-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WLxbovHzIokH5JNtM2F5k+6ng1HQBwn9LOcCV+izhxNNtQBTuTvzNG+plUAmI+Uy Dm7krlOvSLa8pYD3HKp/tg== 0000950134-98-001006.txt : 19980212 0000950134-98-001006.hdr.sgml : 19980212 ACCESSION NUMBER: 0000950134-98-001006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980211 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SIENA HOLDINGS INC 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: SEC FILE NUMBER: 001-06868 FILM NUMBER: 98532214 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 FINANCIAL CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: LOMAS & NETTLETON FINANCIAL CORP DATE OF NAME CHANGE: 19881030 10-Q 1 FORM 10-Q FOR QUARTER ENDED DECEMBER 31, 1997 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 December 31, 1997 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 SIENA HOLDINGS, INC. -------------------------------------- (FORMERLY 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.) 717 North Harwood, Dallas, Texas 75201 - ------------------------------------ ----------- (Address of principal executive offices) (Zip code) (214) 665-6301 ---------------------------------------------------- (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 ----- ------ On October 10, 1995, the Registrant and certain of its subsidiaries filed bankruptcy proceedings under Chapter 11 of the Federal Bankruptcy Code in the District of Delaware. APPLICABLE ONLY TO CORPORATE ISSUERS: The number of shares outstanding of each of the issuer's classes of common stock as of January 31, 1998: Common Stock, $.10 par value -- 4,000,000 shares. 2 SIENA HOLDINGS, INC. AND SUBSIDIARIES (FORMERLY LOMAS FINANCIAL CORPORATION AND SUBSIDIARIES) FORM 10-Q FOR THE QUARTER ENDED DECEMBER 31, 1997 INDEX
PAGE ---- PART I -- FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Consolidated Balance Sheets - December 31, 1997 and June 30, 1997 . . 2 Statement of Consolidated Operations-Quarters and Six Months Ended December 31, 1997 and 1996 . . . . . . . . . . . . . . . . . . . . . 3 Statement of Consolidated Cash Flows - Six Months Ended December 31, 1997 and 1996 . . . . . . . . . . . . . . . . . . . . . 4 Notes to Consolidated Financial Statements . . . . . . . . . . . . . 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . 9 Liquidity and Capital Resources . . . . . . . . . . . . . . . . . . . 10 PART II -- OTHER INFORMATION Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . 12
1 3 PART I -- FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. CONSOLIDATED BALANCE SHEETS SIENA HOLDINGS, INC. AND SUBSIDIARIES (FORMERLY LOMAS FINANCIAL CORPORATION AND SUBSIDIARIES) (IN THOUSANDS)
Reorganized Company ---------------------------------- December 31, 1997 June 30, 1997 ----------------- -------------- (Unaudited) (Note) ASSETS Cash and cash equivalents ............................................... $ 1,903 $ 1,941 Investment in real estate . ............................................. 4,800 4,800 Receivables . ........................................................... 327 242 Prepaid expenses and other assets ....................................... 116 68 ---------------- -------------- $ 7,146 $ 7,051 ================ ============== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Accounts payable and accrued expenses ................................... $ 999 $ 990 Stockholders' equity: Preferred stock -- ($1 par value, 1,000 shares authorized, 0 shares issued and outstanding and 1,000 shares authorized, 0 shares issued and outstanding, respectively)............................................. -- -- Common stock -- ($.10 par value, 15,000 shares authorized, 4,000 shares issued and outstanding respectively).... .............................. 400 400 Other paid-in capital ................................................... 5,777 5,747 Accumulated deficit ..................................................... (30) (86) ---------------- -------------- 6,147 6,061 ---------------- -------------- $ 7,146 $ 7,051 ================ ==============
Note: The balance sheet at June 30, 1997, as presented is derived from the audited financial statements at that date. See notes to consolidated financial statements. 2 4 STATEMENT OF CONSOLIDATED OPERATIONS (UNAUDITED) SIENA HOLDINGS, INC. AND SUBSIDIARIES (FORMERLY LOMAS FINANCIAL CORPORATION AND SUBSIDIARIES) (IN THOUSANDS, EXCEPT NET LOSS PER SHARE AMOUNTS)
Reorganized Predecessor Reorganized Predecessor Company Company Company Company --------------- -------------- ---------------- ---------------- Quarter Ended Quarter Ended Six Months Ended Six Months Ended December 31, December 31, December 31, December 31, 1997 1996 1997 1996 --------------- -------------- ---------------- ---------------- Revenues: Commissions and fees . . . . . . . . $ 61 $ 185 $ 212 $ 1,408 Interest . . . . . . . . . . . . . . 24 57 47 883 Investment . . . . . . . . . . . . . -- -- -- 16 Gain on sales . . . . . . . . . . . . -- 18 -- 188 Other . . . . . . . . . . . . . . . 115 78 162 381 --------------- -------------- ---------------- ---------------- 200 338 421 2,876 --------------- -------------- ---------------- ---------------- Expenses: Personnel . . . . . . . . . . . . . . 25 160 45 1,471 Depreciation and amortization . . . . -- -- -- 106 Other operating . . . . . . . . . . . 158 267 290 2,714 Loss on sale or disposal of assets. . -- -- -- 3,718 --------------- -------------- ---------------- ---------------- 183 427 335 8,009 --------------- -------------- ---------------- ---------------- Income (loss) from continuing operations before reorganization items . . . . 17 (89) 86 (5,133) --------------- -------------- ---------------- ---------------- Reorganization items: Interest earned on cash accumulated . -- 151 -- 2,905 Professional fees . . . . . . . . . . -- (1,045) -- (5,686) Other bankruptcy expenses . . . . . . -- (35) -- (88) --------------- -------------- ---------------- ---------------- -- (929) -- (2,869) --------------- -------------- ---------------- ---------------- Income (loss) before federal income tax . . . . . . . . . . . . . . . . . . 17 (1,018) 86 (8,002) Federal income tax expense . . . . . . . (6) -- (30) -- --------------- -------------- ---------------- ---------------- Net income (loss) . . . . . . . $ 11 $ (1,018) $ 56 $ (8,002) =============== ============== ================ ================= Earnings per common share: Net income . . . . . . . . . . . . . $ 0.00 $ * $ 0.01 $ * Earnings per common share - assuming dilution: Net income . . . . . . . . . . . . . $ 0.00 $ * $ 0.01 $ *
See notes to consolidated financial statements. * Per share amount is not meaningful due to reorganization. 3 5 STATEMENT OF CONSOLIDATED CASH FLOWS (UNAUDITED) SIENA HOLDINGS, INC. AND SUBSIDIARIES (FORMERLY LOMAS FINANCIAL CORPORATION AND SUBSIDIARIES) (IN THOUSANDS)
Reorganized Predecessor Company Company ---------------- ---------------- Six Months Ended Six Months Ended December 31, December 31, 1997 1996 ---------------- ---------------- Operating activities: Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . $ 56 $ (8,002) Adjustments to reconcile net income (loss) to net cash (used) provided by operating activities before working capital changes: Loss on sale or disposal of assets . . . . . . . . . . . . . . . . -- 3,718 Depreciation and amortization . . . . . . . . . . . . . . . . . . -- 106 Federal income tax expense . . . . . . . . . . . . . . . . . . . 30 -- ---------------- ---------------- Cash (used) provided by operations before working capital changes . . 86 (4,178) Net change in sundry receivables, payables, and other assets (124) (2,742) ---------------- ---------------- Net cash (used) provided by operating activities . . . . (38) (6,920) ---------------- ---------------- Investing activities: Purchases of investments . . . . . . . . . . . . . . . . . . . . . . . -- (12,383) Net sales of foreclosed real estate . . . . . . . . . . . . . . . . . -- 276 Net sales of fixed assets . . . . . . . . . . . . . . . . . . . . . . -- 25,374 Proceeds from assets sold to First Nationwide Mortgage Corp . . . . . -- 6,160 Distribution of LMUSA pursuant to reorganization plan . . . . . . . . . -- (191,557) ---------------- ---------------- Net cash (used) provided by investing activities . . . . -- (172,130) ---------------- ---------------- Financing activities: Term debt repayments . . . . . . . . . . . . . . . . . . . . . . . . . -- (11,632) ---------------- ---------------- Net cash used by financing activities . . . . . . . . . . -- (11,632) ---------------- ---------------- Net (decrease) increase in cash and cash equivalents . . . . . . . . . . . (38) (190,682) Cash and cash equivalents at beginning of period . . . . . . . . . . . . . 1,941 197,800 ---------------- ---------------- Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . $ 1,903 $ 7,118 ================ ================ Cash payments for: Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ -- $ -- Federal income tax . . . . . . . . . . . . . . . . . . . . . . . . . . $ -- $ --
See notes to consolidated financial statements. 4 6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) SIENA HOLDINGS, INC. AND SUBSIDIARIES (FORMERLY LOMAS FINANCIAL CORPORATION AND SUBSIDIARIES) DECEMBER 31, 1997 NOTE A -- BASIS OF FINANCIAL STATEMENT PRESENTATION The accompanying unaudited consolidated financial statements include the accounts of Siena Holdings, Inc. ("SHI"), formerly Lomas Financial Corporation ("LFC"), and its subsidiaries (collectively, the "Company"). SHI's wholly-owned, principal subsidiaries are Siena Housing Management Corp. and LLG Lands, Inc. Prior to October 1, 1996, SHI's wholly-owned principal subsidiary was Lomas Mortgage USA, Inc. ("LMUSA"), now known as Nomas Corp. As a result of the Chapter 11 proceedings discussed in "Note B - Reorganization", the Company's interest in LMUSA was extinguished effective October 1, 1996. LFC's plan of reorganization was confirmed on October 4, 1996, but not effective until March 1997. In accordance with the American Institute of Certified Public Accountants' Statement of Position 90-7, Financial Reporting by Entities in Reorganization Under the Bankruptcy Code, the Company adopted fresh-start accounting as of March 31, 1997, after all material conditions required by the Plan were satisfied. The delay in the adoption of fresh-start accounting was due to uncertainties surrounding the resolution of claims and intercompany disputes between the LMUSA Creditors' Committee and the LFC Creditors' Committee. In accordance with fresh-start accounting, the gain on discharge of debt resulting from the bankruptcy proceedings was reflected on the predecessor Company's financial statements for the period ended March 31, 1997. In addition, the accumulated deficit of the predecessor Company at March 31, 1997 was eliminated, and, at April 1, 1997, the reorganized Company's financial statements reflected no beginning retained earnings or deficit. See "Item 8. Financial Statements and Supplementary Data" in the Company's annual Form 10-K for the year ended June 30, 1997 for more details on fresh-start reporting. Since April 1, 1997, the Company's financial statements have been prepared as if it is a new reporting entity and a vertical black line has been placed to separate post-reorganization operating results (the "Reorganized Company") from pre-reorganization operating results (the "Predecessor Company") since they are not prepared on a comparable basis. Under fresh-start accounting, all assets and liabilities were restated to reflect their reorganization value, which approximated fair value at the date of reorganization. The financial statements 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 and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation at December 31, 1997 have been included. Operating results for the quarter and six months ended December 31, 1997 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 1998. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual Form 10-K for the year ended June 30, 1997. NOTE B -- REORGANIZATION On October 10, 1995, LFC, two subsidiaries of LFC and LMUSA (collectively the "Debtor Corporations") filed separate voluntary petitions for reorganization under Chapter 11 of the Federal Bankruptcy Code in the District of Delaware. The petitioning subsidiaries were Lomas Information Systems, Inc. ("LIS") and Lomas Administrative Services, Inc. ("LAS"). The Chapter 11 cases were jointly administered until October 1, 1996. The Debtor Corporations managed their businesses in the ordinary course as debtors-in-possession subject to the control and 5 7 supervision of the Federal Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") from October 10, 1995 through October 4, 1996. On October 23, 1995, a single creditors' committee (the "Joint Creditors' Committee") was appointed by the U.S. Trustee for the District of Delaware (the "U.S. Trustee") to represent creditors of all the Debtor Corporations. On March 15, 1996, the U.S. Trustee revoked the appointment of the Joint Creditors' Committee and appointed statutory committees of unsecured creditors of LFC (the "LFC Creditors' Committee") and of LMUSA (the "LMUSA Creditors' Committee"). The Debtor Corporations filed two separate proposed plans of reorganization with the Bankruptcy Court. LFC, LIS and LAS (the "Joint Debtors") filed their proposed joint plan of reorganization on April 8, 1996 and subsequently filed their first amended joint plan of reorganization on May 13, 1996 and their second amended joint plan of reorganization on July 3, 1996. An order confirming the second amended joint plan of reorganization filed on October 4, 1996 and a stipulation and order among the Joint Debtors and the LFC Creditors' Committee regarding technical modifications to the plan of reorganization and confirmation order filed on January 27, 1997 together with the second amended joint plan of reorganization filed on July 3, 1996 are collectively referred to herein as the "Joint Plan". LMUSA filed its own proposed plan of reorganization on April 8, 1996 and subsequently filed its own proposed first amended plan of reorganization on May 13, 1996 and its second amended joint plan of reorganization on July 3, 1996 (the "LMUSA Plan" and together with the Joint Plan, the "Plans"). In addition, on July 3, 1996, the Joint Debtors filed with the Bankruptcy Court a proposed form of disclosure statement relating to the Joint Plan (the "Joint Disclosure Statement"), and LMUSA filed with the Bankruptcy Court a substantially similar proposed form of disclosure statement (with the same Exhibits as the Joint Disclosure Statement) relating to the LMUSA Plan (the "LMUSA Disclosure Statement" and together with the Joint Disclosure Statement, the "Disclosure Statements"). The LMUSA Plan was confirmed by the Bankruptcy Court on October 1, 1996, was discharged from the bankruptcy case, and changed its name to Nomas Corp. As a result of LMUSA's reorganization plan, LFC distributed its interest in LMUSA to LMUSA's creditors as of October 1, 1996. This distribution decreased the Company's assets and liabilities by $293.3 million and $419.4 million, respectively, and stockholders' deficit was increased by $126.1 million. The operations of LMUSA are included in the Statement of Consolidated Operations and the Statement of Consolidated Cash Flows through the date of distribution of LMUSA. The Joint Plan was confirmed on October 4, 1996, by the Bankruptcy Court. The Joint Plan's effectiveness was conditioned on the satisfaction, or waiver by the LFC Creditors' Committee, of certain conditions. On January 23, 1997, the LFC Creditors' Committee and the LMUSA Creditors' Committee signed an agreement in respect of intercompany claims (the "Intercompany Agreement"). The Intercompany Agreement was approved by the Bankruptcy Court on February 21, 1997. As a result of the settlement, certain assets were transferred to the Company on the effective date of March 7, 1997. The LFC Creditors' Committee waived all other conditions and the Joint Plan became effective March 7, 1997 and the Company emerged with a new name, Siena Holdings, Inc. See Exhibit 10.1, Exhibit 10.2 and Exhibit 10.3 which are filed as exhibits to the Company's annual Form 10-K for the year ended June 30, 1997. 6 8 The following is a summary of the claims, excluding administrative, as of the initial distribution date (as defined herein), (in thousands): Priority LIS claims - allowed . . . . . . . . . . . . . $ 234 Convenience claims - allowed . . . . . . . . . . . . . . 1 Unsecured Class 3 claims - Bondholders - allowed . . . . . . . . . . . . . . . 145,433 Other claims - allowed . . . . . . . . . . . . . . . 1,366 MSP claims - disputed . . . . . . . . . . . . . . . . . . 8,803 ------------------ $ 155,837 ==================
Pursuant to the Joint Plan, the Class 3 unsecured creditors will receive a combination of cash and new common stock as settlement of their allowed claim. On November 12, 1997, the initial distribution date (the "Initial Distribution Date"), $12.5 million was disbursed to the distribution agent for distribution to the Class 3 unsecured creditors. In addition, as assets in the Creditors' Trust (see "Note D - Creditors' Trust") are liquidated, additional distributions will be made to the Class 3 unsecured creditors. Also, on the Initial Distribution Date pursuant to the Joint Plan and a decision by the LFC Creditors' Committee, 4,000,000 shares of the new common stock were issued by the stock transfer agent. For balance sheet presentation and earnings (loss) per share, the 4,000,000 shares were considered issued as of April 1, 1997. The estimated distribution is calculated based on fair values applied to the assets upon adoption of fresh-start reporting and known liabilities. The amounts ultimately distributed to the creditors are solely dependent on the success of the Company and the amounts realized from the collection of assets and the settlement of liabilities for both the Creditors' Trust and the Litigation Trust. See "Note D - Creditors' Trust". NOTE C -- ASSETS DISPOSED OF AND LIABILITIES ASSUMED On October 2, 1995, LMUSA closed the sale to First Nationwide Mortgage Corporation ("First Nationwide") of its GNMA servicing portfolio (approximately $7.9 billion in unpaid principal balance of mortgage loans), its investment in LMUSA Partnership and its loan production business including its mortgage loans held for sale and the payment of the related warehouse lines of credit (the "GNMA Sale"). On January 31, 1996, LMUSA closed the sale to First Nationwide of its remaining mortgage servicing portfolio (approximately $12 billion in unpaid principal balance of mortgage loans) and certain other assets pursuant to Section 363 of the Bankruptcy Code (the "Section 363 Sale"). The above transactions resulted in a loss on sale or disposal of assets in the Company's Statement of Consolidated Operations of $0 and $0 for the quarters ended December 31, 1997 and 1996, respectively and $0 and $3.7 million for the six months ended December 31, 1997 and 1996, respectively. These transactions were subject to additional adjustments which are solely the responsibility of Nomas Corp. as a result of the distribution of LMUSA by the Company. On July 16, 1996, the former Lomas headquarters and all other campus buildings were sold through the Bankruptcy Court process for $23.5 million. Pursuant to a stipulation and order among Travelers Insurance Company ("Travelers"), the Debtors', and the LMUSA Creditors' Committee, Travelers received approximately $11.43 million of the proceeds. The net cash received was deposited into a joint account for the Company and LMUSA. In conjunction with the intercompany claims settlement process in March, 1997, the Company received $1.3 million and LMUSA was granted the remainder plus accrued interest from the joint account. Additionally, substantially all of the remaining furniture, fixtures and equipment of the Company and LMUSA were sold by a liquidator during July and August 1996. 7 9 NOTE D -- CREDITORS' TRUST The Joint Plan established a creditors' trust (the "Creditors' Trust") which the Company serves as trustee. The Creditors' Trust holds the nonreorganized assets of the Company in trust pending their disposition and/or distribution to creditors in accordance with the terms of the Joint Plan. The Creditors' Trust is organized for the sole purpose of liquidating the non- reorganized assets and will terminate on October 4, 2001 unless an extension is approved by the Bankruptcy Court. The assets and liabilities of the Creditors' Trust are not reflected in the accompanying Consolidated Balance Sheet as the Company is not the beneficiary of the Trust. Accordingly, revenues and expenses related to the Creditors' Trust assets and liabilities since April 1, 1997, are not reflected in the accompanying Statement of Consolidated Operations. The allocation of costs between the Creditors' Trust and the Company is based on management's estimate of each entity's proportional share of costs. Gains and losses from the Creditors' Trust are solely for the creditors' benefit and the Company has no risk of loss on the assets or liabilities. The amounts ultimately distributed to the creditors are solely dependent on the amounts realized from the collection of the trust assets and settlement of trust liabilities. The following is a summary of the nonreorganized assets and liabilities held in the Creditors' Trust as of December 31, 1997 (in thousands) (unaudited): Cash held in reserve for payment of administrative expenses and other trust liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,860 Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . (1,517) -------------- Cash available for future trust expenses . . . . . . . . . . . . . . . . . . . $ 343 ============== Cash held in reserve for payment of certain claims . . . . . . . . . . . . . . . . . $ 54 ============== MSP Trust cash held in reserve pending settlement of MSP claims and expenses . . . . $ 6,708 ============== Net assets available for future distribution to Class 3 creditors: Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,048 Subordinated promissory note receivable pursuant to bankruptcy court settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,100 Investments: Two limited partnerships which fund institutional mortgage loans . . . . . 1,060 Residual cash in the MSP Trust pending settlement of MSP claims and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,503 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 -------------- Total investments . . . . . . . . . . . . . . . . . . . . . . . . . 2,584 -------------- Net assets available for future distribution to Class 3 creditors . $ 12,732 * ==============
* Pursuant to the Joint Plan, an additional $300,000 of cash can be set aside for payment of additional trust expenses, if needed. On January 14, 1998, the Creditors' Trust received $8.1 million pursuant to the final settlement of a subordinated promissory note. The settlement was approved by the Bankruptcy Court on December 29, 1997. Also on December 29, 1997, the Bankruptcy Court approved the procedures to be used in settlement of the MSP litigation (see "Part II Other Information, Item 1. Legal Proceedings"). Under the approved procedures the Creditors' Trust and the beneficiaries of the MSP will share the assets remaining in the trust equally after payment of certain legal expenses and MSP trust fees. The procedures include application to federal district court for approval of a class action and settlement. If the settlement is approved, the reserve for MSP claimants would be $3.9 million as of December 31, 1997, thus increasing the funds available for distribution to Class 3 unsecured creditors by $2.4 million. The ultimate amount to be distributed to MSP claimants may differ from the above, pending the outcome of all bankruptcy and legal proceedings. NOTE E -- EARNINGS (LOSS) PER SHARE During the second quarter of 1998 the Company adopted SFAS 128 "Earnings Per Share" ("FAS 128") which replaces the presentation of primary earnings per share ("EPS") with a presentation of basic EPS and requires dual presentation of basic and diluted EPS. The Company retroactively applied FAS 128 to the quarter ended September 30, 1997. Adoption of FAS 128 did not have a material impact on the earnings per share. Earnings per common share for the quarter and six months ended December 31, 1997 was computed using the 4,000,000 shares reserved for issuance and ultimately issued on November 12, 1997. The effects of outstanding options are included in the calculation of earnings per common share - assuming dilution to the extent that they are dilutive to earnings. Effective December 1, 1997 the Company granted options under the Siena Holdings, Inc. Nonqualified Stock Option Agreements (the "Nonqualified Stock Option Agreements"), included as Exhibits 10.3 and 10.4 to this quarterly report Form 10-Q as of December 31, 1997, which are considered in the calculation of earnings per common share - assuming dilution. Earnings (loss) per share information for the predecessor is not presented because of the revision of the Company's capital structure pursuant to the Plan of Reorganization makes such information not meaningful. 8 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATIONS In accordance with the American Institute of Certified Public Accountants' Statement of Position 90-7, Financial Reporting by Entities in Reorganization Under the Bankruptcy Code, the Company adopted fresh-start accounting as of March 31, 1997. See "Note A - Basis of Financial Statement Presentation". The accumulated deficit of the predecessor Company at March 31, 1997 was eliminated, and, at April 1, 1997, the reorganized Company's financial statements reflected no beginning retained earnings or deficit. Since April 1, 1997, the Company's financial statements have been prepared as if it is a new reporting entity and a vertical black line has been placed to separate the operating results of the Predecessor Company from those of the Reorganized Company since they are not prepared on a comparable basis. On October 1, 1996, the Company distributed its interest in LMUSA to LMUSA's creditors pursuant to LMUSA's reorganization plan. Effective March 7, 1997, the Company settled its intercompany disputes with LMUSA resulting in the transfer of assets and writeoff of receivables and payables with a net increase in retained earnings of $16.8 million. See "Note B - Reorganization". The operating results of the Company during the quarters and six months ended December 31, 1997 and 1996 were as follows (in thousands):
