FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
for the quarterly period ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to _____________
Commission file number 0-13423
FNB Rochester Corp.
(Exact name of registrant as specified in its charter)
New York 16-1231984
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
35 State St., Rochester, New York 14614
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(716) 546-3300
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 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 [ ]
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Number of Shares Outstanding at
Class October 31, 1995
Common stock, $1.00 par value 3,568,963
<PAGE>
INDEX
Page No.
Part I Financial Information
Condensed consolidated statements of
financial condition - September 30, 1995
and December 31, 1994 --
Condensed consolidated statements of
operations for the three months and nine
months ended September 30, 1995 and 1994 --
Condensed consolidated statements of cash
flows for the nine months ended September
30, 1995 and 1994 --
Notes to condensed consolidated financial
statements --
Management's discussion and analysis of
financial condition and results of
operations --
Part II Other information --
Index of Exhibits --
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
FNB ROCHESTER CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Financial Condition (unaudited)
(In thousands, except per share data)
<CAPTION>
September 30, December 31,
1995 1994
_____________ ____________
<S> <C> <C>
Assets
Cash and due from banks $16,856 $17,281
Interest-bearing deposits with other banks 1,038 1,077
Federal funds sold 4,300 2,000
Securities available-for-sale 47,180 49,284
Securities held-to-maturity, at amortized
cost (fair value of $57,958 in 1995 and
$50,227 in 1994) 57,799 52,997
Loans:
Commercial 159,921 134,529
Mortgage 45,442 31,080
Home Equity 19,478 20,586
Consumer 20,291 16,443
______ ______
Total loans 245,132 202,638
Net deferred loan fees (76) (201)
Allowance for loan losses (6,125) (6,452)
_______ _______
Net loans 238,931 195,985
Premises and equipment, net 6,561 4,918
Accrued interest receivable 3,434 3,159
Other real estate 0 100
Other assets 2,204 2,461
_____ _____
Total assets $378,303 $329,262
======= =======
Liabilities and shareholders' equity
Deposits:
Demand:
Non-interest bearing $ 40,877 $ 37,887
Interest bearing - NOW 63,355 70,690
Savings and money market 80,029 75,774
Certificates of deposit:
Under $100,000 105,968 88,674
$100,000 and over 51,108 22,356
______ ______
Total deposits 341,337 295,381
Securities sold under agreement to
repurchase and short-term borrowing 8,800 9,875
Accrued interest payable and other 3,632 2,646
liabilities _____ _____
Total liabilities 353,769 307,902
_______ _______
Shareholders' equity:
Common stock, $1 par value; authorized
5,000,000 shares; issued and outstanding
3,568,713 in 1995 and 1994 3,569 3,569
Additional paid in capital 13,023 13,023
Unrealized net holding gain (loss) on
securities available-for-sale 284 (781)
Undivided profits 7,658 5,549
_____ _____
Total shareholders' equity 24,534 21,360
______ ______
Total liabilities and shareholders' equity $ 378,303 $ 329,262
======= =======
See accompanying notes to condensed consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
FNB ROCHESTER CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (unaudited)
(In thousands, except for share data)
<CAPTION>
Nine months ended Three months ended
September 30, September 30,
1995 1994 1995 1994
____ ____ ____ ____
<S> <C> <C> <C> <C>
Interest income:
Commercial $ 11,081 $ 8,016 $ 3,967 $ 2,941
Mortgage 2,108 1,689 805 570
Home equity 1,509 1,213 496 426
Consumer 1,186 901 436 328
_____ ___ ___ ___
Total interest and
fees on loans 15,884 11,819 5,704 4,265
Federal funds sold and
time deposits 478 310 128 128
Securities 5,139 4,498 1,720 1,502
_____ _____ _____ _____
Total interest income 21,501 16,627 7,552 5,895
______ ______ _____ _____
Interest expense:
Savings, NOW and money
market accounts 2,564 2,412 858 786
Certificates of deposit 6,101 3,090 2,221 1,198
Short-term borrowing 305 58 123 10
Long-term debt - 123 - -
____ ___ ___ ___
Total interest expense 8,970 5,683 3,202 1,994
_____ _____ _____ _____
Net interest income 12,531 10,944 4,350 3,901
Provision for loan losses
(recovery) - (43) - -
______ ____ _____ _____
Net interest income
after recovery for loan
losses 12,531 10,987 4,350 3,901
______ ______ _____ _____
Other income:
