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EXHIBIT 99.1
EMPLOYMENT AGREEMENT
1. PREAMBLE
AGREEMENT made this 30th day of October, 1995, between University
Bank, a Michigan Banking Corporation, its main offices at 000 Xxxx Xxxxxxx
Xxxxxx, Xxxxx Xx. Xxxxx, Xxxxxxxx, 00000 hereafter called the "Bank" or
"Employer"; Xxxx Xxxxxx of 0000 Xxxxx Xxxxx Xxxxx, Xxx Xxxxx, Xxxxxxxx, 00000
hereafter called the "Employee"; and Xxxxxxxx Bancorp Inc., pursuant to the
terms of paragraph 3(c) below, hereafter called "Xxxxxxxx".
WHEREAS, the Bank shall engage in any lawful business of which
Michigan banking corporations are authorized to do in the State of Michigan;
and
WHEREAS, Employee desires to be employed by the Bank and the Bank
desires to employ Employee on the following terms.
NOW, THEREFORE, it is mutually agreed as follows:
2. EMPLOYMENT DUTIES
The Bank hereby employs Employee, and Employee hereby accepts
employment by the Bank as President and Chief Executive Officer of University
Bank. During the term of his employment, Employee shall at all times be
appointed to the Bank's Board of Directors and shall serve as Chairman and
Chief Executive Officer of the Bank and the Employee may, at his discretion,
retain the office of President. Employee shall be in charge of all offices of
the Bank wherever located, but shall principally oversee the operation of the
Xxx Arbor office. Employee shall report directly to the Board of Directors of
the Bank. Employee shall attend all monthly Board of Director meetings of the
Bank as well as all special meetings of the Board of Directors, unless absent
on vacation or sick leave. The Bank shall reimburse employee for all expenses
incurred in attending the meetings of the Board of Directors not held in Xxx
Arbor. Employee shall perform such duties in connection herewith as may be
fixed by the Board of Directors from time to time consistent with those
customarily performed by Chief Executive Officers of financial institutions.
In addition, during his employment with the Bank, Employee shall continually
serve as a member of the Board of Directors of Xxxxxxxx.
Employee shall have authority to make loans without approval of the
Board of Directors of the Bank of up to $100,000.00 in accordance with
generally accepted banking practices. The Board of Directors of the Bank shall
approve all other loans in excess of $100,000.00 and up to the current limit of
$500,000.00.
3. COMPENSATION
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(a) Base Salary. As compensation for the services to be rendered by
Employee, the Bank shall pay him an annual salary of $127,000 as of the date of
commencement of employment (the "Start Date") which salary shall be increased
annually at a minimum of 5% payable in equal bi-monthly installments beginning
on the start date. In addition, Employee shall be entitled to customary fees
for service as a member of the Bank's Board and the Board of Xxxxxxxx.
(b) Bonus Salary. In addition to the base salary described above,
Employee shall receive bonuses tied to the performance of the Bank's office(s)
located in the lower peninsula of Michigan. The bonus shall be paid when the
following financial milestones are achieved (as of the end of any calendar
quarter).
On-Balance
Bonus Deposits Sheet loans Incentive
-------- -------- ----------- ---------
#1 $5,000,000 $0 $30,000
#2 $10,000,000 $5,000,000 $60,000
#3 $15,000,000 $8,000,000 $75,000
#4 $20,000,000 $11,000,000 $90,000
#5 $25,000,000 $14,000,000 $100,000
#6 $30,000,000 $18,000,000 $110,000
#7 $35,000,000 $22,000,000 $135,000
#8 $40,000,000 $26,000,000 $150,000
The total cumulative amount of bonus available being $750,000.
Deposits are defined as all deposits of the Bank originated through
any Bank office located in the Lower Peninsula of Michigan. On-Balance Sheet
loans include any loans originated through any retail Bank office located in
the Lower Peninsula of Michigan and held for investment by the Bank, plus an
amount equal to the cumulative amount of 10% of any loans originated for sale
to investors or correspondents from any retail Bank office or Bank employed
originator reporting to the Bank's retail mortgage department located in the
Lower Peninsula of Michigan (Secondary Market Mortgages), plus an amount equal
to the Bank's retained percentage of any loans originated through any retail
bank office located in the Lower Peninsula and in which a participation is
sold. It is understood that existing or future correspondents and net branches
of the wholesale mortgage division of the Bank shall be excluded from this sum
of Secondary Market Mortgage originations so long as the Sault St. Xxxxx office
of the Bank is responsible for supervision of quality control and accounting
for Secondary Market Mortgages. However, correspondents, originators and net
branches established by the Bank's retail mortgage department based in Xxx
Arbor which report directly to the Employee or to a subordinate of the Employee
shall be added to the sum of Secondary Market Mortgages, regardless.
