attendance of a person at a
meeting shall constitute a waiver of notice of such meeting, except
when the person attends the meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of
any business because the meeting is not lawfully called or
convened. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice.
Section 5. Quorum. Unless otherwise provided under the
certificate of incorporation or these restated bylaws and subject
to Delaware Law, the presence, in person or by proxy, of the
holders of a majority of the outstanding capital stock of the
Corporation entitled to vote at a meeting of stockholders shall
constitute a quorum for the transaction of business.
Section 6. Voting. (a) Unless otherwise provided in the
certificate of incorporation and subject to Delaware Law, each
stockholder shall be entitled to one vote for each outstanding
share of capital stock of the Corporation held by such stockholder.
Unless otherwise provided in Delaware Law, the certificate of
incorporation or these restated bylaws, the affirmative vote of a
majority of the shares of capital stock of the Corporation present,
in person or by proxy, at a meeting of stockholders and entitled to
vote on the subject matter shall be the act of the stockholders.
(b) Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to a corporate action
in writing without a meeting may authorize another person or
persons to act for him by proxy, but no such proxy shall be voted
or acted upon after three years from its date, unless the proxy
provides for a longer period.
Section 7. Action by Consent. Any action required or
permitted to be taken at any annual or special meeting of
stockholders may be taken only upon the vote of stockholders at an
annual or special meeting duly noticed and called in accordance
with Delaware Law and may not be taken by written consent of
stockholders without a meeting.
Section 8. Organization. At each meeting of stockholders,
the Chairman of the Board, if one shall have been elected (or in
his absence or if one shall not have been elected, the President),
shall act as chairman of the meeting. The Secretary (or in his
absence or inability to act, the person whom the chairman of the
meeting shall appoint secretary of the meeting) shall act as
secretary of the meeting and keep the minutes thereof.
Section 9. Order of Business. The order of business at all
meetings of stockholders shall be as determined by the chairman of
the meeting.
Section 10. Nomination of Directors. Only persons who are
nominated in accordance with the procedures set forth in these
restated bylaws shall be eligible to serve as directors.
Nominations of persons for election to the Board of Directors of
the Corporation may be made at a meeting of stockholders (a) by or
at the direction of the Board of Directors or (b) by any
stockholder of the Corporation who is a stockholder of record at
the time of giving of notice provided for in this Section 10, who
shall be entitled to vote for the election of directors at the
meeting and who complies with the notice procedures set forth in
this Section 10. Such nominations, other than those made by or at
the direction of the Board of Directors, shall be made pursuant to
timely notice in writing to the secretary of the Corporation. To
be timely, with respect to an annual meeting, a stockholder's
notice shall be delivered to or mailed and received at the
principal executive offices of the Corporation not less than 120
days nor more than 150 days prior to the date of the Corporation's
last proxy statement sent to stockholders in connection with the
previous year's annual meeting of stockholders; provided, however,
that if (i) no annual meeting was held in the previous year, or
(ii) the date of the annual meeting has been changed to a date more
than 30 days from the date contemplated at the time of the
Corporation's previous year's proxy statement, to be timely, notice
by the stockholder must be received not less than 120 days prior to
the date of the meeting. Notwithstanding the foregoing, if less
than 70 days' notice or prior public disclosure of the date of a
meeting is given or made to stockholders, notice by the stockholder
to be timely must be received not later than the close of business
on the 10th day following the day on which such notice of the date
of the meeting or such public disclosure was made. Such
stockholder's notice shall set forth (a) as to each person whom the
stockholder proposes to nominate for election or re-election as a
director all information relating to such person that is required
to be disclosed in solicitations of proxies for election of
directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and Rule 14a-11 thereunder (including
such person's written consent to being named in the proxy statement
as a nominee and to serving as a director is elected); and (b) as
to the stockholder giving the notice (i) the name and address, as
they appear on the Corporation's books, of such stockholder, and
(ii) the class and number of shares of the Corporation which are
beneficially owned by such stockholder. At the request of the
Board of Directors, any person nominated by the Board of Directors
for election as a director shall furnish to the secretary of the
Corporation that information required to be set forth in a
stockholder's notice of nomination which pertains to the nominee.
No person shall be eligible to serve as a director of the
Corporation unless nominated in accordance with the procedures set
forth in this Section 10. The chairman of the meeting shall have
the power and duty to determine whether any nomination was made in
accordance with the procedures set forth in this Section 10, and
the chairman shall, if the facts warrant, determine and declare to
the meeting that a nomination was not made in accordance with the
procedures prescribed by the restated bylaws, and if he should so
determine, he shall so declare to the meeting and the defective
nomination shall be disregarded. For purposes of this Section 10,
'public announcement' shall mean disclosure in a press release
reported by the Dow Jones News Service, Associated Press, United
Press International, Reuters Economic News Service or any other
comparable national news service or in a document filed by the
Corporation with the Securities and Exchange Commission pursuant to
Sections 13, 14 or 15(d) of the Exchange Act. Notwithstanding the
foregoing provisions of this Section 10, a stockholder shall also
comply with all applicable requirements of the Exchange Act and the
rules and regulations thereunder with respect to the matters set
forth in this Section.
Section 11. Notice of Business. At any meeting of the
stockholders, only such business shall be conducted as shall have
been brought before the meeting (a) by or at the direction of the
Board of Directors or (b) by any stockholder of the Corporation who
is a stockholder of record at the time of giving of the notice
provided for in this Section 11, who shall be entitled to vote at
such meeting and who complies with the notice procedures set forth
in this Section 11. For business to be properly brought before a
stockholder meeting by a stockholder, the stockholder must have
given timely notice thereof in writing to the secretary of the
Corporation. To be timely, with respect to an annual meeting, a
stockholder's notice must be delivered to or mailed and received at
the principal executive offices of the Corporation not less than
120 days nor more than 150 days prior to the date of the
Corporation's last proxy statement sent to stockholders in
connection with the previous year's annual meeting of stockholders;
provided, however, that if (i) no annual meeting was held in the
previous year, or (ii) the date of the annual meeting has been
changed to a date more than 30 days from the date contemplated at
the time of the Corporation's previous year's proxy statement, to
be timely, notice by the stockholder must be received not less than
120 days prior to the date of the meeting. Notwithstanding the
foregoing, if less than 70 days' notice or prior public disclosure
of the date of a meeting is given or made to stockholders, notice
by the stockholder to be timely must be received not later than the
close of business on the 10th day following the day on which such
notice of the date of the meeting or such public disclosure was
made. A stockholder's notice to the secretary shall set forth as
to each matter the stockholder proposes to bring before the meeting
(a) a brief description of the business desired to be brought
before the meeting and the reasons for conducting such business at
the meeting, (b) the name and address, as they appear on the
Corporation's books, of the stockholder proposing such business,
(c) the class and number of shares of the Corporation which are
beneficially owned by the stockholder and (d) any material interest
of the stockholder in such business. Notwithstanding anything in
the restated bylaws to the contrary, no business shall be conducted
at a stockholder meeting except in accordance with the procedures
set forth in this Section 11. The chairman of the meeting shall
have the power and duty to determine whether any business proposed
to be brought before the meeting was proposed in accordance with
the procedures set forth in this Section 11, and the chairman
shall, if the facts warrant, determine and declare to the meeting
that business was not properly brought before the meeting and in
accordance with the provisions of the restated bylaws, and if he
should so determine, he shall so declare to the meeting and any
such business not properly brought before the meeting shall not be
transacted. For purposes of this Section 11, 'public announcement'
shall mean disclosure in a press release reported by the Dow Jones
News Service, Associated Press, United Press International, Reuters
Economic News Service or any other comparable national news service
or in a document filed by the Corporation with the Securities and
Exchange Commission pursuant to Sections 13, 14 or 15(d) of the
Exchange Act. Notwithstanding the foregoing provisions of this
Section 11, a stockholder shall also comply with all applicable
requirements of the Exchange Act and the rules and regulations
thereunder with respect to the matters set forth in this Section
11.
ARTICLE III
DIRECTORS
Section 1. General Powers. Except as otherwise provided in
Delaware Law or the certificate of incorporation, the business and
affairs of the Corporation shall be managed by or under the
direction of the Board of Directors.
Section 2. Number, Election and Term of Office. The number
of directors which shall constitute the whole Board shall be fixed
from time to time by resolution of the Board of Directors but shall
not be less than seven (7) nor more than seventeen (17). The
directors shall be elected at the annual meeting of the
stockholders, except as provided in Section 12 of this Article III,
and each director so elected shall hold office until his successor
is elected and qualified or until his earlier death, resignation or
removal. Directors need not be stockholders.
Section 3. Quorum and Manner of Acting. One-half of the
directors, but never less than four (4), shall constitute a quorum
for the transaction of business and the act of the majority of the
directors present at a meeting at which a quorum is present shall
be the act of the Board of Directors, unless a greater number is
required by statute, the certificate of incorporation, or elsewhere
in these restated bylaws. When a meeting is adjourned to another
time or place (whether or not a quorum is present), notice need not
be given of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken. At the
adjourned meeting, the Board of Directors may transact any business
which might have been transacted at the original meeting. If a
quorum shall not be present at any meeting of the Board of
Directors, the directors present thereat may adjourn the meeting,
from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
Section 4. Time and Place of Meetings. The Board of
Directors shall hold its meetings at such place, either within or
without the State of Delaware, and at such time as may be
determined from time to time by the Board of Directors (or the
Chairman in the absence of a determination by the Board of
Directors).
Section 5. Annual Meetings. The Board of Directors shall
meet for the purpose of organization, the election of officers and
the transaction of other business, as soon as practicable after
each annual meeting of stockholders, on the same day and at the
same place where such annual meeting shall be held. Notice of such
meeting need not be given. In the event such annual meeting is not
so held, the annual meeting of the Board of Directors may be held
at such place either within or without the State of Delaware, on
such date and at such time as shall be specified in a notice
thereof given as hereinafter provided in Section 7 of this Article
III or in a waiver of notice thereof signed by any director who
chooses to waive the requirement of notice.
Section 6. Regular Meetings. After the place and time of
regular meetings of the Board of Directors shall have been
determined and notice thereof shall have been once given to each
member of the Board of Directors, regular meetings may be held
without further notice being given.
Section 7. Special Meetings. Special meetings of the Board
of Directors may be called by the Chairman of the Board and shall
be called by the Chairman of the Board or Secretary on the written
request of three directors. Notice of special meetings of the
Board of Directors shall be given to each director at least three
days before the date of the meeting. Such notice may be given by
mail, telegraph or facsimile, and in such other manner as is
determined by the Board of Directors.
Section 8. Committees. The Board of Directors may, by
resolution passed by a majority of the whole Board, designate one
or more committees, each committee to consist of one or more of the
directors of the Corporation; provided that (i) there shall be an
Audit Committee, a Compensation Committee and a Nominating
Committee of the Board of Directors, (ii) each of the Audit
Committee, the Compensation Committee and the Nominating Committee
of the Board of Directors shall consist of one or more of the
directors of the Corporation , (iii) at least a majority of the
directors serving on the Nominating Committee of the Board of
Directors shall be independent directors and (iv) all of the
directors serving on each of the Audit Committee and the
Compensation Committee of the Board of Directors shall be
independent directors. The Board may designate one or more
directors as alternate members of any committee, who may replace
any absent or disqualified member at any meeting of the committee.
Any such committee, to the extent provided in the resolution of the
Board of Directors, shall have and may exercise all the powers and
authority of the Board of Directors in the management of the
business and affairs of the Corporation, and may authorize the seal
of the Corporation to be affixed to all papers which may require
it; but no such committee shall have the power or authority in
reference to amending the certificate of incorporation, adopting an
agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially
all of the Corporation's property and assets, recommending to the
stockholders a dissolution of the Corporation or a revocation of a
dissolution, or amending the restated bylaws of the Corporation;
and unless the resolution of the Board of Directors or the
certificate of incorporation expressly so provide, no such
committee shall have the power or authority to declare a dividend
or to authorize the issuance of stock. Each committee shall keep
regular minutes of its meetings and report the same to the Board of
Directors when required. For purposes of this Section 8, an
independent director means any director who is not an officer or
employee of the Corporation.
<PAGE>
Section 9. Action by Consent. Unless otherwise restricted by
the certificate of incorporation or these restated bylaws, any
action required or permitted to be taken at any meeting of the
Board of Directors or of any committee thereof may be taken without
a meeting, if all members of the Board or committee, as the case
may be, consent thereto in writing, and the writing or writings are
filed with the minutes of proceedings of the Board or committee.
Section 10. Telephonic Meetings. Unless otherwise restricted
by the certificate of incorporation or these restated bylaws,
members of the Board of Directors, or any committee designated by
the Board of Directors, may participate in a meeting of the Board
of Directors or such committee, as the case may be, by means of
conference telephone or similar communications equipment by means
of which all persons participating in the meeting can hear each
other, and such participation in a meeting shall constitute
presence in person at the meeting.
Section 11. Resignation. Any director may resign at any time
by giving written notice to the Board of Directors or to the
Secretary of the Corporation. The resignation of any director
shall take effect upon receipt of notice thereof or at such later
time as shall be specified in such notice; and unless otherwise
specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
Section 12. Vacancies. Unless otherwise provided in the
certificate of incorporation, vacancies and newly created
directorships resulting from any increase in the authorized number
of directors elected by all the stockholders having the right to
vote as a single class may be filled by a majority of the directors
then in office, although less than a quorum, or by a sole remaining
director. Whenever the holders of any class or classes of stock or
series thereof are entitled to elect one or more directors by the
certificate of incorporation, vacancies and newly created
directorships of such class or classes or series may be filled by
a majority of directors elected by such class or classes or series
thereof then in office, or by a sole remaining director so elected.
Each director so chosen shall hold office until his successor is
elected and qualified, or until his earlier death, resignation or
removal. If there are no directors in office, then an election of
directors may be held in accordance with Delaware Law. Unless
otherwise provided in the certificate of incorporation, when one or
more directors shall resign from the Board, effective at a future
date, a majority of the directors then in office, including those
who have so resigned, shall have the power to fill such vacancy or
vacancies, the vote thereon to take effect when such resignation or
resignations shall become effective, and each director so chosen
shall hold office as provided in the filling of other vacancies.
Section 13. Removal. Subject to the certificate of
incorporation, any director or the entire Board of Directors may be
removed, with or without cause, at any time by the affirmative vote
of the holders of a majority of the outstanding capital stock of
the Corporation entitled to vote and the vacancies thus created may
be filled in accordance with Section 12 of this Article III. <PAGE>
Section 14. Compensation. Unless otherwise restricted by the
certificate of incorporation or these restated bylaws, the Board of
Directors shall have authority to fix the compensation of
directors, including fees and reimbursement of expenses.
Section 15. Preferred Directors. Notwithstanding anything
else contained herein, whenever the holders of one or more classes
or series of Preferred Stock shall have the right, voting
separately as a class or series, to elect directors, the election,
term of office, filling of vacancies, removal and other features of
such directorships shall be governed by the terms of the
resolutions applicable thereto adopted by the Board of Directors
pursuant to the certificate of incorporation, and such directors so
elected shall not be subject to the provisions of Sections 2, 12
and 13 of this Article III unless otherwise provided therein.
ARTICLE IV
OFFICERS
Section 1. Principal Officers. The principal officers of the
Corporation shall be a Chairman and Chief Executive Officer (who
shall be a member of the Board of Directors) or a Chairman (who
shall be a member of the Board of Directors) and a Chief Executive
Officer (who shall be a member of the Board of Directors), a
President, a Treasurer and a Secretary who shall have the duty,
among other things, to record the proceedings of the meetings of
stockholders and directors in a book kept for that purpose. The
Corporation may also have such other principal officers as the
Board may in its discretion appoint. Except for the Chairman and
Chief Executive Officer or the Chairman and the Chief Executive
Officer, as the case may be, no officer of the Corporation is
required to be a member of the Board of Directors. One person may
hold the offices and perform the duties of any two or more of said
offices, except that no person shall hold the offices and perform
the duties of Chairman and Chief Executive Officer and Secretary or
Chairman and Secretary.
Section 2. Election, Term of Office and Remuneration. The
principal officers of the Corporation shall be elected annually by
the Board of Directors at the annual meeting thereof. Each such
officer shall hold office until his successor is elected and
qualified, or until his earlier death, resignation or removal. The
remuneration of all officers of the Corporation shall be fixed by
the Board of Directors. Any vacancy in any office shall be filled
in such manner as the Board of Directors shall determine.
Section 3. Subordinate Officers. In addition to the
principal officers enumerated in Section 1 of this Article IV, the
Corporation may have one or more Assistant Treasurers, Assistant
Secretaries and Assistant Controllers and such other subordinate
officers, agents and employees as the Board of Directors may deem
necessary, each of whom shall hold office for such period as the
Board of Directors may from time to time determine. The Board of
Directors may delegate to any principal officer the power to
appoint and to remove any such subordinate officers, agents or
employees.
Section 4. Removal. Except as otherwise permitted with
respect to subordinate officers, any officer may be removed, with
or without cause, at any time, by resolution adopted by the Board
of Directors; provided that no such removal shall alter, void or
otherwise effect any change in any written contractual relationship
between the Corporation and any such officer thus removed from
office.
Section 5. Resignations. Any officer may resign at any time
by giving written notice to the Board of Directors (or to a
principal officer if the Board of Directors has delegated to such
principal officer the power to appoint and to remove such officer).
The resignation of any officer shall take effect upon receipt of
notice thereof or at such later time as shall be specified in such
notice; and unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
Section 6. Powers and Duties. The officers of the
Corporation shall have such powers and perform such duties incident
to each of their respective offices and such other duties as may
from time to time be conferred upon or assigned to them by the
Board of Directors.
ARTICLE V
GENERAL PROVISIONS
Section 1. Fixing the Record Date. (a) In order that the
Corporation may determine the stockholders entitled to notice of or
to vote at any meeting of stockholders or any adjournment thereof,
the Board of Directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors, and which record
date shall not be more than 60 nor less than 10 days before the
date of such meeting. If no record date is fixed by the Board of
Directors, the record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice
is given, or, if notice is waived, at the close of business on the
day next preceding the day on which the meeting is held. A
determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of
the meeting; provided that the Board of Directors may fix a new
record date for the adjourned meeting.
(b) In order that the Corporation may determine the
stockholders entitled to receive payment of any dividend or other
distribution or allotment of any rights or the stockholders
entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix a record date, which
record date shall not precede the date upon which the resolution
fixing the record date is adopted, and which record date shall be
not more than 60 days prior to such action. If no record date is
fixed, the record date for determining stockholders for any such
purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto.
Section 2. Dividends. Subject to limitations contained in
Delaware Law and the certificate of incorporation, the Board of
Directors may declare and pay dividends upon the shares of capital
stock of the Corporation, which dividends may be paid either in
cash, in property or in shares of the capital stock of the
Corporation.
Section 3. Fiscal Year. The fiscal year of the Corporation
shall be fixed by resolution of the Board of Directors.
Section 4. Corporate Seal. The corporate seal shall have
inscribed thereon the name of the Corporation, the year of its
organization and the words "Corporate Seal, Delaware". The seal
may be used by causing it or a facsimile thereof to be impressed,
affixed or otherwise reproduced.
Section 5. Voting of Stock Owned by the Corporation. The
Board of Directors may authorize any person, on behalf of the
Corporation, to attend, vote at and grant proxies to be used at any
meeting of stockholders of any corporation (except this
Corporation) in which the Corporation may hold stock.