Service charges on deposit
accounts 896 909 307 286
Credit card fees 477 383 166 124
Gain on sale of securities
available-for-sale 53 - - -
Loan servicing fees 218 242 70 78
Gain on sale of subsidiary 0 191 0 100
Other operating income 319 262 128 154
___ ___ ___ ___
Total other income 1,963 1,987 671 742
_____ _____ ___ ___
Other expenses:
Salaries and employee
benefits 6,047 5,884 2,065 2,062
Occupancy 1,946 1,786 668 681
Marketing and public
relations 442 657 144 221
Office supplies, printing
and postage 406 395 124 125
Processing fees 726 673 250 219
F.D.I.C. assessments 317 504 (14) 156
Net cost of operation of
other real estate (14) 241 1 71
Legal 235 316 77 106
Other 1,325 1,184 538 380
_____ _____ ___ ___
Total other expenses 11,430 11,640 3,853 4,021
______ ______ _____ _____
Income before income 3,064 1,334 1,168 622
Income tax expense 955 441 352 189
___ ___ ___ ___
Net income $ 2,109 $ 893 $ 816 $ 433
===== === === ===
Weighted average
shares outstanding
- primary 3,568,713 3,224,465 3,568,713 3,568,712
========= ========= ========= =========
Net income per common
share - primary $ .59 $ .28 $ .23 $ .12
=== === === ===
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
FNB ROCHESTER CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (unaudited)
(In thousands)
<CAPTION>
Nine months ended
September 30,
1995 1994
____ ____
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,109 $ 893
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses (recovery) - (43)
Depreciation and amortization 818 740
Amortization of goodwill 178 188 Gain on sales of securities available-for
-sale (53) -
(Increase) decrease in mortgage loans held
-for-sale (416) 2,979
Increase in accrued interest receivable (275) (179)
Decrease in other assets 179 595
Increase (decrease) in accrued interest
payable and other liabilities 793 (116)
___ _____
Net cash provided by operating
activities 3,333 5,057
_____ _____
Cash flows from investing activities:
Decrease in interest bearing deposits 39 -
Securities available-for-sale:
Purchase of securities (12,159) (7,988)
Proceeds from maturities 8,541 10,896
Proceeds from sales 7,033 5,815
Securities held-to-maturity:
Purchase of securities (6,599) (5,450)
Proceeds from maturities 1,797 6,113
Loan origination and principal collection,
net (42,530) (30,629)
Capital expenditures, net (2,461) (1,446)
______ ______
Net cash used by investing activities (46,339) (22,689)
Cash flows from financing activities:
Net decrease in demand, savings, NOW and
money market accounts (90) (13,846)
Certificates of deposit accepted and
repaid, net 46,046 26,279
Increase (decrease) in short-term
borrowings and securities sold under
agreement to repurchase (1,075) 800
_____ ___
Net cash provided by financing 44,881 13,233
activities ______ ______
Increase (decrease) in cash and cash
equivalents 1,875 (4,399)
Cash and cash equivalents at beginning
of year 19,281 28,583
______ ______
Cash and cash equivalents at end of
period $ 21,156 $ 24,184
====== ======
Supplemental disclosure of non-cash investing
and financing activities
Transfer of loan from in-substance
foreclosure to commercial loans 1,160 -
Conversion of subordinated notes to common
stock - 7,249
The Company paid cash during the nine months ended
September 30, 1995 and 1994 as follows:
Cash paid for interest $ 8,743 $ 5,846
Cash paid for taxes 650 330
See accompanying notes to condensed consolidated financial statements.
<PAGE>
</TABLE>
FNB ROCHESTER CORP. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (unaudited)
(1) Summary of Significant Accounting Policies
Basis of Presentation
FNB Rochester Corp. (the Company) operates as a bank holding
company. At September 30, 1995, its only subsidiary is
First National Bank of Rochester (the Bank). Prior to its
sale on April 1, 1994, the Company also owned Atlanta
National Bank (Atlanta). The consolidated financial
statements include the accounts of the Company and its
wholly owned subsidiaries, the Bank and Atlanta (through its
sale date). All material intercompany accounts and
transactions have been eliminated in the consolidation.
The financial information is prepared in conformity with
generally accepted accounting principles and such principles
are applied on a basis consistent with those reflected in
the December 31, 1994 Form 10-K Report of the Company filed
with the Securities and Exchange Commission. The financial
information included herein has been prepared by management
without audit by independent certified public accountants.