(c) Stock Options. As further compensation for the services to be
rendered by Employee, Xxxxxxxx hereby provides the Employee with an option
("Option 1") to buy up to 60,000 shares of common stock of Xxxxxxxx Bancorp,
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Inc. at a price of $4.50 per share within five years of the Start Date. Such
stock option will unconditionally and irrevocably vest at a rate of 20% of the
option shares per year during the term of this Agreement, beginning one year
from the Start Date. The option may be exercised in one or more transactions
for any number of shares not to exceed 60,000 shares in the aggregate. In
addition, Employee is also hereby granted by Xxxxxxxx an unqualified option
("Option 2") to purchase at any time prior to December 31, 1997 up to 120,000
shares of Xxxxxxxx common stock at a price of $4.50 per share. The option may
be exercised in one or more transactions for any number of shares not to exceed
120,000 shares in the aggregate. As further assurance for the granting of the
foregoing Option 1 and Option 2, in executing this Agreement, Xxxxxxx X.
Xxxxxxx and Xxxxxx X. Xxxxxxx, hereby jointly and severally guarantee to the
Employee the availability of said stock options in accordance with the terms of
this Agreement.
If Employee requests, Xxxxxxxx shall either lend Employee the funds to
exercise the stock options described in this paragraph, or arrange for a loan
to Employee to allow Employee to exercise these options at an interest rate
equal to the Wall Street Journal posted Prime Rate for commercial loans with a
term of not less than three years and an amortization schedule of not less than
15 years. At the option of the Employee, interest on any such loans may
accumulate without payment until December 31, 2000.
Employee shall also participate in the Xxxxxxxx Bancorp Inc. Employee
Stock Option Plan and shall have the opportunity to purchase additional shares
with any other offer to employees, existing shareholders or prospective
shareholders.
(d) Former employment benefits. Current benefits to be paid by
Employer in lieu of payment by previous employer:
1) Employee Stock Ownership Program (Great Lakes Bancorp
payout), $15,000
2) Bonus for 1995, $35,000
3) The grant of shares of common stock of Xxxxxxxx equal
in value, as of December 31, 1995, to 20% of all
shares of TCF Bancorp stock contemplated by the
Restricted Stock Agreement between Employee and TCF
Financial Corporation, dated February 9, 1995, but in
any event not less than 900 shares of TCF Bancorp
stock.
The benefits described in paragraph (d)(1) and (2)
shall be paid by check to Employee within five days
after execution of this Agreement by all parties and
held by Employee until the Start Date at which time
such check may be cashed. The benefits in paragraph
(d)(3) shall be granted to Employee on or before
January 5, 1996.
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(e) Disability Insurance. Employer shall pay all premiums for
Employee's disability insurance under a policy in form and
substance satisfactory to Employee with a waiting period of
not more than 90 days and a disability payment of not less
than 66% of Employee's then base salary.
(f) Life Insurance. Employer shall pay all premiums for
Employee's life insurance policies consistent with the
standard life insurance benefits available to other officers
of the Bank and the officers of Xxxxxxxx.
4. TERM OF AGREEMENT
The term of this employment shall be through December 31, 2000
beginning from the date of this Agreement. This Agreement may be renewed,
modified or changed only upon a new signed written agreement from both parties
to this employment contract.
Termination for Cause. Employee's employment under this Agreement
shall continue until the occurrence of any of the following:
(a) Employee's death.
(b) Employee's physical or mental disability for a period of 90
days in any twelve (12) month period.
(c) Employee's gross or reckless disregard for duties and, or
responsibilities to the Bank.
(d) Conviction of a felony.
(e) If the Bank's Xxx Arbor division does not reach the level of
deposits and On-Balance Sheet loans equal to $10,000,000 in
deposits and $10,000,000 in On-Balance Sheet loans as adjusted
and defined in paragraph (3)(b) by December 31, 1997.