Reorganized Predecessor Reorganized Predecessor Company Company Company Company ------------ ------------ ------------ ------------ Quarter Quarter Six Months Six Months Ended Ended Ended Ended December 31, December 31, December 31, December 31, 1997 1996 1997 1996 ------------ ------------ ------------ ------------ Operating income (loss): Mortgage banking ............................. $ -- $ -- $ -- $ (1,340) Assisted care management ......................... 39 138 160 265 Other ........................................ 123 127 176 384 ------------ ------------ ------------ ------------ 162 265 336 (691) Expenses: General and administrative ................... (145) (354) (250) (724) Loss on sale or disposal of assets ........... -- -- -- (3,718) ------------ ------------ ------------ ------------ (145) (354) (250) (4,442) ------------ ------------ ------------ ------------ Income (loss) from operations before reorganization items ............................................ 17 (89) 86 (5,133) Reorganization items---net .......................... -- (929) -- (2,869) ------------ ------------ ------------ ------------ Income (loss) before federal income tax expense ..... 17 (1,018) 86 (8,002) Federal income tax expense .......................... (6) -- (30) -- ------------ ------------ ------------ ------------ Net income (loss) .................... $ 11 $ (1,018) $ 56 $ (8,002) ============ ============ ============ ============
The operating results presented above for the quarter and six months ended December 31, 1997 are not comparable to those for the same periods in fiscal year 1997. The first quarter of fiscal 1997 included the operations of LMUSA prior to the distribution of LMUSA from the Company on October 1, 1996. During that period, LMUSA recorded an additional loss on the sale of assets of $3.7 million as a result of an adjustment to the calculation of interest on the receivables from First Nationwide and an agreed upon settlement of the final purchase price on the GNMA sale. Additionally, during the quarter and six months ended December 31, 1996, the Company recorded net reorganization 9 11 items of $0.9 million and $2.9 million, respectively. At fresh start on April 1, 1997, certain assets were transferred to the Creditors' Trust. See "Note D - - Creditors' Trust". This resulted in lower income for the quarter and six months ended December 31, 1997 than for the same periods in the prior fiscal year as it relates to those assets that were transferred to the Creditors' Trust. The decreased profitability of the assisted care management operations from $39,000 and $160,000 for the quarter and six months ended December 31, 1997, respectively, as compared to $138,000 and $265,000 for the quarter and six months ended December 31, 1996, respectively, is primarily attributable to the decreased management fee received by Siena Housing Management, Inc. ("SHM"), a wholly-owned subsidiary of the Company. SHM manages and maintains an assisted care facility in Houston, Texas under a management agreement into which it entered on June 27, 1977 with Treemont, Inc. ("Treemont"). Treemont elected to begin significant capital improvements for fire protection that are to be funded by operations. These expenditures decreased the second quarter management fee received by SHM and will continue to result in lower management fees until the completion of the project which is expected to be finished by the end of fiscal year 1998. After December 31, 1997, Treemont will no longer pay the Company for pension benefits paid to the employees of SHM. The reduction in Treemont expense will reduce the effect of the capital expenditures on SHM revenue during fiscal year 1998 and increase profitability thereafter. Refer to the Company's annual report on Form 10-K for the fiscal year ended June 30, 1997 for more information on the Company's assisted care business and management contract. The Company reported other operating income of $123,000 and $176,000 for the quarter and six months ended December 31, 1997, respectively, including an overhead allocation for certain expenses charged to the Creditors' Trust of $114,000. The remaining income consisted of investment and dividend income. Other operating income for the quarter and six months ended December 31, 1996 included investment and dividend income related to assets that were transferred to the Creditors' Trust as of April 1, 1997, and thus not comparable to the quarter and six months ended December 31, 1997. The Company has reviewed the real estate interests held in its subsidiary LLG Lands, Inc. and has begun to market the property zoned for multi-family use. The Company holds approximately 150 net acres of undeveloped land in Allen, Texas. Of this total, approximately 37 net acres are zoned for multi-family use, the remaining net acreage is zoned for single family use and commercial use. The Company will attempt to increase the values of the property through the re-zoning and relocation of zoning in certain tracts. Refer to the Company's annual report on Form 10-K for the fiscal year ended June 30, 1997 for more information on the Company's real estate investment. General and administrative expenses decreased from the same period in fiscal year 1997 as a result of the significant decrease in the number of employees or consultants and related occupancy and other office expenses. Effective December 1, 1997, the Board of Directors of the Company approved the separate retention for its two officers, John P. Kneafsey - Chief Executive Officer and W. Joseph Dryer - President, (the "Retention Agreements") included as Exhibits 10.1 and 10.2, respectively, to this Form 10-Q for the quarter ended December 31, 1997. The Retention Agreements, with a five year term, provide for the payment of: (1) a monthly retainer, (2) severance upon early termination of the contract by the Company, and (3) a success bonus based upon certain performance criteria. The Retention Agreements also awarded stock options to Mr. Kneafsey and Mr. Dryer pursuant to the SHI Nonqualified Stock Option Agreements included as Exhibits 10.3 and 10.4, respectively, to this Form 10-Q for the quarter ended December 31, 1997. The stock options resulted in related expense of $1,000 for the quarter ended December 31, 1997. LIQUIDITY AND CAPITAL RESOURCES As of December 31, 1997, the only liabilities of the Company were accounts payable and accrued expenses which will be paid from current operating cash available as of December 31, 1997. 10 12 PART II -- OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. The Company had a Management Security Plan ("MSP") for certain of its employees. According to the MSP, key employees of the Company who participated in the MSP are to be paid, in the event of retirement or death, a portion of the employee's salary which such employee chose as the basis for computation of retirement or death benefits. The Company ceased new enrollments in 1985. The LFC Creditors' Committee has argued that the funds contributed to the MSP are held in a trust (the "MSP Trust") subject to the claims of creditors in the event of insolvency. Because of the bankruptcy filings by the Company and LMUSA, no contributions, payments or actuarial evaluation have been made to the MSP since the petition date. On June 11, 1996, the Bankruptcy Court authorized the LFC Creditors' Committee to commence and prosecute an action against the trustee seeking the return of funds held in such MSP Trust. The LFC Creditors' Committee contends that the funds in the trust constitute property of the Company's estate. However, the trustee, Bankers Trust, has asserted that the trustee is obligated to hold the assets for the sole benefit of the MSP participants. In addition, during the course of litigation, the Unofficial Committee of MSP Beneficiaries filed a motion to intervene in the adversary proceeding which the Bankruptcy Court granted, and filed an action against Bankers Trust to turn over to the MSP beneficiaries the assets held in the MSP Trust. On April 29, 1997, pursuant to a Stipulation and Order Regarding Reserve for MSP Claimants, the Bankruptcy Court authorized the Company to maintain a single distribution reserve in the amount of $6.3 million in order to satisfy any obligations to the MSP Claimants under the Joint Plan. On December 31, 1997, the balance of the MSP Trust was $8.2 million. Pursuant to the above stipulation, the Creditors' Trust assumed $6.3 million of the MSP Trust balance to be held in reserve for MSP claimants. The remainder of the MSP Trust, $1.9 million, net of a reserve of $0.4 million for MSP related legal fees and expenses, is included as an asset in the Creditors' Trust available for distribution to the Class 3 unsecured creditors. The preliminary MSP disputed claims total $8.8 million. On December 29, 1997, the Bankruptcy Court approved procedures for a settlement whereby the MSP claimants would receive fifty percent of the MSP Trust balance after deducting certain legal fees and MSP trust expenses. If this settlement is approved by a federal district court, the reserve for MSP claimants would be $3.9 million, thus increasing the funds available for distribution to the Class 3 unsecured creditors by $2.4 million. The ultimate amount to be distributed to the MSP claimants may differ from the above, pending the outcome of all bankruptcy and legal proceedings. The LFC Committee also commenced an adversary proceeding to recover the funds in the rabbi trust for the Company's Excess Benefit Plan (the "EBP Trust") on September 20, 1996, having obtained the Bankruptcy Court's approval for such action on September 9, 1996. Bankers Trust, the trustee of the EBP Trust, agreed that the Company is entitled to the funds held in the EBP Trust, and accordingly, funds totaling $0.6 million were received by the Company in June, 1997 and subsequently transferred to the Creditors' Trust. The remaining funds were received in July 1997. On August 28, 1996 the Bankruptcy Court authorized the LFC Committee to commence an action against Residential Information Services Limited Partnership ("RIS") and certain of its affiliates and related companies. In a complaint dated September 30, 1996, the LFC Committee commenced such an action. On January 10, 1997, the LFC Committee filed an amended complaint. The amended complaint contains, inter alia, claims for breach of contract, fraud, tortious interference with contract, turnover and quantum meruit against RIS and the other defendants in connection with RIS' acquisition of substantially all of the assets of Lomas Information Systems, Inc. in December 1994. The amended complaint seeks substantial damages from the defendants together with interest, costs and attorneys' fees and punitive damages. This case was settled and proceeds of $5.4 million were received in June 1997 by the Company and subsequently transferred, net of $234,000 for certain administrative claims, to the Creditors' Trust. 11 13 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits: Exhibit Number ------ (10.1) Retention Agreement effective December 1, 1997 by and between SHC and John P. Kneafsey (10.2) Retention Agreement effective December 1, 1997 by and between SHC and W. Joseph Dryer (10.3) Siena Holdings, Inc. Nonqualified Stock Option Agreement dated December 1, 1997 by and between SHC and John P. Kneafsey (10.4) Siena Holdings, Inc. Nonqualified Stock Option Agreement dated December 1, 1997 by and between SHC and W. Joseph Dryer (11) Computation of Earnings (Loss) Per Share (27) Financial Data Schedule (submitted to the Securities and Exchange Commission for its information). (b) Reports on Form 8-K: None. 12 14 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. SIENA HOLDINGS, INC. ---------------------------- (Registrant) Date: February 11, 1998 By: /S/ W. JOSEPH DRYER ----------------------------- President Date: February 11, 1998 By: /S/ W. JOSEPH DRYER ----------------------------- Principal Accounting Officer 13 15 INDEX TO EXHIBITS
Exhibit Number Description ------ ----------- (10.1) Retention Agreement effective December 1, 1997 by and between SHC and John P. Kneafsey (10.2) Retention Agreement effective December 1, 1997 by and between SHC and W. Joseph Dryer (10.3) Siena Holdings, Inc. Nonqualified Stock Option Agreement dated December 1, 1997 by and between SHC and John P. Kneafsey (10.4) Siena Holdings, Inc. Nonqualified Stock Option Agreement dated December 1, 1997 by and between SHC and W. Joseph Dryer (11) Computation of Earnings (Loss) Per Share (27) Financial Data Schedule (submitted to the Securities and Exchange Commission for its information).