The information furnished includes all adjustments and
accruals, solely of a normal recurring nature, that are in
the opinion of management necessary for a fair presentation
of results for the interim period ended September 30, 1995.
Amounts in prior periods' financial statements are
reclassified whenever necessary to conform with current
presentation.
(2) Allowance for Loan Losses
The Financial Accounting Standards Board issued Statement
114 Accounting by Creditors for Impairment of a Loan as
amended by Statement 118, Accounting by Creditors for
Impairment of a Loan - Income and Disclosure. These
statements prescribe recognition criteria for loan
impairment, generally related to commercial type loans, and
measurement methods for certain impaired loans and all loans
whose terms are modified in troubled debt restructuring
subsequent to the adoption of these statements. A loan is
considered impaired when it is probable that the borrower
will be unable to repay the loan according to the original
contractual terms of the loan agreement.
As of January 1, 1995, the Company has adopted the
provisions of SFAS No. 114 and SFAS 118 and has provided the
required disclosures. The effect of adoption was not
material to the consolidated financial statements. As of
January 1, 1995, all of the Company's in substance
foreclosed assets were reclassified into impaired loan
status as required by SFAS No. 114. For all prior periods
presented, all amounts related to in substance foreclosures
have also been reclassified. These reclassifications did
not impact the Company's consolidated financial condition or
results of operations.
As a result of the adoption of SFAS No. 114, the allowance
for possible loan losses related to impaired loans that are
identified for evaluation in accordance with SFAS No. 114 is
based on the present value of expected cash flows discounted
at the loan's initial effective interest rate, except that
as a practical expedient, impairment may be measured at the
loan's observable market price, or the fair value of the
collateral for certain loans where repayment of the loan is
expected to be provided solely by the underlying collateral
(collateral dependent loans). The Company's impaired loans
are generally collateral dependent.
The Company considers estimated costs to sell, on a
discounted basis, when determining the fair value of
collateral in the measurement of impairment if those costs
are expected to reduce the cash flows available to repay or
otherwise satisfy the loans. Prior to the adoption of SFAS
No. 114 and 118, the allowance for possible loan losses
related to these loans was based on estimated undiscounted
cash flows or the fair value of the collateral, less
estimated costs to sell for collateral dependent loans.
Other real estate owned included both formally foreclosed
and in-substance foreclosed real properties. In accordance
with SFAS No. 114, a loan is classified as an in-substance
foreclosure when the Company has taken possession of the
collateral regardless of whether formal foreclosure
proceedings have taken place. Prior to the adoption of SFAS
No. 114 and SFAS No. 118, in-substance foreclosed properties
included those properties where the borrower has little or
no remaining equity in the property considering its fair
value, where repayment was only expected to come from the
operation or sale of the property; and where the borrower
had effectively abandoned control of the property or it was
doubtful that the borrower would be able to rebuild equity
in the property.
Changes in the allowance for possible loan losses for the
nine months ended September 30, 1995 and 1994 are as
follows:
1995 1994
____ ____
Balance at beginning of $6,452 $6,823
period
Provisions (recovery) for - (43)
possible loan losses
Allowance of subsidiary - (177)
sold
Loans charged off (512) (178)
Recoveries on loans
previously charged-off 185 927
___ ___
Balance at end of period $6,125 $7,352
At September 30, 1995, the recorded investment in loans that
are considered to be impaired under SFAS No. 114 totaled
$547,000. The average recorded investments in impaired loans
during the nine months ended September 30, 1995 was
approximately $1,319,000.
Impaired loans are included in non-performing loans,
generally as non-accrual loans. Commercial type loans past
due greater than 90 days and still accruing are generally
not considered to be impaired as the Company expects to
collect all amounts due, including interest accrued at the
contractual interest rate for the delinquent period.
When a loan is impaired and the future repayment of the
recorded balance is doubtful, interest payments received are
applied to principal and no interest income is recognized.
If the recorded loan balance is expected to be paid,
interest income is recognized on a cash basis.
For the nine months ended September 30, 1995, the Company
recognized $26,000 interest income on the impaired loans.
(3) Income per Common Share
Per share data is based upon the weighted average number of
common shares outstanding during the year. Common share
equivalents (stock options) are not used in the income per
share calculation as they dilute earnings per share by less
than 3 percent. Fully diluted per share data is not
presented as potentially dilutive securities dilute earnings
per share by less than 3 percent or are antidilutive.