If Employee's employment under this Agreement is terminated through
the causes stated in subparagraphs (a) or (b) above, then in addition to all
life, health and disability insurance benefits payable to the Employee or the
Employee's estate, the Employee or his estate shall promptly receive from the
Employer all salary and bonuses accrued but unpaid up to the date of
termination, and Option 1 and Option 2 as provided in paragraph 3(c) above,
shall continue to be exercisable by the Employee or the Employee's estate until
the respective expiration dates; provided, however, that stock Option 1 shall
be deemed immediately vested in full.
If the Board of Directors terminates this Employment Agreement for any
of the causes stated in subparagraphs (c) or (d) above, then the Employer shall
pay and the Employee shall be entitled to the immediate payment of all salary
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and bonuses accrued but unpaid up to the time of termination.
If the Board of Directors terminates this Employee Agreement for the
cause set forth in paragraph (e) above, then the Employer shall pay and the
Employee shall be entitled to: (i) the immediate payment of all salary and
bonuses accrued but unpaid up to the termination date; and (ii) the immediate
payment of twelve (12) months' future salary from the termination date; and
(iii) Option 1 and Option 2 as provided in paragraph 3(c) above, shall continue
to be exercisable until their respective expiration dates, including the right
to receive loan proceeds to exercise any option.
Termination without Cause. If the Board of Directors terminates this
Employment Agreement except where based upon one or more of the causes set
forth in subparagraphs (a) through (e) above, or if there is any material
reduction of the responsibilities of the Employee without the Employee's
express written consent, then the Employer shall pay and the Employee shall be
entitled to (i) the immediate payment of all salary and bonuses accrued but
unpaid to the date of termination; and (ii) the immediate payment of the unpaid
amount of base salary payable to the Employee during the remaining portion of
the term of this Agreement; provided, however, that in no event shall this
payment be equal to less than twelve (12) months' salary; and (iii) the
immediate payment of all future bonus salary when earned and otherwise payable
to the Employee if the termination or reduction of the responsibilities had not
occurred; and (iv) Option 1 and Option 2 as provided in paragraph 3(c) above,
shall continue to be exercisable until their respective dates, including the
right to receive loan proceeds to exercise any option; provided, however, that
stock Option 1 shall be deemed immediately vested in full; and (v) all health
and life insurance premiums for the Employee required to maintain the same or
comparable benefits coverage shall be promptly paid when due by the Employer
for a period of one (1) year from the date of termination.
In any event, the involuntary termination or reduction of
responsibilities of Employee's employment under this Agreement may only be made
pursuant to the lawful action of the Bank's Board of Directors. If the
stockholders' equity of Xxxxxxxx falls below 3% of total consolidated assets,
the amount of all future salary, stock and bonuses payable to the Employee will
be immediately placed by Xxxxxxxx in an escrow account with an escrow agent and
under such terms and conditions as are reasonably satisfactory to the Employee
and Xxxxxxxx for the future benefit, as earned, of the Employee. Xxxxxxxx
shall provide the Employee with updated quarterly financial statements within
45 days after the end of each calendar quarter and within 90 days after the end
of each fiscal year of Xxxxxxxx and promptly provide Employee with a copy of
all audited and/or reviewed financial statements. Failure by Xxxxxxxx to
comply with any of the foregoing provisions shall constitute a material breach
by the Employer of this Agreement.
The Bank will directly pay all legal costs incurred by the Employee in
connection with the negotiation, review and execution of this Agreement.
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5. OUTSIDE ACTIVITIES RESTRICTIONS
During the term of this Agreement, Employee shall devote his entire
working time to this employment, provided, however, the Employee shall be free
to continue to develop personal financial interests, and the Employee is
encouraged to be actively involved in community and political activities which
benefit the Bank so long as these activities are not competitive with the
business of the Bank.