Section 6. Amendments. These restated bylaws or any of them,
may be altered, amended or repealed, or new restated bylaws may be
made, by the stockholders entitled to vote thereon at any annual or
special meeting thereof or by the Board of Directors.
Date: December 7, 1994
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
AGREEMENT executed on the 3rd day of January, 1995, between
Lomas Financial Corporation, a Delaware corporation (the "Company")
and W. Joseph Dryer (the "Executive").
WHEREAS, the Company desires to employ the Executive in an
executive capacity and to compensate him therefor;
NOW, THEREFORE, in consideration of the foregoing and of the
respective covenants and agreements of the parties herein
contained, the parties hereto agree as follows:
1. Employment. The Company hereby agrees to employ the
Executive and the Executive hereby agrees to be employed by the
Company, on the terms and conditions set forth herein for the
period commencing on January 3, 1995 and expiring on January 3,
1997 (unless sooner terminated as hereinafter set forth). The term
of this Agreement may be referred to herein as the "Period of
Employment."
2. Position and Duties. The Executive, during the Period of
Employment, shall serve as Senior Vice President of the Company.
The Executive shall have responsibility for such participation in
the general operations of the Company as may from time to time be
prescribed by the President & Chief Executive Officer of the
Company, and shall have such other powers and duties as may from
time to time be prescribed by the President & Chief Executive
Officer or the Board of Directors of the Company (the "Board"),
provided that such duties are consistent with the Executive's
position. During the Period of Employment, the Executive may
devote a reasonable amount of time to continuing his present work
as an officer of Geothermal Resources International, Inc. ("GEO")
provided that the Executive uses his best efforts to cause GEO to
assign to the Company, without deductions, all money or property
received by GEO by virtue of continuing his present work as a
"Loaned Employee" to GEO East Mesa Limited Partnership (as that
term is defined in that certain Amended and Restated Limited
Partnership Agreement of GEO East Mesa Limited Partnership dated
_____________, 19__). Except as set forth in the immediately
preceding sentence, the Executive shall devote substantially all
his working time and efforts to the business and affairs of the
Company.
3. Place of Performance. In connection with his employment
by the Company during the Period of Employment, the Executive shall
be based at the Company's principal executive offices.
<PAGE>
4. Compensation and Related Matters.
(a) Base Salary. Initially, the Executive shall receive
a base salary ("Base Salary") at the annual rate of One
Hundred Forty-Five Thousand Eight Hundred Dollars ($145,800)
during the period ending July 14, 1995, at which time the Base
Salary rate will be reviewed and renegotiated in good faith.
Base Salary shall be payable in twenty-six (26) substantially
equal biweekly installments, shall in no way limit or reduce
the obligations of the Company hereunder, and, once
established at a specified rate, shall not be reduced
thereafter during the Period of Employment.
(b) Incentive Compensation. In addition to Base Salary,
the Executive shall be entitled to receive (i) $22,500 on July
15, 1995 and (ii) within seventy-five (75) days after the end
of each fiscal year of the Company thereafter, incentive
compensation in an amount not to exceed thirty percent (30%)
of Base Salary, such amount to be determined by the Board with
respect to the Company's financial results for the prior
fiscal year. Notwithstanding the previous sentence, the Board
shall not be limited in the amount of incentive compensation
it may award. Any amount paid under this Subsection 4(b) is
not to be included in determining the Base Salary pursuant to
Subsection 4(a) for the following year.
(c) Expenses and Car Allowance. The Executive shall be
entitled to receive prompt reimbursement for all reasonable
expenses incurred by him (in accordance with the policies and
procedures established by the Company from time to time for
its senior executive officers) during the Period of
Employment, in performing services hereunder, provided that
the Executive properly accounts therefor in accordance with
Company policy. Subject to the Company's right to reduce or
eliminate car allowances for its senior executive officers,
the Company will pay (in accordance with the policies and
procedures established by the Company from time to time for
its senior executive officers) the Executive a car allowance,
which under current Company policies and procedures is three
hundred fifty dollars ($350.00) per month.
(d) Relocation Expenses. The Company shall reimburse
the Executive for reasonable relocation expenses (not to
exceed twenty-five thousand dollars ($25,000.00)) associated
with the Executive's relocation from San Francisco, California
to Dallas, Texas.
(e) Employee Benefit Plans or Arrangements. The
Executive shall be entitled to participate in or receive
benefits under any employee benefit plan or arrangement which
may, in the future, be made available by the Company to its
executives and key management employees, subject to and on a
basis consistent with the terms, conditions and overall
administration of such plan or arrangement. Nothing paid to
the Executive under any such employee benefit plan or
arrangement shall be deemed to be in lieu of compensation
payable to the Executive pursuant to Subsections 4(a) or 4(b).
(f) Vacations. The Executive shall be entitled to the
number of paid vacation days in each calendar year determined
by the Company from time to time for its senior executive
officers and shall also be entitled to all paid holidays given
by the Company to its senior executive officers.
(g) Perquisites. The Executive shall be entitled to
receive the perquisites and fringe benefits appertaining to
the office of Senior Vice President of the Company (in
accordance with the policies and procedures established by the
Company from time to time for its senior executive officers).
5. Offices. The Executive agrees to serve without
additional compensation as a director of any of the Company's
subsidiaries or affiliates and in one or more executive offices of
any of the Company's subsidiaries or affiliates, in each case if
elected or appointed thereto, provided he is indemnified for
serving in any and all such capacities on a basis no less favorable
than is currently provided by the Company's Certificate of
Incorporation.
6. Unauthorized Disclosure.
(a) During the Period of Employment hereunder, the
Executive shall not, without the written consent of the Board
or a person authorized thereby, disclose to any person, other
than an employee of the Company or a person to whom disclosure
is reasonably necessary or appropriate in connection with the
performance by the Executive of his duties as an executive of
the Company or as may be required by law or regulation, any
material confidential information obtained by him while in the
employ of the Company with respect to any of the Company's
products, systems, customers or organization, the disclosure
of which he knows will be materially damaging to the Company;
provided, however, that confidential information shall not
include any information known generally to the public (other
than as a result of unauthorized disclosure by the Executive)
or any information of a type not otherwise considered
confidential by persons engaged in the same business or a
business similar to that conducted by the Company. For the
period ending two (2) years following the termination of
employment hereunder, the Executive shall not disclose any
confidential information of the type described above.
(b) The foregoing provisions of this Section 6 shall be
binding upon the Executive's heirs, successors and legal
representatives.
7. Termination. The Executive's employment hereunder may be
terminated without any breach of this Agreement only under the
following circumstances:
(a) Death. The Executive's employment hereunder shall
terminate upon his death.
(b) Disability. If, as a result of the Executive's
incapacity due to physical or mental illness, the Executive
shall have been absent from his duties hereunder on a
full-time basis for ninety (90) consecutive calendar days, and
within thirty (30) days after written Notice of Termination
(as defined in Subsection 7(e)) is given (which may occur no
earlier than thirty (30) days before, but at any time after,
the end of such ninety (90) day period), the Executive shall
not have returned to the performance of his duties hereunder
on a full-time basis, the Company may terminate the
Executive's employment hereunder.
(c) Cause. The Company may terminate the Executive's
employment hereunder for Cause. For purposes of this
Agreement, the Company shall have "Cause" to terminate the
Executive's employment hereunder upon (A) the willful and
continued failure by the Executive to substantially perform
his duties hereunder (other than any such failure resulting
from the Executive's incapacity due to physical or mental
illness) after demand for substantial performance is delivered
by the Company specifically identifying the manner in which
the Company believes the Executive has not substantially
performed his duties, or (B) the willful engaging by the
Executive in misconduct which is materially injurious to the
Company, monetarily or otherwise, or (C) the willful violation
by the Executive of the provisions of Section 6 hereof,
provided that such violation results in material injury to the
Company. For purposes of this Subsection 7(c), no act, or
failure to act, on the Executive's part shall be considered
"willful" unless done, or omitted to be done, by him not in
good faith and without reasonable belief that his action or
omission was in the best interest of the Company.
(d) Termination by the Executive. The Executive may,
during the Period of Employment, upon giving Notice of
Termination, terminate his employment hereunder (i) for Good
Reason, or (ii) if his health should become impaired to such
an extent that the continued performance of his duties
hereunder is hazardous to his physical or mental health or his
life, provided that the Executive shall have furnished the
Company with a written statement from a qualified doctor to
such effect and provided, further, that at the Company's
request and expense the Executive shall submit to an
examination by a doctor selected by the Company and such
doctor shall have concurred in the conclusion of the
Executive's doctor.
For purposes of this Agreement, "Good Reason" shall mean
(A) any assignment to the Executive of any duties other than
those contemplated by Section 2 and Section 5 hereof, or any
limitation of the powers of the Executive in any respect not
contemplated by Section 2 hereof, (B) a reduction in the
Executive's Base Salary as in effect at the time in question,
or any other failure by the Company to comply with Section 4
hereof, (C) failure by the Company to comply with Section 3
hereof (relating to place of employment), or (D) failure of
the Company to obtain the assumption of the obligation to
perform this Agreement by any successor as contemplated in
Section 9 hereof.
(e) Notice of Termination. Any termination, during the
Period of Employment, of the Executive's employment by the
Company or any such termination by the Executive (other than
termination pursuant to Subsection 7(a) above on account of
death) shall be communicated by written Notice of Termination
to the other party hereto. For purposes of this Agreement,
a "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination
of the Executive's employment under the provision so
indicated. On or before March 31, 1995, the Company and the
Executive will review, in good faith, the termination
provisions of this Agreement and determine (i) whether to
extend the Period of Employment and (ii) what additional
notice, if any, is required before the Company may terminate
this Agreement without Cause.
(f) Date of Termination. "Date of Termination" shall,
during the Period of Employment, mean (i) if the Executive's
employment is terminated by his death, the date of his death,
(ii) if the Executive's employment is terminated on account of
disability pursuant to Subsection 7(b) above, thirty (30) days
after Notice of Termination is given (provided that the
Executive shall not, during such thirty (30) day period, have
returned to the performance of his duties on a full-time
basis), (iii) if the Executive's employment is terminated (by
the Company for Cause) pursuant to Subsection 7(c) above, the
date specified in the Notice of Termination, and (iv) if the
Executive's employment is terminated for any other reason, the
date on which a Notice of Termination is given.
8. Compensation Upon Termination or During Disability.
(a) If the Executive's employment shall be terminated by
reason of his death, the Company shall, within ninety (90)
days of death, pay a lump sum death benefit to such person as
he shall designate in a notice filed with the Company, or, if
no such person shall be designated, to his estate. The amount
of such death benefit shall be equal to his full Base Salary
to the date of his death which shall at the date of death be
unpaid. In addition to the foregoing, any payments to which
the Executive's spouse, beneficiaries or estate may be
entitled pursuant to any employee benefit plan or other
arrangement shall also be paid pursuant to the terms of such
plan or arrangement. Such payments, in the aggregate, shall
fully discharge the Company's obligations hereunder.
(b) During any period that the Executive fails to
perform his duties hereunder as a result of incapacity due to
physical or mental illness, the Executive shall continue to
receive his full Base Salary until the Executive's employment
is terminated due to disability pursuant to Subsection 7(b)
hereof, or until the Executive terminates his employment
pursuant to Subsection 7(d)(ii) hereof, whichever first
occurs. Subsection 8(a) above shall apply to any termination
due to death which occurs prior to the final determination of
the Date of Termination. For periods of time after
termination pursuant to Subsection 7(b) or 7(d)(ii), the
Executive shall be paid sixty percent (60%) of his Base
Salary, at the rate in effect at the time Notice of
Termination is given less any disability payments otherwise
payable by or pursuant to any employee benefit plan or other
arrangement provided by the Company and actually paid to the
Executive. Such payments shall continue during the term of
this Agreement.
(c) If the Executive's employment shall be terminated by
the Company for Cause, the Company shall, through the Date of
Termination, continue to pay the Executive his full Base
Salary at the rate in effect at the time Notice of Termination
is given, and thereafter the Company shall have no further
obligations to the Executive under this Agreement; provided,
any such termination shall not adversely affect or alter the
Executive's rights under any employee benefit plan or other
arrangement of the Company in which the Executive, at the Date
of Termination, has a vested interest.
(d) If (A) in breach of this Agreement, the Company
shall terminate the Executive's employment other than pursuant
to Subsection 7(b) or 7(c) hereof (it being understood that a
purported termination pursuant to Subsection 7(b) or 7(c)
hereof which is disputed and finally determined not to have
been proper shall be a termination by the Company in breach of
this Agreement), or (B) the Executive shall terminate his
employment for Good Reason, then
(i) the Company shall, through the Date of
Termination, pay the Executive his full Base Salary at
the rate in effect at the time Notice of Termination is
given together with all other accrued amounts which are
payable by the Company to Executive pursuant to any
annual employee benefit programs in which the Executive
participates as of the Date of Termination;
(ii) in lieu of any further payments of salary to
the Executive for periods subsequent to the Date of
Termination the Company shall, on the fifth day following
the Date of Termination, pay as severance pay to the
Executive, a lump sum amount equal to the amount of the
Executive's Base Salary which would have accrued pursuant
to Subsection 4(a) hereof for a period (the
"Determination Period") commencing on the Date of
Termination and ending on January 3, 1997; and
(iii) the Company shall pay all other damages
(without duplication of the amounts expressly made
payable as provided in this Agreement) to which the
Executive may be entitled as a result of the Company's
termination of his employment under this Agreement.
(e) If it is established pursuant to a final
determination of a court or an Internal Revenue Service
administrative appeals proceeding that a payment (or portion
thereof) is made pursuant to Subsection (d) of this Section 8
which would result in any payment to or for the benefit of the
Executive by the Company pursuant to this Agreement being an
excess parachute payment (as defined in Section 280G of the
Internal Revenue Code), then the Company shall pay to the
Executive an additional amount in cash equal to the amount
necessary to cause the amount of the aggregate after-tax
compensation and benefits otherwise receivable by the
Executive (taking into account any tax liability associated
with such additional amount) to be equal to the aggregate
after-tax cash compensation and benefits he would have
received as if Sections 280G and 4999 of the Internal Revenue
Code had not been enacted.
(f) The Executive shall not be required to mitigate the
amount of any payment provided for in this Section 8 by
seeking other employment or otherwise, nor shall the amount of
any payment provided for in this Section 8 be reduced by any
compensation earned by the Executive as the result of
employment by another employer after the Date of Termination,
or otherwise.
9. Successors; Binding Agreement.
(a) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Company, by agreement in form and substance
satisfactory to the Executive, to expressly assume and agree
to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no
such succession had taken place. Failure of the Company to
obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall
entitle the Executive to compensation from the Company in the
same amount and on the same terms as he would be entitled to
hereunder if he terminated his employment for Good Reason,
except that for purposes of implementing the foregoing, the
date on which any such succession becomes effective shall be
deemed the Date of Termination, the provisions of Subsection
7(f)(iv) to the contrary notwithstanding. In the event of
such a breach of this Agreement, the Notice of Termination
shall specify such date as the Date of Termination. As used
in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or
all or part of its assets as aforesaid which executes and
delivers the agreement provided for in this Section 9 or which
otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law.
(b) This Agreement and all rights of the Executive
hereunder shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amounts would
still be payable to him hereunder if he had continued to live,
all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the
Executive's devisee, legatee, or other designee or, if there
be no such designee, to the Executive's estate.
10. Notice. For purposes of this Agreement, notices and all
other communications provided for in the Agreement shall be in
writing and shall be deemed to have been duly given when delivered
or mailed by United States registered mail, return receipt
requested, postage prepaid, addressed as follows:
<PAGE>
If to the Executive:
W. Joseph Dryer
220 Montgomery Street
Suite 497
San Francisco, California 94104
If to the Company:
Lomas Financial Corporation
1600 Viceroy Drive
Dallas, Texas 75235
Attn: President & Chief Executive Officer
or to such other address as any party may have furnished to the
other in writing in accordance herewith, except that notices of
change of address shall be effective only upon receipt.
11. Miscellaneous. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by the Executive and such
officer as may be specifically designated by the Board. No waiver
by either party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or
implied, unless specifically referred to herein, with respect to
the subject matter hereof have been made by either party which are
not set forth expressly in this Agreement. The validity,
interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of Texas.
12. Validity. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the
validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
13. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but
all of which together will constitute one and the same instrument.
14. Arbitration. Any dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by
arbitration in Dallas, Texas, in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction;
provided that the Company shall be entitled to seek a restraining
order or injunction in any court of competent jurisdiction to
prevent any continuation of any violation of Section 6 hereof.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement
effective as the date and year first written above.
COMPANY: EXECUTIVE:
LOMAS FINANCIAL CORPORATION /s/ W. JOSEPH DRYER
-----------------------------------
W. Joseph Dryer
By: /s/ ERIC D. BOOTH ATTEST:
---------------------------
Eric Booth, President &
Chief Executive Officer
By: /s/REBECCA S. ROONEY
-----------------------------
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
AGREEMENT executed on the 1st day of February, 1995, between
INTELLIFILE, Inc., a Nevada corporation (the "Company") and Charles
Kight (the "Executive").
WHEREAS, the Executive has entered into a Consulting Agreement
(the "Consulting Agreement") dated as of January 3, 1995 by and
between the Executive and Lomas Financial Corporation (the
"Parent"), a Delaware corporation and an affiliate of the Company;
WHEREAS, the Executive and the Parent desire to terminate the
Consulting Agreement as of the effective date of this Agreement;
WHEREAS, the Company desires to employ the Executive in an
executive capacity and to compensate him therefor;
NOW, THEREFORE, in consideration of the foregoing and of the
respective covenants and agreements of the parties herein
contained, the parties hereto agree as follows:
1. Employment. The Company hereby agrees to employ the
Executive and the Executive hereby agrees to be employed by the
Company, on the terms and conditions set forth herein for the
period commencing on February 1, 1995 and expiring on the later of
July 31, 1995 and sixty (60) days after delivery of written Notice
of Termination (as defined in Subsection 7(e)) by the Company or
the Executive (unless sooner terminated as hereinafter set forth).
The term of this Agreement may be referred to herein as the "Period
of Employment."
2. Position and Duties. The Executive, during the Period of
Employment, shall serve as President of the Company and Senior Vice
President and Chief Information Officer of Lomas Mortgage USA,
Inc., an affiliate of the Company. The Executive shall have
responsibility for such participation in the general operations of
the Company as may from time to time be prescribed by the Chairman
& Chief Executive Officer of the Company, and shall have such other
powers and duties as may from time to time be prescribed by the
Chairman & Chief Executive Officer or the Board of Directors of the
Company (the "Board"), provided that such duties are consistent
with the Executive's position. During the Period of Employment,
the Executive shall devote substantially all his working time and
efforts to the business and affairs of the Company.
3. Place of Performance. In connection with his employment
by the Company during the Period of Employment, the Executive shall
be based at the Company's principal executive offices.
<PAGE>
4. Compensation and Related Matters.
(a) Base Salary. The Executive shall receive a base
salary ("Base Salary") at the annual rate of One Hundred
Forty-Five Thousand Dollars ($145,000) during the Period of
Employment. Base Salary shall be payable in substantially
equal biweekly installments, shall in no way limit or reduce
the obligations of the Company hereunder, and, once
established at a specified rate, shall not be reduced
thereafter during the Period of Employment.
