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EXHIBIT 10.66
SEVERANCE AGREEMENT
SEVERANCE AGREEMENT dated as of May 18, 1995, by and between Lomas
Financial Corporation, a Delaware corporation (the "Company") and Xxxxx X.
Xxxxxxx ("Executive").
WHEREAS, Executive and the Company have previously entered into an
Employment Agreement dated as of July 1, 1991 (the "Employment Agreement");
WHEREAS, effective June 30, 1995, Executive wishes to participate in
the enhanced pension program offered by the Company and the parties wish to
terminate the Employment Agreement; and
WHEREAS, the Company and Executive desire to enter into this Agreement
to provide, among other things, for the payment to Executive of certain
severance benefits upon termination of the employer-employee relationship
between the Company and Executive;
NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein and Executive's long prior service to the Company, and in
cancellation and settlement of all obligations under the Employment Agreement,
the parties agree as follows:
1. Resignation. Executive shall remain employed by the Company as an
Executive Vice President until June 30, 1995 (the "Termination Date"), upon
which date Executive shall elect to participate in the enhanced pension program
offered by the Company pursuant to which he will be credited with five (5)
additional years of age and service under the Company pension plan.
Executive's secretary, Xxxxx Xxxxxxx, will be terminated on the Termination
Date but will receive as severance pay (in lieu of any
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payment under the Company severance plan) fifty percent (50%) of her current
annual base salary.
2. Severance Benefit. (a) (i) On May 18, 1995 the Company will pay
Executive $572,141 representing all of his severance benefits pursuant to the
Employment Agreement less all applicable federal, state and local withholding
taxes; (ii) on the Termination Date the Company will pay Executive for up to
eighty (80) hours of accrued but unused vacation and (iii) the Company will
reimburse Executive, in accordance with current Company policy, for all
necessary and reasonable costs and expenses incurred on behalf of the Company.
The Company will cause to be paid to Executive, on or before (i) July 15, 1995,
approximately $173,016 and $31,071, representing, respectively, Executive's
vested interest in the Company pension plan and supplemental excess retirement
plan, (ii) July 15, 1995, approximately $121,154 representing the enhanced
pension benefit payable to Executive under the enhanced pension program
referred to in Paragraph 1 and (iii) August 15, 1995, the vested interest of
Executive (increased by the enhanced pension program referred to in Paragraph
1) in the Company 401(k) plan.
(b) If, within six (6) months after the Termination Date the Company
effects a Transaction, as hereinafter defined, with an individual or entity
with whom the Company has held discussions on or before the Termination Date
regarding a possible Transaction, Executive shall be eligible to participate in
the "success bonus" arrangement attached hereto as Exhibit "A" established by
the Compensation Committee of the Board of Directors for senior
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executives of the Company in connection with the sale of all or a substantial
portion of the Company. In the context of this Paragraph 2(b), a "Transaction"
shall mean a disposition or transfer of all or a majority of the stock or
assets of the Company or Lomas Mortgage USA, Inc., whether in the form of a
sale, spin-off, joint venture or other similar arrangement, in one transaction
or a series of transactions after January 1, 1994.
(c) Executive will be eligible to participate in the Company's
welfare plans as amended from time to time to include group medical plan, group
life plan and group accidental death and dismemberment plan at the employee
premium rate for twelve (12) months subsequent to the Termination Date and,
thereafter, on the basis and for the remainder of the period set forth in the
enhanced pension program offered by the Company; provided, however, that
Executive's right to such continued participation shall cease if Executive
receives comparable coverage as a result of future employment. In the event
that Executive's participation in any such welfare plan is barred, the Company
shall arrange to provide Executive with benefits substantially similar to those
which Executive would otherwise have been entitled to receive under such
welfare plans from which his continued participation is barred.
(d) All 40,000 outstanding stock options with an exercise price of
$8.25 granted to Executive shall be fully vested and shall expire June 30, 1997
and the Company shall make such amendments to the plans and the outstanding
awards as may be necessary to effectuate the provisions of this Paragraph 2(d).