(4) Subordinated Capital Notes
The Company issued 10% Subordinated Capital Notes in 1990
and 1989. On March 2, 1994 the notes were converted to
common stock of the Company. The conversion increased the
Company's common shares by 1,566,325 and equity by
$7,249,000. Interest expense for the subordinated capital
notes amounted to $123,000 for the period ended September
30, 1994.
(5) Stock Option Plan
The Company has an incentive stock option plan under which
options to acquire 225,000 shares of its common stock were
available to grant to key employees. At September 30,
1995, options to purchase 223,350 shares were held by
grantees under the plan. The range of exercise prices of
the options is $5.63 to $7.75 per share with an average
exercise price of $6.59 per share. At September 30, 1995,
options to acquire 167,400 shares were exercisable. The
remaining options become exercisable at various times
through June 1997. As of September 30, 1995, no options
granted under the plan have been exercised.
(6) Dividends
At the March 1992 Board of Director's meeting, the Board
approved the suspension of the dividend on common stock
as part of its plan to preserve capital. No dividends
have been paid since 1991.
<PAGE>
FNB ROCHESTER CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of
certain significant factors which have affected the
Company's financial position and operating results during
the periods included in the accompanying condensed
consolidated financial statements. Management's discussion
and analysis supplements management's discussion and
analysis for the year ended December 31, 1994 contained in
Company's Form 10-K for the period then ended and includes
certain known trends, events and uncertainties that are
reasonably expected to have a material effect on the
Company's Financial position or operating results.
Overview
Average loans and deposits have continued to grow. Loans
have increased $42.6 million from December 31, 1994 and
deposits have increased $46 million. The deposit increase
has primarily been in certificates of deposit of which
$28.8 million is in certificates of $100,000 or more. A
large increase in the number of public fund banking
relationships in the Company's banking offices has
contributed to this increase. Total non-performing assets
have declined $674,000, or 20% from December 31, 1994 to a
level of $2.7 million and declined as a percent of total
loans and real estate acquired by foreclosure to 1.10% from
1.67% at year end.
Net income for the nine months ended September 30, 1995
increased $1,216,000, or 136.2%, to $2,109,000 from $893,000
for the same period in 1994. Income per share increased to
$.59, up $.31 in comparison to $.28 for the nine months
ended September 30, 1994. The increase in income was
primarily due to an increase in net interest income of
$1,587,000. Other operating income decreased $24,000, or
1.2%, and other expense decreased $210,000, or 1.8%. 1994
other operating income included a $191,000 gain for the sale
of Atlanta National Bank. 1995 other expense showed
reductions in Federal Deposit Insurance assessments, net
cost in operation of other real estate, and marketing with
some offsetting increases in salaries and benefits and
occupancy expense. For the quarter net income increased
$383,000 primarily due to an increase in net interest
income of $449,000 and a decline in Federal Deposit
Insurance assessment of $170,000, offset by an increase in
other operating expense of $158,000. $100,000 of the gain
for the sale of Atlanta was recognized in September 1994.
Net Interest Income
Net interest income for the nine-month period increased
$1,587,000, or 14.5%, as compared to the period ended
September 30, 1994 and increased $449,000, or 11.5%, for the
three-month period. As in the first and second quarters,
increased lending activity, the conversion of the
subordinated notes, declines in non-performing assets, and
increased yields on earning assets have contributed to this
trend. As in 1994 the focus in 1995 continues to be
increased lending activity funded primarily with deposit
growth. Net interest margin, which was 5.10% for the year
ended December 31, 1994, has generally trended downward
during 1995 going to 5.02%, 4.83% and 4.9% for the quarters
ended March, June and September, respectively. Interest
margins may continue to decline in future months as much of
the deposit growth continues to be in higher-yielding
certificates of deposit. While margins may decline, net
interest income may continue to increase because of loan and
other earning asset growth.
Increased loan volume continues to have a positive effect on
interest income. Interest and fees on loans increased
$4,065,000, or 34.4% for the nine-month period ended
September 30, 1995 and $1,439,000, or 33.7% for the three-
month period, as compared to the same periods in 1994. The
increases were caused by both increased volumes and
increased rates.