(b) Incentive Compensation.
(i) If, during the Period of Employment (1) the
Parent or an affiliate enters into a definitive agreement
to effect a Transaction (as hereinafter defined) or (2)
(A) the Parent or an affiliate enters into an agreement
in principle to effect a Transaction and (B) such
agreement in principle results, within the sixty (60) day
period following the Period of Employment, in a
definitive agreement to effect a Transaction, the Company
agrees to pay the Executive incentive compensation as
follows:
Aggregate Consideration Incentive Compensation
----------------------- ----------------------
$0 - $2,299,999 0%
2,300,000 - 2,300,001 2.5% of Aggregate Consideration
2,300,001 - 4,000,000 2.5% of Aggregate Consideration
plus 0.5% of Aggregate
Consideration greater than
$2,300,001
4,000,001 and above 3.5% of Aggregate Consideration
In the context of this paragraph, (a) a "Transaction"
shall mean a disposition of all or a majority of the
stock or assets of the Company, whether in the form of a
sale, spin-off, joint venture or other similar
arrangement, in one or a series of transactions and (b)
"Aggregate Consideration" shall mean (I) the total amount
of cash and the fair market value of all other property
paid or payable by a prospective buyer of the Company
plus (II) the amount of liabilities of the Company
assumed by any such buyer minus (III) the costs
associated with any contract for the provision of goods
or services by such buyer to the Parent or its affiliates
to the extent such costs exceed the fair market value of
such goods or services. Liabilities will include any
leases assumed by such buyer and any severance pay
liability avoided by a Transaction.
To the extent that a portion of the Aggregate
Consideration is paid on a deferred basis, the Executive
shall be entitled to receive that portion of his
incentive compensation when the Parent (or its
affiliates) receives that portion of the Aggregate
Consideration.
(ii) In addition to Base Salary, the Executive shall
be entitled to receive such incentive compensation (not
to exceed $36,250) as shall be determined by the Chairman
& Chief Executive Officer of the Company with respect to
improvements made by the Executive to the Company's
financial results during the Period of Employment
considering such factors as improvement in the Company's
operating results, the addition of new contracts for
services to be provided by the Company and the overall
condition of and prospects for the Company's business.
(c) Expenses and Use of Company Car. The Executive
shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by him (in accordance with the
policies and procedures established by the Company from time
to time for its senior executive officers) during the Period
of Employment, in performing services hereunder, provided that
the Executive properly accounts therefor in accordance with
Company policy. Subject to the Company's right to eliminate
the use of Company cars by its senior executive officers, the
Company will provide (in accordance with the policies and
procedures established by the Company from time to time for
its senior executive officers) the Executive the use of a
station wagon currently owned by the Company. The Company
shall pay the costs of owning and operating such car,
including the costs of required insurance, with the exception
of fuel costs which shall be borne by the Executive.
(d) Housing and Travel Allowance. During the Period of
Employment, the Company will pay to or on behalf of the
Executive (i) up to $2,050 per month as a temporary housing
allowance and (ii) up to $1,000 per month as a personal travel
allowance, provided that the Executive properly accounts
therefor by providing the Company with appropriate invoices or
receipts.
(e) Employee Benefit Plans or Arrangements. Except as
set forth in Subsection 8 (d)(ii), the Executive shall be
entitled to participate in or receive benefits under any
employee benefit plan or arrangement which may, in the future,
be made available by the Company to its executives and key
management employees, subject to and on a basis consistent
with the terms, conditions and overall administration of such
plan or arrangement. Nothing paid to the Executive under any
such employee benefit plan or arrangement shall be deemed to
be in lieu of compensation payable to the Executive pursuant
to Subsections 4(a) or 4(b).
(f) Vacations. The Executive shall be entitled to the
number of paid vacation days in each calendar year determined
by the Company from time to time for its senior executive
officers and shall also be entitled to all paid holidays given
by the Company to its senior executive officers.
(g) Perquisites. The Executive shall be entitled to
receive the perquisites and fringe benefits appertaining to
the office of President of the Company (in accordance with the
policies and procedures established by the Company from time
to time for its senior executive officers).
5. Offices. The Executive agrees to serve without
additional compensation as a director of any of the Parent's
subsidiaries or affiliates and in one or more executive offices of
any of the Parent's subsidiaries or affiliates, in each case if
elected or appointed thereto. The Executive shall be indemnified
for serving in any and all such capacities under Section 2 or under
this Section 5 on a basis no less favorable than is currently
provided by the Parent's Certificate of Incorporation.
6. Unauthorized Disclosure.
(a) During the Period of Employment hereunder, the
Executive shall not, without the written consent of the Board
or a person authorized thereby, disclose to any person, other
than an employee of the Company or a person to whom disclosure
is reasonably necessary or appropriate in connection with the
performance by the Executive of his duties as an executive of
the Company or as may be required by law or regulation, any
material confidential information obtained by him while in the
employ of the Company with respect to any of the Company's
products, systems, customers or organization, the disclosure
of which he knows will be materially damaging to the Company;
provided, however, that confidential information shall not
include any information known generally to the public (other
than as a result of unauthorized disclosure by the Executive)
or any information of a type not otherwise considered
confidential by persons engaged in the same business or a
business similar to that conducted by the Company. For the
period ending two (2) years following the termination of
employment hereunder, the Executive shall not disclose any
confidential information of the type described above.
(b) The foregoing provisions of this Section 6 shall be
binding upon the Executive's heirs, successors and legal
representatives.
7. Termination. The Executive's employment hereunder may be
terminated without any breach of this Agreement only under the
following circumstances:
(a) Death. The Executive's employment hereunder shall
terminate upon his death.
(b) Disability. If, as a result of the Executive's
incapacity due to physical or mental illness, the Executive
shall have been absent from his duties hereunder on a
full-time basis for ninety (90) consecutive calendar days, and
within thirty (30) days after written Notice of Termination
(as defined in Subsection 7(e)) is given (which may occur no
earlier than thirty (30) days before, but at any time after,
the end of such ninety (90) day period), the Executive shall
not have returned to the performance of his duties hereunder
on a full-time basis, the Company may terminate the
Executive's employment hereunder.
(c) Cause. The Company may terminate the Executive's
employment hereunder for Cause. For purposes of this
Agreement, the Company shall have "Cause" to terminate the
Executive's employment hereunder upon (A) the willful and
continued failure by the Executive to substantially perform
his duties hereunder (other than any such failure resulting
from the Executive's incapacity due to physical or mental
illness) after demand for substantial performance is delivered
by the Company specifically identifying the manner in which
the Company believes the Executive has not substantially
performed his duties, or (B) the willful engaging by the
Executive in misconduct which is materially injurious to the
Company, monetarily or otherwise, or (C) the willful violation
by the Executive of the provisions of Section 6 hereof,
provided that such violation results in material injury to the
Company. For purposes of this Subsection 7(c), no act, or
failure to act, on the Executive's part shall be considered
"willful" unless done, or omitted to be done, by him not in
good faith and without reasonable belief that his action or
omission was in the best interest of the Company.
(d) Termination by the Executive. The Executive may,
during the Period of Employment, upon giving Notice of
Termination, terminate his employment hereunder for Good
Reason.
For purposes of this Agreement, "Good Reason" shall mean
(A) any assignment to the Executive of any duties other than
those contemplated by Section 2 and Section 5 hereof, or any
limitation of the powers of the Executive in any respect not
contemplated by Section 2 hereof, (B) a reduction in the
Executive's Base Salary as in effect at the time in question,
or any other failure by the Company to comply with Section 4
hereof, (C) failure by the Company to comply with Section 3
hereof (relating to place of employment), or (D) failure of
the Company to obtain the assumption of the obligation to
perform this Agreement by any successor as contemplated in
Section 9 hereof.
(e) Notice of Termination. Any termination, during the
Period of Employment, of the Executive's employment by the
Company or any such termination by the Executive (other than
termination pursuant to Subsection 7(a) above on account of
death) shall be communicated by written Notice of Termination
to the other party hereto. For purposes of this Agreement,
a "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination
of the Executive's employment under the provision so
indicated.
(f) Date of Termination. "Date of Termination" shall,
during the Period of Employment, mean (i) if the Executive's
employment is terminated by his death, the date of his death,
(ii) if the Executive's employment is terminated on account of
disability pursuant to Subsection 7(b) above, thirty (30) days
after Notice of Termination is given (provided that the
Executive shall not, during such thirty (30) day period, have
returned to the performance of his duties on a full-time
basis), (iii) if the Executive's employment is terminated (by
the Company for Cause) pursuant to Subsection 7(c) above, the
date specified in the Notice of Termination, and (iv) if the
Executive's employment is terminated for any other reason, the
date on which a Notice of Termination is given.
8. Compensation Upon Termination or During Disability.
(a) If the Executive's employment shall be terminated by
reason of his death, the Company shall, within ninety (90)
days of death, pay a lump sum death benefit to such person as
he shall designate in a notice filed with the Company, or, if
no such person shall be designated, to his estate. The amount
of such death benefit shall be equal to his full Base Salary
to the date of his death which shall at the date of death be
unpaid. In addition to the foregoing, any payments to which
the Executive's spouse, beneficiaries or estate may be
entitled pursuant to any employee benefit plan or other
arrangement shall also be paid pursuant to the terms of such
plan or arrangement. Such payments, in the aggregate, shall
fully discharge the Company's obligations hereunder.
(b) During any period that the Executive fails to
perform his duties hereunder as a result of incapacity due to
physical or mental illness, the Executive shall continue to
receive his full Base Salary until the Executive's employment
is terminated due to disability pursuant to Subsection 7(b)
hereof. Subsection 8(a) above shall apply to any termination
due to death which occurs prior to the final determination of
the Date of Termination. For periods of time after
termination pursuant to Subsection 7(b) and continuing until
the end of the Period of Employment, the Executive shall be
paid sixty percent (60%) of his Base Salary, at the rate in
effect at the time Notice of Termination is given less any
disability payments otherwise payable by or pursuant to any
employee benefit plan or other arrangement provided by the
Company and actually paid to the Executive.
(c) If the Executive's employment shall be terminated by
the Company for Cause, the Company shall, through the Date of
Termination, continue to pay the Executive his full Base
Salary at the rate in effect at the time Notice of Termination
is given, and thereafter the Company shall have no further
obligations to the Executive under this Agreement; provided,
any such termination shall not adversely affect or alter the
Executive's rights under any employee benefit plan or other
arrangement of the Company in which the Executive, at the Date
of Termination, has a vested interest.
(d) If (A) in breach of this Agreement, the Company
shall terminate the Executive's employment other than pursuant
to Subsection 7(b) or 7(c) hereof (it being understood that a
purported termination pursuant to Subsection 7(b) or 7(c)
hereof which is disputed and finally determined not to have
been proper shall be a termination by the Company in breach of
this Agreement), or (B) the Executive shall terminate his
employment for Good Reason, then
(i) the Company shall, through the Date of
Termination, pay the Executive his full Base Salary at
the rate in effect at the time Notice of Termination is
given together with all other accrued amounts which are
payable by the Company to Executive pursuant to any
annual employee benefit programs in which the Executive
participates as of the Date of Termination;
(ii) in lieu of (1) any further payments of salary
to the Executive for periods subsequent to the Date of
Termination and (2) any payment to the Executive under
the Lomas Financial Group Severance Plan the Company
shall, on the fifth day following the Date of
Termination, pay as severance pay to the Executive, a
lump sum amount equal to the amount of the Executive's
Base Salary which would have accrued pursuant to
Subsection 4(a) hereof for a period (the "Determination
Period") commencing on the Date of Termination and ending
on the last day of the Period of Employment; and
(iii) the Company shall pay all other damages
(without duplication of the amounts expressly made
payable as provided in this Agreement) to which the
Executive may be entitled as a result of the Company's
termination of his employment under this Agreement.
(e) If it is established pursuant to a final
determination of a court or an Internal Revenue Service
administrative appeals proceeding that a payment (or portion
thereof) is made pursuant to Subsection (d) of this Section 8
which would result in any payment to or for the benefit of the
Executive by the Company pursuant to this Agreement being an
excess parachute payment (as defined in Section 280G of the
Internal Revenue Code), then the Company shall pay to the
Executive an additional amount in cash equal to the amount
necessary to cause the amount of the aggregate after-tax
compensation and benefits otherwise receivable by the
Executive (taking into account any tax liability associated
with such additional amount) to be equal to the aggregate
after-tax cash compensation and benefits he would have
received as if Sections 280G and 4999 of the Internal Revenue
Code had not been enacted.
(f) The Executive shall not be required to mitigate the
amount of any payment provided for in this Section 8 by
seeking other employment or otherwise, nor shall the amount of
any payment provided for in this Section 8 be reduced by any
compensation earned by the Executive as the result of
employment by another employer after the Date of Termination,
or otherwise.
9. Successors; Binding Agreement.
(a) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Company, by agreement in form and substance
satisfactory to the Executive, to expressly assume and agree
to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no
such succession had taken place. Failure of the Company to
obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall
entitle the Executive to compensation from the Company in the
same amount and on the same terms as he would be entitled to
hereunder if he terminated his employment for Good Reason,
except that for purposes of implementing the foregoing, the
date on which any such succession becomes effective shall be
deemed the Date of Termination, the provisions of Subsection
7(f)(iv) to the contrary notwithstanding. In the event of
such a breach of this Agreement, the Notice of Termination
shall specify such date as the Date of Termination. As used
in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or
all or part of its assets as aforesaid which executes and
delivers the agreement provided for in this Section 9 or which
otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law.
(b) This Agreement and all rights of the Executive
hereunder shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amounts would
still be payable to him hereunder if he had continued to live,
all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the
Executive's devisee, legatee, or other designee or, if there
be no such designee, to the Executive's estate.
10. Notice. For purposes of this Agreement, notices and all
other communications provided for in the Agreement shall be in
writing and shall be deemed to have been duly given when delivered
or mailed by United States registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
Charles Kight
4329 Aztec Way
Okemos, Michigan 48866
If to the Company:
INTELLIFILE, Inc.
8600 Harry Hines
Dallas, Texas 75235
Attn: Chairman & Chief Executive Officer
or to such other address as any party may have furnished to the
other in writing in accordance herewith, except that notices of
change of address shall be effective only upon receipt.
11. Miscellaneous. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by the Executive and such
officer as may be specifically designated by the Board. No waiver
by either party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or
implied, unless specifically referred to herein, with respect to
the subject matter hereof have been made by either party which are
not set forth expressly in this Agreement. The validity,
interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of Texas.
12. Validity. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the
validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
13. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but
all of which together will constitute one and the same instrument.
14. Arbitration. Any dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by
arbitration in Dallas, Texas, in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction;
provided that the Company shall be entitled to seek a restraining
order or injunction in any court of competent jurisdiction to
prevent any continuation of any violation of Section 6 hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement
effective as the date and year first written above.
COMPANY: EXECUTIVE:
INTELLIFILE, INC. /s/ CHARLES KIGHT
-----------------------------------
Charles Kight
By: /s/ ERIC BOOTH ATTEST:
------------------------------
Eric Booth, Chairman &
Chief Executive Officer
By: /s/ JAMES B. ALLEMAN
-------------------------------
EXHIBIT 10.3
TERMINATION AGREEMENT
This Termination Agreement (this "Agreement") is made
effective the 2nd day of March, 1995, by and between Lomas
Financial Corporation ("Lomas") and Jess Hay ("Consultant").
W I T N E S S E T H
WHEREAS, Lomas and Consultant entered into an Employment
Agreement (the "Employment Agreement") dated as of October 7, 1983;
WHEREAS, pursuant to the Employment Agreement, Consultant
served as an executive officer or director of Lomas and various
other direct and indirect subsidiaries of Lomas;
WHEREAS, Lomas and Consultant terminated the employer-employee
relationship between Lomas and Consultant as evidenced by a
Consulting Agreement (the "Consulting Agreement") dated as of
August 2, 1994;
WHEREAS, Consultant wishes to resign from his positions as
Chairman Emeritus and director of Lomas and the parties wish to
terminate the Consulting Agreement; and
WHEREAS, Lomas and Consultant desire to enter into this
Agreement to provide, among other things, for the payment to
Consultant of certain termination benefits upon termination of the
consulting relationship between Lomas and Consultant.
NOW, THEREFORE, Lomas and Consultant in consideration of the
mutual promises and agreements contained herein, and for other good
and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, agree as follows:
1. Termination of Engagement. Consultant's engagement by
Lomas will be terminated effective as of March 2, 1995 (the
"Termination Date"). Effective the Termination Date, Consultant
will resign as Chairman Emeritus and director of Lomas.
Consultant's secretary will be terminated on the Termination Date
(i) but will receive as severance pay the amount of her salary
which would have accrued through December 31, 1995 and in addition
(ii) will participate in the Lomas voluntary early retirement
program pursuant to which she will be credited with five (5)
additional years of age and service under the Lomas pension plan.
2. Termination Benefits.
(a) Contemporaneous with the execution of this Agreement
Lomas has paid Consultant $500,000 in lieu of his termination
benefits provided for in the Consulting Agreement.
(b) Lomas shall continue until December 31, 2004 the
participation of Consultant and severally of his spouse in all
employee benefit arrangements of Lomas that provide life
insurance and health, medical, hospitalization and similar
benefits at the employee premium rate, to the extent that
Consultant and his spouse are covered under existing policies,
on a basis no less favorable than that on which they were
covered on August 2, 1994 under any such plan or policy;
provided, however, that Consultant's right to such
participation shall cease if Consultant receives comparable
coverage as a result of future employment.
(c) All 150,000 outstanding stock options with an
exercise price of $8.25 granted to Consultant prior to the
date of his retirement are fully vested and shall expire on
the dates set forth below:
Number of Options Expiration Date
----------------- ---------------
40,000 February 13, 2002
35,000 January 25, 2003
75,000 January 25, 2004
and the Company shall make such amendments to the plans and
the outstanding awards as may be necessary to effectuate the
provisions of this Paragraph 2(c).
(d) If, on or before December 31, 1995, (i) Lomas enters
into a definitive agreement to effect a Transaction, as
hereinafter defined, and (ii) such definitive agreement
results in the closing of such Transaction on or before June
30, 1996, Consultant shall be eligible to participate to the
extent of $500,000 in the "success bonus" arrangement
established by the Compensation Committee of the Board of
Directors for senior executives of Lomas in connection with
the sale of all or a substantial portion of Lomas. In the
context of this Paragraph 2(d), a "Transaction" shall mean a
disposition of all or a majority of the stock or assets of
Lomas or Lomas Mortgage USA, Inc., whether in the form of a
sale, spin-off, joint venture or other similar arrangement, in
one transaction or a series of transactions after January 1,
1994.
(e) It is intended that the termination benefits paid
hereunder shall constitute revenues to Consultant. To the
extent consistent with applicable law, Lomas will not withhold
any amounts therefrom as federal income tax withholding from
wages or as employee contributions under the Federal Insurance
Contributions Act or any other state or federal laws.
Consultant shall be solely responsible for the withholding
and/or payment of any federal, state or local income or
payroll taxes.
(f) Consultant expressly acknowledges and agrees that
the termination benefits described in this Agreement
constitute the only benefits to which Consultant is entitled
as a result of Consultant's termination and that upon
execution of this Agreement by Consultant and Lomas, the
Consulting Agreement shall be null and void.