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(e) Executive shall continue to be eligible to participate in the
"Stock Based Incentive Compensation Plan" arrangement attached hereto as
Exhibit "B" established by the Compensation Committee of the Board of Directors
for senior executives of the Company.
(f) Executive expressly acknowledges and agrees that the severance
benefits described in this Paragraph 2 constitute the only benefits to which
Executive is entitled as a result of Executive's severance and that upon
execution of this Agreement by Executive and the Company, the Employment
Agreement shall be null and void.
3. Position and Responsibilities. Prior to the Termination Date,
Executive agrees to render such advice and services to the Company as
reasonably may be requested by the Chief Executive Officer or the Board of
Directors of the Company. The services to be performed by Executive under this
Agreement shall include, but not be limited to, financial restructuring of the
Company, facilitation of a Transaction, liquidation of the Conseco Tranche B
Security and the Vista Properties prepackaged bankruptcy, and Executive shall
perform such services prior to the Termination Date unless and until another
person is designated to perform any of such services by the Chief Executive
Officer or the Board of Directors. Allowing for reasonable and customary paid
vacations and taking into account the nature of the services provided,
Executive shall devote substantially all of his working time and effort to
rendering services under this Agreement.
4. Compensation. The Company shall continue to pay
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Executive his current monthly salary through the Termination Date.
5. Expenses and Other Facilities. (a) Executive shall be reimbursed
on the same basis as set forth in the Employment Agreement for necessary and
reasonable business expenses incurred by Executive in connection with the
performance of his duties hereunder.
(b) The Company shall continue to make available to Executive through
the Termination Date, without any expense to him, an office and such
administrative staff as reasonably may be necessary to perform his duties. In
addition, the Company will provide for telephone, telecopy, Xerox, supplies,
mail, and express mail services as may reasonably be required by Executive.
6. Termination and Liquidated Damages. (a) This Agreement and
Executive's retention hereunder may be terminated at any time by either party
upon ten (10) days prior written notice to the other party. In the event of
(i) such a termination by the Company, other than a termination for "Cause," as
hereinafter defined, or (ii) a termination at any time by Executive as a result
of a breach of this Agreement by the Company, Executive shall be entitled to
receive as liquidated damages an amount in cash equal to the then-present value
of all remaining payments due hereunder through June 30, 1995. Such amount
shall be calculated using a discount rate of 6% per annum and shall be paid in
a single sum not later than ten (10) days after any such termination.
(b)(i) In the event of a voluntary termination of his retention
hereunder by Executive prior to the close of business on
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the Termination Date other than as set forth in clause (a) (ii) above, the
Company will have no further obligation to make payments to Executive following
any such termination and Executive shall forfeit, to the extent not already
paid, all rights to his portion of the "success bonus" described in Paragraph
2(b) and his portion of the "Stock Based Incentive Compensation Plan" described
in Paragraph 2(e). Executive shall not be subject to liability for breach of
this Agreement by reason of his voluntary termination of his retention
hereunder.
(ii) In the event of a termination of Executive's retention hereunder
by the Company for "Cause," the Company will have no further obligation to make
payments to Executive following any such termination and Executive shall
forfeit, to the extent not already paid, all rights to his portion of the
"success bonus" described in Paragraph 2(b) and his portion of the "Stock Based
Incentive Compensation Plan" described in Paragraph 2(e).
(c) For purposes of this Agreement, "Cause" shall mean (i)
Executive's willful and continued failure substantially to perform his duties
hereunder (other than as a result of Executive's death, "disability" [as
defined under the Company's Long-Term Disability Plan] and other than as a
result of breach of this Agreement by the Company), (ii) Executive's dishonesty
in the performance of his duties hereunder or (iii) an act or acts on
Executive's part constituting a felony under the laws of the United States or
any state thereof.
(d) In the event of any termination of this Agreement
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pursuant to this Paragraph 6, the Company shall continue to provide Executive
with the benefits specified in Paragraph 2(c).