EX-10.1 2 RETENTION AGMT EFFECTIVE 12/1/97 - J. KNEAFSEY 1 EXHIBIT 10.1 RETENTION AGREEMENT This Retention Agreement (this "Agreement"), dated and effective as of the 1st day of December, 1997 is by and between Siena Holdings, Inc., a Delaware corporation ("Company"), and John P. Kneafsey, an individual residing in Phoenix, Maryland, ("Officer"). In consideration of the mutual covenants set forth herein, Company and Officer, intending to be legally bound, hereby agree as follows: 1. Relationship. Company hereby retains Officer, and Officer hereby accepts such retention, upon the terms and conditions set forth in this Agreement. Such retention relationship shall continue for the stated term of this Agreement, as described in Section 7 hereof, or until the earlier termination of such relationship and this Agreement pursuant to Section 5 hereof. 2. Position and Responsibilities of Officer. Officer shall be retained as the Chief Executive Officer of Company and shall be stationed in Maryland or such other locations which during the term of this Agreement, may be designated by Company and approved by Officer. Officer shall devote approximately one-half of his business time and attention to the business of Company. Officer shall make himself available in person to render services on a regular basis equivalent to four days a week, allowing for reasonable and customary vacations and taking into account the nature of the services required; and provided that Officer shall be required to render no less than 20 hours per week on average. Officer, shall, subject to the supervision, direction and control of the Board of Directors of Company (the "Board") and the provisions of the Certificate of Incorporation, as amended from time to time in accordance with the provisions thereof, and Bylaws, as amended from time to time in accordance with the provisions thereof, of Company, manage, supervise and control such business, and shall devote his best efforts to the faithful performance of his duties on behalf of Company; provided, however, that it is the understanding of parties that Officer shall be entitled to engage in other business, professional and fiduciary obligations, including but not limited to those currently being pursued by Officer to the extent that such interests and obligations do no materially interfere with Officer's performance of his duties for Company. Officer's duties shall generally be those assigned to and customarily performed by the Chief Executive Officer of a company and shall include, specifically without limitation, management of Siena Housing Management operations, LLG Lands real estate, provision of information to trustee of the certain litigation trust("Litigation Trustee")created pursuant to the Second Amended Joint Chapter 11 Plan of Lomas Financial Corporation, Lomas Information Systems, Inc. and Lomas Administrative Services, Inc.("Plan") and post-confirmation creditor's committee as authorized in the confirmation order to the Plan to -1- 2 execute the terms of the Plan, maintenance of existing records, and general supervision of the corporate and legal affairs of the Company and the LFC Creditors Trust while the Company is Trustee. 3. Compensation. As approved by the Board of Directors in its meeting of November 24, 1997; for all services rendered by Officer pursuant to this Agreement, Company shall pay to Officer, and Officer shall accept as full compensation hereunder, the following: (A) Retainer. Officer shall receive a monthly retainer of not less than $10,666.67, with such adjustments thereto as may be determined by the Board in its sole discretion. If Officer's base annual retainer is increased at any time, it shall not thereafter be decreased during the term of this Agreement, unless such decrease is the result of a general reduction affecting the base salaries of all other executive officers of the Company. (B) Bonus. Such bonuses to be paid as part of the deal-maker portion of the incentive plan which will pay a percentage of the deal value established by the Board of Directors or the appreciated value above the fair market value of the asset; which, as a result of the fresh start adjustments is the same as book value on June 30, 1997. Officer shall be paid 6% of the gross appreciation value above book value or 6% of the deal value, upon the close of such transaction. Such bonus provision shall apply to the Company and its subsidiaries and shall be applied to the Company's results as Trustee of the LFC Creditors Trust. (C) Stock Options. Officer shall receive 271,750 non-qualified stock options which will vest at a rate of 20% per 12 months of service. Upon the event of any change-in-control of the Company the stock options shall be 100% vested. The Board of Directors may from time to time grant additional stock options or other forms of long-term incentive compensation arrangements to the Officer. The privilege to participate in these grants is at the discretion of the Board of Directors and the stipulations regarding the granting of these awards and their exercise by the Officer will be defined in separate agreements or in other plans or actions of the Board of Directors. (D) Insurance. Company will provide Officer with coverage under a customary insurance policy with respect to certain errors, omission and acts of directors and officers as supplied to the Board of Directors. Failure to provide such a policy shall constitute constructive termination of Officer by Company and shall entitle Officer to a termination payment in accordance with paragraph 6. 4. Reimbursement of Expense. Officer shall be entitled to reimbursement for reasonable expenses incurred by Officer in the course of rendering services to Company under this agreement. 5. Termination. The Retention relationship between Officer and Company created hereunder shall terminate before the expiration of the stated term of this Agreement upon the occurrence of any of the following events: -2- 3 (a) Termination for Cause. The following events, which for purposes of this Agreement shall constitute "cause" for termination: (i) the willful breach by Officer of any provision of Sections 1 or 2 (including but not limited to a refusal to follow lawful directives of the Board); (ii) any act of fraud or dishonesty by Officer with respect to any aspect of Company's business; (iii) the illegal use of drugs by Officer during the term of this Agreement that, in the determination of the Board, substantially interferes with Company's business; (iv) substantial failure of performance by Officer, which is repeated or continued after written notice to Officer of such failure, and which is reasonably determined by the Board to be materially injurious to the business or interests of Company; (v) conviction of Officer by a court of competent jurisdiction of a felony or of a crime involving moral turpitude; or (vi) death of Officer or disability because of injury, illness, or other incapacity (physical or mental) which for more than 90 days renders Officer incapable of performing the essential functions of the position contemplated by the Agreement herein. Any notice of discharge shall describe with reasonable specificity the cause of causes for the termination of Officer's retention, as well as the effective date of the termination (which effective date may be the date of such notice). If Company terminates Officer's retention for any of the reasons set forth above in this Section 5(a), Company shall have no further obligations hereunder from and after the effective date of termination (other than as set forth below) and shall have all other rights and remedies available under this or any other agreement and at law or in equity. (b) Voluntary Termination. Officer provides 60 days written notice to Company of his intent to terminate the retention relationship with Company. Company retains the right after proper notice of Officer's voluntary termination to require Officer to cease retention immediately; however, in such event, Company shall remain obligated to pay Officer his retention payment during the 60-day notice period. 6. Compensation Upon Termination. (a) General. Upon the termination of Officer's retention under this Agreement before the expiration of the stated term hereof for any reason, Officer shall be entitled to the compensation earned by him before the effective date of termination, as provided in Section -3- 4 3 hereof, prorated on the basis of the number of full days of service rendered by Officer during the month to the effective date of termination. Upon the event of any termination pursuant to this section the Company the stock options identified above shall be 100% vested. (b) Termination Payment. If such termination is the result of the discharge of Officer by Company for any reason other than cause (as defined in Section 5(a) hereof), then Officer shall be entitled to receive on the effective date of termination as a termination payment an amount equal to the retention payment (excluding bonuses) that Officer would have received for the next 12 months following termination adjusted up to take into consideration taxes that would have to paid on the Termination Payment. For the purpose of determining the amount of such termination payment, "retention payment" shall be deemed to be the average level of Officer's retention payment that is established in accordance with Section 3(a) hereof for the 90 day period ending on the effective date of termination. On the last day of service, the termination contemplated herein shall be paid in cash on the date of expiration or the termination. If Officer's retention hereunder terminates because of the death of the Officer, all amounts that are due to him under the terms of this Agreement shall be paid to his administrators, personal representatives, heirs and legatees, as may be appropriate. (c) Termination For Cause or Voluntary Termination. If the retention relationship hereunder is terminated by Company for cause or voluntarily by Officer, Officer shall not be entitled to any termination payment, other than pursuant to the terms of paragraph 3. (d) Survival. The provisions of Section 6 hereof shall survive the termination of the retention relationship hereunder and this Agreement to the extent necessary or reasonably appropriate to effect the intent of the parties hereto as expressed in such provisions. 7. Term. The stated term of this Agreement and the retention relationship created hereunder shall be and remain in effect for a period of five years from the date hereof. The Board, upon notice to Officer not less that 60 days prior to the expiration of the term of this Agreement shall have the option to extend this Agreement for successive 6 month periods under terms and retention payment to be mutually agreed to by Company and Officer unless this Agreement is sooner terminated in accordance with Section 5 hereof. 8. Relocation Expense. In the event that the corporate office of the Company is moved at the direction of the Board to a location which is more that 100 miles away from Maryland, and as a result and in order to be able to effectively perform his services hereunder, Officer relocates to the vicinity of such relocation, Company shall reimburse Officer for all of his reasonable and documented relocation expenses. 9. Remedies. Each of the parties to this Agreement will be entitled to enforce its rights under this Agreement specifically, to recover damages by reason of any breach of the provisions of this Agreement and to exercise all other rights existing in its favor. The parties hereto -4- 5 agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive relief in order to enforce or prevent any violations of the provisions of this Agreement. 10. Attorney's Fees. If any action at law or equity, including any action for declaratory or injunctive relief, is brought to enforce or interpret the provisions of this Agreement, the prevailing party shall be entitled to recover reasonable attorneys' fees from the non-prevailing party, which fees may be set by the court in the trial of such action, or may be enforced in a separate action brought for that purpose, and which fees shall be in addition to any other relief which may be awarded. 11. Assignment. This Agreement is personal to Officer and may not be assigned in any way by Officer without the prior written consent of Company. This Agreement shall not be assignable or delegated by Company. Nothwithstanding the preceding sentence, this Agreement may be assigned or delegated by Company to any subsidiary of Company. The rights and obligations under this Agreement shall inure to the benefit of and shall be binding upon the heirs, legatees, administrators and personal representatives of Officer and upon the successors, representatives and assigns of Company. 12. Severability and Reformation. The parties hereto intend all provisions of this Agreement to be enforced to the fullest extent permitted by law. If, however, any provision of this Agreement is held to be illegal, invalid, or unenforceable under present or future law, such provision shall be fully severable, and this Agreement shall be construed and enforced as if such illegal, invalid, or unenforceable provision were never a part hereof, and the remaining provisions shall remain in full force and effect and shall not be affected by the illegal, invalid, or unenforceable provision or by its termination. 13. Notices. All notices and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given if delivered personally, mailed by certified mail (return receipt requested) or sent by overnight delivery service, cable, telegram, facsimile transmission or telex to the parties at the following addresses or at such other address as shall be specified by the parties by like notice: If to Company: Siena Holdings, Inc. 717 N. Harwood Street, Suite 1110 Dallas, Texas 75201 If to Officer: John P. Kneafsey 12 Lochwynd Court Phoenix, Maryland 21131-1210 Notice so given shall, in the case of notice so given by mail, be deemed to be given and received on -5- 6 the fourth calendar day after posting, in the case of notice so given by overnight delivery service, on the date of actual delivery and, in the case of notice so given by cable, telegram, facsimile transmission, telex or personal delivery, on the date of actual transmission or, as the case may be, personal delivery. 14. Further Actions. Whether or not specifically required under the terms of this Agreement, each party hereto shall execute and deliver such documents and take such further actions as shall be necessary in order for such party to perform all of his or its obligations specified herein or reasonably implied from the terms hereof. 15. GOVERNING LAW AND VENUE. THIS AGREEMENT IS MADE IN THE STATE OF TEXAS, AND SHALL FOR ALL PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAW, AND NOT THE LAW OF CONFLICTS, OF SAID STATE. 16. Arbitration. Except for matters involving suits requesting injunctive relief, any controversy or claim arising out of or relating to this Agreement, or any breach hereof, shall be settled by arbitration. The parties hereto agree that any such controversy shall be submitted to three arbitrators in accordance with the Rules of Commercial Arbitration of the American Arbitration Association. The arbitrators shall be governed by and shall apply the substantive law of the State of Texas in making their determination, and their ruling shall be binding and conclusive upon the parties hereto. All arbitrations (should any be required) shall occur in Texas. 