3. Non-Competition. During the period from March 2, 1995
through June 30, 1996, Consultant shall not directly or indirectly
be or remain employed by, or render services for, any person, firm,
partnership, joint venture, association, corporation or other
business organization, entity or enterprise engaged in any
business, which is in competition with any business currently
conducted by Lomas; provided, however, that no provision of this
Paragraph 3 shall in any way restrict Consultant from engaging in
the practice of law or the rendering of legal services to anyone in
any location. During the period from March 2, 1995 through March
2, 2000, Consultant shall not directly or indirectly participate by
or on behalf of any person, firm, partnership, joint venture,
association, corporation or other business organization, entity or
enterprise in any pending or threatened action, claim, suit or
proceeding which is or threatens to become adverse to Lomas, or any
business currently conducted by Lomas, by or before any state,
Federal, foreign, or other court or governmental department,
commission, board, bureau, agency or instrumentality .
4. Confidentiality. Consultant shall not disclose or use
for Consultant's own benefit or purposes or the benefit or purposes
of any other person, firm, partnership, joint venture, association,
corporation or other business organization, entity or enterprise
other than Lomas and any of its subsidiaries or affiliates, any
trade secrets, information, data, or other confidential information
relating to customers, development programs, costs, marketing,
trading, investment, sales activities, promotion, credit and
financial data, manufacturing processes, financing methods, plans,
or the business and affairs of Lomas generally, or of any
subsidiary or affiliate of Lomas; provided that the foregoing shall
not apply to information which is not unique to Lomas or which is
generally known to the industry or the public other than as a
result of Consultant's breach of this covenant.
5. Specific Performance. Consultant acknowledges and agrees
that Lomas's remedies at law for a breach or threatened breach of
any of the provisions of Paragraph 3 or Paragraph 4 would be
inadequate and, in recognition of this fact, Consultant agrees
that, in the event of such a breach or threatened breach, in
addition to any remedies at law, Lomas, without posting any bond,
shall be entitled to obtain equitable relief in the form of
specific performance, temporary restraining order, temporary or
permanent injunction or any other equitable remedy which may then
be available.
6. Fees and Expenses. Lomas agrees, in the event of a
dispute between Consultant and Lomas with respect to any of
Consultant's rights under this Agreement, to reimburse Consultant
for any and all reasonable legal fees and related expenses incurred
by Consultant in connection with enforcing such rights if
Consultant is successful as to at least part of the disputed claim
by reason of arbitration, litigation or settlement.
7. Miscellaneous.
(a) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS.
(b) Entire Agreement; Amendments. This Agreement
supersedes all prior agreements between Consultant and Lomas
relating to Consultant's engagement and the termination
thereof, including, without limitation, the Consulting
Agreement, and, together with the agreements evidencing the
stock options and other awards referred to in Paragraph 2(c),
the documents evidencing the benefits to which Consultant and
his spouse are entitled pursuant to Paragraphs 2(b) and (d),
and the documents relating to the assignment to Consultant's
spouse of Policy 2297799 issued by The Great-West Life
Assurance Company insuring the life of Consultant, contains
the entire understanding of the parties with respect to the
termination of Consultant's engagement by Lomas; provided,
however, that this Agreement shall not impair any rights or
benefits accrued by Consultant under any benefit plan,
compensation arrangement or pension, excess retirement or
management security plan of Lomas. Except as aforesaid, there
are no restrictions, agreements, promises, warranties,
covenants or undertakings between the parties with respect to
the subject matter herein other than those expressly set forth
herein. This Agreement may not be altered, modified, or
amended except by written instrument signed by the parties
hereto.
(c) No Waiver. The failure of a party to insist upon
strict adherence to any term of this Agreement on any occasion
shall not be considered a waiver of such party's rights or
deprive such party of the right thereafter to insist upon
strict adherence to that term or any other term of this
Agreement.
(d) Severability. In the event that any one or more of
the provisions of this Agreement shall be or become invalid,
illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions of
this Agreement shall not be affected thereby.
(e) Assignment. This Agreement shall not be assignable
by Consultant and shall be assignable by Lomas only with the
consent of Consultant, which consent shall not be unreasonably
withheld; provided that no such assignment by Lomas shall
relieve Lomas of any liability hereunder, whether accrued
before or after such assignment.
(f) Arbitration. Any dispute between the parties to
this Agreement arising from or relating to the terms of this
Agreement shall be submitted to arbitration in Dallas, Texas
under the auspices of the American Arbitration Association.
(g) Successors; Binding Agreement.
(i) Lomas shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business
and/or the assets of Lomas to expressly assume and agree
to perform this Agreement in the same manner and to the
same extent that Lomas would be required to perform it if
no such succession had taken place.
(ii) This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their
respective heirs, representatives, successors and
assigns.
(h) Notice. For the purposes of this Agreement, notices
and all other communications provided for in this Agreement
shall be in writing and shall be deemed to have been duly
given when delivered or mailed by United States registered
mail, return receipt requested, postage prepaid, addressed to
the respective addresses set forth on the execution page of
this Agreement; provided that all notices to Lomas shall be
directed to the attention of the General Counsel or to such
other address as either party may have furnished to the other
in writing in accordance herewith, except that notice of
change of address shall be effective only upon receipt.
(i) Counterparts. This Agreement may be signed in
counterparts, each of which shall be an original, with the
same effect as if the signatures thereto and hereto were upon
the same instrument.
IN WITNESS WHEREOF, Lomas and Consultant have executed this
Agreement, each intending to be legally bound hereby.
LOMAS FINANCIAL CORPORATION
By: /s/ ERIC BOOTH
---------------------------------
Eric Booth, President &
Chief Executive Officer
Address: 1600 Viceroy Drive
Dallas, Texas 75235
Consultant
/s/ JESS HAY
--------------------------------------
Jess Hay
Address: 7236 Lupton Circle
Dallas, Texas 75225
EXHIBIT 10.4
CONSULTING AGREEMENT
CONSULTING AGREEMENT dated as of March 29, 1995, by and between
Lomas Financial Corporation, a Delaware corporation (the "Company") and
Robert E. Byerley, Jr. ("Consultant").
WHEREAS, Consultant and the Company have previously entered into
an Employment Agreement dated as of April 1, 1993 (the
"Employment Agreement");
WHEREAS, effective March 29, 1995, Consultant wishes to participate
in the enhanced pension program offered by the Company and the parties wish
to terminate the Employment Agreement;
WHEREAS, the Company's management desires that it be able to
continue to call upon the experience and knowledge of Consultant for
consultation services and advice;
WHEREAS, Consultant is willing to render such services to the
Company on the terms and conditions hereinafter set forth in this Agreement;
and
WHEREAS, the Company and Consultant further desire to enter into
this Agreement to provide, among other things, for the payment to Consultant
of certain severance benefits upon termination of the Employer-employee
relationship between the Company and Consultant;
NOW, THEREFORE, in consideration of the promises and mutual
covenants contained herein and Consultant's long prior service to the
Company, and in cancellation and settlement of all obligations under
the Employment Agreement, the parties agree as follows:
1. Participation and Appointment. Consultant shall remain
employed by the Company until March 29, 1995, upon which date Consultant
shall elect to participate in the enhanced pension program offered by
the Company pursuant to which he will be credited with five (5) additional
years of age and service under the Company pension plan; provided,
however, that Consultant shall continue to be an officer of the Company with
the title of Senior Vice President during the Consulting Term (as
hereinafter defined), unless a successor shall have been elected at an
earlier date by the Company's Board of Directors. Consultant's
secretary, Deborah Nesbitt, will be terminated on the termination date
of this Agreement but will receive as severance pay (in lieu of any
payment under the Company severance plan) fifty percent (50%) of her
current annual base salary.
2. Severance Benefit. (a) On March 29, 1995 (i) the Company
will pay Consultant $286,778 representing all but $100,000 of his
severance benefits pursuant to the Employment Agreement less all applicable
federal, state and local withholding taxes; (ii) Consultant will pay the
Company $111,831.51 representing money borrowed from the Company and
evidenced by a certain promissory note dated July 29, 1993 in the
original principal amount of $100,000; (iii) the Company will defer the
$100,000 remainder of Consultant's severance benefit (the "Deferred
Payment") pursuant to the provisions of this Paragraph 2(a); (iv) the
Company will pay Consultant for up to eighty (80) hours of accrued but
unused vacation and (v) the Company will reimburse Consultant, in accordance
with current Company policy, for all necessary and reasonable costs and
expenses incurred on behalf of the Company. The Company will cause to be
paid to Consultant, on or before (i) April 30, 1995, approximately
$61,236 and $8,883, representing, respectively, Consultant's vested
interest in the Company pension plan and supplemental excess retirement
plan, (ii) May 10, 1995, approximately $106,615, representing the
enhanced pension benefit payable to Consultant under the enhanced pension
program referred to in Paragraph 1 and (iii) June 30, 1995, the vested
interest of Consultant (increased by the enhanced pension program referred to
in Paragraph 1) in the Company 401(k) plan.
Unless this Agreement is terminated voluntarily by Consultant
pursuant to Paragraph 7(b), on September 30, 1995 the Company will pay to
Consultant the Deferred Payment plus interest at the rate of six percent
(6%) per annum. The Company shall secure and perform its obligation to
pay the Deferred Payment by delivering to Consultant within five (5)
business days after the execution of this Agreement a letter of credit
(the "Letter of Credit") in the amount of $103,000, drawn on Bank One,
Texas, N.A. (the "Bank"). The Letter of Credit shall provide that it may
be drawn upon by Consultant or, in the event of his death, his executor or
administrator, in the amount of the Deferred Payment plus interest at six
percent (6%) per annum, upon delivery to the Bank of an executed,
notarized statement stating that any one or more of the following events
(a "Draw Event") has occurred:
(A) Consultant's retention under this Agreement has been
terminated by the Company;
(B) Consultant has died;
(C) Consultant has not voluntarily terminated his retention
under this Agreement prior to September 30, 1995; or
(D) there has occurred any one or more of the following
(a "Liquidation Event"):
(1) the Company or Lomas Mortgage USA, Inc. has filed a
voluntary petition in bankruptcy;
(2) the Company or Lomas Mortgage USA, Inc. has had
an involuntary petition in bankruptcy filed against it;
(3) the Company or Lomas Mortgage USA, Inc. has been placed
in receivership or conservatorship; or
(4) the Company or Lomas Mortgage USA, Inc. has in any
manner disposed of all or substantially all of its assets; provided that
the Letter of Credit shall state that in the case of Draw Events, other
than a Liquidation Event, payment may not be made unless Consultant
furnishes to the Bank evidence that the Company has been notified of
the Draw Event and the Company has not objected to the Bank in writing
within three (3) days of the date of receipt of notice of the Draw Event.
Consultant may upon the occurrence of a Liquidation Event draw upon the
Letter of Credit without any notice to the Company, and such payment shall
be deemed to have been made as of the close of business on the day prior
to the occurrence of the Liquidation Event.
(b) If, within six (6) months after the end of the Consulting Term
the Company effects a Transaction, as hereinafter defined, with an
individual or entity with whom the Company has held discussions during the
Consulting Term regarding a possible Transaction, Consultant shall be
eligible to participate in the "success bonus" arrangement attached hereto
as Exhibit "A" established by the Compensation Committee of the Board of
Directors for senior executives of the Company in connection with the sale
of all or a substantial portion of the Company. In the context of this
Paragraph 2(b), a "Transaction" shall mean a disposition or transfer of all
or a majority of the stock or assets of the Company or Lomas Mortgage USA,
Inc., whether in the form of a sale, spin-off, joint venture or
other similar arrangement, in one transaction or a series of transactions
after January 1, 1994.
(c) (i) Consultant will be eligible to participate in the
Company's welfare plans as amended from time to time to include group
medical plan, group life plan and group accidental death and dismemberment
plan at the employee premium rate for twenty-four (24) months
subsequent to the termination of this Agreement and, thereafter, on the
basis and for the remainder of the period set forth in the enhanced
pension program offered by the Company; provided, however, that
Consultant's right to such continued participation shall cease if
Consultant receives comparable coverage as a result of future employment.
In the event that Consultant's participation in any such welfare plan is
barred, the Company shall arrange to provide Consultant with benefits
substantially similar to those which Consultant would otherwise have been
entitled to receive under such welfare plans from which his continued
participation is barred.
(d) All 30,000 outstanding stock options with an exercise price
of $8.25 granted to Consultant shall be fully vested and shall expire
twenty-four (24) months subsequent to the termination of this Agreement and
the Company shall make such amendments to the plans and the outstanding
awards as may be necessary to effectuate the provisions of this Paragraph
2(d).
(e) Consultant shall continue to be eligible to participate in
the "Stock Based Incentive Compensation Plan" arrangement attached hereto
as Exhibit "B" established by the Compensation Committee of the Board
of Directors for senior executives of the Company.
(f) Consultant expressly acknowledges and agrees that the
severance benefits described in this Paragraph 2 constitute the only
benefits to which Consultant is entitled as a result of Consultant's
severance and that upon execution of this Agreement by Consultant and
the Company, the Employment Agreement shall be null and void.
3. Term of Agreement. Consultant shall be retained by the
Company for a period commencing on March 30, 1995, and terminating on the
earlier of the date on which a Transaction is effected or September
30, 1995, unless extended to December 31, 1995 at the option of the Company
exercised by delivering written notice of such intent to extend on or
before August 31, 1995 (the initial period and any extension thereof shall
constitute the "Consulting Term").
4. Position and Responsibilities. Consultant agrees to serve as
a consultant to the Company and to render such advice and services to the
Company as reasonably may be requested by the Chief Executive Officer or
the Board of Directors of the Company. The services to be performed by
Consultant under this Agreement shall include, but not be limited to,
financial restructuring of the Company, facilitation of a Transaction, the
sale of the Company's artwork and the restructuring of The L&N School, and
Consultant shall perform such services during the Consulting Term unless
and until another person is designated to perform any of such services by
the Chief Executive Officer or the Board of Directors. Allowing for
reasonable and customary paid vacations and taking into account the nature
of the services provided, Consultant shall devote substantially all of his
working time and effort to rendering services under this Agreement.
Consultant is required to perform his services under this Agreement in a
manner that insures that he is not an employee of the Company as defined by
state or federal law, including but not limited to the rules and
regulations of taxing authorities.
5. Compensation. The Company shall pay Consultant a
monthly retainer in advance (the "Retainer") of $15,000 during the Consulting
Term.
6. Expenses and Other Facilities. (a) During the Consulting
Term Consultant shall be reimbursed in accordance with the policies of
the Company for necessary and reasonable business expenses incurred
by Consultant in connection with the performance of his duties
hereunder, which necessary and reasonable business expenses will not
include a car allowance, athletic, social or country club dues or the costs
of owning and operating cellular telephones.
(b) During the Consulting Term the Company shall continue to
make available to Consultant, without any expense to him, an office and
such administrative staff as reasonably may be necessary to perform
his consulting duties. In addition, the Company will provide for
telephone, telecopy, Xerox, supplies, mail, and express mail
services as may reasonably be required by Consultant.
7. Termination and Liquidated Damages. (a) This Agreement
and Consultant's retention hereunder may be terminated at any time by
either party upon thirty (30) days prior written notice to the other
party. In the event of (i) such a termination by the Company,
other than a termination for "Cause," as hereinafter defined, or (ii) a
termination at any time by Consultant as a result of a breach of this
Agreement by the Company, Consultant shall be entitled to receive as
liquidated damages an amount in cash equal to the then-present value of
all remaining payments due hereunder (y) through September 30, 1995 if
the Company elects not to extend this Agreement and (z) through December
31, 1995 if the Company elects to extend this Agreement. Such amount
shall be calculated using a discount rate of 6% per annum and shall be paid
in a single sum not later than ten (10) days after any such termination.
(b) (i) In the event of a voluntary termination of his
retention hereunder by Consultant prior to the end of the Consulting Term
other than as set forth in clause (a) (ii) above, the Company will have
no further obligation to make payments to Consultant following any such
termination and Consultant shall forfeit, to the extent not already paid,
all rights to the Deferred Payment, his portion of the "success bonus"
described in Paragraph 2(b), and his portion of the "Stock Based Incentive
Compensation Plan" described in Paragraph 2(c). Consultant shall not be
subject to liability for breach of this Agreement by reason of his
voluntary termination of his retention hereunder.
(ii) In the event of a termination of Consultant's retention
hereunder by the Company for "Cause," the Company will have no further
obligation to make payments to Consultant following any such termination
and Consultant shall forfeit, to the extent not already paid, all rights to
his portion of the "success bonus" described in Paragraph 2(b) and his
portion of the "Stock Based Incentive Plan" described in Paragraph 2(c).
(c) For purposes of this Agreement, "Cause" shall mean
(i) Consultant's willful and continued failure substantially to perform
his duties hereunder (other than as a result of Consultant's
death, "disability" [as defined under the Company's Long-Term Disability
Plan] and other than as a result of breach of this Agreement by the
Company), (ii) Consultant's dishonesty in the performance of his duties
hereunder or (iii) an act or acts on Consultant's part constituting a felony
under the laws of the United States or any state thereof.
(d) In the event of any termination of this Agreement pursuant
to Paragraph 7(a), the Company shall continue to provide Consultant with
the benefits specified in Paragraph 2(c).
8. Status; Taxes.
(a) Status of Consultant. During the Consulting Term,
Consultant shall not be an employee of the Company and shall not be
entitled to participate in any employee benefit plans or other benefits or
conditions of employment available to the employees of the Company
except to the extent set forth in Paragraphs 2(b), (c), (d) and (e).
Consultant shall have no authority to act as an agent of the Company,
except on authority specifically so delegated, and he shall not represent
to the contrary to any person. Consultant shall only consult, render
advice and perform such tasks as Consultant determines are necessary to
complete the projects specified by the Company. Although the Company may
specify the projects to be assigned to Consultant and may control and
direct him in that regard, the Company shall not control or direct
Consultant as to the details or means by which such projects are
accomplished.
(b) Taxes. It is intended that the amounts paid hereunder
to Consultant under Paragraphs 2(b), 2(e) and 5 shall constitute revenues
to Consultant. To the extent consistent with applicable law, the Company
will not withhold any amounts therefrom as federal income tax withholding
from wages or as employee contributions under the Federal
Insurance Contributions Act or any other state or federal laws. Consultant
shall be solely responsible for the withholding and/or payment of any
federal, state or local income or payroll taxes.
9. Non-Competition. During the Consulting Term, Consultant
shall not directly or indirectly be or remain employed by, or render
services for, any person, firm, partnership, joint venture, association,
corporation or other business organization, entity or enterprise
engaged in any business, which is in competition with any business
currently conducted by the Company. During the period from March 30, 1995
through March 30, 2000, Consultant shall not directly or indirectly
participate by or on behalf of any person, firm, partnership, joint venture,
association, corporation or other business organization, entity or
enterprise in any pending or threatened action, claim, suit or
proceeding which is or threatens to become adverse to the Company or any
business currently conducted by the Company, by or before any state,
Federal, foreign, or other court or governmental department,
commission, board, bureau, agency or instrumentality.