7. Non-Competition. Prior to the close of business on the Termination
Date, Executive shall not directly or indirectly be or remain employed by, or
render services for, any person, firm, partnership, joint venture, association,
corporation or other business organization, entity or enterprise engaged in any
business, which is in competition with any business currently conducted by the
Company. During the period from May 18, 1995 through May 18, 2000, Executive
shall not directly or indirectly participate by or on behalf of any person,
firm, partnership, joint venture, association, corporation or other business
organization, entity or enterprise in any pending or threatened action, claim,
suit or proceeding which is or threatens to become adverse to the Company or
any business currently conducted by the Company, by or before any state,
Federal, foreign, or other court or governmental department, commission, board,
bureau, agency or instrumentality.
8. Confidentiality. Executive shall not disclose or use for
Executive's own benefit or purposes or the benefit or purposes of any other
person, firm, partnership, joint venture, association, corporation or other
business organization, entity or enterprise other than the Company and any of
its subsidiaries or affiliates, any trade secrets, information, data, or other
confidential information relating to customers, development programs, costs,
marketing, trading, investment, sales activities, promotion, credit and
financial data, manufacturing processes, financing methods,
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plans, or the business and affairs of the Company generally, or of any
subsidiary or affiliate of the Company; provided that the foregoing shall not
apply to information which is not unique to the Company or which is generally
known to the industry or the public other than as a result of Executive's
breach of this covenant. Any provision of this Agreement to the contrary
notwithstanding, Executive's obligations pursuant to this Paragraph 8 shall
survive any termination of this Agreement and Executive's retention hereunder.
9. Specific Performance. Executive acknowledges and agrees that the
Company's remedies at law for a breach or threatened breach of any of the
provisions of Paragraph 7 or Paragraph 8 would be inadequate and, in
recognition of this fact, Executive agrees that, in the event of such a breach
or threatened breach, in addition to any remedies at law, the Company, without
posting any bond, shall be entitled to obtain equitable relief in the form of
specific performance, temporary restraining order, temporary or permanent
injunction or any other equitable remedy which may then be available.
10. Miscellaneous.
(a) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
(b) Entire Agreement; Amendments. This Agreement supersedes all
prior agreements between Executive and the Company relating to Executive's
employment and the termination thereof, including, without limitation, the
Employment Agreement, and, together with
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the agreements evidencing the stock options and other awards referred to in
Paragraph 2(d) and the documents evidencing the benefits to which Executive is
entitled pursuant to Paragraphs 2(a), (b), (c) and (e), contains the entire
understanding of the parties with respect to the retention of Executive by the
Company; provided, however, that this Agreement shall not impair any rights or
benefits accrued by Executive under any benefit plan, compensation arrangement
or pension, excess retirement or management security plan of the Company prior
to the termination of his employment on June 30, 1995. Except as aforesaid,
there are no restrictions, agreements, promises, warranties, covenants or
undertakings between the parties with respect to the subject matter herein
other than those expressly set forth herein. This Agreement may not be
altered, modified, or amended except by written instrument signed by the
parties hereto.
(c) No Waiver. The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion shall not be considered
a waiver of such party's rights or deprive such party of the right thereafter
to insist upon strict adherence to that term or any other term of this
Agreement.
(d) Severability. In the event that any one or more of the
provisions of this Agreement shall be or become invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions of this Agreement shall not be affected thereby.
(e) Assignment. This Agreement shall not be assignable by
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Executive and shall be assignable by the Company only with the consent of
Executive which consent shall not be unreasonably withheld; provided that no
such assignment by the Company shall relieve the Company of any liability
hereunder, whether accrued before or after such assignment.
(f) Arbitration. Any dispute between the parties to this Agreement
arising from or relating to the terms of this Agreement or the retention of
Executive by the Company shall be submitted to arbitration in Dallas, Texas
under the auspices of the American Arbitration Association.
(g) Successors; Binding Agreement.
(i) The Company shall require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or the assets of the Company
to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. Failure of the
Company to obtain such agreement prior to the effectiveness of any
such succession shall be a breach of this Agreement and shall entitle
Executive to the benefits set forth in Paragraph 6(a).