6. RESTRICTIVE COVENANTS
Employee agrees that for the term hereof, and for one (1) year
thereafter, he will not aid or take part in the establishment or operation of
any enterprise competitive with that of the Bank and that he will not
participate directly or indirectly as stockholder (except as what is currently
held at employment or otherwise available as stock options for unrestricted
stock), director, officer, partner, principal, agent or otherwise in any
business that competes with the Bank in the Xxx Arbor market; provided,
however, that the foregoing covenant shall apply and be enforceable only where
the termination of employment is a voluntary one by Employee or where the
termination is based on one or more of the causes in paragraph 4(a)-(e). This
excludes and is not applicable to continuing to run for political office and
serving on the Board of Trustees at Northwood University which the Bank
encourages the Employee to do.
Employee acknowledges that during the course of his employment he will
receive confidential information pertaining to the Bank's business and agrees
not to disclose same, either during or after the termination of his employment,
to any person who is not a stockholder, officer, director or employee of the
Bank or any of the Bank's professional representatives such as attorneys or
accountants. Such confidential information shall include information
constituting a trade secret. Upon termination of this employment Employee
shall promptly deliver to the Bank all files, lists, and other written data in
his possession pertaining to the Bank's business. The parties hereto recognize
that the services to be performed are special and unique hereunder and in the
course thereof Employee will acquire confidential information. It is agreed
that any material breach of the foregoing provisions will authorize the Bank to
apply to any court of competent jurisdiction to enjoin any violation,
threatened or actual, of such provisions.
7. VACATION
Employee shall be entitled to three (3) weeks paid vacation annually.
Such vacation shall be taken at such time or times as may be specified by the
Employee and notification at least two (2) weeks in advance to the Bank's Board
of Directors. In addition, employee shall be entitled to such personal days,
sick days and holidays as are customarily provided by the Bank to its other
executives.
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8. FRINGE BENEFITS
During the term of this Agreement, Employee shall be entitled to the
following benefits:
(a) Automobile. An automobile will be provided by the Bank or
reimbursement for lease payments and all service, maintenance,
gas and insurance.
(b) Health benefits. Employer shall purchase and maintain for the
benefit of Employee and family, medical insurance as received
by other similarly situated employees of the Bank providing
such coverage as may from time to time be determined by the
Employer's Board of Directors and immediately effective upon
termination of employee's prior employment. If the Bank opts
to change its health plan to a medical savings account plan,
or similar such plan, the Bank shall pay and provide for full
coverage and benefits under such plan for Employee and his
family consistent with other officers and/or directors of the
Bank and Xxxxxxxx; provided, however, that if the Bank does
not adopt a medical savings account plan within 3 years from
the date hereof, the Employee may, at his option, take the
amount of the premium as additional compensation.
(c) Other benefits.
(1) Employee shall be entitled to participate in any
life insurance plans, pension plans, employee stock
ownership plans (ESOP) or any other health insurance
plans that the company may adopt from time to time
for the benefit of its officers or other employees.
(2) Bank shall pay all assessments and annual dues to a
Country Club and other Civic or Professional
Organizations as provided by employee's current
employer. Employer will also pay any country club
equity reimbursement as may be required by Employee's
previous employer, such country club membership to be
the property of the Employee and shall not be
refundable to the Bank in the event that Employee's
employment with the Bank terminates.
(3) Conferences. Employee is entitled to participate in
and the Bank will pay for at least one state and one
national conference annually for his ongoing
education to be paid by the Bank.
(4) Education. The Bank will pay for continuing
education for the Employee as it relates to business.
(5) Physical. The Bank will pay for an annual physical
for the Employee.
(6) Business Related Expenses. The Bank will pay for
business related community expenses. The Bank will
also pay matching charitable
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contributions made by the Employee that are deemed
appropriate by the Bank's Board of Directors.
(7) The Bank shall pay all dental costs incurred for the
Employee through December 31, 1995.
9. GUARANTEE
Xxxxxxxx hereby unconditionally guarantees the Bank's performance and
payment obligations under this Agreement; this guarantee being a continuing
irrevocable guarantee of payment and not collection.
10. ASSIGNMENT
The rights and obligations of the Bank under this Agreement shall
inure to the benefit of and shall be binding upon the successors and assigns of
the Employer. This Agreement shall not be assignable by Employee.
11. START DATE
The Start Date of this Agreement shall be the first date when Employee
begins full time activities on behalf of the Employer, and in any event not
later than January 1, 1996. If the Start Date is January 1, 1996, the
compensation to be paid to Employee under paragraph 3(d)(1) and (2) in lieu of
payment by previous employer (viz, $15,000 and $35,000) shall not be paid by
Employer to Employee.