10. Confidentiality. During and after the Consulting
Term, Consultant shall not disclose or use for Consultant's own
benefit or purposes or the benefit or purposes of any other person, firm,
partnership, joint venture, association, corporation or other business
organization, entity or enterprise other than the Company and any of its
subsidiaries or affiliates, any trade secrets, information, data, or
other confidential information relating to customers, development programs,
costs, marketing, trading, investment, sales activities, promotion,
credit and financial data, manufacturing processes, financing methods,
plans, or the business and affairs of the Company generally, or of any
subsidiary or affiliate of the Company; provided that the foregoing shall
not apply to information which is not unique to the Company or which
is generally known to the industry or the public other than as a result
of Consultant's breach of this covenant. Any provision of this
Agreement to the contrary notwithstanding, Consultant's obligations
pursuant to this Paragraph 10 shall survive any termination of this
Agreement and Consultant's retention hereunder.
11. Specific Performance. Consultant acknowledges and agrees
that the Company's remedies at law for a breach or threatened breach of any
of the provisions of Paragraph 9 or Paragraph 10 would be inadequate and,
in recognition of this fact, Consultant agrees that, in the event of such
a breach or threatened breach, in addition to any remedies at law, the
Company, without posting any bond, shall be entitled to obtain equitable
relief in the form of specific performance, temporary restraining order,
temporary or permanent injunction or any other equitable remedy which may
then be available.
12. Miscellaneous.
(a) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
(b) Entire Agreement; Amendments. This Agreement supersedes
all prior agreements between Consultant and the Company relating
to Consultant's employment and the termination thereof, including,
without limitation, the Employment Agreement, and, together with the
agreements evidencing the stock options and other awards referred to in
Paragraph 2(d) and the documents evidencing the benefits to which Consultant
is entitled pursuant to Paragraphs 2(a), (b), (c) and (e), contains
the entire understanding of the parties with respect to the retention of
Consultant by the Company; provided, however, that this Agreement shall
not impair any rights or benefits accrued by Consultant under any
benefit plan, compensation arrangement or pension, excess retirement
or management security plan of the Company prior to the termination of his
employment on March 29, 1995. Except as aforesaid, there are no
restrictions, agreements, promises, warranties, covenants or undertakings
between the parties with respect to the subject matter herein other
than those expressly set forth herein. This Agreement may not be
altered, modified, or amended except by written instrument signed by the
parties hereto.
(c) No Waiver. The failure of a party to insist upon
strict adherence to any term of this Agreement on any occasion shall
not be considered a waiver of such party's rights or deprive such party
of the right thereafter to insist upon strict adherence to that term or any
other term of this Agreement.
(d) Severability. In the event that any one or more of
the provisions of this Agreement shall be or become invalid, illegal
or unenforceable in any respect, the validity, legality and enforceability
of the remaining provisions of this Agreement shall not be affected thereby.
(e) Assignment. This Agreement shall not be assignable by
Consultant and shall be assignable by the Company only with the consent of
Consultant which consent shall not be unreasonably withheld; provided
that no such assignment by the Company shall relieve the Company of
any liability hereunder, whether accrued before or after such assignment.
(f) Arbitration. Any dispute between the parties to this
Agreement arising from or relating to the terms of this Agreement or the
retention of Consultant by the Company shall be submitted to arbitration
in Dallas, Texas under the auspices of the American Arbitration Association.
(g) Successors; Binding Agreement.
(i) The Company shall require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or the assets of the
Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle Consultant to
the benefits set forth in Paragraph 7(a).
(ii) This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs,
representatives, successors and assigns.
(h) Notice. For the purposes of this Agreement, notices and
all other communications provided for in the Agreement shall be in writing
and shall be deemed to have been duly given when delivered or mailed by
United States registered mail, return receipt requested, postage
prepaid, addressed to the respective addresses set forth on the execution
page of this Agreement; provided that all notices to the Company shall be
directed to the attention of the General Counsel of the Lomas Financial
Group or to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notice of change of
address shall be effective only upon receipt.
(i) Counterparts. This Agreement may be signed in counterparts,
each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the day and year first above written.
/s/ ROBERT E. BYERLEY, JR.
----------------------------------------
ROBERT E. BYERLEY, JR.
Address: 3600 N. Versailles
Dallas, Texas 75209
LOMAS FINANCIAL CORPORATION
ATTEST: By: /s/ ERIC D. BOOTH
----------------------------------------
Eric Booth
President & Chief Executive Officer
/s/ RAMONA TAYLOR
---------------------------
Ramona Taylor, Secretary
Address: 1600 Viceroy Drive
Dallas, Texas 75235
(SEAL)
<PAGE>
Exhibit "A"
"Success Bonus" Arrangement
LOMAS Memorandum
- ---------------------------------------------------------------------------
Date: September 9, 1994
To: Gary Kell
Jim Crowson
Bert Byerley
Gary White
Ramona Taylor
From: Jess Hay
Re: Success Bonuses - Project X
As you previously have been advised, the Board of Directors
of Lomas Financial Corporation, in January 1994, retained
Salomon Brothers, Inc. to assist Lomas in evaluating
strategic alternatives to maximize stockholder values.
Options to be considered include the possibility of
merging with or being acquired (in whole or in
substantial part) by another institution.
As an incentive to you and other senior officers of the
Company, the Compensation Committee of the Board, at the
meeting thereof on January 25, 1994, adopted the following
resolution related to the Salomon initiative (which is
referred to in the resolution as Project X):
"RESOLVED, that a formula for establishing
the aggregate amount of success bonuses to be awarded
upon the successful conclusion of Project X is hereby
approved as follows:
A. The minimum aggregate amount
payable at closure of any
transaction resulting from
Project X that is acceptable
to the Board of Directors: $2,000,000
<PAGE>
Memorandum
September 9, 1994
Page Two
B. The aggregate amount payable at
various prices per share
(including the $2 million
minimum):
$13.50 $2,200,000
$13.75 $2,400,000
$14.00 $2,600,000
$14.25 $2,800,000
$14.50 $3,000,000
$14.75 $3,200,000
$15.00 $3,400,000
$15.25 $3,600,000
$15.50 $3,800,000
$15.75 $4,000,000
$16.00 $4,200,000
$16.25 $4,400,000
$16.50 $4,600,000
$16.75 $4,800,000
$17.00 $5,000,000
$17.25 $5,200,000
$17.50 $5,400,000
$17.75 $5,600,000
$18.00 $5,800,000
$18.25 $6,000,000
$18.50 $6,200,000
$18.75 $6,400,000
$19.00 $6,600,000
$19.50 $6,800,000
$20.00 $7,000,000
FURTHER RESOLVED, that 50 percent of any
aggregate bonuses payable under the foregoing
formula hereby is allocated to and shall be
distributed to Jess Hay.
FURTHER RESOLVED, that 50 percent of any
aggregate bonuses payable under the foregoing
formula shall be allocated among and distributed to
Gary Kell, James L. Crowson, David L. Chapman II,
Robert E. Byerley, Jr., Gary White, and up to 15 other
key executives to be designated by Jess Hay, in such
respective amounts as may be determined by Jess Hay."
<PAGE>
Memorandum
September 9, 1994
Page Three
(The 50 percent of the aggregate bonuses payable under
the foregoing resolutions which is to be allocated
by me hereinafter is called "the residual bonus pool".)
Initially, the residual bonus pool was allocated as follows:
Name Percentage
---- ----------
Gary Kell 17.5
James L. Crowson 17.5
Robert E. Byerley, Jr. 15.0
David L. Chapman II 15.0
Gary White 15.0
Ramona Taylor 7.5
Others 12.5
-----
100.0
=====
Subsequent to this initial allocation, David
Chapman's employment by the Company has been
terminated and his 15 percent share of the
residual bonus pool has been reallocated, resulting
in the following current distribution of the pool:
Name Percentage
---- ----------
Gary Kell 20.0
James L. Crowson 20.0
Robert E. Byerley, Jr. 17.5
Gary White 17.5
Ramona Taylor 10.0
Others 15.0
-----
100.0
=====
Please call me if you have any questions.
/s/ JESS HAY
JESS HAY
JH/vm <PAGE>
Exhibit "B"
Stock Based Incentive Compensation Plan
LOMAS Memorandum
- ---------------------------------------------------------------------------
Date: November 2, 1994
To: James L. Crowson
Robert E. Byerley, Jr.
Ramona Taylor
Gary White
From: Jess Hay
Re: Stock Based Incentive Compensation Plan
As you previously have been advised, the Compensation
Committee of the Company's Board of Directors, in August
1994, approved a Fiscal 1995 "Stock Based Incentive
Compensation Plan" for the four of you and me. A copy of
the approved plan is appended as Exhibit A for your review
and retention.
You will note that compensation (if any) payable under the
plan is based on the relationship between the average price
of Lomas Financial Corporation's common stock during the
first quarter of Fiscal 1995 ("the base price" as defined in
the plan) and the average price of LFC's common stock during
the month of June 1995 ("the year-end price" as defined in
the plan). Appended as Exhibits B and C, respectively,
are computations of the "base price" by Solomon Brothers
Inc. and by our Treasury Department. Solomon's report
(Exhibit B) indicates that the average closing
price for LFC's stock during the three months ended September
30, 1994 was $5.44 per share, and our internal report
(Exhibit C) fixes that average at $5.43. For your purposes,
I suggest use of Solomon's $5.44 per share.
Should you have any questions regarding the plan, please give
me a call.
Many thanks.
/s/ JESS HAY
Jess Hay <PAGE>
EXHIBIT A
(Memorandum 11/02/94)
Page 1 of 2
Lomas Financial Corporation
Proposed Stock Based Incentive Compensation
Plan for Senior Corporate Officers
Fiscal 1995
1) Participants:
Name Salary
------------------------ ---------
Jess Hay $450,000*
James L. Crowson $275,000
Robert E. Byerley, Jr. $220,000
Gary White $220,000
Ramona Taylor $130,000
------------------
*For purposes of this plan, Mr. Hay's salary is deemed to be the
sum of (i) his salary for the first six months of the year
($300,000) plus (ii) his consulting fees for the final six months
of the year ($150,000).
------------------
2) The concept of the proposed plan is to tie fiscal 1995
incentive compensation for the five participants directly to the
performance of the Company's common stock and thereby to relate
such incentive compensation to enhancement of shareholder value.
Specifically, it is proposed that the amount of each
participant's fiscal 1995 incentive compensation be based on
the amount of appreciation realized during the year in the
market price of the Company's common stock. As proposed, the
process for determining the amount of such appreciation in the
value of the Company's common stock and the resulting incentive
compensation, if any, payable to the respective participants would
be as follows:
Step 1. The average price of Lomas Financial Corporation's
("LFC") common stock on the New York Stock Exchange at
the close of each of the business days of July, August
and September 1994 shall be determined and shall
constitute the "base price."
<PAGE>
EXHIBIT A
(Memorandum 11/02/94)
Page 2 of 2
Step 2. The average price of LFC's common stock on the New
York Stock Exchange at the close of each of the
business days of June 1995 shall be determined and shall
constitute the "year-end price"; provided, at the
discretion of the Compensation Committee, the closing
prices on the final two business days of June 1995
need not be included in determining the year-end price.
Step 3. The relationship between the year-end price and
the base price shall be determined on July 1,
1995, and then:
Then each participant
shall receive incen-
tive compensation in
If the year-end price July 1995 equal to the
represents as a percen- indicated percentage
tage of the base price of his or her salary
---------------------- -----------------------
Less than 110 percent 0.0 percent*
110 percent 15.0 percent
115 percent 22.5 percent
120 percent 30.0 percent
125 percent 37.5 percent
130 percent 45.0 percent
135 percent 52.5 percent
140 percent 60.0 percent
145 percent 67.5 percent
150 percent 75.0 percent
160 percent 90.0 percent
170 percent 105.0 percent
180 percent 120.0 percent
190 percent 135.0 percent
200 percent 150.0 percent
--------------------
*If no incentive compensation is payable under the foregoing formula,
the Compensation Committee, in its discretion, nonetheless may elect
to award individual bonuses to some or all of the participants
based on the Committee's evaluation of each participant's
contribution to the achievement of the Company's objectives for
fiscal 1995.
--------------------
<PAGE>
EXHIBIT B
(Memorandum 11/02/94)
Page 1 of 1
Salomon Brothers Inc
Lomas Financial Corporation
Daily Data 7/1/94 Through 9/30/94
Price Volume
(000)
High: $6.25 393.2
Low: 4.50 5.6
Mean: 5.44 74.1
Graphic material consisting of the computation of the "base price" by
Salomon Brothers Inc based on the average closing price of LFC's common
stock on the New York Stock Exchange during the three months ended
September 30, 1994 relating to the Fiscal 1995 Stock Based Incentive
Compensation Plan has been omitted in accordance with Rule 304 of
Regulation S-T - General Rules and Regulations for Electronic Filing.
<PAGE>
<TABLE>
EXHIBIT C
(Memorandum 11/02/94)
Page 1 of 1
<CAPTION>
LOMAS FINANCIAL CORPORATION
COMMON STOCK CLOSING PRICES PER SHARE
(JULY 1994 THRU SEPTEMBER 1994)
CLOSING CLOSING CLOSING
DATE PRICE DATE PRICE DATE PRICE
---- ------- ---- ------- ---- -------
<S><C> <C> <C> <C> <C> <C>
01-JUL-94 6 1/8 01-AUG-94 5 01-SEP-94 5 3/4
05-JUL-94 6 1/8 02-AUG-94 5 1/2 02-SEP-94 5 7/8
06-JUL-94 5 7/8 03-AUG-94 5 1/4 06-SEP-94 5 7/8
07-JUL-94 5 3/4 04-AUG-94 5 1/8 07-SEP-94 5 3/4
08-JUL-94 5 3/4 05-AUG-94 5 1/4 08-SEP-94 5 3/4
11-JUL-94 5 5/8 08-AUG-94 5 5/8 09-SEP-94 5 3/4
12-JUL-94 5 1/2 09-AUG-94 5 5/8 12-SEP-94 5 13/32
13-JUL-94 5 1/2 10-AUG-94 5 5/8 13-SEP-94 5 5/8
14-JUL-94 5 3/8 11-AUG-94 5 1/2 14-SEP-94 5 3/4
15-JUL-94 5 3/8 12-AUG-94 5 3/8 15-SEP-94 5 3/4
18-JUL-94 5 3/8 15-AUG-94 5 1/4 16-SEP-94 5 5/8
19-JUL-94 5 16-AUG-94 5 3/8 19-SEP-94 5 5/8
20-JUL-94 5 17-AUG-94 5 1/2 20-SEP-94 5 3/8
21-JUL-94 4 1/2 18-AUG-94 5 1/2 21-SEP-94 5 1/2
22-JUL-94 4 3/4 19-AUG-94 5 1/4 22-SEP-94 4 3/4
25-JUL-94 4 3/4 22-AUG-94 5 7/8 23-SEP-94 4 7/8
26-JUL-94 4 5/8 23-AUG-94 6 1/4 26-SEP-94 5 1/8
27-JUL-94 4 7/8 24-AUG-94 6 27-SEP-94 4 3/4
28-JUL-94 4 7/8 25-AUG-94 5 7/8 28-SEP-94 5 1/4
29-JUL-94 4 7/8 26-AUG-94 6 29-SEP-94 5
29-AUG-94 5 3/4 30-SEP-94 5
30-AUG-94 5 7/8
31-AUG-94 5 7/8
<FN>
Average Daily Closing Price Per Share During The Period $5.43
</TABLE>
EXHIBIT 10.5
LOMAS Lomas Mortgage USA
A member of the
Lomas Financial Group
1600 Viceroy Drive
Dallas, Texas 75235
March 31, 1995
Gary Kell
Lomas Mortgage USA, Inc.
1600 Viceroy Drive
Dallas, Texas 75235
Dear Gary:
As you are aware, in a letter dated March 1, 1994 (the "Protection
Letter"), Lomas Mortgage USA, Inc. (the "Company") agreed to
provide you with a severance benefit if you were involuntarily
terminated without cause. Included within the concept of
involuntarily terminated without cause was "constructive
discharge," which as defined, means, among other things, "a
material reduction in your job function, duties or
responsibilities..."
As we have discussed, it is important to the Company and its future
that you devote your undivided attention to the production side of
the Company's business. Accordingly, upon your execution of this
letter, the servicing side of the Company's business will report to
me in accordance with the following:
(1) all of production will be assigned to you or your direct
reports;
(2) all of servicing will be assigned to me or my direct
reports; and
(3) effective the earlier of June 30, 1996 or the day I cease
to be Chief Executive Officer of the Company, you will be
restored to the job function, duties and responsibilities
you held on the date of the Protection Letter.
Notwithstanding any other provision of the Protection Letter to the
contrary, if you agree to the provisions of this letter, you will
not be deemed to have waived your right to assert "constructive
discharge" under the Protection Letter if you are not restored to
your job functions, duties and responsibilities in accordance with
clause (3) above.
As you know, a portion of your incentive compensation for the
fiscal years ended June 30, 1991, 1992, 1993 and 1994 has been
deferred pursuant to letter agreements between the Company and you
dated August 22, 1991, July 1, 1992, August 24, 1993 and July 19,
1994 (collectively, the "Deferred Incentive Compensation
Agreements"). As additional consideration for your signing this
letter, pursuant to the Deferred Incentive Compensation Agreements
and the Protection Letter, you will be paid, subject to continued
employment as described in the Protection Letter, the following
amounts (representing the unpaid amounts due under the Deferred
Incentive Compensation Agreements) on the dates indicated:
Payment Date Amount
------------ -----------
July 1, 1995 $232,652.96
July 1, 1996 $139,591.77
July 1, 1997 $ 93,061.19
Except as amended by the terms of this letter, the Protection
Letter remains in full force and effect.
Please indicate your agreement with the provisions of this letter
by signing in the space indicated below.
Sincerely,
/s/ ERIC BOOTH
----------------------------------
Eric Booth
Chairman & Chief Executive Officer
Accepted and Agreed to:
/s/ GARY KELL
----------------------------------
Gary Kell
EXHIBIT 10.6
TERMINATION AGREEMENT
This Termination Agreement (this "Agreement") is made
effective the 30th day of April, 1995, by and between Lomas
Financial Corporation ("Lomas") and Ramona Taylor ("Consultant").
W I T N E S S E T H
WHEREAS, Lomas and Consultant entered into an Employment
Agreement (the "Employment Agreement") dated as of April 1, 1993;
WHEREAS, pursuant to the Employment Agreement, Consultant
served as an executive officer of Lomas and various other direct
and indirect subsidiaries of Lomas;
WHEREAS, Lomas and Consultant terminated the employer-employee
relationship between Lomas and Consultant as evidenced by a
Consulting Agreement (the "Consulting Agreement") dated as of
November 1, 1994;
WHEREAS, Consultant wishes to resign from her positions as
Senior Vice President and Secretary of Lomas and the parties wish
to terminate the Consulting Agreement; and
WHEREAS, Lomas and Consultant desire to enter into this
Agreement to provide, among other things, for the payment to
Consultant of certain termination benefits upon termination of the
consulting relationship between Lomas and Consultant.
NOW, THEREFORE, Lomas and Consultant in consideration of the
mutual promises and agreements contained herein, and for other good
and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, agree as follows:
1. Termination of Engagement. Consultant's engagement by
Lomas will be terminated effective as of April 30, 1995 (the
"Termination Date"). Effective the Termination Date, Consultant
will resign as Senior Vice President and Secretary of Lomas.
2. Termination Benefits.
(a) Contemporaneous with the execution of this Agreement
Lomas has paid Consultant $207,997.68 representing her
termination benefits provided for in the Consulting Agreement.