(ii) This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs,
representatives, successors and assigns.
(h) Notice. For the purposes of this Agreement, notices and all
other communications provided for in the Agreement shall be in
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writing and shall be deemed to have been duly given when delivered or mailed by
United States registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the execution page of this
Agreement; provided that all notices to the Company shall be directed to the
attention of the General Counsel of the Lomas Financial Group or to such other
address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
(i) Counterparts. This Agreement may be signed in counterparts, each
of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
/s/ XXXXX X. XXXXXXX
-----------------------------------
XXXXX X. XXXXXXX
Address: 0000 Xxxxxx, #000
Xxxxxx, XX 00000
LOMAS FINANCIAL CORPORATION
ATTEST: By: /s/ XXXX XXXXX
--------------------------------
Xxxx Xxxxx
President & Chief
Executive Officer
/s/ XXXXX X. XXXXXXX
------------------------------
Xxxxx X. Xxxxxxx, Secretary
Address: 0000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
(SEAL)
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Exhibit "A"
"Success Bonus" Arrangement
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[LOMAS LETTERHEAD]
Date: September 9, 1994
To: Xxxx Xxxx
Xxx Xxxxxxx
Xxxx Xxxxxxx
Xxxx Xxxxx
Xxxxxx Xxxxxx
From: Xxxx Xxx
Re: Success Bonuses - Project X
As you previously have been advised, the Board of Directors of Lomas
Financial Corporation, in January 1994, retained Salomon Brothers,
Inc. to assist Lomas in evaluating strategic alternatives to maximize
stockholder values. Options to be considered include the possibility
of merging with or being acquired (in whole or in substantial part) by
another institution.
As an incentive to you and other senior officers of the Company, the
Compensation Committee of the Board, at the meeting thereof on January
25, 1994, adopted the following resolution related to the Salomon
initiative (which is referred to in the resolution as Project X):
"RESOLVED, that a formula for establishing the
aggregate amount of success bonuses to be awarded upon the
successful conclusion of Project X is hereby approved as
follows:
A. The minimum aggregate amount
payable at closure of any
transaction resulting from
Project X that is acceptable
to the Board of Directors: $2,000,000
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Memorandum
September 9, 1994
Page Two
B. The aggregate amount payable at
various prices per share
(including the $2 million
minimum):
$13.50 $2,200,000
$13.75 $2,400,000
$14.00 $2,600,000
$14.25 $2,800,000
$14.50 $3,000,000
$14.75 $3,200,000
$15.00 $3,400,000
$15.25 $3,600,000
$15.50 $3,800,000
$15.75 $4,000,000
$16.00 $4,200,000
$16.25 $4,400,000
$16.50 $4,600,000
$16.75 $4,800,000
$17.00 $5,000,000
$17.25 $5,200,000
$17.50 $5,400,000
$17.75 $5,600,000
$18.00 $5,800,000
$18.25 $6,000,000
$18.50 $6,200,000
$18.75 $6,400,000
$19.00 $6,600,000
$19.50 $6,800,000
$20.00 $7,000,000
FURTHER RESOLVED, that 50 percent of any aggregate bonuses
payable under the foregoing formula hereby is allocated to and shall
be distributed to Xxxx Xxx.
FURTHER RESOLVED, that 50 percent of any aggregate bonuses
payable under the foregoing formula shall be allocated among and
distributed to Xxxx Xxxx, Xxxxx X. Xxxxxxx, Xxxxx X. Xxxxxxx XX,
Xxxxxx X. Xxxxxxx, Xx., Xxxx Xxxxx, and up to 15 other key executives
to be designated by Xxxx Xxx, in such respective amounts as may be
determined by Xxxx Xxx."
(The 50 percent of the aggregate bonuses payable under the foregoing
resolutions which is to be allocated by me hereinafter is called "the residual
bonus pool".)