Average commercial loans increased $26.1 million, or 21.7%,
from the period ended September 30, 1994 to the period
ended September 30, 1995. The increased volume contributed
$1,977,000 to income while increasing rates provided
$1,088,000 of additional income. Average mortgage loans
increased $9.9 million, or 36.9%. The increase in the
mortgage portfolio was primarily made up of 15 year fixed
rate mortgages and variable rate mortgages. If mortgage
rates continue at current levels, or decline, more of the
new mortgages originated for portfolio are likely to be
fixed than variable. The lower rates for mortgages being
placed in the portfolio in 1995 have caused some decline in
average yield and as a result income declined $149,000
because of the lower rates and increased $568,000 because of
the additional volume. Average home equity loans increased
$106,000, or .5%, and increasing prime lending rate was the
primary reason for the increase in income. Average consumer
loans increased $4 million, or 27.5% and the result for the
period was an increase in interest income of $256,000 from
volume and $29,000 from higher rates.
Income from securities increased $641,000 when comparing the
nine-month period ended September 30, 1995 to the September
30, 1994 period. During the period ended September 30,
1995, the average amount of portfolio securities was $8.4
million larger than for the same period in 1994. In
comparing the period ended September 1995 to the same period
in 1994, income increased $404,000 due to the additional
volume and increased $237,000 because of higher rates.
Most of the Banks' securities are taxable, and average
yields on those securities have increased from 6.23% for the
period ended September 1994 to 6.51% for the period ended
September 30, 1995.
Interest expense increased $3,287,000, or 57.8%, for the
nine-month period ended September 30, 1995 as compared to
the period ended September 30, 1994. The savings, NOW, and
money market categories of deposits have shown increased
interest expense of $317,000 from increased rates and a
decrease of $165,000 from volume as deposit balances
declined from September 1994 levels. From September 30,
1994 to September 30, 1995 average savings, NOW, and money
market deposits declined $9.2 million, or 6.1% while
certificates of deposit increased $45.9 million, or 47.6%.
The Bank's deposit growth in certificates of deposit
resulted in $1,968,000 additional interest expense because
of increased balances and $1,043,000 because of increased
rates. Average total interest bearing deposits have
increased $36.7 million from September 30, 1994 to September
30, 1995. Securities sold under agreement to repurchase
increased interest expense for short-term borrowing by
approximately $247,000, and a savings of $123,000 in
interest expense was realized in the period ended September
30, 1995 as compared to 1994 because of the conversion of
the Subordinated Capital Notes.
Provision for Loan Losses
The Bank provides for loan losses by a charge to current
operations. The provision is based upon discretionary
adjustments which, in the opinion of management, are
necessary to bring the allowance to an appropriate level
considering the character of the loan portfolio, current
economic conditions, analyses of specific loans, and
historical loss experience.
The Bank had net charge-offs of $327,000 for the nine-month
period ended September 30, 1995 as compared to net
recoveries of $749,000 for the same period in 1994. The
Bank sold a $1.2 million nonperforming loan in September
1995 and a $360,000 charge-off was recognized as a result of
that sale. Net charge-offs (recoveries) (annualized) as a
percent of average loans were .20% and (.55)%, respectively,
for the nine months ended September 30, 1995 and 1994. The
ratios of the allowance for possible loan losses as a
percent of period end loans for the comparable period were
2.50% and 3.75% respectively. Non performing assets
declined in the nine months ended September 30, 1995 to $2.7
million from $3.4 million. Management undertakes a
quarterly analysis to assess the adequacy of the allowance
taking into account non-performing and delinquent loans,
internally criticized loans, historical trends, economic
factors, and overall credit administration. Based on this
analysis, the allowance is considered adequate at September
30, 1995 to absorb anticipated losses. It is anticipated
that further additions to the allowance will not be
necessary in 1995 unless there are significant changes in
the local economy or higher than anticipated loan growth.
Non-Interest Income and Non-Interest Expense
Non-interest income of $1,963,000 for the first nine months
of 1995 represents a decline of $24,000, or 1.2%, from
$1,987,000 for the comparable period in 1994. A $191,000
gain was recognized in 1994 for the sale of Company's bank
subsidiary Atlanta National Bank. 1995 income shows
increases in credit card fees of $94,000 and gains on the
sale of securities available for sale of $53,000.
Non-interest expense was $11,430,000 for the first nine
months of 1995 as compared to $11,640,000 for the comparable
period in 1994, a decline of $210,000, or 1.8%. The largest
components of non-interest expense for the nine-month period
ended September 30, 1995 were salaries and employee benefits
of $6,047,000 which increased $163,000, or 2.8%, from
$5,884,000 for the same period in 1994.