(b) Lomas shall continue until December 31, 1996 the
participation of Consultant in all employee benefit
arrangements of Lomas that provide life insurance and health,
medical, hospitalization and similar benefits at the employee
premium rate, to the extent that Consultant is covered under
existing policies, on a basis no less favorable than that on
which she was covered on December 1, 1994 under any such plan
or policy; provided, however, that Consultant's right to such
participation shall cease if Consultant receives comparable
coverage as a result of future employment.
(c) All 10,000 outstanding stock options with an
exercise price of $8.25 granted to Consultant prior to the
date of her retirement are fully vested and shall expire on
the dates set forth below:
Number of Options Expiration Date
----------------- ---------------
2,500 February 13, 2002
2,500 January 25, 2003
5,000 January 25, 2004
and the Company shall make such amendments to the plans and
the outstanding awards as may be necessary to effectuate the
provisions of this Paragraph 2(c).
(d) Consultant shall not be eligible to participate in
the "success bonus" arrangement established by the
Compensation Committee of the Board of Directors for senior
executives of Lomas in connection with the sale of all or a
substantial portion of Lomas.
(e) It is intended that the termination benefits paid
hereunder shall constitute revenues to Consultant. To the
extent consistent with applicable law, Lomas will not withhold
any amounts therefrom as federal income tax withholding from
wages or as employee contributions under the Federal Insurance
Contributions Act or any other state or federal laws.
Consultant shall be solely responsible for the withholding
and/or payment of any federal, state or local income or
payroll taxes.
(f) Consultant expressly acknowledges and agrees that
the termination benefits described in this Agreement
constitute the only benefits to which Consultant is entitled
as a result of Consultant's termination and that upon
execution of this Agreement by Consultant and Lomas, the
Consulting Agreement shall be null and void.
3. Confidentiality. Consultant shall not disclose or use
for Consultant's own benefit or purposes or the benefit or purposes
of any other person, firm, partnership, joint venture, association,
corporation or other business organization, entity or enterprise
other than Lomas and any of its subsidiaries or affiliates, any
trade secrets, information, data, or other confidential information
relating to customers, development programs, costs, marketing,
trading, investment, sales activities, promotion, credit and
financial data, manufacturing processes, financing methods, plans,
or the business and affairs of Lomas generally, or of any
subsidiary or affiliate of Lomas; provided that the foregoing shall
not apply to information which is not unique to Lomas or which is
generally known to the industry or the public other than as a
result of Consultant's breach of this covenant.
4. Specific Performance. Consultant acknowledges and agrees
that Lomas's remedies at law for a breach or threatened breach of
any of the provisions of Paragraph 3 would be inadequate and, in
recognition of this fact, Consultant agrees that, in the event of
such a breach or threatened breach, in addition to any remedies at
law, Lomas, without posting any bond, shall be entitled to obtain
equitable relief in the form of specific performance, temporary
restraining order, temporary or permanent injunction or any other
equitable remedy which may then be available.
5. Fees and Expenses. Lomas agrees, in the event of a
dispute between Consultant and Lomas with respect to any of
Consultant's rights under this Agreement, to reimburse Consultant
for any and all reasonable legal fees and related expenses incurred
by Consultant in connection with enforcing such rights if
Consultant is successful as to at least part of the disputed claim
by reason of arbitration, litigation or settlement.
6. Miscellaneous.
(a) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS.
(b) Entire Agreement; Amendments. This Agreement
supersedes all prior agreements between Consultant and Lomas
relating to Consultant's engagement and the termination
thereof, including, without limitation, the Consulting
Agreement, and, together with the agreements evidencing the
stock options and other awards referred to in Paragraph 2(c)
and the documents evidencing the benefits to which Consultant
is entitled pursuant to Paragraph 2(b), contains the entire
understanding of the parties with respect to the termination
of Consultant's engagement by Lomas; provided, however, that
this Agreement shall not impair any rights or benefits accrued
by Consultant under any benefit plan, compensation arrangement
or pension, excess retirement or management security plan of
Lomas. Except as aforesaid, there are no restrictions,
agreements, promises, warranties, covenants or undertakings
between the parties with respect to the subject matter herein
other than those expressly set forth herein. This Agreement
may not be altered, modified, or amended except by written
instrument signed by the parties hereto.
(c) No Waiver. The failure of a party to insist upon
strict adherence to any term of this Agreement on any occasion
shall not be considered a waiver of such party's rights or
deprive such party of the right thereafter to insist upon
strict adherence to that term or any other term of this
Agreement.
(d) Severability. In the event that any one or more of
the provisions of this Agreement shall be or become invalid,
illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions of
this Agreement shall not be affected thereby.
(e) Assignment. This Agreement shall not be assignable
by Consultant and shall be assignable by Lomas only with the
consent of Consultant, which consent shall not be unreasonably
withheld; provided that no such assignment by Lomas shall
relieve Lomas of any liability hereunder, whether accrued
before or after such assignment.
(f) Arbitration. Any dispute between the parties to
this Agreement arising from or relating to the terms of this
Agreement shall be submitted to arbitration in Dallas, Texas
under the auspices of the American Arbitration Association.
(g) Successors; Binding Agreement.
(i) Lomas shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business
and/or the assets of Lomas to expressly assume and agree
to perform this Agreement in the same manner and to the
same extent that Lomas would be required to perform it if
no such succession had taken place.
(ii) This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their
respective heirs, representatives, successors and
assigns.
(h) Notice. For the purposes of this Agreement, notices
and all other communications provided for in this Agreement
shall be in writing and shall be deemed to have been duly
given when delivered or mailed by United States registered
mail, return receipt requested, postage prepaid, addressed to
the respective addresses set forth on the execution page of
this Agreement; provided that all notices to Lomas shall be
directed to the attention of the General Counsel or to such
other address as either party may have furnished to the other
in writing in accordance herewith, except that notice of
change of address shall be effective only upon receipt.
(i) Counterparts. This Agreement may be signed in
counterparts, each of which shall be an original, with the
same effect as if the signatures thereto and hereto were upon
the same instrument.
<PAGE>
IN WITNESS WHEREOF, Lomas and Consultant have executed this
Agreement, each intending to be legally bound hereby.
LOMAS FINANCIAL CORPORATION
By: /s/ ERIC D. BOOTH
-----------------------------------
Eric Booth President &
Chief Executive Officer
Address: 1600 Viceroy Drive
Dallas, Texas 75235
Consultant
/s/ RAMONA TAYLOR
----------------------------------------
Ramona Taylor
Address: Suite 236
14999 Preston Road D-212
Dallas, Texas 75240-7811
(214) 661-5561
EXHIBIT 10.7
LOMAS LOMAS INFORMATION SYSTEMS
A member of the
Lomas Financial Group
1750 Viceroy Drive
Dallas, Texas 75235
Telephone (214) 879-5711
August 1, 1993
Mr. Thomas J. Clooney
Executive Vice President
Lomas Information Systems, Inc.
1750 Viceroy
Dallas, Texas 75235
Dear Joe:
We are pleased to advise you that the Compensation Committee of the
Board of Directors of Lomas Financial Corporation has approved a
new employee protection plan (the "Plan") for a limited number of
key officers and employees of Lomas Information Systems.
You are a designated participant under the Plan. As applied to
you, the Plan provides that, should you be involuntarily terminated
during the three years ending July 31, 1996 (for any reason other
than (i) for cause, or (ii) by reason of your being transferred to
a comparable position with another entity within the Lomas
Financial Group or with any affiliate, assignee, or successor of
the Lomas Financial Group or any member thereof), you will be
awarded, at termination, and in addition to all otherwise accrued
and vested benefits, a severance payment equal to 200 percent of
your then current annual salary.
Your participation in the Program is (i) in recognition of your
value to the Company in the past and in anticipation of the
contributions you will make in the future, and (ii) governed
entirely by the terms of this letter.
Sincerely,
/s/ JESS HAY
Jess Hay
Chairman and Chief Executive Officer
JH/lr
EXHIBIT 10.8
--------------------
* An asterisk indicates certain confidential portions of information
that have been omitted from this Agreement and are subject to a
request for confidential treatment pursuant to Rule 24b-2 of the
Securities Exchange Act of 1934, as amended. Such omitted
confidential portions have been filed separately with the
Securities and Exchange Commission.
--------------------
COMMITMENT AGREEMENT (the "Agreement"), dated as of April 24, 1995
between LOMAS MORTGAGE USA, INC. (the "Lender") and FEDERAL NATIONAL
MORTGAGE ASSOCIATION ("Fannie Mae").
W I T N E S S E T H:
WHEREAS, the Lender has agreed to deliver mortgages to Fannie
Mae through the "As Soon As Pooled II" delivery option pursuant to an
agreement dated as of April 24, 1995 as amended from time to time (the
"Delivery Option"); and
WHEREAS, the Lender seeks a commitment from Fannie Mae to
accept mortgages from the Lender for a mutually agreeable period of time;
NOW, THEREFORE, Fannie Mae and the Lender hereby agree as follows:
1.(a) Until April 25, 1996 (the "Termination Date"), Fannie
Mae commits to accept mortgages delivered by the Lender pursuant to the
terms and conditions of the Delivery Option except as provided herein.
(b) Until the Termination Date, Fannie Mae shall use, as the
Pricing Rate (per PSA Master Repurchase Agreement) in its calculation of the
price paid for the mortgages delivered by the Lender, an amount equal to the
sum of (i) * basis points and (ii) the Eurodollar Rate (as defined
herein) ------- on the business day immediately preceding the Purchase
Date with a maturity date equal to the Repurchase Date for the transaction
in question, or in the event there is no Eurodollar Rate posted with a
maturity date equal to the Repurchase Date for the transaction in
question, the Eurodollar Rate shall be calculated by interpolation between
the last maturity date prior to the Repurchase Date and the first
maturity date after the Repurchase Date.
(c) Prior to delivering any Mortgages pursuant to this Agreement,
the Lender will pay to Fannie Mae a commitment fee (the "Commitment Fee")
of $ * by wire transfer pursuant to Fannie Mae instructions.
------------
<PAGE>
(d) The Lender may enter into as many transactions with Fannie Mae
as it wishes under the Delivery Option prior to the Termination Date,
provided that (i) the Purchase Date for each transaction is no later
than the Termination Date and (ii) at the time of such Transaction,
the total Purchase Price of all mortgages that are related to any
Transactions that are not yet completed does not exceed $200,000,000 unless
Fannie Mae agrees to enter into such transaction.
(e) The "Eurodollar Rate" shall mean, with respect to any
particular date, the rate (expressed as a percentage per annum) for
deposits in U.S. dollars for a maturity selected by Fannie Mae pursuant to
Section 1(b) that appears on Telerate Page 4833 (as defined below) and that
is posted thereon with reference (i) to such date and (ii) to a time on such
date no earlier than 9:00 a.m. (New York City time). If such rate does
not appear on Telerate Page 4833 on such date, the Eurodollar Rate may
be drawn from Telerate Page 314 (as defined below). If such rate does
not appear on Telerate Page 4833 or Telerate Page 314, the Eurodollar
Calculation Agent (as defined below) will request four major banks in New
York city selected by the Eurodollar Calculation Agent (after consultation
with Fannie Mae, if Fannie Mae is not then acting as Eurodollar Calculation
Agent) to provide such bank's offered quotation (expressed as a
percentage per annum) to leading European banks for loans in U.S. dollars
for a period that appears on Telerate Page 4833 as of approximately 9:00 a.m.
(New York City time) on such date and in a Representative Amount (as defined
below). If at least two such quotations are provided, the Eurodollar Rate,
with respect to such date, will be the arithmetic mean of such
quotations, rounded to the nearest one hundred-thousandth of one percent,
with five one-millionths of one percent rounded upward. If fewer than two
such quotations are provided as requested, then Fannie Mae shall select a
reasonable alternative method of calculating the Eurodollar Rate.
As used herein:
"Eurodollar Calculation Agent" means Fannie Mae or a bank or
broker- dealer designated by Fannie Mae.
"Representative Amount" means a principal amount of not less than
U.S. $1,000,000 that, in the Eurodollar Calculation Agent's sole
judgment, is representative for a single transaction in the
relevant market at the relevant time.
"Telerate Page 4833" means the display designated as "Page 4833"
(or its successor page) on the Telerate Service (or such other
service as may be selected as the information vendor) for the
purpose of displaying the Eurodollar Rate.
"Telerate Page 314" means the display designated as "Page 314" (or
its successor page) on the Telerate Service (or such other
service as may be selected as the information) for the purpose of
displaying the Eurodollar Rate.
2. On and after the MORNET Transmission Date related to a
mortgage that the Lender intends to back a Fannie Mae mortgage-backed
security, such mortgage may not be related to any "gestation repo" or
"early funding" transaction, or used as collateral or be related to any
other similar transaction, as determined by Fannie Mae, except for one of
the Delivery Options, unless (i) as of such MORNET Transmission Date, the
total unpaid principal balance of all mortgages that are related to any
transactions subject to this Agreement equals or exceeds $100,000,000 and
(ii) Fannie Mae elects not to accept such mortgage pursuant to the Delivery
Option on the terms and conditions set forth in such Delivery Option and
in this Commitment Agreement.
3. Notwithstanding the obligation of Fannie Mae set forth
in Paragraph 1(a) above, Fannie Mae may terminate such obligation if any
of the following events occur:
(a) at any time, quotations for repurchase (or reverse
repurchase) transactions in Fannie Mae mortgage-backed securities are
no longer available for any reason for a period of ten consecutive business
days;
(b) the Lender has breached this Agreement, or has failed to meet
its obligations in any transaction conducted pursuant to the Delivery
Option, or has breached any provision of its Mortgage Selling and
Servicing Contract with Fannie Mae (the "Mortgage Selling and Servicing
Contract") or other agreement that the Lender has with Fannie Mae;
(c) the Lender has failed to meet or exceed the financial
standard (based upon information set forth in Fannie Mae Form 1002) set
forth in Section 4 below;
(d) the Lender files for a petition for bankruptcy or
seeks protection from creditors or is involuntarily placed into bankruptcy by
its creditors;
(e) the Net Worth (as defined herein) of the Lender falls
below $85,000,000;
(f) the Master Trade Assignment Letter (Exhibit A of the As Soon
As Pooled II Agrement) expires, or Fannie Mae determines that, in its
opinion, such Master Trade Assignment Letter is no longer valid or
enforceable;
(g) the Lender, or its parent, undergoes any mergers,
consolidations, reorganizations or substantial change in ownership; or
(h) the Lender's Mortgage Selling and Servicing Contract has
been terminated by Fannie Mae.
4.(a) The following financial standard shall apply to Section 3(c)
of this Agreement:
(i) Liquid Assets/Total Servicing (as defined below)
must be greater than or equal to .01:
(b) Some of the terms used in this Agreement are defined
below. Included in some of these definitions are the cell numbers used in
Fannie Mae Form 1002 for the components of such definitions.
(i) "Liquid Assets/Total Servicing" equals (Cash +
Marketable Securities at lower of costs or market +
Reverse Repurchase Agreements)/Total Servicing or
(A010 + A040 + A050 + A410)/(L100 + L200), as such
terms are reported in Fannie Mae Form 1002.
(ii) "Net Worth," as used in Section 3 (e) above, equals
equity (as calculated in accordance with generally
accepted accounting principles) less all intangible
assets (other than purchased mortgage servicing rights).
(c) Fannie Mae reserves the right to amend the definitions in
section 4(b) above, provided that any material change to such definitions
must be agreed to by the Lender.
5. The Lender acknowledges that Fannie Mae has the right to
make changes to the terms and conditions of the Delivery Option (provided
that any material change must be agreed to by the Lender) and that such
changes will not affect the obligations of the Lender pursuant to this
Agreement.
6. The Lender and Fannie Mae agree that a breach of this Agreement
by the Lender shall be deemed to be a breach of the Mortgage Selling
and Servicing Contract and Fannie Mae shall have the right to exercise
all remedies set forth in the Mortgage Selling and Servicing Contract, or
at law or equity, whether or not it exercises its right to terminate above.
7. The Lender hereby confirms that: (i) the sale to Fannie Mae of
the mortgages delivered to Fannie Mae pursuant to this Agreement has
either been (a) specifically approved by the Board of Directors of the
Lender and such approval is reflected in the minutes of the meetings of such
Board of Directors or (b) approved by an officer of the Lender who
was duly authorized by such Board of Directors to enter into such
types of transactions such authorization is reflected in the minutes of the
meetings of such Board of Directors; and (ii) this Agreement, together
with the Fannie Mae Selling Guide and the Mortgage Selling and Servicing
Contract, constitutes the "written agreement" governing the Lender's sale
to Fannie Mae of the mortgages delivered pursuant to this Agreement, and
it shall continuously maintain all components of such "written
agreement" as an official record of the undersigned (or of any successor
thereof).
8. This Agreement shall be effective on the date that Fannie
Mae receives the Commitment Fee described in Section 1(c) hereof.
9. In the event Fannie Mae terminates this Agreement pursuant
to Section 3(a) or 3(g) above, the Lender shall be entitled to a
partial refund of the Commitment Fee, as calculated on a pro rata per diem
basis.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on
the dates hereinafter set forth.
LOMAS MORTGAGE USA, INC. FEDERAL NATIONAL MORTGAGE ASSOCIATION
By: /s/ Paul D. Fletcher By:/s/ James E. Pallota
-------------------------- ---------------------------
(Authorized Signature)
Paul D. Fletcher - Senior Vice President
----------------------------------------
(Type Name and Title)
Date: April 28, 1995 Date: May 4, 1995
------------------------ ---------------------
EXHIBIT 10.9
April 24, 1995
Mr. Gary Kell
Lomas Mortgage USA, Inc.
1600 Viceroy Drive
Post Office Box 655644
Dallas, Texas 75265-5644
SUBJECT: As Soon As Pooled Option II
Dear Mr. Kell:
This letter shall constitute the agreement (the "As Soon As Pooled Option
II Agreement") between the Federal National Mortgage Association ("Fannie
Mae") and Lomas Mortgage USA, Inc. ("Lender") to allow Lender to deliver
pools of one- to four-family residential mortgage loans (the "Mortgages")
pursuant to the terms and conditions described herein. This As Soon As
Pooled Option II Agreement shall be deemed to amend any provision
authorizing deliveries of Mortgages in any existing or hereafter existing
master agreement or MBS pool purchase contract between Fannie Mae and
Lender and shall, for purposes of the transactions contemplated herein, be
deemed to amend the PSA Master Repurchase Agreement between Fannie Mae and
Lender (the "PSA Master Repurchase Agreement") dated April 24, 1995.
Lender and Fannie Mae agree that, notwithstanding anything to the contrary
in the Fannie Mae Selling Guide or the Fannie Mae Servicing Guide (the
"Guides"), Lender may deliver Mortgages pursuant to the As Soon As Pooled
Option II (the "As Soon As Pooled Option II"). Such option may be
terminated at the discretion of either party unless otherwise agreed to by
the parties; provided, however, that any termination will not affect
transactions outstanding as of the date of such termination.
The following terms and definitions apply to each delivery of Mortgages
made pursuant to the "As Soon As Pooled Option II":
Book-Entry Delivery Date: The actual date that an MBS first appears on the
books and records of the appropriate Federal Reserve Bank. Such date shall
be at least six Business Days after the MORNET Transmission Date.
Business Day: Any day other than a Saturday, Sunday or day that Fannie Mae
or the appropriate Federal Reserve Bank is not open for business.