12. NOTICES
Any notice required to be given under this Agreement shall be deemed
sufficiently given if sent by regular mail to the party to be notified at the
address set forth above or to such other address or addresses as either party
may hereafter designate by notice given in the same manner.
13. ARBITRATION
Any controversy or claim arising out of or related to this Agreement
shall be resolved by binding arbitration in Xxx Arbor or Detroit, Michigan, at
the Bank's option, in accordance with the commercial arbitration rules of the
America Arbitration Association. A judgment upon any award may be entered in
any Court having jurisdiction thereof. Notwithstanding the provisions of this
paragraph, the Bank shall have the right to apply to any Court of competent
jurisdiction to enjoin any violation, threatened or actual, of this Agreement
by Employee pending the final resolution of the arbitration procedure as
provided in this paragraph.
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14. WAIVER OF BREACH
In the event that any breach of this Agreement is waived by the
non-breaching party, such waiver shall not constitute a waiver of any
subsequent breach. No waiver shall be valid unless made in writing and signed
by the non-breaching party, whether the Employee or an authorized
representative of the Employer.
15. SEVERABILITY
If one or more of the provisions of this Agreement should be found
invalid or otherwise unenforceable, the validity, effectiveness and
enforceability of any and all other provisions hereof shall not be affected.
16. ENTIRE AGREEMENT
This Agreement together with any employee manual hereafter created for
the Employer shall constitute the entire agreement and understanding between
the Bank and Employee and supersedes any prior agreement and understanding
relating to the subject matter; provided, however, that any conflict between
the terms and conditions contained in such employee manual and this Agreement
shall be resolved in favor of the terms and conditions contained in this
Agreement. This Agreement may be modified or amended only by a written
instrument executed by Sellers and Purchasers each acting through its duly
authorized agent.
17. LAWS GOVERNING AGREEMENT
This Agreement shall be construed in accordance with and governed by
the laws of the State of Michigan.
18. CAPTIONS
The captions in this Agreement are for convenience only and shall not
be considered a part hereof or affect the construction or interpretation of any
provisions of this Agreement.
IN WITNESS WHEREOF, THE parties have executed this Agreement as of the
day and year first above mentioned.
Witnesses: BANK:
UNIVERSITY BANK, a Michigan
banking corporation
By: /s/ Xxxxxxx Xxxxx Ranzini
------------------------------- ------------------------------------
Xxxxxxx Xxxxx Xxxxxxx, President
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EMPLOYEE:
By:/s/ Xxxx Xxxxxx
------------------------------ --------------------------------------
Xxxx Xxxxxx
XXXXXXXX:
By:/s/ Xxxxxxx Xxxxx Ranzini
------------------------------ --------------------------------------
Xxxxxxx Xxxxx Xxxxxxx, President
/s/ Xxxxxxx Xxxxx Ranzini
------------------------------ -----------------------------------------
Xxxxxxx Xxxxx Xxxxxxx, Individually
/s/ Xxxxxx X. Xxxxxxx
------------------------------ -----------------------------------------
Xxxxxx X. Xxxxxxx, Individually
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Amendment to Employment Agreement
Amendment, dated as of December 15, 1995, to the Employment
Agreement dated October 30, 1995 (the "Employment Agreement") between
University Bank, a Michigan banking corporation ("Bank") and Xxxx Xxxxxx
("Employee") and, as to the provisions of paragraph 3(c) of said Employment
Agreement, Xxxxxxxx Bancorp., a Delaware corporation ("Xxxxxxxx").
The parties hereto mutually agree as follows:
1. Employee has commenced his employment with the Bank,
thereby rendering effective the Employment Agreement, as the same is amended
hereby.