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Memorandum
September 9, 1994
Page Three
Initially, the residual bonus pool was allocated as follows:
Name Percentage
---- ----------
Xxxx Xxxx 17.5
Xxxxx X. Xxxxxxx 17.5
Xxxxxx X. Xxxxxxx, Xx. 15.0
Xxxxx X. Xxxxxxx XX 15.0
Xxxx Xxxxx 15.0
Xxxxxx Xxxxxx 7.5
Others 12.5
-----
100.0
=====
Subsequent to this initial allocation, Xxxxx Xxxxxxx'x employment by the
Company has been terminated and his 15 percent share of the residual bonus
pool has been reallocated, resulting in the following current distribution of
the pool:
Name Percentage
---- ----------
Xxxx Xxxx 20.0
Xxxxx X. Xxxxxxx 20.0
Xxxxxx X. Xxxxxxx, Xx. 17.5
Xxxx Xxxxx 17.5
Xxxxxx Xxxxxx 10.0
Others 15.0
-----
100.0
=====
Please call me if you have any questions.
/s/ XXXX XXX
XXXX XXX
JH/vm
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Exhibit "B"
Stock Based Incentive Compensation Plan
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[LOMAS LETTERHEAD]
Date: November 2, 1994
To: Xxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx, Xx.
Xxxxxx Xxxxxx
Xxxx Xxxxx
From: Xxxx Xxx
Re: Stock Based Incentive Compensation Plan
As you previously have been advised, the Compensation Committee of the
Company's Board of Directors, in August 1994, approved a Fiscal 1995
"Stock Based Incentive Compensation Plan" for the four of you and me.
A copy of the approved plan is appended as Exhibit A for your review
and retention.
You will note that compensation (if any) payable under the plan is
based on the relationship between the average price of Lomas Financial
Corporation's common stock during the first quarter of Fiscal 1995
("the base price" as defined in the plan) and the average price of
LFC's common stock during the month of June 1995 ("the year-end price"
as defined in the plan). Appended as Exhibits B and C, respectively,
are computations of the "base price" by Solomon Brothers Inc. and by
our Treasury Department. Solomon's report (Exhibit B) indicates that
the average closing price for LFC's stock during the three months
ended September 30, 1994 was $5.44 per share, and our internal report
(Exhibit C) fixes that average at $5.43. For your purposes, I suggest
use of Solomon's $5.44 per share.
Should you have any questions regarding the plan, please give me a
call.
Many thanks.
/s/ XXXX XXX
Xxxx Xxx
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EXHIBIT A
(Memorandum 11/02/94)
Page 1 of 2
Lomas Financial Corporation
Proposed Stock Based Incentive Compensation
Plan for Senior Corporate Officers
Fiscal 1995
1) Participants:
Name Salary
------------------------ --------
Xxxx Xxx $450,000*
Xxxxx X. Xxxxxxx $275,000
Xxxxxx X. Xxxxxxx, Xx. $220,000
Xxxx Xxxxx $220,000
Xxxxxx Xxxxxx $130,000
_________________
*For purposes of this plan, Xx. Xxx'x salary is deemed to be
the sum of (i) his salary for the first six months of the year
($300,000) plus (ii) his consulting fees for the final six
months of the year ($150,000).
2) The concept of the proposed plan is to tie fiscal 1995 incentive
compensation for the five participants directly to the performance of
the Company's common stock and thereby to relate such incentive
compensation to enhancement of shareholder value. Specifically, it is
proposed that the amount of each participant's fiscal 1995 incentive
compensation be based on the amount of appreciation realized during
the year in the market price of the Company's common stock. As
proposed, the process for determining the amount of such appreciation
in the value of the Company's common stock and the resulting incentive
compensation, if any, payable to the respective participants would be
as follows:
Step 1. The average price of Lomas Financial Corporation's
("LFC") common stock on the New York Stock Exchange
at the close of each of the business days of July,
August and September 1994 shall be determined and
shall constitute the "base price."
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EXHIBIT A
(Memorandum 11/02/94)
Page 2 of 2
Step 2. The average price of LFC's common stock on the New
York Stock Exchange at the close of each of the
business days of June 1995 shall be determined and
shall constitute the "year-end price"; provided, at
the discretion of the Compensation Committee, the
closing prices on the final two business days of
June 1995 need not be included in determining the
year-end price.