Master Trade Assignment Letter: An agreement, attached hereto as Exhibit
"A," among Lender, Fannie Mae and another party (the "Takeout Buyer")
approved by Fannie Mae, whereby Takeout Buyer agrees to purchase MBS from
Fannie Mae in partial fulfillment of its obligations to purchase mortgages
from Lender pursuant to the terms and conditions of the Management
Agreement dated June 13, 1989 as amended (the "Management Agreement")
between Lender and Takeout Buyer (Exhibit "C").
Issue Date: The first of the month in which the MBS are issued on the
book-entry system of the appropriate Federal Reserve Bank.
MBS Delivery Date: The first Business Day following the MORNET
Transmission Date.
MORNET Transmission Date: The date on which Lender transmits the pooled
Mortgages to Fannie Mae via MORNET.
Original Issue Date: The first Business Day after the MORNET Transmission
Date, or, if the Issue Date related to an MBS pool precedes the MBS
Delivery Date, the Issue Date.
Settlement Notice: A letter, in the form attached hereto as Exhibit "B,"
from Lender to Fannie Mae notifying Fannie Mae to deliver the MBS specified
to Takeout Buyer on the terms and conditions contained therein.
Lender may designate a delivery of Mortgages as an As Soon As Pooled Option
II delivery by contacting the Customer Service Trading Desk no later 3:00
p.m. (Eastern Time) on the Business Day prior to the related MBS Delivery
Date in order to establish the terms of the As Soon As Pooled Option II
transaction. Once the terms of an As Soon As Pooled Option II transaction
are established, Fannie Mae will send Lender a written notice that will
serve as a formal confirmation of such terms.
Lender represents and warrants that each Mortgage delivered under an As
Soon As Pooled Option II transaction complies (i) with all requirements
under Fannie Mae Master Agreement Number MDO1226 (and any successor master
agreement between Fannie Mae and Lomas created expressly and exclusively
for mortgages originated under the CalPERS Member Home Loan Program) and
(ii) with the terms and conditions applicable in the Management Agreement.
If for any reason, after the Purchase Date but prior to the Repurchase
Date, the Lender or the Takeout Buyer determine that any Mortgage related
to an MBS does not meet the requirements of the Management Agreement, such
party must notify Fannie Mae within one (1) business day in such instance.
Fannie Mae may require Lender to repurchase Mortgages or MBS and accelerate
the Repurchase Date to a date which is three (3) business days after
notification is given to Fannie Mae.
By the close of business on the MORNET Transmission Date, Lender will
deliver Mortgages to Fannie Mae in accordance with the applicable terms of
the Fannie Mae Selling Guide concerning Mortgage deliveries for MBS. On
the MBS Delivery Date, Fannie Mae will deliver (or be deemed by both
parties hereto constructively to have delivered) to Lender MBS backed by
such Mortgages, provided that the pool documentation package, as defined in
the Fannie Mae Selling Guide, was complete, accurate, and consistent with
the terms of the As Soon As Pooled Option II transaction and was delivered
in accordance with Chapter IV, Section 203.02 of the Fannie Mae Selling
Guide. Such MBS will not appear on the books or records of the appropriate
Federal Reserve Bank on the MBS Delivery Date, but will appear on the books
and records of Fannie Mae. On the Book-Entry Delivery Date, the related
MBS will also appear in book-entry from at the appropriate Federal Reserve
Bank.
By electing an As Soon As Pooled Option II transaction, Lender (i) agrees
to accept MBS backed by such Mortgages, (ii) acknowledges its release of
all interest in the Mortgages upon receipt of such MBS, (iii) upon such
delivery (or constructive delivery) of the MBS, shall simultaneously re-
deliver such MBS to Fannie Mae pursuant to a PSA Master Repurchase
Agreement, and (iv) shall comply with all terms and conditions of such PSA
Master Repurchase Agreement. Notwithstanding anything to the contrary
herein or in the PSA Master Repurchase Agreement, Fannie Mae shall deliver
to the Takeout Buyer MBS held by it as part of a repurchase transaction
governed by this agreement on the related Repurchase Date, provided that
Fannie Mae receives (i) from the Lender a fully executed Settlement Notice
(in original or facsimile form) at least 96 hours prior to the Repurchase
Date and (ii) from the Takeout Buyer the amount of proceeds set forth in
such Settlement Notice. Upon receipt of such proceeds from the Takeout
Buyer, Fannie Mae shall wire to the Lender an amount equal to the amount by
which the sum of (a) the settlement proceeds from Takeout Buyer and (b) any
funds or securities delivered by Lender to Fannie Mae in relation to such
MBS pursuant to Section 4 of the PSA Master Repurchase Agreement exceeds
(c) the Repurchase Price. In the event that (c) above exceeds the sum of
(a) and (b), Fannie Mae shall so notify Lender at least one (1) Business
Day prior to the Repurchase Date and Lender shall wire such amount to
Fannie Mae on the Repurchase Date. The "Purchase Date" under such PSA
Master Repurchase Agreement shall be the MBS Delivery Date.
Lender shall indicate on the Delivery Schedule (Form 2014) and the Schedule
of Mortgages (Form 2005 or 2025 or successor forms) the earliest possible
date for the Book-Entry Delivery Date, given the eligibility of the
Mortgages for the specified Issue Date and the standard six Business Day
turnaround after MORNET transmission that is required for book entry on the
books and records of the appropriate Federal Reserve Bank. Fannie Mae will
then select the Original Issue Date as follows. If the Issue Date selected
by Lender follows the MBS Delivery Date, the Original Issue Date will be
the MBS Delivery Date and the Issue Date will be the first of the following
month. If the Issue Date selected by Lender is earlier than the MBS
Delivery Date, the Original Issue Date will be the Issue Date. For
example, if a pool documentation package that is delivered on May 20 is set
up for a June issue (with June balances), the Issue Date would be June 1
and the Original Issue Date would be May 22. If the package is eligible
for a May issue (with May balances), May 1 would be both the Issue Date and
the Original Issue Date, taking into consideration the earliest possible
Book-Entry Delivery Date.
The delivery of pools of Mortgages as part of an As Soon As Pooled Option
II transaction must take place in accordance with the requirements of an
existing MBS pool purchase contract, including those related to the
specified guaranty fee and any use of guaranty fee buyups or buydowns, the
Rapid Payment Method (RPM) or MBS Express for remittances.
Lender shall use the MBS Pool Submission System to transmit detailed
information about the pooled Mortgages, which is summarized on the Schedule
of Mortgages. The Delivery Schedule must also be transmitted on MORNET.
Special instructions for completing the delivery and wiring instructions
for the Delivery Schedule follow:
Telegraphic Abbreviations: FMAE DC MBS
Receiver Sub-Account: SPEC
ABA Number: 021039539
Owner Account Name: SOON
Owner Account Number: Leave Blank
Fannie Mae CSTD Trade No.: Leave Blank
Lender shall complete the MORNET transmission by 3:00 p.m. (Eastern time)
at least one Business Day before the specified MBS Delivery Date for the As
Soon as Pooled Option II transaction.
Fannie Mae must receive electronic certification from the custodian by
10:30 a.m. (Eastern time) on the Business Day following the MORNET
transmission.
Any change to the pool documentation package (such as a change in the
principal balances or other characteristics of the pool of Mortgages) will
delay the purchase. In addition, failure by Lender to follow the special
instructions for completing and marking the Delivery Schedule to indicate
the delivery of an As Soon As Pooled Option II transaction may be deemed an
election by Lender not to use the As Soon As Pooled Option II.
In the event that the MBS does not meet the requirements of the Settlement
Notice (in amount, coupon or otherwise), Fannie Mae may require Lender,
upon one (1) business days's notice, to deliver to Fannie Mae additional
MBS so that Fannie Mae may complete delivery under the terms of the
Settlement Notice. Failure by Lender to do so shall constitute a material
breach of this As Soon As Pooled Option II Agreement and the Mortgage
Selling and Servicing Contract and shall entitle Fannie Mae to pursue any
and all remedies available to it pursuant to the Mortgage Selling and
Servicing Contract, the Guides, any applicable master agreements, and other
applicable agreements between the parties and any other rights and remedies
available to it under law.
In the event that the Takeout Buyer does not purchase the MBS from Fannie
Mae on the Repurchase Date according to the terms of the Settlement Notice,
Fannie Mae may, in its discretion, require Lender to purchase such MBS upon
one (1) business day's notice at the price specified in the Master Trade
Assignment Letter, plus accrued interest. Failure by Lender to purchase
such MBS shall constitute a material breach of this As Soon As Pooled
Option II Agreement and the Mortgage Selling and Servicing Contract, and
Fannie Mae shall be entitled, upon failure of Lender to comply with such
demand, (i) immediately to sell any such MBS in a recognized market at such
price or prices as Fannie Mae may reasonably deem satisfactory, and (ii) to
notify Lender of any loss incurred by Fannie Mae in connection with such
sale. Failure by Lender to indemnify Fannie Mae within two (2) business
days for such loss shall entitle Fannie Mae to pursue any and all remedies
available to it pursuant to the Mortgage Selling and Servicing Contract,
the Guides, any applicable master agreements, and other applicable
agreements between the parties and any other rights and remedies available
to it under law.
In the event that Fannie Mae does not receive such fully executed
Settlement Notice (either FAXed or original) at least 96 hours before the
Repurchase Date, Lender will contact Fannie Mae at least one (1) business
day before the Repurchase Date, to enter into a new transaction, using the
same MBS as collateral, for not less than 30 days from the Repurchase Date
and not more than 90 days from the Repurchase Date. If Lender does not
contact Fannie Mae before one (1) business day prior to the Repurchase
Date, Fannie Mae may require Lender to repurchase the MBS on the Repurchase
Date.
This As Soon As Pooled Option II Agreement may not be assigned in whole or
in part by Lender nor modified without the prior written consent of Fannie
Mae. Fannie Mae has negotiated the terms of this As Soon As Pooled Option
II Agreement specifically with Lender and such terms do not necessarily
represent terms applicable to any other transaction with Fannie Mae.
Promotion, advertising, circulars, press releases, and other public
statements or representations concerning the terms of this Agreement may
not be distributed or made without Fannie Mae's prior written consent. Any
distribution of this As Soon As Pooled Option II Agreement, in whole or in
part, is also prohibited.
This As Soon As Pooled Option II Agreement shall not be deemed a waiver of
the right of Lender to deliver Mortgages pursuant to the As Soon As Pooled
Option as contained in the Fannie Mae Selling Guide.
Lender agrees that a violation of this Agreement or any related transaction
under the PSA Master Repurchase Agreement shall constitute a breach of the
Mortgage Selling and Servicing Contract and the Guides and shall entitle
Fannie Mae to pursue any and all remedies available to it thereunder or at
law.
This As Soon As Pooled Option II Agreement shall be deemed to be a contract
under, and this As Soon As Pool Option II Agreement and the rights of the
parties hereunder shall be governed by and construed and interpreted in
accordance with, the laws of the District of Columbia applicable to
contracts made and to be entirely performed in the District of Columbia.
Lender hereby confirms, by checking the appropriate blank below, that:
X It is not a federally insured institution or an affiliate or
subsidiary of a federally insured institution.
_____It is a federally insured institution or an affiliate or subsidiary of
a federally insured institution, and (i) the sale to, and (if
applicable) servicing for, Fannie Mae of the Mortgages delivered to
Fannie Mae pursuant to this As Soon As Pooled Option II Agreement
has been either (a) specifically approved by the Board of Directors of
Lender and such approval is reflected in the minutes of the meetings of
such Board of Directors or (b) approved by an officer of Lender who
was duly authorized by the Board of Directors to enter into such
types of transactions and such authorization is reflected in the
minutes of the Board of Directors' meetings and (ii) this As Soon as
Pooled Option II Agreement, together with the Guides and the Mortgage
Selling and Servicing Contract, constitutes the "written agreement"
governing Lender's sale to, and (if applicable) servicing for,
Fannie Mae of the Mortgages delivered pursuant hereto and Lender (or
any successor thereto) shall continuously maintain all components
of such "written agreement" as an official record.
In the event of any conflict between (i) the provisions of this As Soon
As Pooled Option II Agreement and (ii) the provisions of the Mortgage
Selling and Servicing Contract, the PSA Master Repurchase Agreement,
any Master Agreement or MBS Pool Purchase Contract and/or the Guides,
the provision of this As Soon as Pooled Option II Agreement shall
prevail.
<PAGE>
Lender shall return to Fannie Mae a duly executed duplicate original
of this letter.
Sincerely,
Federal National Mortgage Association
By: /s/ James E. Pallotta
------------------------------
James Pallotta
Director, MBS Funding
Agreed, acknowledge and accepted this 4th day of May 1995.
------- -------------
Lomas Mortgage USA, Inc.
By: /s/ Paul D. Fletcher
------------------------------
<PAGE>
EXHIBIT A
LOMAS Lomas Mortgage USA
A member of the
Lomas Financial Group
8880 Cal Center Drive, Suite 330
Sacramento, California 95826
Telephone (916) 361-4310
Fax (916) 362-9982
May 1, 1995
MASTER TRADE ASSIGNMENT LETTER
Mr. Al Fernandez
Mortgage Investment Officer
State of California Public Employees' Retirement System
Investment Office
400 P Street
Sacramento, California 95812
Dear Mr. Fernandez:
This letter will confirm the following agreement by Lomas Mortgage
USA, Inc. ("Lomas"), the State of California Public Employees'
Retirement System ("CalPERS"), and Federal National Mortgage
Association ("Fannie Mae") in conjunction with the CalPERS Member Home
Loan Program. The parties hereto agree to the assignment by Lomas to
Fannie Mae of Lomas' right to receive payment in connection with all
repurchase transactions in which Fannie Mae serves as repo counterparty
to Lomas and in which CalPERS, as Takeout Buyer, is obligated to
purchase mortgage securities created under Fannie Mae Master Agreement
Number MDO1226 (and any successor master agreement between Fannie
Mae and Lomas created expressly and exclusively for mortgages
originated under the CalPERS Member Home Loan Program). This
agreement will be in effect for 360 days from the date of this letter.
For these transactions you hereby agree to accept delivery from, and
pay the Takeout Price, which shall not be below 99.50% of the
aggregate securities' scheduled unpaid principal balance as of the
last day of the month prior to the settlement date nor exceed
100.50% of the aggregate securities' scheduled unpaid principal
balance as of the last day of the month prior to the settlement date
plus scheduled accrued interest from the first day of the month of
settlement through the day preceding the settlement date, directly
to Fannie Mae, whose acceptance of this trade assignment is indicated
below. Accordingly, Fannie Mae is obligated to make delivery of
such securities to CalPERS, and CalPERS will establish these trades
as Buy transactions from Fannie Mae. This agreement may be
terminated at any time by any party upon one hundred (100) days
written notice to each of the other parties, except that the
agreement shall continue to apply to any transactions agreed to prior
to the effective date of such termination. Notwithstanding the above,
any deliveries will be subject to the provisions of the Management
Agreement between Lomas and CalPERS.
All confirmations pertaining to these trades should be sent to Fannie
Mae, Customer Service Trading Desk, 3900 Wisconsin Avenue, N.W.,
Washington, D.C. 20016. Please execute this letter in the space
provided below and send it by facsimile to Fannie Mae, Attention:
Jim Pallotta, Telephone: (202) 752-7966, Facsimile (202) 752-4679.
The parties hereto agree that until Fannie Mae is otherwise instructed
by Lomas Mortgage USA, Inc. or CalPERS, Fannie Mae shall send all
statements and confirmations pertaining to the financing and /or sale
of the subject Mortgage-Backed Securities to Lomas Mortgage
USA, Inc., Treasury Department, 1600 Viceroy Drive, Dallas, TX
75235, Attention: Paul Fletcher.
Very truly yours,
Lomas Mortgage USA, Inc., as Seller
By: /s/ J. Colin Kirkham
------------------------------
Name: J. Colin Kirkham
-------------------------
Title: Senior Vice President
-------------------------
Agreed:
Federal National Mortgage Association
By: /s/ James E. Pollota
------------------------------
Name: James E. Pollota
-------------------------
Title: A.V.P.
-------------------------
Date: 5/04/95
-------------------------
State of California Public Employees' Retirement System, as Takeout
Buyer
By: /s/ Alfonso Fernandez
------------------------------
Name: Alfonso Fernandez
-------------------------
Title: Mortgage Investment Officer
-------------------------
Date: 5/3/95
-------------------------
<PAGE>
EXHIBIT B
[DATE]
SETTLEMENT NOTICE
Mr. Andrew Bon Salle
Fannie Mae
3900 Wisconsin Avenue, N.W.
Washington, D.C. 20016
Re: Lomas Mortgage USA, Inc.
Instructions for repos maturing [DATE].
Dear Andrew:
On [DATE] please deliver versus payment the securities referenced below
to this account:
[WIRING INSTRUCTIONS]
Pool# Cusip UPB Price Proceeds
----- ----- --- ----- --------
xxxx xxxx xxxxx xxxx xxxxxxx
xxxx xxxx xxxxx xxxx xxxxxxx
xxxx xxxx xxxxx xxxx xxxxxxx
Totals
Sincerely,
Paul D. Fletcher
Senior Vice President
<PAGE>
Pursuant to Item 601(b)(2) of Regulation S-K, the registrant has not
filed herewith the Management Agreement effective as of June 13, 1989
between Lomas Mortgage USA, Inc., as Manager ("LMUSA"), and
California Public Employees' Retirement System ("PERS"), as
amended by the Amendment to Management Agreement entered into as of
May 25, 1990 between LMUSA and PERS and the Second Amendment to
Management Agreement effective as of November 8, 1993 between LMUSA and
PERS (collectively, the "Management Agreement"). The Management
Agreement is attached as Exhibit C to the As Soon As Pooled Option II
Agreement dated April 24, 1995 between LMUSA, as Lender, and the
Federal National Mortgage Association ("FNMA").
The Management Agreement governs the management of the California
PERS Member Home Loan Conduit Program, as implemented by the
Management Agreement, the Participant Contracts and the Participant
Guide, as the same have been or may be amended from time to time (the
"Program") (Unless otherwise defined herein, all capitalized terms used
herein shall have the meanings as set forth in the Management
Agreement). The Program Agreements provide that LMUSA will, among
other things, purchase certain Mortgage Loans from Participants and
warehouse the Mortgage Loans until such time as they are placed into
one or more Pools for the issuance of FNMA Certificates or
nonagency Certificates issued pursuant to certain Pooling Agreements
to be entered into between PERS, LMUSA and a Trustee. Each
Mortgage Loan is serviced by a Participant or by LMUSA. Pursuant to
the Management Agreement, LMUSA has general responsibility
for the administration and supervision of the Program and provides
certain uniform reports and services to PERS.
Pursuant to Item 601(b)(2) of Regulation S-K, the registrant hereby
agrees to furnish supplementally a copy of the Management Agreement
upon request.
EXHIBIT 10.10
"Success Bonus" Arrangement
LOMAS Memorandum
- ---------------------------------------------------------------------------
Date: September 9, 1994
To: Gary Kell
Jim Crowson
Bert Byerley
Gary White
Ramona Taylor
From: Jess Hay
Re: Success Bonuses - Project X
As you previously have been advised, the Board of Directors
of Lomas Financial Corporation, in January 1994, retained
Salomon Brothers, Inc. to assist Lomas in evaluating
strategic alternatives to maximize stockholder values.
