Exhibit 10.3

 

AMENDMENT TO EMPLOYMENT AGREEMENT

 

This Agreement shall serve to amend Exhibit C to the employment agreement
entered into by and between Richard Johnson and Impac Funding Corporation dated
April 1, 2003, (the “Agreement”).

 

The parties hereto hereby agree to amend the Agreement by replacing Exhibit C
with Exhibit C2 attached hereto. This replacement shall be effective as to any
payment that became due on or after May 25, 2004.

 

Employee:

 

/s/ Richard Johnson

--------------------------------------------------------------------------------

 

Date: 9-9-04

Richard Johnson

   

 

Impac Funding Corporation

By

 

/s/ Ron Morrison

--------------------------------------------------------------------------------

 

Date: 9-9-04

   

Ron Morrison

   

Its

 

Executive Vice President

   

--------------------------------------------------------------------------------

EXHIBIT C2

 

INCENTIVE COMPENSATION

 

Excess Income: Excess Income equals the greater of zero or Net Income minus the
product of ((the Ten Year U.S. Treasury Rate plus 200 basis points) x (Average
Net Worth divided by 4)).

 

Net Income: The definition for “Net Income” is at any date of determination, the
net income of IMH determined in accordance with then current tax law before the
total Incentive Compensation paid to Joseph R. Tomkinson, William Ashmore; and
Richard Johnson (collectively, the “Executives”) pursuant to their respective
employment agreements, the deduction for dividends paid and any net operating
loss deductions arising from losses in prior periods. Upon filing IMH’s actual
tax return, any variance from prior period estimates, shall be an adjustment to
the then current period Incentive Compensation calculation.

 

Average Net Worth: The definition of “Average Net Worth” for any quarter is
IMH’s accumulated net worth of $514,795,766 at December 31, 2002 plus subsequent
to December 31, 2002, the weighted average daily sum of the gross proceeds from
any sale of IMH’s equity securities, before deducting any underwriting discounts
and commissions and other expenses; plus the average balance quarter-to-date on
IMH’s General Ledger of the retained earnings for the quarter (general ledger
account number 317500); less the weighted average daily sum of the gross
proceeds used to repurchase IMH’s stock; less the average balance
quarter-to-date on IMH’s General Ledger of the cumulative dividends declared
(general ledger account number 317510); plus an amount equal to Prior Period
Losses. Prior Period Losses equal the lower of (a) zero, or (b) the sum of any
losses incurred by IMH after December 31, 2003 and prior to the quarter of the
determination of Incentive Compensation less any Net Income for the quarters
subsequent to the quarter of the loss plus any losses incurred for quarters
subsequent to the quarter of the loss.

 

Ten Year U.S. Treasury Rate: The definition for “Ten Year U.S. Treasury Rate”
for a quarterly period is the arithmetic average of the weekly per annum Ten
Year Average Yields published by the Federal Reserve Board during such quarter.
In the event that the Federal Reserve Board does not publish a weekly per annum
Ten Year Average Yield during any week in a quarter, then the Ten Year U.S.
Treasury Rate for such week shall be the weekly per annum Ten Year Average
Yields published by any Federal, Reserve Bank or by any U.S. Government
department or agency selected by Employer for such week. In the event that
Employer determines in good faith that for any reason Employer cannot determine
the ten Year U.S. Treasury Rate for any quarter as provided above, then the Ten
Year U.S. Treasury Rate for such quarter shall be the arithmetic average of the
per annum average yields to maturity based upon the daily closing bids during
such quarter for each of the issues of actively traded marketable U.S. Treasury
fixed interest rate securities (other than securities which can, at the option
of the

--------------------------------------------------------------------------------

holder, be surrendered at face value in payment of any federal estate tax) with
the final maturity date not less than eight nor more than twelve years from the
date of each such quotation, for each business day in New York City (or less
frequently if daily quotations shall not be generally available) in each such
quarterly period as chosen by at least three recognized dealers in U.S.
Government securities selected by Employer.

 

NEW DEFINITIONS

 

Net Income: The definition for “Net Income” is at any date of determination, the
net income of IMH determined in accordance with then current tax law after the
deduction of dividends, whether declared or paid on any of IMH’s preferred stock
equity during the period; however, before the total Incentive Compensation paid
to Joseph R. Tomkinson, William Ashmore; and Richard Johnson (collectively, the
“Executives”) pursuant to their respective employment agreements, the deduction
for dividends paid on IMH’s common stock equity and any net operating loss
deductions arising from losses in prior periods. Upon filing IMH’s actual tax
return, any variance from prior period estimates, shall be an adjustment to the
then current period Incentive Compensation calculation.

 

Average Net Worth: The definition of “Average Net Worth” for any quarter is
IMH’s accumulated net worth of $514,795,766 at December 31, 2002 plus subsequent
to December 31, 2002, the weighted average daily sum of the gross proceeds from
any sale of 1IMH’s common stock equity, before deducting any underwriting
discounts and commissions and other expenses; plus the average balance
quarter-to-date on IMH’s General Ledger of the retained earnings for the quarter
(general ledger account number 317500); less the weighted average daily sum of
the gross proceeds used to repurchase IMH’s stock; less the average balance
quarter-to-date on IMH’s General Ledger of the cumulative dividends declared on
both IMH’s common and preferred stock equity (general ledger account numbers
317510 & 317550); plus an amount equal to Prior Period Losses. Prior Period
Losses equal the lower of (a) zero, or (b) the sum of any losses incurred by IMH
after December 31, 2003 and prior to the quarter of the determination of
Incentive Compensation less any Net Income for the quarters subsequent to the
quarter of the loss plus any losses incurred for quarters subsequent to the
quarter of the loss.