2. (a) The parties acknowledge that it was at the time of
execution thereof and continues to be their intent that the provisions of
paragraphs 3(c) and 4 of the Employment Agreement relating to the grant and
exercise of options to purchase shares of Common Stock of Xxxxxxxx be
implemented by the grant of options, at such time as the Employee commenced his
employment with the Bank, pursuant to the stock option plan of Xxxxxxxx in
effect at the inception of such employment. Such stock option plan is the 1995
Stock Plan of Xxxxxxxx, as adopted by the Board of Directors of Xxxxxxxx and as
to be presented to the stockholders for approval at the next annual meeting of
stockholders of Xxxxxxxx (the "Plan"). Accordingly, it is hereby acknowledged
and agreed that Employee is, on or about the date hereof, being granted options
to purchase an aggregate of 180,000 shares of Common Stock pursuant to the
Plan, of which options for 100,000 of such shares are intended to be "incentive
stock options" as defined in the Plan, and with the options for the remaining
80,000 of such shares intended to be "Non Qualified" options, as defined in the
Plan. The exercise price and the latest expiration dates of such options and
the date as of which such options are to become exercisable are set forth in
Exhibit A hereto. Certain other terms and conditions of or pertaining to such
options shall be set forth in the Employee Stock Option Agreement to be entered
into by Employee and Xxxxxxxx (the "Option Agreement").
(b) It is also agreed that the loans to be provided
or arranged in connection with the exercise of the aforementioned options, as
referred to in paragraphs 3(c) and 4 of the Employment Agreement, shall be made
in accordance with, and the rights and obligations with respect thereto shall
be as set forth in, the applicable provisions of the Option Agreement.
(c) The terms of the Option Agreement and of this
Section 2 shall and hereby supersede all provisions of the Employment Agreement
regarding the grant and exercise of options to purchase shares of Xxxxxxxx and
shall henceforth govern such options and matters pertaining thereto.
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(d) If stockholder approval for the Plan is not
obtained by December 31, 1996, Xxxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxxx shall
arrange for Xxxxxxxx to grant to Employee options ("New Options") to replace
and in substitution for, the options granted to Employee under the Plan and
otherwise conforming as nearly as is practicable to the terms of said options
(except all such New Options shall be non-qualified options).
3. This Amendment may be executed in counterparts.
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IN WITNESS WHEREOF, the undersigned have executed this
Amendment as of the date first above written:
/s/ Xxxx Xxxxxx
----------------------------------
Xxxx Xxxxxx
UNIVERSITY BANK, a Michigan banking Corporation
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------
Sr. Vice President
As to Paragraph 2 above:
XXXXXXXX BANCORP. INC.
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------
President
As to Paragraph 2(c) above:
/s/ Xxxxxxx X. Xxxxxxx
----------------------------------
Xxxxxxx X. Xxxxxxx
/s/ Xxxxxx X. Xxxxxxx
----------------------------------
Xxxxxx X. Xxxxxxx
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Exhibit A
Incentive Options (Total Shares: 100,000) as follows:
(a) 20,000 shares of Common Stock:
(i) Exercisable immediately (subject to satisfaction of
the conditions set forth in Section 7 of the Employee
Stock Option Agreement).
(ii) Latest expiration date: December 31, 1997.
(iii) Purchase price per share: $4.50
(b) 20,000 shares of Common Stock:
(i) Exercisable on or after January 10, 1997 (subject to
satisfaction of the conditions set forth in Section 7
of the Employee Stock Option Agreement).
(ii) Latest expiration date: December 31, 1997.
(iii) Purchase price per share: $4.50
(c) 20,000 shares of Common Stock:
(i) Exercisable on or after January 10, 1998 (subject to
satisfaction of the conditions set forth in Section 7
of the Employee Stock Option Agreement).
(ii) Latest expiration date: September 30, 2000
(iii) Purchase price per share: $4.50
(d) 20,000 shares of Common Stock:
(i) Exercisable on or after January 10, 1999 (subject to
satisfaction of the conditions set forth in Section 7
of the Employee Stock Option Agreement).
(ii) Latest expiration date: September 30, 2000
(iii) Purchase price per share: $4.50
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(e) 20,000 shares of Common Stock:
(i) Exercisable on or after January 10, 2000 (subject to
satisfaction of the conditions set forth in Section 7
of the Employee Stock Option Agreement).
(ii) Latest Expiration Date: September 30, 2000
(iii) Purchase price per share: $4.50
Other Options :
(a) 80,000 shares of Common Stock:
(i) Exercisable immediately (subject to satisfaction of
the conditions set forth in Section 7 of the Employee
Stock Option Agreement)
(ii) Expiration date: December 31, 1997
(iii) Purchase price: $4.50
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