17. Entire Agreement and Amendment. This Agreement contains the entire understanding and agreement between the parties, and supersedes any other agreement between Officer and Company, whether oral or in writing, with respect to the subject matter hereof. This Agreement may not be altered, amended, or rescinded, nor may any of its provisions be waived, except by an instrument in writing signed by both parties hereto or, in the case of an asserted waiver, by the party against whom the waiver is sought to be enforced. -6- 7 18. Counterparts. This Agreement may be executed in counterparts, with the same effect as if both parties had signed the same document. All such counterparts shall be deemed an original, shall be construed together and shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. Company: Siena Holdings, Inc. By: --------------------------------- Name: W. Joseph Dryer Title: President Officer: - ------------------------------------ John P. Kneafsey -7- EX-10.2 3 RETENTION AGMT EFFECTIVE 12/1/97 - J. DRYER 1 EXHIBIT 10.2 RETENTION AGREEMENT This Retention Agreement (this "Agreement"), dated and effective as of the 1st day of December, 1997 is by and between Siena Holdings, Inc., a Delaware corporation ("Company"), and W. Joseph Dryer, an individual residing in Dallas, Texas, ("Officer"). In consideration of the mutual covenants set forth herein, Company and Officer, intending to be legally bound, hereby agree as follows: 1. Relationship. Company hereby retains Officer, and Officer hereby accepts such retention, upon the terms and conditions set forth in this Agreement. Such retention relationship shall continue for the stated term of this Agreement, as described in Section 7 hereof, or until the earlier termination of such relationship and this Agreement pursuant to Section 5 hereof. 2. Position and Responsibilities of Officer. Officer shall be retained as the President of Company and shall be stationed in Dallas, Texas or such other locations which during the term of this Agreement, may be designated by Company and approved by Officer. Officer shall devote approximately one-half of his business time and attention to the business of Company. Officer shall make himself available in person to render services on a regular basis equivalent to four days a week, allowing for reasonable and customary vacations and taking into account the nature of the services required; and provided that Officer shall be required to render no less than 20 hours per week on average. Officer, shall, subject to the supervision, direction and control of the Board of Directors of Company (the "Board") and the provisions of the Certificate of Incorporation, as amended from time to time in accordance with the provisions thereof, and Bylaws, as amended from time to time in accordance with the provisions thereof, of Company, manage, supervise and control such business, and shall devote his best efforts to the faithful performance of his duties on behalf of Company; provided, however, that it is the understanding of parties that Officer shall be entitled to engage in other business, professional and fiduciary obligations, including but not limited to those currently being pursued by Officer to the extent that such interests and obligations do no materially interfere with Officer's performance of his duties for Company. Officer's duties shall generally be those assigned to and customarily performed by the President of a company and shall include, specifically without limitation, management of Siena Housing Management operations, LLG Lands real estate, provision of information to trustee of the certain litigation trust("Litigation Trustee")created pursuant to the Second Amended Joint Chapter 11 Plan of Lomas Financial Corporation, Lomas Information Systems, Inc. and Lomas Administrative Services, Inc.("Plan") and post-confirmation -1- 2 creditor's committee as authorized in the confirmation order to the Plan to execute the terms of the Plan, maintenance of existing records, and general supervision of the corporate and legal affairs of the Company and the LFC Creditors Trust while the Company is Trustee. 3. Compensation. As approved by the Board of Directors in its meeting of November 24, 1997; for all services rendered by Officer pursuant to this Agreement, Company shall pay to Officer, and Officer shall accept as full compensation hereunder, the following: (A) Retainer. Officer shall receive a monthly retainer of not less than $12,000, with such adjustments thereto as may be determined by the Board in its sole discretion. If Officer's base annual retainer is increased at any time, it shall not thereafter be decreased during the term of this Agreement, unless such decrease is the result of a general reduction affecting the base salaries of all other executive officers of the Company. (B) Bonus. Such bonuses to be paid as part of the deal-maker portion of the incentive plan which will pay a percentage of the deal value established by the Board of Directors or the appreciated value above the fair market value of the asset; which, as a result of the fresh start adjustments is the same as book value on June 30, 1997. Officer shall be paid 4% of the gross appreciation value above book value or 4% of the deal value, upon the close of such transaction. Such bonus provision shall apply to the Company and its subsidiaries and shall be applied to the Company's results as Trustee of the LFC Creditors Trust. (C) Stock Options. Officer shall receive 163,000 non-qualified stock options which will vest at a rate of 20% per 12 months of service. Upon the event of any change-in-control of the Company the stock options shall be 100% vested. The Chief Executive Officer and/or the Board of Directors may from time to time grant additional stock options or other forms of long-term incentive compensation arrangements to the Officer. The privilege to participate in these grants is at the discretion of the Chief Executive Officer and/or the Board of Directors and the stipulations regarding the granting of these awards and their exercise by the Officer will be defined in separate agreements or in other plans or actions of the Chief Executive Officer and/or the Board of Directors. (D) Benefits and Perquisites. Officer shall be entitled to retain the Airpass previously purchased by Lomas Financial Corporation in the Officer's name. (E) Insurance. Company will provide Officer with coverage under a customary insurance policy with respect to certain errors, omission and acts of directors and officers as supplied to the Board of Directors. Failure to provide such a policy shall constitute constructive termination of Officer by Company and shall entitle Officer to a termination payment in accordance with paragraph 6. 4. Reimbursement of Expense. Officer shall be entitled to reimbursement for reasonable expenses incurred by Officer in the course of rendering services to Company under this agreement. -2- 3 5. Termination. The Retention relationship between Officer and Company created hereunder shall terminate before the expiration of the stated term of this Agreement upon the occurrence of any of the following events: (a) Termination for Cause. The following events, which for purposes of this Agreement shall constitute "cause" for termination: (i) the willful breach by Officer of any provision of Sections 1 or 2 (including but not limited to a refusal to follow lawful directives of the Board); (ii) any act of fraud or dishonesty by Officer with respect to any aspect of Company's business; (iii) the illegal use of drugs by Officer during the term of this Agreement that, in the determination of the Board, substantially interferes with Company's business; (iv) substantial failure of performance by Officer, which is repeated or continued after written notice to Officer of such failure, and which is reasonably determined by the Board to be materially injurious to the business or interests of Company; (v) conviction of Officer by a court of competent jurisdiction of a felony or of a crime involving moral turpitude; or (vi) death of Officer or disability because of injury, illness, or other incapacity (physical or mental) which for more than 90 days renders Officer incapable of performing the essential functions of the position contemplated by the Agreement herein. Any notice of discharge shall describe with reasonable specificity the cause of causes for the termination of Officer's retention, as well as the effective date of the termination (which effective date may be the date of such notice). If Company terminates Officer's retention for any of the reasons set forth above in this Section 5(a), Company shall have no further obligations hereunder from and after the effective date of termination (other than as set forth below) and shall have all other rights and remedies available under this or any other agreement and at law or in equity. (b) Voluntary Termination. Officer provides 60 days written notice to Company of his intent to terminate the retention relationship with Company. Company retains the right after proper notice of Officer's voluntary termination to require Officer to cease retention immediately; however, in such event, Company shall remain obligated to pay Officer his retention payment during the 60-day notice period. -3- 4 6. Compensation Upon Termination. (a) General. Upon the termination of Officer's retention under this Agreement before the expiration of the stated term hereof for any reason, Officer shall be entitled to the compensation earned by him before the effective date of termination, as provided in Section 3 hereof, prorated on the basis of the number of full days of service rendered by Officer during the month to the effective date of termination. Upon the event of any termination pursuant to this section the Company the stock options identified above shall be 100% vested. (b) Termination Payment. If such termination is the result of the discharge of Officer by Company for any reason other than cause (as defined in Section 5(a) hereof), then Officer shall be entitled to receive on the effective date of termination as a termination payment an amount equal to the retention payment (excluding bonuses) that Officer would have received for the next 12 months following termination adjusted up to take into consideration taxes that would have to paid on the Termination Payment. For the purpose of determining the amount of such termination payment, "retention payment" shall be deemed to be the average level of Officer's retention payment that is established in accordance with Section 3(a) hereof for the 90 day period ending on the effective date of termination. On the last day of service, the termination contemplated herein shall be paid in cash on the date of expiration or the termination. If Officer's retention hereunder terminates because of the death of the Officer, all amounts that are due to him under the terms of this Agreement shall be paid to his administrators, personal representatives, heirs and legatees, as may be appropriate. (c) Termination For Cause or Voluntary Termination. If the retention relationship hereunder is terminated by Company for cause or voluntarily by Officer, Officer shall not be entitled to any termination payment, other than pursuant to the terms of paragraph 3. (d) Survival. The provisions of Section 6 hereof shall survive the termination of the retention relationship hereunder and this Agreement to the extent necessary or reasonably appropriate to effect the intent of the parties hereto as expressed in such provisions. 7. Term. The stated term of this Agreement and the retention relationship created hereunder shall be and remain in effect for a period of five years from the date hereof. The Board, upon notice to Officer not less that 60 days prior to the expiration of the term of this Agreement shall have the option to extend this Agreement for successive 6 month periods under terms and retention payment to be mutually agreed to by Company and Officer unless this Agreement is sooner terminated in accordance with Section 5 hereof. 8. Relocation Expense. In the event that the corporate office of the Company is moved at the direction of the Board to a location which is more that 100 miles away from Dallas, Texas, and, as a result and in order to be able to effectively perform his services hereunder, Officer relocates to the vicinity of such relocation, Company shall reimburse Officer for all of his -4- 5 reasonable and documented relocation expenses. 9. Remedies. Each of the parties to this Agreement will be entitled to enforce its rights under this Agreement specifically, to recover damages by reason of any breach of the provisions of this Agreement and to exercise all other rights existing in its favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive relief in order to enforce or prevent any violations of the provisions of this Agreement. 10. Attorney's Fees. If any action at law or equity, including any action for declaratory or injunctive relief, is brought to enforce or interpret the provisions of this Agreement, the prevailing party shall be entitled to recover reasonable attorneys' fees from the non-prevailing party, which fees may be set by the court in the trial of such action, or may be enforced in a separate action brought for that purpose, and which fees shall be in addition to any other relief which may be awarded. 11. Assignment. This Agreement is personal to Officer and may not be assigned in any way by Officer without the prior written consent of Company. This Agreement shall not be assignable or delegated by Company. Nothwithstanding the preceding sentence, this Agreement may be assigned or delegated by Company to any subsidiary of Company. The rights and obligations under this Agreement shall inure to the benefit of and shall be binding upon the heirs, legatees, administrators and personal representatives of Officer and upon the successors, representatives and assigns of Company. 12. Severability and Reformation. The parties hereto intend all provisions of this Agreement to be enforced to the fullest extent permitted by law. If, however, any provision of this Agreement is held to be illegal, invalid, or unenforceable under present or future law, such provision shall be fully severable, and this Agreement shall be construed and enforced as if such illegal, invalid, or unenforceable provision were never a part hereof, and the remaining provisions shall remain in full force and effect and shall not be affected by the illegal, invalid, or unenforceable provision or by its termination. 13. Notices. All notices and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given if delivered personally, mailed by certified mail (return receipt requested) or sent by overnight delivery service, cable, telegram, facsimile transmission or telex to the parties at the following addresses or at such other address as shall be specified by the parties by like notice: If to Company: Siena Holdings, Inc. 717 N. Harwood Street, Suite 1110 Dallas, Texas 75201 -5- 6 If to Officer: W. Joseph Dryer 3401 Lakebrook Drive Plano, Texas 75093 Notice so given shall, in the case of notice so given by mail, be deemed to be given and received on the fourth calendar day after posting, in the case of notice so given by overnight delivery service, on the date of actual delivery and, in the case of notice so given by cable, telegram, facsimile transmission, telex or personal delivery, on the date of actual transmission or, as the case may be, personal delivery. 14. Further Actions. Whether or not specifically required under the terms of this Agreement, each party hereto shall execute and deliver such documents and take such further actions as shall be necessary in order for such party to perform all of his or its obligations specified herein or reasonably implied from the terms hereof. 15. GOVERNING LAW AND VENUE. THIS AGREEMENT IS MADE IN THE STATE OF TEXAS, AND SHALL FOR ALL PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAW, AND NOT THE LAW OF CONFLICTS, OF SAID STATE. 16. Arbitration. Except for matters involving suits requesting injunctive relief, any controversy or claim arising out of or relating to this Agreement, or any breach hereof, shall be settled by arbitration. The parties hereto agree that any such controversy shall be submitted to three arbitrators in accordance with the Rules of Commercial Arbitration of the American Arbitration Association. The arbitrators shall be governed by and shall apply the substantive law of the State of Texas in making their determination, and their ruling shall be binding and conclusive upon the parties hereto. All arbitrations (should any be required) shall occur in Texas. 