Options to be considered include the possibility of
merging with or being acquired (in whole or in
substantial part) by another institution.
As an incentive to you and other senior officers of the
Company, the Compensation Committee of the Board, at the
meeting thereof on January 25, 1994, adopted the following
resolution related to the Salomon initiative (which is
referred to in the resolution as Project X):
"RESOLVED, that a formula for establishing
the aggregate amount of success bonuses to be awarded
upon the successful conclusion of Project X is hereby
approved as follows:
A. The minimum aggregate amount
payable at closure of any
transaction resulting from
Project X that is acceptable
to the Board of Directors: $2,000,000
Memorandum
September 9, 1994
Page Two
B. The aggregate amount payable at
various prices per share
(including the $2 million
minimum):
$13.50 $2,200,000
$13.75 $2,400,000
$14.00 $2,600,000
$14.25 $2,800,000
$14.50 $3,000,000
$14.75 $3,200,000
$15.00 $3,400,000
$15.25 $3,600,000
$15.50 $3,800,000
$15.75 $4,000,000
$16.00 $4,200,000
$16.25 $4,400,000
$16.50 $4,600,000
$16.75 $4,800,000
$17.00 $5,000,000
$17.25 $5,200,000
$17.50 $5,400,000
$17.75 $5,600,000
$18.00 $5,800,000
$18.25 $6,000,000
$18.50 $6,200,000
$18.75 $6,400,000
$19.00 $6,600,000
$19.50 $6,800,000
$20.00 $7,000,000
FURTHER RESOLVED, that 50 percent of any
aggregate bonuses payable under the foregoing
formula hereby is allocated to and shall be
distributed to Jess Hay.
FURTHER RESOLVED, that 50 percent of any
aggregate bonuses payable under the foregoing
formula shall be allocated among and distributed to
Gary Kell, James L. Crowson, David L. Chapman II,
Robert E. Byerley, Jr., Gary White, and up to 15 other
key executives to be designated by Jess Hay, in such
respective amounts as may be determined by Jess Hay."
<PAGE>
Memorandum
September 9, 1994
Page Three
(The 50 percent of the aggregate bonuses payable under
the foregoing resolutions which is to be allocated
by me hereinafter is called "the residual bonus pool".)
Initially, the residual bonus pool was allocated as follows:
Name Percentage
---- ----------
Gary Kell 17.5
James L. Crowson 17.5
Robert E. Byerley, Jr. 15.0
David L. Chapman II 15.0
Gary White 15.0
Ramona Taylor 7.5
Others 12.5
-----
100.0
=====
Subsequent to this initial allocation, David
Chapman's employment by the Company has been
terminated and his 15 percent share of the
residual bonus pool has been reallocated, resulting
in the following current distribution of the pool:
Name Percentage
---- ----------
Gary Kell 20.0
James L. Crowson 20.0
Robert E. Byerley, Jr. 17.5
Gary White 17.5
Ramona Taylor 10.0
Others 15.0
-----
100.0
=====
Please call me if you have any questions.
/s/ JESS HAY
JESS HAY
JH/vm
EXHIBIT 10.11
Stock Based Incentive Compensation Plan
LOMAS Memorandum
- ---------------------------------------------------------------------------
Date: November 2, 1994
To: James L. Crowson
Robert E. Byerley, Jr.
Ramona Taylor
Gary White
From: Jess Hay
Re: Stock Based Incentive Compensation Plan
As you previously have been advised, the Compensation
Committee of the Company's Board of Directors, in August
1994, approved a Fiscal 1995 "Stock Based Incentive
Compensation Plan" for the four of you and me. A copy of
the approved plan is appended as Exhibit A for your review
and retention.
You will note that compensation (if any) payable under the
plan is based on the relationship between the average price
of Lomas Financial Corporation's common stock during the
first quarter of Fiscal 1995 ("the base price" as defined in
the plan) and the average price of LFC's common stock during
the month of June 1995 ("the year-end price" as defined in
the plan). Appended as Exhibits B and C, respectively,
are computations of the "base price" by Solomon Brothers
Inc. and by our Treasury Department. Solomon's report
(Exhibit B) indicates that the average closing
price for LFC's stock during the three months ended September
30, 1994 was $5.44 per share, and our internal report
(Exhibit C) fixes that average at $5.43. For your purposes,
I suggest use of Solomon's $5.44 per share.
Should you have any questions regarding the plan, please give
me a call.
Many thanks.
/s/ JESS HAY
Jess Hay <PAGE>
EXHIBIT A
(Memorandum 11/02/94)
Page 1 of 2
Lomas Financial Corporation
Proposed Stock Based Incentive Compensation
Plan for Senior Corporate Officers
Fiscal 1995
1) Participants:
Name Salary
------------------------ ---------
Jess Hay $450,000*
James L. Crowson $275,000
Robert E. Byerley, Jr. $220,000
Gary White $220,000
Ramona Taylor $130,000
------------------
*For purposes of this plan, Mr. Hay's salary is deemed to be the
sum of (i) his salary for the first six months of the year
($300,000) plus (ii) his consulting fees for the final six months
of the year ($150,000).
------------------
2) The concept of the proposed plan is to tie fiscal 1995
incentive compensation for the five participants directly to the
performance of the Company's common stock and thereby to relate
such incentive compensation to enhancement of shareholder value.
Specifically, it is proposed that the amount of each
participant's fiscal 1995 incentive compensation be based on
the amount of appreciation realized during the year in the
market price of the Company's common stock. As proposed, the
process for determining the amount of such appreciation in the
value of the Company's common stock and the resulting incentive
compensation, if any, payable to the respective participants would
be as follows:
Step 1. The average price of Lomas Financial Corporation's
("LFC") common stock on the New York Stock Exchange at
the close of each of the business days of July, August
and September 1994 shall be determined and shall
constitute the "base price."
<PAGE>
EXHIBIT A
(Memorandum 11/02/94)
Page 2 of 2
Step 2. The average price of LFC's common stock on the New
York Stock Exchange at the close of each of the
business days of June 1995 shall be determined and shall
constitute the "year-end price"; provided, at the
discretion of the Compensation Committee, the closing
prices on the final two business days of June 1995
need not be included in determining the year-end price.
Step 3. The relationship between the year-end price and
the base price shall be determined on July 1,
1995, and then:
Then each participant
shall receive incen-
tive compensation in
If the year-end price July 1995 equal to the
represents as a percen- indicated percentage
tage of the base price of his or her salary
---------------------- -----------------------
Less than 110 percent 0.0 percent*
110 percent 15.0 percent
115 percent 22.5 percent
120 percent 30.0 percent
125 percent 37.5 percent
130 percent 45.0 percent
135 percent 52.5 percent
140 percent 60.0 percent
145 percent 67.5 percent
150 percent 75.0 percent
160 percent 90.0 percent
170 percent 105.0 percent
180 percent 120.0 percent
190 percent 135.0 percent
200 percent 150.0 percent
--------------------
*If no incentive compensation is payable under the foregoing formula,
the Compensation Committee, in its discretion, nonetheless may elect
to award individual bonuses to some or all of the participants
based on the Committee's evaluation of each participant's
contribution to the achievement of the Company's objectives for
fiscal 1995.
--------------------
<PAGE>
EXHIBIT B
(Memorandum 11/02/94)
Page 1 of 1
Salomon Brothers Inc
Lomas Financial Corporation
Daily Data 7/1/94 Through 9/30/94
Price Volume
(000)
High: $6.25 393.2
Low: 4.50 5.6
Mean: 5.44 74.1
Graphic material consisting of the computation of the "base price" by
Salomon Brothers Inc based on the average closing price of LFC's common
stock on the New York Stock Exchange during the three months ended
September 30, 1994 relating to the Fiscal 1995 Stock Based Incentive
Compensation Plan has been omitted in accordance with Rule 304 of
Regulation S-T - General Rules and Regulations for Electronic Filing.
<PAGE>
<TABLE> EXHIBIT C
(Memorandum 11/02/94)
Page 1 of 1
LOMAS FINANCIAL CORPORATION
COMMON STOCK CLOSING PRICES PER SHARE
(JULY 1994 THRU SEPTEMBER 1994)
<CAPTION>
CLOSING CLOSING CLOSING
DATE PRICE DATE PRICE DATE PRICE
---- ------- ---- ------- ---- -------
<S><C> <C> <C> <C> <C> <C>
01-JUL-94 6 1/8 01-AUG-94 5 01-SEP-94 5 3/4
05-JUL-94 6 1/8 02-AUG-94 5 1/2 02-SEP-94 5 7/8
06-JUL-94 5 7/8 03-AUG-94 5 1/4 06-SEP-94 5 7/8
07-JUL-94 5 3/4 04-AUG-94 5 1/8 07-SEP-94 5 3/4
08-JUL-94 5 3/4 05-AUG-94 5 1/4 08-SEP-94 5 3/4
11-JUL-94 5 5/8 08-AUG-94 5 5/8 09-SEP-94 5 3/4
12-JUL-94 5 1/2 09-AUG-94 5 5/8 12-SEP-94 5 13/32
13-JUL-94 5 1/2 10-AUG-94 5 5/8 13-SEP-94 5 5/8
14-JUL-94 5 3/8 11-AUG-94 5 1/2 14-SEP-94 5 3/4
15-JUL-94 5 3/8 12-AUG-94 5 3/8 15-SEP-94 5 3/4
18-JUL-94 5 3/8 15-AUG-94 5 1/4 16-SEP-94 5 5/8
19-JUL-94 5 16-AUG-94 5 3/8 19-SEP-94 5 5/8
20-JUL-94 5 17-AUG-94 5 1/2 20-SEP-94 5 3/8
21-JUL-94 4 1/2 18-AUG-94 5 1/2 21-SEP-94 5 1/2
22-JUL-94 4 3/4 19-AUG-94 5 1/4 22-SEP-94 4 3/4
25-JUL-94 4 3/4 22-AUG-94 5 7/8 23-SEP-94 4 7/8
26-JUL-94 4 5/8 23-AUG-94 6 1/4 26-SEP-94 5 1/8
27-JUL-94 4 7/8 24-AUG-94 6 27-SEP-94 4 3/4
28-JUL-94 4 7/8 25-AUG-94 5 7/8 28-SEP-94 5 1/4
29-JUL-94 4 7/8 26-AUG-94 6 29-SEP-94 5
29-AUG-94 5 3/4 30-SEP-94 5
30-AUG-94 5 7/8
31-AUG-94 5 7/8
<FN>
Average Daily Closing Price Per Share During The Period $5.43
</TABLE>
EXHIBIT 10.12
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
This First Amendment to Employment Agreement is dated as of May 11, 1995
and is by and between Eric D. Booth ("Executive") and Lomas Financial
Corporation (the "Company").
WHEREAS, the parties have come to recognize over the course of
Executive's employment that the business of the Company is inextricably
linked to the operations of its principal subsidiary, Lomas Mortgage USA,
Inc. ("LMUSA"); and
WHEREAS, the parties have come to recognize over the same period
that the greatest portion of Executive's time and effort must be devoted to
LMUSA if the Company is to preserve its value to its shareholders; and
WHEREAS, the parties wish to formalize the contractual relationship
between LMUSA and Executive;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained herein and for other good and valuable consideration, the
parties agree as follows:
1. Position. In addition to serving as Chief Executive Officer
("CEO") of the Company, Executive shall serve as CEO of LMUSA and shall have
such duties and responsibilities with regard to LMUSA as are consistent with
those of a chief executive officer. Executive shall serve as a member of the
board of directors of LMUSA. Executive shall devote such time as is
necessary to the performance of his duties for LMUSA. Section 2 of the
Employment Agreement dated December 1, 1994 (the "Agreement") is amended
accordingly.
2. Termination. Executive's term of employment with LMUSA shall
be co-terminus with his employment with the Company subject to the terms of
the Agreement. Executive's employment with LMUSA may only be terminated
concurrently with his employment with the Company as provided in section 7 of
the Agreement. For purposes of section 11 of the Agreement, a "Sale" shall
include a sale of an interest in the stock or assets of LMUSA to the same
extent as provided therein for a sale of the stock or assets of the Company.
3. Indemnification. Executive shall enjoy the same duty of
indemnification from LMUSA as he enjoys from the Company for the performance
of Executive's duties on behalf of LMUSA.
4. Joint and Several Liability. The liability of LMUSA and the
Company for payment of the salary, bonus, benefits and other perquisites due
Executive under the Agreement shall be joint and several, without requirement
to apportion between LMUSA and the Company the relative time and effort spent
on behalf of each by Executive.
5. Relation Back. This First Amendment to Employment Agreement
relates back to the execution of the Employment Agreement such that LMUSA
assumes joint and several liability for all of the Company's duties and
obligations to Executive from and after that date to and including the
present and ratifies all agreements and understandings between the Company
and Executive.
6. Execution by LMUSA. LMUSA joins in the execution of this
First Amendment to Employment Agreement, although not originally a party to
the Agreement, for the purpose of acknowledging the terms of this First
Amendment to Employment Agreement and to signify that it is contractually
bound by the terms hereof.
IN WITNESS WHEREOF, the parties have executed this First Amendment
to Employment Agreement as of the date written above.
LOMAS FINANCIAL CORPORATION
By:/s/ Louis P. Gregory
--------------------------------
Its: Senior Vice President & General Counsel
------------------------------
LOMAS MORTGAGE USA, INC.
By: /s/ Louis P. Gregory
-------------------------------
Its: Senior Vice President & General Counsel
------------------------------
/s/ Eric D. Booth
- -----------------------------------
Eric D. Booth
EXHIBIT 10.13
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
This First Amendment to Employment Agreement is dated as of May 11,
1995, 1995 and is by and between Robert R. Denton ("Executive") and Lomas
Financial Corporation (the "Company").
WHEREAS, the parties have come to recognize over the course of
Executive's employment that the business of the Company is inextricably
linked to the operations of its principal subsidiary, Lomas Mortgage USA,
Inc. ("LMUSA"); and
WHEREAS, the parties have come to recognize over the same period
that the greatest portion of Executive's time and effort must be devoted to
LMUSA if the Company is to preserve its value to its shareholders; and
WHEREAS, the parties wish to formalize the contractual relationship
between LMUSA and Executive;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained herein and for other good and valuable consideration, the
parties agree as follows:
1. Position. In addition to serving as Executive Vice President
of the Company, Executive shall serve as Executive Vice President of LMUSA
and shall have such duties and responsibilities with regard to LMUSA as are
consistent with those of an executive vice president. Executive shall devote
such time as is necessary to the performance of his duties for LMUSA.
Section 2 of the Employment Agreement dated December 1, 1994 (the
"Agreement") is amended accordingly.
2. Termination. Executive's term of employment with LMUSA shall
be co-terminus with his employment with the Company subject to the terms of
the Agreement. Executive's employment with LMUSA may only be terminated
concurrently with his employment with the Company as provided in section 7 of
the Agreement. For purposes of section 11 of the Agreement, a "Sale" shall
include a sale of an interest in the stock or assets of LMUSA to the same
extent as provided therein for a sale of the stock or assets of the Company.
3. Indemnification. Executive shall enjoy the same duty of
indemnification from LMUSA as he enjoys from the Company for the performance
of Executive's duties on behalf of LMUSA.
4. Joint and Several Liability. The liability of LMUSA and the
Company for payment of the salary, bonus, benefits and other perquisites due
Executive under the Agreement shall be joint and several, without requirement
to apportion between LMUSA and the Company the relative time and effort spent
on behalf of each by Executive.
5. Relation Back. This First Amendment to Employment Agreement
relates back to the execution of the Employment Agreement such that LMUSA
assumes joint and several liability for all of the Company's duties and
obligations to Executive from and after that date to and including the
present and ratifies all agreements and understandings between the Company
and Executive.
6. Execution by LMUSA. LMUSA joins in the execution of this
First Amendment to Employment Agreement, although not originally a party to
the Agreement, for the purpose of acknowledging the terms of this First
Amendment to Employment Agreement and to signify that it is contractually
bound by the terms hereof.
IN WITNESS WHEREOF, the parties have executed this First Amendment
to Employment Agreement as of the date written above.
LOMAS FINANCIAL CORPORATION
By: /s/ Louis P. Gregory
-------------------------------
Its: Senior Vice President & General Counsel
------------------------------
LOMAS MORTGAGE USA, INC.
By: /s/ Louis P. Gregory
-------------------------------
Its: Senior Vice President & General Counsel
------------------------------
/s/ Robert R. Denton
- -----------------------------------
Robert R. Denton
EXHIBIT 11
LOMAS FINANCIAL CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS (LOSS) PER SHARE
(in thousands, except per share amounts)
Quarter Ended Nine Months Ended
March 31 March 31
------------------ ------------------
1995 1994 1995 1994
-------- -------- -------- ---------
PRIMARY
Average common shares outstanding 20,146 20,100 20,126 20,099
Common stock equivalents under
Nonemployee Directors Long Term
Incentive Plan 18 35 25 32
-------- -------- -------- ---------
Total shares 20,164 20,135 20,151 20,131
======== ======== ======== =========
Loss from continuing operations $(19,549) $ (4,746) $(60,608) $ (86,947)
Loss from discontinued operations (5,600) (12,923) (18,600) (28,427)
-------- -------- -------- ---------
Net loss $(25,149) $(17,669) $(79,208) $(115,374)
======== ======== ======== =========
Per share amounts:
Loss from continuing operations $ (.97) $ (.24) $(3.01) $(4.32)
Loss from discontinued operations (.28) (.64) (.92) (1.41)
------ ------ ------ ------
Net loss $(1.25) $ (.88) $(3.93) $(5.73)
====== ====== ====== ======
<PAGE>
FULLY DILUTED
Average common shares outstanding 20,146 20,100 20,126 20,099
Common stock equivalents under
Nonemployee Directors Long Term
Incentive Plan 18 35 25 32
-------- -------- -------- ---------
Total shares 20,164 20,135 20,151 20,131
======== ======== ======== =========
Loss from continuing operations $(19,549) $ (4,746) $(60,608) $ (86,947)
Loss from discontinued operations (5,600) (12,923) (18,600) (28,427)
-------- -------- -------- ---------
Net loss $(25,149) $(17,669) $(79,208) $(115,374)
======== ======== ======== =========
Per share amounts:
Loss from continuing operations $ (.97) $ (.24) $(3.01) $(4.32)
Loss from discontinued operations (.28) (.64) (.92) (1.41)
------ ------ ------ ------
Net loss $(1.25) $ (.88) $(3.93) $(5.73)
====== ====== ====== ======
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000060150
<NAME> GARY WHITE
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> MAR-31-1995
<CASH> 36,336
<SECURITIES> 9,953
<RECEIVABLES> 85,785
<ALLOWANCES> (26,650)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 103,710
<DEPRECIATION> (19,434)
<TOTAL-ASSETS> 1,237,805
<CURRENT-LIABILITIES> 0
<BONDS> 519,015
<COMMON> 20,146
0
0
<OTHER-SE> 42,275
<TOTAL-LIABILITY-AND-EQUITY> 1,237,805
<SALES> 0
<TOTAL-REVENUES> 163,788
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 132,374
<LOSS-PROVISION> 33,207
<INTEREST-EXPENSE> 58,815
<INCOME-PRETAX> (60,608)
<INCOME-TAX> 0
<INCOME-CONTINUING> (60,608)
<DISCONTINUED> (18,600)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (79,208)
<EPS-PRIMARY> (3.93)
<EPS-DILUTED> (3.93)
</TABLE>