Step 3. The relationship between the year-end price and
the base price shall be determined on July 1,
1995, and then:
Then each participant
shall receive incen-
tive compensation in
If the year-end price July 1995 equal to the
represents as a percen- indicated percentage
tage of the base price of his or her salary
----------------------- ----------------------
Less than 110 percent 0.0 percent*
110 percent 15.0 percent
115 percent 22.5 percent
120 percent 30.0 percent
125 percent 37.5 percent
130 percent 45.0 percent
135 percent 52.5 percent
140 percent 60.0 percent
145 percent 67.5 percent
150 percent 75.0 percent
160 percent 90.0 percent
170 percent 105.0 percent
180 percent 120.0 percent
190 percent 135.0 percent
200 percent 150.0 percent
________________
*If no incentive compensation is payable under the foregoing
formula, the Compensation Committee, in its discretion, nonetheless
may elect to award individual bonuses to some or all of the
participants based on the Committee's evaluation of each
participant's contribution to the achievement of the Company's
objectives for fiscal 1995.
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EXHIBIT B
(Memorandum 11/02/94)
Page 1 of 1
SALOMON BROTHERS INC
LOMAS FINANCIAL CORPORATION
DAILY DATA -- 7/1/94 THROUGH 9/30/94
[GRAPH]
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EXHIBIT C
(Memorandum 11/02/94)
Page 1 of 1
LOMAS FINANCIAL CORPORATION
COMMON STOCK CLOSING PRICES PER SHARE
(JULY 1994 THRU SEPTEMBER 1994)
CLOSING CLOSING CLOSING
DATE PRICE DATE PRICE DATE PRICE
---- ----- ---- ----- ---- -----
01-JUL-94 6 1/8 01-AUG-94 5 01-SEP-94 5 3/4
05-JUL-94 6 1/8 02-AUG-94 5 1/2 02-SEP-94 5 7/8
06-JUL-94 5 7/8 03-AUG-94 5 1/4 06-SEP-94 5 7/8
07-JUL-94 5 3/4 04-AUG-94 5 1/8 07-SEP-94 5 3/4
08-JUL-94 5 3/4 05-AUG-94 5 1/4 08-SEP-94 5 3/4
11-JUL-94 5 5/8 08-AUG-94 5 5/8 09-SEP-94 5 3/4
12-JUL-94 5 1/2 09-AUG-94 5 5/8 12-SEP-94 5 13/32
13-JUL-94 5 1/2 10-AUG-94 5 5/8 13-SEP-94 5 5/8
14-JUL-94 5 3/8 11-AUG-94 5 1/2 14-SEP-94 5 3/4
15-JUL-94 5 3/8 12-AUG-94 5 3/8 15-SEP-94 5 3/4
18-JUL-94 5 3/8 15-AUG-94 5 1/4 16-SEP-94 5 5/8
19-JUL-94 5 16-AUG-94 5 3/8 19-SEP-94 5 5/8
20-JUL-94 5 17-AUG-94 5 1/2 20-SEP-94 5 3/8
21-JUL-94 4 1/2 18-AUG-94 5 1/2 21-SEP-94 5 1/2
22-JUL-94 4 3/4 19-AUG-94 5 1/4 22-SEP-94 4 3/4
25-JUL-94 4 3/4 22-AUG-94 5 7/8 23-SEP-94 4 7/8
26-JUL-94 4 5/8 23-AUG-94 6 1/4 26-SEP-94 5 1/8
27-JUL-94 4 7/8 24-AUG-94 6 27-SEP-94 4 3/4
28-JUL-94 4 7/8 25-AUG-94 5 7/8 28-SEP-94 5 1/4
29-JUL-94 4 7/8 26-AUG-94 6 29-SEP-94 5
29-AUG-94 5 3/4 30-SEP-94 5
30-AUG-94 5 7/8
31-AUG-94 5 7/8
AVERAGE DAILY CLOSING PRICE PER SHARE DURING THE PERIOD $5.43