17. Entire Agreement and Amendment. This Agreement contains the entire understanding and agreement between the parties, and supersedes any other agreement between Officer and Company, whether oral or in writing, with respect to the subject matter hereof. This Agreement may not be altered, amended, or rescinded, nor may any of its provisions be waived, except by an instrument in writing signed by both parties hereto or, in the case of an asserted waiver, by the party against whom the waiver is sought to be enforced. -6- 7 18. Counterparts. This Agreement may be executed in counterparts, with the same effect as if both parties had signed the same document. All such counterparts shall be deemed an original, shall be construed together and shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. Company: Siena Holdings, Inc. By: -------------------------------- Name: John Kneafsey Title: Chairman of the Board and Chief Executive Officer Officer: - ----------------------------------- W. Joseph Dryer -7- EX-10.3 4 NON-QUALIFIED STOCK OPTION AGMT 12/1/97 - KNEAFSEY 1 EXHIBIT 10.3 NON-QUALIFIED STOCK OPTION AGREEMENT SIENA HOLDINGS, INC. 1. GRANT OF OPTION. Siena Holdings, Inc., a Delaware corporation (the "Company" or "Siena") or its Subsidiaries, hereby grants to: JOHN P. KNEAFSEY (the "Grantee" "You" or "Your") an option to purchase from the Company a total of 271,750 full shares ("Stock Options") of Ordinary Shares ("Common Stock") of the Company at $0.92 per share in the amounts, during the periods, and upon the terms and conditions set forth in this agreement. The Date of Grant of this Stock Option is DECEMBER 1, 1997. This is a NON-QUALIFIED STOCK OPTION. 2. SUBJECT TO PLAN. This Stock Option and its exercise are subject to the terms and conditions of this Agreement. The capitalized terms used in this Agreement are defined below. This Stock Option is subject to any rules which have been or may be made by the Board or the Committee and communicated to you in writing. (A) Board. The Board of Directors (or equivalent governing authority) of the Company, as appointed by the Chairman of Siena. (B) Change in Control. A "Change in Control" shall mean a change in control of a nature that would be required to be reported in response to item 6(e) of Schedule 14A of Regulation 14A promulgated under the Exchange Act as such Schedule, Regulation and Act were in effect on the date of adoption of this Plan by the Board, assuming that such Schedule, Regulation and Act applied to the Company, provided that such a change in control shall be deemed to have occurred at such time as: (I) any "person" (as that term is used in Section 13(d) and 14(d)(2) of the Exchange Act) (other than Siena Holdings, Inc. or an affiliate of Siena Holdings, Inc.) becomes, directly or indirectly, the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of securities representing a 30% or more of the combined voting power for election of members of the Board of the then outstanding voting securities of the Company or any successor of the Company; (II) during any period of two (2) consecutive years or less, individuals who at the beginning of such period constituted the Board of the Company cease, for any reason, to constitute at least a majority of the Board, unless the election or nomination for -1- 2 election of each new member of the Board was approved by a vote of at least two-thirds of the members of the Board then still in office who were members of the Board at the beginning of the period; (III) the equity-holders of the Company approve any merger or consolidation to which the Company is a party as a result of which the persons who were equity-holders of the Company immediately prior to the effective date of the merger or consolidation (and excluding, however, any shares held by any party to such merger or consolidation and their affiliates) shall have beneficial ownership of less than 50% of the combined voting power for election of members of the Board (or equivalent) of the surviving entity following the effective date of such merger or consolidation; or (IV) the equity-holders of the Company approve any merger or consolidation as a result of which the equity interests in the Company shall be changed, converted or exchanged (other than a merger with a wholly-owned subsidiary of the Company) or any liquidation of the Company or any sale or other disposition of 50% or more of the assets or earnings power of the Company; (C) Code. The Internal Revenue Code of 1986, as amended. (D) Compensation Committee or Committee. The Committee, which shall be comprised of three or more members who shall be appointed by the Board to administer this Agreement, which the Board shall have the power to fill vacancies on the Committee arising by resignation, death, removal or otherwise. In the absence of a Committee, reference thereto shall be to the Board. (E) Common Stock. Siena Holdings, Inc. Class A Common Stock, which the Company is authorized to issue or may in the future be authorized to issue. (F) Company. Siena Holdings, Inc. ("Siena"), its subsidiaries and any successor corporation. (G) Disability. Any complete and permanent disability as defined in Section 22(e)(3) of the Code and determined in accordance with the procedures set forth in the regulations thereunder. (H) Officer. Any officer of the Company or any Parent or Subsidiary, who, in the opinion of the Committee, is one of a select group of executive officers, other officers or other key management personnel of the Company or any Parent or Subsidiary who is in a position to contribute materially to the continued growth and development and to the continued financial success of the Company or any Parent or Subsidiary, including executive officers and officers who are members of the Board. -2- 3 (I) Exchange Act. The Securities Exchange Act of 1934, as amended. (J) Fair Market Value. The closing sales price of the Common Stock as reported or listed on a national securities exchange on any relevant date for valuation, or, if there is no such sale on such date, the applicable prices as so reported on the nearest preceding date upon which such sale took place. In the event the shares of Common Stock are not listed on a national securities exchange, the Fair Market Value of such shares shall initially; be based upon the book value of the Company on June 30, 1997 which includes adjustments to reflect the market value of the assets and liabilities pursuant to generally accepted accounting principles, thereafter shall be determined by the Committee in its sole discretion. (K) Grantee. Any Officer or Director of the Company who in the opinion of the Committee performs significant services for the benefit of the Company and who is granted a Stock Option under this Agreement. (L) Involuntary Termination. The termination of Grantee's retention by Siena other than for death, Disability, Retirement, Terminated for Cause, Terminated for Good Reason, or in the event of a Change of Control (as defined in Section 2(B) above). (M) Retirement. The termination of retention by the Company or any Parent or Subsidiary constituting retirement as determined by the Committee. (N) Stock Option. A Non-Qualified Stock Option granted by the Committee to a Grantee under this Agreement. (O) Subsidiary. Any corporation (whether now or hereafter existing) which constitutes a "subsidiary" of the Company, as defined in Section 424(f) of the Code. (P) Termination for Cause. An Officer shall be deemed Terminated for Cause if he or she is terminated as a result of a breach of his or her written retention agreement. (Q) Termination for Good Reason. The resignation of an Officer shall be deemed to be a Termination for Good Reason if the Officers resignation is within two years of a Change in Control as defined in Section 2(B) above, caused by and within ninety (90) days of the following: (I) without the express written consent of the Officer, any duties that are assigned which are materially inconsistent with the Officer's position, duties and status with Siena at the time of the Change in Control; (ii) any action by Siena which results in a material diminution in the position, duties or status of the Officer with Siena at the time of the Change in Control or any transfer or proposed transfer of the Officer for any extended period to a location outside his principal place of retention at the time of the Change in Control without his consent; (iii) the base annual compensation of the Officer, as same may be hereafter be increased from time to time, is reduced; or (iv) without limiting the generality or effect of the foregoing, Siena fails to comply with any of its material obligations hereunder. -3- 4 3. VESTING: TIME OF EXERCISE. Except as specifically provided in this Agreement and subject to certain terms, restrictions and conditions set forth in this Agreement, this Stock Option is exercisable in the following cumulative installments: First installment. Up to 20% of the total Stock Options at any time following the first anniversary of the Date of Grant. Second installment. Up to an additional 20% of the total Stock Options at any time following the second anniversary of the Date of Grant. Third installment. Up to an additional 20% of the total Stock Options at any time following the third anniversary of the Date of Grant. Forth installment. Up to an additional 20% of the total Stock Options at any time following the forth anniversary of the Date of Grant. Fifth installment. Up to an additional 20% of the total Stock Options at any time following the fifth anniversary of the Date of Grant. 4. TERM; FORFEITURE. This Stock Option, and all unexercised Stock Options granted hereunder, will terminate and be forfeited at the first of the following to occur; (A) 5:00 pm on December 1, 2007; or (B) 5:00 pm on the date which is twelve (12) months following termination of service due to death, Disability or six (6) months after Retirement for Stock Options vested at termination; or (C) 5:00 pm on the date which is twelve (12) months following termination of service due to death, Disability or six (6) months after Retirement for Stock Options that vest after termination; or (D) 5:00 pm on the 31st day after the day of any other termination of service. (E) For purposes of termination of service due to death or Disability, any non-vested portion of any outstanding Stock Option shall become vested and immediately and fully exercisable, notwithstanding any provision therein for the exercise in installments. (F) For purposes of termination of service due to Retirement, any non-vested portion of any outstanding Stock Options shall become vested and immediately and fully exercisable, notwithstanding any provision therein for the exercise in installments. immediately. -4- 5 (G) For purposes of termination of service as a result of Involuntary Termination (not Change in Control), any non-vested portion of any outstanding Stock Options shall vest on a pro-rata basis based upon the number of months the terminated Officer has been retained within the applicable vesting schedule of this Agreement. (H) In the event of Involuntary Termination or Termination for Good Reason within two years of a Change in Control, all Stock Options then outstanding shall become vested and immediately and fully exercisable, notwithstanding any provision therein for the exercise in installments. 5. WHO MAY EXERCISE. Subject to the terms and conditions set forth in Sections 3 and 4 above, this Stock Option may be exercised only by Grantee. If as a result of death or Disability prior to the termination date specified in Section 4(A) hereof and Grantee have not exercised this Stock Option as to the maximum percentage of Stock Options set forth in Section 3 hereof as of the date of death of Disability, the following persons may exercise the exercisable portion of this Stock Option on behalf of Grantee at any time prior to the earlier of the dates specified in Sections 4(A) or (B) hereof: (i) if Grantee is disabled, your guardian; or (ii) if Grantee dies, the personal representative of your estate, or the person who acquired the right to exercise this Stock Option by bequest or inheritance or by reason of Grantees death; provided that this Stock Option shall remain subject to the other term of this Agreement, and applicable laws, rules, and regulations. 6. RESTRICTIONS. This Stock Option may be exercised only with respect to full shares and no fractional share of stock shall be issued. 7. MANNER OF EXERCISE. Subject to such rules as the Board or the Committee may from time to time adopt, this Stock Option may be exercised by the delivery of written notice to the Secretary of the Company setting forth the number of shares of Common Stock with respect to which the Stock Option is to be exercised and the date of exercise thereof (the "Exercise Date") which shall be at least three (3) days after giving such notice unless an earlier time shall have been mutually agreed upon. On the Exercise Date, Grantee shall deliver to the Company consideration with a value equal to the total Option Price of the shares to be purchased, payable as follows: (i) cash, certified check, bank draft, or money order payable to the order of the Company, and/or (ii) any other form of payment which is acceptable to the Committee. Common Stock which is acquired by Grantee pursuant to the exercise of this Stock Option may not b used to exercise a subsequent option until and unless such shares have been held for a period of six months. Upon payment of all amounts due, the Company shall cause certificates for the Common Stock then being purchased to be delivered to Grantee (or the person exercising Stock Option in the event of your death of Disability) at its principal business office promptly after the -5- 6 Exercise date. The obligation of the Company to deliver shares of Common Stock shall, however, be subject to the condition that if at any time the Committee shall determine in its sole discretion that the listing, registration, or qualification of the Stock Option or the Common Stock upon any securities exchange or under any state of federal law, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the Stock Option or the issuance or purchase of shares of Common Stock thereunder, then the Stock Option may not be exercised in whole or in part unless such, listing, registration, qualification, consent, or approval shall have been effected or obtained free of any conditions not acceptable to the Committee. If Grantee fails to pay for any of the Common Stock specified in such notice or fail to accept delivery thereof, then your right to purchase such Common Stock may be terminated by the Company. 8. TAX WITHHOLDING. The Company shall have the right to deduct from all amounts hereunder paid in cash or other form, any Federal, state or local taxes required by law to be deducted. As a requirement for receiving shares of Common Stock issued under this Stock Option, Grantee will be required to pay the Company the amount of any taxes which the Company is required to withhold with respect to such shares of Common Stock. Such payments shall be required to be made before the delivery of any certificate representing such shares of Common Stock will be issued. The Committee may determine such payment can be made in cash, by check, or through the delivery of shares of Common Stock owned by Grantee (which may be effected by the actual delivery of shares of Common Stock by Grantee or if Grantee is not an insider (as defined by the Securities and Exchange Commission), by the Company's withholding a number of shares to be issued upon exercise of this Stock Option, if applicable), which shares have an aggregate Fair Market Value equal to the required minimum withholding payment, or any combination thereof. 