-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Pl/unJw4SP4AzI/FID6Cd7kdSyNyIx2mZuVwlEvYiiF/aOsOh7CqxzDwamr8GvKl OO7z1yxDr2ZtAL82IHBVCQ== 0000060150-95-000011.txt : 19950517 0000060150-95-000011.hdr.sgml : 19950516 ACCESSION NUMBER: 0000060150-95-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 17 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950512 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LOMAS FINANCIAL CORP CENTRAL INDEX KEY: 0000060150 STANDARD INDUSTRIAL CLASSIFICATION: MORTGAGE BANKERS & LOAN CORRESPONDENTS [6162] IRS NUMBER: 751043392 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-06868 FILM NUMBER: 95538306 BUSINESS ADDRESS: STREET 1: 1600 VICEROY DR 8TH FLOOR CITY: DALLAS STATE: TX ZIP: 75235 BUSINESS PHONE: 2148794000 MAIL ADDRESS: STREET 1: 1600 VICEROY DR STREET 2: 8TH FLOOR CITY: DALLAS STATE: TX ZIP: 75235 FORMER COMPANY: FORMER CONFORMED NAME: LOMAS & NETTLETON FINANCIAL CORP DATE OF NAME CHANGE: 19881030 10-Q 1 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. 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 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 ---------- ---------- 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. 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. 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) -------- -------- 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. 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. 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. 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):
Quarter Ended March 31 Nine Months Ended March 31 --------------------------------- --------------------------------- 1995 1994 1995 1994 --------------- --------------- --------------- --------------- 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 ------ ------ ------ ------- 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) ====== ====== ====== ======
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. 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. 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. 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. 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 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. EX-3.1 2 EXHIBIT 3.1 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. 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. 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 EX-10.1 3 EXHIBIT 10.1 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. 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: 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. 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 ----------------------------- EX-10.2 4 EXHIBIT 10.2 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. 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 ------------------------------- EX-10.3 5 EXHIBIT 10.3 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 EX-10.4 6 EXHIBIT 10.4 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. 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) 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 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." 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 "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 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." 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. -------------------- 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. EXHIBIT C (Memorandum 11/02/94) Page 1 of 1
LOMAS FINANCIAL CORPORATION COMMON STOCK CLOSING PRICES PER SHARE (JULY 1994 THRU SEPTEMBER 1994) CLOSING CLOSING CLOSING DATE PRICE DATE PRICE DATE PRICE ---- ------- ---- ------- ---- ------- 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 Average Daily Closing Price Per Share During The Period $5.43
EX-10.5 7 EXHIBIT 10.5 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 EX-10.6 8 EXHIBIT 10.6 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. 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 EX-10.7 9 EXHIBIT 10.7 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 EX-10.8 10 EXHIBIT 10.8 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. ------------ (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. 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 ------------------------ --------------------- EX-10.9 11 EXHIBIT 10.9 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. 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 ------------------------------ 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 ------------------------- 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 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. EX-10.10 12 EXHIBIT 10.10 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." 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 EX-10.11 13 EXHIBIT 10.11 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 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." 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. -------------------- 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. EXHIBIT C (Memorandum 11/02/94) Page 1 of 1 LOMAS FINANCIAL CORPORATION COMMON STOCK CLOSING PRICES PER SHARE (JULY 1994 THRU SEPTEMBER 1994)
CLOSING CLOSING CLOSING DATE PRICE DATE PRICE DATE PRICE ---- ------- ---- ------- ---- ------- 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 Average Daily Closing Price Per Share During The Period $5.43
EX-10.12 14 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 EX-10.13 15 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 EX-11 16 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) ====== ====== ====== ====== 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) ====== ====== ====== ====== EX-27 17
5 0000060150 GARY WHITE 1,000 9-MOS JUN-30-1995 JUL-01-1994 MAR-31-1995 36,336 9,953 85,785 (26,650) 0 0 103,710 (19,434) 1,237,805 0 519,015 20,146 0 0 42,275 1,237,805 0 163,788 0 0 132,374 33,207 58,815 (60,608) 0 (60,608) (18,600) 0 0 (79,208) (3.93) (3.93)
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