9. NON-ASSIGNABILITY. This Stock Option is not assignable or transferable except by will or the laws of descent and distribution or pursuant to a qualified domestic relations order as defined in the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended. However, after Grantee has shown reasonable evidence of tax and/or financial advice from a third-party, Grantee may make an irrevocable gift of the Stock Option to a family member or trust. 10. RIGHTS AS STOCKHOLDER. You will have no rights as a stockholder with respect to any shares covered by this Stock Option until the issuance of a certificate or certificates to Grantee for the shares. No adjustment shall be made for dividends or other rights for which the record date is prior to the issuance of such certificate of certificates. 11. ADJUSTMENT OF NUMBER OF SHARES AND RELATED MATTERS. The number of shares of Common Stock covered by this Stock Option, and the Option Price thereof, shall be subject to adjustment in accordance with change in capitalization of Siena Holdings, Inc. or a -6- 7 combination, merger, or reorganization of Siena Holdings, Inc. into or with any other corporation or any other transaction with similar effects. 12. GRANTEE'S REPRESENTATIONS. Notwithstanding any of the provisions hereof, Grantee hereby agrees that Grantee will not exercise the Stock Option granted hereby, and that the Company will not be obligated to issue any shares to Grantee hereunder, if the exercise thereof or the issuance of such shares shall constitute a violation by Grantee or the Company of any provision of any law or regulation of any governmental authority. Any determination in this connection by the Committee shall be final, binding and conclusive. The obligations of the Company and your rights are subject to all applicable laws, rules and regulations. Furthermore, if Grantee is an "insider" (as defined by the Securities Exchange Commission), Grantee agrees that Grantee will not exercise this Stock Option during the six (6) months following the Date of Grant. 13. INVESTMENT REPRESENTATION. Unless the Common Stock is issued to Grantee in a transaction registered under applicable Federal and state securities laws, by Grantees execution hereof, Grantee represents and warrants to the Company that all Common Stock which may be purchased hereunder will be acquired by Grantee for investment purposes for your own account and not with any intent for resale or distribution in violation of Federal or state securities laws. Unless the Common Stock is issued to you in a transaction registered under the applicable Federal and state securities laws, all certificates issued with respect to the Common Stock shall bear an appropriate restrictive investment legend. 14. PARTICIPANT'S ACKNOWLEDGMENTS. As a Grantee under this Agreement, Grantee acknowledges receipt of a copy of this Agreement, and represents that Grantee is familiar with the terms and provisions of this Agreement. By signing this Agreement, Grantee hereby accepts as binding, conclusive, and final all decisions or interpretations of the Committee, as that term is defined in this Agreement, upon any questions arising under this Agreement. Any disagreement by Grantee as to any decision or interpretation of the Committee shall be settled exclusively by the terms of this Agreement. 15. LAW GOVERNING. This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Delaware (excluding any conflict of laws rule or principle of Delaware law that might refer the governance, construction, or interpretation of this agreement to the laws of another state). In the event of any change in applicable laws or any change in circumstances which results in or would result in any dilution of the rights granted under this Agreement, or which otherwise warrants equitable adjustment because it interferers with the intended operation of this Agreement, then if the Committee shall, in its sole discretion, determine that such change requires an adjustment in the number or kind of shares of stock or other securities or property theretofore subject, or which may become subject, to issuance or transfer under this -7- 8 Agreement or in the terms and conditions of this Agreement, such adjustment shall be made in accordance with such determination. The Committee shall give notice to each Grantee, and upon notice such adjustment shall be effective and binding for all purposes of this Agreement. 16. NO RIGHT TO CONTINUE RETENTION. Nothing herein shall be construed to confer upon Grantee the right to continue in the retention of the Company or any Subsidiary or interfere with or restrict in any way the right of the Company or any Subsidiary to discharge Grantee at any time (subject to any contract rights Grantee might have). 17. LEGAL CONSTRUCTION. In the event that any one or more of the terms, provisions or agreements that are contained in this Agreement shall be held by a Court of competent jurisdiction to be invalid, illegal or unenforceable in any respect for any reason, the invalid, illegal or unenforceable term, provision or agreement shall not affect any other term, provision or agreement that is contained in this Agreement and this Agreement shall be construed in all respects as if the invalid, illegal or unenforceable term, provision or agreement had never been contained herein. 18. ENTIRE AGREEMENT. This Agreement supersede any and all other prior understandings and agreements, either oral or in writing, between the parties with respect to the subject matter hereof and constitute the sole and only agreements between the parties with respect to the said subject matter. All prior negotiations and agreements between the parties with respect to the subject matter hereof are merged into this Agreement. Each party to this Agreement acknowledges that no representations, inducements, promises or agreements, orally or otherwise, have been made by any party or by anyone acting on behalf of any party, which are not embodied in this Agreement and that any agreement, statement or promise that is not contained in this Agreement shall not be valid or binding or of any force or effect. 19. PARTIES BOUND. The terms, provisions, representations, warranties, covenants, and agreements that are contained in this Agreement shall apply to, be binding upon, and inure to the benefit of the parties and their respective heirs, executors, administrators, legal representatives, and permitted successors and assigns. 20. MODIFICATION. No change or modification of this Agreement shall be valid or binding upon the parties unless the change or modification is in writing and signed by the parties. Notwithstanding the preceding sentence, the Company may amend this Agreement or revoke this Stock Option to the extent permitted in this Agreement. 21. HEADINGS. The headings that are used in this Agreement are used for reference and convenience purposes only and do not constitute substantive matters to be considered in construing the terms and provisions of this Agreement. -8- 9 22. NOTICE. Any notice required or permitted to be delivered hereunder shall be deemed to be delivered only when actually received by the Company or by Grantee, as the case may be, at the addresses set forth below, or at such other addresses as they have theretofore specified by written notice delivered in accordance herewith. (A) Notice to the Company shall be addressed and delivered as follows: Siena Holdings, Inc. Attention: Chairman 717 Harwood Street, Suite 1110 Dallas, TX 75201 (B) Notice to Grantee shall be addressed and delivered as follows: John P. Kneafsey 12 Lochwynd Court Phoenix, MD 21131 IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and Grantee, to evidence Grantees consent and approval of all the terms hereof, has duly executed this Agreement, as of the date specified in Section 1 hereof. SIENA HOLDINGS, INC. BY: -------------------------------- TITLE: ----------------------------- GRANTEE: - ----------------------------------- -9- EX-10.4 5 NON-QUALIFIED STOCK OPTION AGMT 12/1/97 - DRYER 1 EXHIBIT 10.4 NON-QUALIFIED STOCK OPTION AGREEMENT SIENA HOLDINGS, INC. 1. GRANT OF OPTION. Siena Holdings, Inc., a Delaware corporation (the "Company" or "Siena") or its Subsidiaries, hereby grants to: W. JOSEPH DRYER (the "Grantee" "You" or "Your") an option to purchase from the Company a total of 163,000 full shares ("Stock Options") of Ordinary Shares ("Common Stock") of the Company at $0.92 per share in the amounts, during the periods, and upon the terms and conditions set forth in this agreement. The Date of Grant of this Stock Option is DECEMBER 1, 1997. This is a NON-QUALIFIED STOCK OPTION. 2. SUBJECT TO PLAN. This Stock Option and its exercise are subject to the terms and conditions of this Agreement. The capitalized terms used in this Agreement are defined below. This Stock Option is subject to any rules which have been or may be made by the Board or the Committee and communicated to you in writing. (A) Board. The Board of Directors (or equivalent governing authority) of the Company, as appointed by the Chairman of Siena. (B) Change in Control. A "Change in Control" shall mean a change in control of a nature that would be required to be reported in response to item 6(e) of Schedule 14A of Regulation 14A promulgated under the Exchange Act as such Schedule, Regulation and Act were in effect on the date of adoption of this Plan by the Board, assuming that such Schedule, Regulation and Act applied to the Company, provided that such a change in control shall be deemed to have occurred at such time as: (I) any "person" (as that term is used in Section 13(d) and 14(d)(2) of the Exchange Act) (other than Siena Holdings, Inc. or an affiliate of Siena Holdings, Inc.) becomes, directly or indirectly, the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of securities representing a 30% or more of the combined voting power for election of members of the Board of the then outstanding voting securities of the Company or any successor of the Company; (II) during any period of two (2) consecutive years or less, individuals who at the beginning of such period constituted the Board of the Company cease, for any reason, to constitute at least a majority of the Board, unless the election or nomination for -1- 2 election of each new member of the Board was approved by a vote of at least two-thirds of the members of the Board then still in office who were members of the Board at the beginning of the period; (III) the equity-holders of the Company approve any merger or consolidation to which the Company is a party as a result of which the persons who were equity-holders of the Company immediately prior to the effective date of the merger or consolidation (and excluding, however, any shares held by any party to such merger or consolidation and their affiliates) shall have beneficial ownership of less than 50% of the combined voting power for election of members of the Board (or equivalent) of the surviving entity following the effective date of such merger or consolidation; or (IV) the equity-holders of the Company approve any merger or consolidation as a result of which the equity interests in the Company shall be changed, converted or exchanged (other than a merger with a wholly-owned subsidiary of the Company) or any liquidation of the Company or any sale or other disposition of 50% or more of the assets or earnings power of the Company; (C.) Code. The Internal Revenue Code of 1986, as amended. (D) Compensation Committee or Committee. The Committee, which shall be comprised of three or more members who shall be appointed by the Board to administer this Agreement, which the Board shall have the power to fill vacancies on the Committee arising by resignation, death, removal or otherwise. In the absence of a Committee, reference thereto shall be to the Board. (E) Common Stock. Siena Holdings, Inc. Class A Common Stock, which the Company is authorized to issue or may in the future be authorized to issue. (F) Company. Siena Holdings, Inc. ("Siena"), its subsidiaries and any successor corporation. (G) Disability. Any complete and permanent disability as defined in Section 22(e)(3) of the Code and determined in accordance with the procedures set forth in the regulations thereunder. (H) Officer. Any officer of the Company or any Parent or Subsidiary, who, in the opinion of the Committee, is one of a select group of executive officers, other officers or other key management personnel of the Company or any Parent or Subsidiary who is in a position to contribute materially to the continued growth and development and to the continued financial success of the Company or any Parent or Subsidiary, including executive officers and officers who are members of the Board. -2- 3 (I) Exchange Act. The Securities Exchange Act of 1934, as amended. (J) Fair Market Value. The closing sales price of the Common Stock as reported or listed on a national securities exchange on any relevant date for valuation, or, if there is no such sale on such date, the applicable prices as so reported on the nearest preceding date upon which such sale took place. In the event the shares of Common Stock are not listed on a national securities exchange, the Fair Market Value of such shares shall initially; be based upon the book value of the Company on June 30, 1997 which includes adjustments to reflect the market value of the assets and liabilities pursuant to generally accepted accounting principles, thereafter shall be determined by the Committee in its sole discretion. (K) Grantee. Any Officer or Director of the Company who in the opinion of the Committee performs significant services for the benefit of the Company and who is granted a Stock Option under this Agreement. (L) Involuntary Termination. The termination of Grantee's retention by Siena other than for death, Disability, Retirement, Terminated for Cause, Terminated for Good Reason, or in the event of a Change of Control (as defined in Section 2(B) above). (M) Retirement. The termination of retention by the Company or any Parent or Subsidiary constituting retirement as determined by the Committee. (N) Stock Option. A Non-Qualified Stock Option granted by the Committee to a Grantee under this Agreement. (O) Subsidiary. Any corporation (whether now or hereafter existing) which constitutes a "subsidiary" of the Company, as defined in Section 424(f) of the Code. (P) Termination for Cause. An Officer shall be deemed Terminated for Cause if he or she is terminated as a result of a breach of his or her written retention agreement. (Q) Termination for Good Reason. The resignation of an Officer shall be deemed to be a Termination for Good Reason if the Officers resignation is within two years of a Change in Control as defined in Section 2(B) above, caused by and within ninety (90) days of the following: (I) without the express written consent of the Officer, any duties that are assigned which are materially inconsistent with the Officer's position, duties and status with Siena at the time of the Change in Control; (ii) any action by Siena which results in a material diminution in the position, duties or status of the Officer with Siena at the time of the Change in Control or any transfer or proposed transfer of the Officer for any extended period to a location outside his principal place of retention at the time of the Change in Control without his consent; (iii) the base annual compensation of the Officer, as same may be hereafter be increased from time to time, is reduced; or (iv) without limiting the generality or effect of the foregoing, Siena fails to comply with any of its material obligations hereunder. -3- 4 3. VESTING: TIME OF EXERCISE. Except as specifically provided in this Agreement and subject to certain terms, restrictions and conditions set forth in this Agreement, this Stock Option is exercisable in the following cumulative installments: First installment. Up to 20% of the total Stock Options at any time following the first anniversary of the Date of Grant. Second installment. Up to an additional 20% of the total Stock Options at any time following the second anniversary of the Date of Grant. Third installment. Up to an additional 20% of the total Stock Options at any time following the third anniversary of the Date of Grant. Forth installment. Up to an additional 20% of the total Stock Options at any time following the forth anniversary of the Date of Grant. Fifth installment. Up to an additional 20% of the total Stock Options at any time following the fifth anniversary of the Date of Grant. 4. TERM; FORFEITURE. This Stock Option, and all unexercised Stock Options granted hereunder, will terminate and be forfeited at the first of the following to occur; (A) 5:00 pm on December 1, 2007; or (B) 5:00 pm on the date which is twelve (12) months following termination of service due to death, Disability or six (6) months after Retirement for Stock Options vested at termination; or (C.) 5:00 pm on the date which is twelve (12) months following termination of service due to death, Disability or six (6) months after Retirement for Stock Options that vest after termination; or (D) 5:00 pm on the 31st day after the day of any other termination of service. (E) For purposes of termination of service due to death or Disability, any non-vested portion of any outstanding Stock Option shall become vested and immediately and fully exercisable, notwithstanding any provision therein for the exercise in installments. (F) For purposes of termination of service due to Retirement, any non-vested portion of any outstanding Stock Options shall become vested and immediately and fully exercisable, notwithstanding any provision therein for the exercise in installments. immediately. (G) For purposes of termination of service as a result of Involuntary Termination (not -4- 5 Change in Control), any non-vested portion of any outstanding Stock Options shall vest on a pro-rata basis based upon the number of months the terminated Officer has been retained within the applicable vesting schedule of this Agreement. (H) In the event of Involuntary Termination or Termination for Good Reason within two years of a Change in Control, all Stock Options then outstanding shall become vested and immediately and fully exercisable, notwithstanding any provision therein for the exercise in installments. 5. WHO MAY EXERCISE. Subject to the terms and conditions set forth in Sections 3 and 4 above, this Stock Option may be exercised only by Grantee. If as a result of death or Disability prior to the termination date specified in Section 4(A) hereof and Grantee have not exercised this Stock Option as to the maximum percentage of Stock Options set forth in Section 3 hereof as of the date of death of Disability, the following persons may exercise the exercisable portion of this Stock Option on behalf of Grantee at any time prior to the earlier of the dates specified in Sections 4(A) or (B) hereof: (i) if Grantee is disabled, your guardian; or (ii) if Grantee dies, the personal representative of your estate, or the person who acquired the right to exercise this Stock Option by bequest or inheritance or by reason of Grantees death; provided that this Stock Option shall remain subject to the other term of this Agreement, and applicable laws, rules, and regulations. 6. RESTRICTIONS. This Stock Option may be exercised only with respect to full shares and no fractional share of stock shall be issued. 7. MANNER OF EXERCISE. Subject to such rules as the Board or the Committee may from time to time adopt, this Stock Option may be exercised by the delivery of written notice to the Secretary of the Company setting forth the number of shares of Common Stock with respect to which the Stock Option is to be exercised and the date of exercise thereof (the "Exercise Date") which shall be at least three (3) days after giving such notice unless an earlier time shall have been mutually agreed upon. On the Exercise Date, Grantee shall deliver to the Company consideration with a value equal to the total Option Price of the shares to be purchased, payable as follows: (i) cash, certified check, bank draft, or money order payable to the order of the Company, and/or (ii) any other form of payment which is acceptable to the Committee. Common Stock which is acquired by Grantee pursuant to the exercise of this Stock Option may not be used to exercise a subsequent option until and unless such shares have been held for a period of six months. Upon payment of all amounts due, the Company shall cause certificates for the Common Stock then being purchased to be delivered to Grantee (or the person exercising Stock Option in the event of your death of Disability) at its principal business office promptly after the -5- 6 Exercise date. The obligation of the Company to deliver shares of Common Stock shall, however, be subject to the condition that if at any time the Committee shall determine in its sole discretion that the listing, registration, or qualification of the Stock Option or the Common Stock upon any securities exchange or under any state of federal law, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the Stock Option or the issuance or purchase of shares of Common Stock thereunder, then the Stock Option may not be exercised in whole or in part unless such, listing, registration, qualification, consent, or approval shall have been effected or obtained free of any conditions not acceptable to the Committee. If Grantee fails to pay for any of the Common Stock specified in such notice or fail to accept delivery thereof, then your right to purchase such Common Stock may be terminated by the Company. 8. TAX WITHHOLDING. The Company shall have the right to deduct from all amounts hereunder paid in cash or other form, any Federal, state or local taxes required by law to be deducted. As a requirement for receiving shares of Common Stock issued under this Stock Option, Grantee will be required to pay the Company the amount of any taxes which the Company is required to withhold with respect to such shares of Common Stock. Such payments shall be required to be made before the delivery of any certificate representing such shares of Common Stock will be issued. The Committee may determine such payment can be made in cash, by check, or through the delivery of shares of Common Stock owned by Grantee (which may be effected by the actual delivery of shares of Common Stock by Grantee or if Grantee is not an insider (as defined by the Securities and Exchange Commission), by the Company's withholding a number of shares to be issued upon exercise of this Stock Option, if applicable), which shares have an aggregate Fair Market Value equal to the required minimum withholding payment , or any combination thereof. 9. NON-ASSIGNABILITY. This Stock Option is not assignable or transferable except by will or the laws of descent and distribution or pursuant to a qualified domestic relations order as defined in the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended. However, after Grantee has shown reasonable evidence of tax and/or financial advice from a third-party, Grantee may make an irrevocable gift of the Stock Option to a family member or trust. 10. RIGHTS AS STOCKHOLDER. You will have no rights as a stockholder with respect to any shares covered by this Stock Option until the issuance of a certificate or certificates to Grantee for the shares. No adjustment shall be made for dividends or other rights for which the record date is prior to the issuance of such certificate of certificates. 11. ADJUSTMENT OF NUMBER OF SHARES AND RELATED MATTERS. The number of shares of Common Stock covered by this Stock Option, and the Option Price thereof, shall be subject to adjustment in accordance with change in capitalization of Siena Holdings, Inc. or a -6- 7 combination, merger, or reorganization of Siena Holdings, Inc. into or with any other corporation or any other transaction with similar effects. 12. GRANTEE'S REPRESENTATIONS. Notwithstanding any of the provisions hereof, Grantee hereby agrees that Grantee will not exercise the Stock Option granted hereby, and that the Company will not be obligated to issue any shares to Grantee hereunder, if the exercise thereof or the issuance of such shares shall constitute a violation by Grantee or the Company of any provision of any law or regulation of any governmental authority. Any determination in this connection by the Committee shall be final, binding and conclusive. The obligations of the Company and your rights are subject to all applicable laws, rules and regulations. Furthermore, if Grantee is an "insider" (as defined by the Securities Exchange Commission), Grantee agrees that Grantee will not exercise this Stock Option during the six (6) months following the Date of Grant. 13. INVESTMENT REPRESENTATION. Unless the Common Stock is issued to Grantee in a transaction registered under applicable Federal and state securities laws, by Grantees execution hereof, Grantee represents and warrants to the Company that all Common Stock which may be purchased hereunder will be acquired by Grantee for investment purposes for your own account and not with any intent for resale or distribution in violation of Federal or state securities laws. Unless the Common Stock is issued to you in a transaction registered under the applicable Federal and state securities laws, all certificates issued with respect to the Common Stock shall bear an appropriate restrictive investment legend. 14. PARTICIPANT'S ACKNOWLEDGMENTS. As a Grantee under this Agreement, Grantee acknowledges receipt of a copy of this Agreement, and represents that Grantee is familiar with the terms and provisions of this Agreement. By signing this Agreement, Grantee hereby accepts as binding, conclusive, and final all decisions or interpretations of the Committee, as that term is defined in this Agreement, upon any questions arising under this Agreement. Any disagreement by Grantee as to any decision or interpretation of the Committee shall be settled exclusively by the terms of this Agreement. 15. LAW GOVERNING. This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Delaware (excluding any conflict of laws rule or principle of Delaware law that might refer the governance, construction, or interpretation of this agreement to the laws of another state). In the event of any change in applicable laws or any change in circumstances which results in or would result in any dilution of the rights granted under this Agreement, or which otherwise warrants equitable adjustment because it interferers with the intended operation of this Agreement, then if the Committee shall, in its sole discretion, determine that such change requires an adjustment in the number or kind of shares of stock or other securities or property theretofore subject, or which may become subject, to issuance or transfer under this -7- 8 Agreement or in the terms and conditions of this Agreement, such adjustment shall be made in accordance with such determination. The Committee shall give notice to each Grantee, and upon notice such adjustment shall be effective and binding for all purposes of this Agreement. 16. NO RIGHT TO CONTINUE RETENTION. Nothing herein shall be construed to confer upon Grantee the right to continue in the retention of the Company or any Subsidiary or interfere with or restrict in any way the right of the Company or any Subsidiary to discharge Grantee at any time (subject to any contract rights Grantee might have). 17. LEGAL CONSTRUCTION. In the event that any one or more of the terms, provisions or agreements that are contained in this Agreement shall be held by a Court of competent jurisdiction to be invalid, illegal or unenforceable in any respect for any reason, the invalid, illegal or unenforceable term, provision or agreement shall not affect any other term, provision or agreement that is contained in this Agreement and this Agreement shall be construed in all respects as if the invalid, illegal or unenforceable term, provision or agreement had never been contained herein. 18. ENTIRE AGREEMENT. This Agreement supersede any and all other prior understandings and agreements, either oral or in writing, between the parties with respect to the subject matter hereof and constitute the sole and only agreements between the parties with respect to the said subject matter. All prior negotiations and agreements between the parties with respect to the subject matter hereof are merged into this Agreement. Each party to this Agreement acknowledges that no representations, inducements, promises or agreements, orally or otherwise, have been made by any party or by anyone acting on behalf of any party, which are not embodied in this Agreement and that any agreement, statement or promise that is not contained in this Agreement shall not be valid or binding or of any force or effect. 19. PARTIES BOUND. The terms, provisions, representations, warranties, covenants, and agreements that are contained in this Agreement shall apply to, be binding upon, and inure to the benefit of the parties and their respective heirs, executors, administrators, legal representatives, and permitted successors and assigns. 20. MODIFICATION. No change or modification of this Agreement shall be valid or binding upon the parties unless the change or modification is in writing and signed by the parties. Notwithstanding the preceding sentence, the Company may amend this Agreement or revoke this Stock Option to the extent permitted in this Agreement. 21. HEADINGS. The headings that are used in this Agreement are used for reference and convenience purposes only and do not constitute substantive matters to be considered in construing the terms and provisions of this Agreement. 22. NOTICE. Any notice required or permitted to be delivered hereunder shall be deemed to be -8- 9 delivered only when actually received by the Company or by Grantee, as the case may be, at the addresses set forth below, or at such other addresses as they have theretofore specified by written notice delivered in accordance herewith. (A) Notice to the Company shall be addressed and delivered as follows: Siena Holdings, Inc. Attention: Chairman 717 Harwood Street, Suite 1110 Dallas, TX 75201 (B) Notice to Grantee shall be addressed and delivered as follows: W. Joseph Dryer 3401 LakeBrook Drive Plano, TX 75093 IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and Grantee, to evidence Grantees consent and approval of all the terms hereof, has duly executed this Agreement, as of the date specified in Section 1 hereof. SIENA HOLDINGS, INC. BY: ---------------------------- TITLE: ------------------------- GRANTEE: - -------------------------------- -9- EX-11 6 COMPUTATION OF EARNINGS (LOSS) PER SHARE 1 EXHIBIT 11 SIENA HOLDINGS, INC. AND SUBSIDIARIES (FORMERLY LOMAS FINANCIAL CORPORATION AND SUBSIDIARIES) COMPUTATION OF EARNINGS (LOSS) PER SHARE (IN THOUSANDS, EXCEPT PER SHARE DATA)
Reorganized Predecessor Reorganized Predecessor Company Company Company Company ----------- ----------- ----------- ----------- Six Months Six Months Quarter Ended Quarter Ended Ended Ended December 31, December 31, December 31, December 31, 1997 1996 1997 1996 ----------- ----------- ----------- ----------- EARNINGS PER COMMON SHARE: Average common shares outstanding 4,000 * 4,000 * Net income $ 11 * $ 56 * Earnings per common share: Net income $ .00 * $ .01 * EARNINGS PER COMMON SHARE - ASSUMING DILUTION: Average common shares outstanding 4,000 * 4,000 * Average common stock equivalent under SHI Nonqualified Stock Option Plan 9 * 4 * ----------- ----------- ----------- ----------- TOTAL SHARES 4,009 * 4,004 * =========== =========== =========== =========== Net income $ 11 * $ 56 * Earnings per common share - assuming dilution: Net income $ .00 * $ .01 *
* Average shares outstanding and per share amount not meaningful due to reorganization. EX-27 7 FINANCIAL DATA SCHEDULE
5 0000060150 JOSEPH DRYER 1,000 6-MOS JUN-30-1998 JUL-01-1997 DEC-31-1997 1,903 0 327 0 0 0 0 0 7,146 0 0 0 0 400 5,747 7,146 0 421 0 0 (335) 0 0 86 (30) 56 0 0 0 56 0.01 0.01
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