For the nine-month period ended September 30, 1995 as
compared to the period ended September 30, 1994, occupancy
expense increased $160,000, or 9.%. The primary reason for
the increase is the leasehold costs associated with the move
to the Powers Building, depreciation costs for the computer
network and computer system upgrades installed in 1994, and
costs associated with the planned relocation of the
Henrietta office. Other operating expense increased
$141,000, of which $120,000 was related to various non-loan
related charge-offs, including a defalcation by a former
employee. Offsetting these increases were declines in
marketing and public relations of $215,000, net cost of
operation of other real estate of $255,000, and $187,000
decrease in Federal Deposit Insurance assessments. Federal
Deposit Insurance rates were decreased retroactive to May
1995. The Bank is expected to realize future benefits from
this decrease in rates.
With continued focus on sales, deposit and loan growth, and
customer service, the Bank's operating expenses are expected
to increase. As part of this focus the Bank is expanding
its community banking office network in the Rochester area.
In March of 1995 the Bank opened a banking office in the
community of East Rochester, a banking office in the Town of
Chili was opened in September of 1995, and a third new
banking office in the Town of Penfield was opened in October
1995. Currently under construction is a new office in the
Town of Perinton and a new facility for the relocation of
the existing Henrietta office.
Provision for Income Taxes
The provision for income tax increased $514,000, to $955,000
for the period ended September 30, 1995. The Company's
effective tax rates for the periods were 31.2% and 33.1% for
1995 and 1994 respectively. The increased provision was
caused by the increase in pretax income.
Capital Adequacy
Total shareholders' equity was $24,534,000 at September 30,
1995, which represents an increase of $3,174,000, or 14.9%
from $21,360,000 at December 31, 1994. Capital was
increased by $1,065,000 from increases in the market value
of the available-for-sale securities portfolio and
$2,109,000 from earnings.
At September 30, 1995, the Company and its banking
subsidiary exceeded the minimum guidelines for Tier 1 and
Total Risk-Based Capital of 4% and 8%, respectively. The
Company's ratios were 9.78% and 11.05% respectively, at
September 30, 1995. Banking organizations must also
maintain a minimum Tier 1 Leverage Ratio of 3% of assets.
Banking organizations that are not top-rated according to
regulators' "Camel" ratings, however must meet leverage
ratios of at least 100 basis points above the 3% standard.
The Company's Tier 1 Leverage Ratio at September 30, 1995
was 6.38%.
Liquidity
Liquidity measures the ability to meet maturing obligations
and existing commitments, to withstand fluctuations in
deposit levels, to fund operations, and to provide for
customers' credit needs. Management carefully monitors its
liquidity position and seeks to maintain adequate liquidity
to meet its needs. All internal liquidity measures are well
over minimum levels established by the Bank. The
fundamental source of liquidity will continue to be
deposits. Available sources of asset liquidity include
short-term investments, loan repayments, and securities held
in the available-for-sale portfolio. Additionally, the Bank
has the ability to pledge securities to secure short-term
borrowing. The Bank is a member of the Federal Home Loan
Bank which provides an additional source of funding.
The vast majority of the assets of the Company are held by
the Bank. Dividends and cash advances to the Company from
the Bank are subject to standard bank regulatory
constraints. An analysis of projected expenses and cash
flows indicates that the Company has sufficient cash to meet
its anticipated cash obligations through 1996.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
Exhibit Incorporation by
Reference or page in
sequential numbering
where exhibit may be
found:
(3.1) Certificate of Exhibits 4.2-4.5 to
Incorporation as Registration Statement
amended, of the No. 33-7244, filed July
Registrant 22, 1986
(3.2) Amendment to Exhibit 3 to Form 10-Q
Certificate of for period ended
Incorporation of June 30, 1992
Registrant dated August
6, 1992
(3.3) By-laws of the Exhibit 3.3 to Annual
Registrant, as Report on Form 10-K
amended. for the year ended
December 31, 1992
(10.1) Residential Page --
Mortgage Loan Agreements
between Russell Family
Associates, related to
H. Bruce Russell, and
First National Bank of
Rochester
(10.2) Commercial Loan Page --
Agreements between
Estate of Fred B.
Kravetz and First
National Bank of
Rochester
(10.3) Commercial Line Page --
of Credit Agreement
between GLC Outsourcing
Services, Inc., related
to James D. Ryan, and
First National Bank of
Rochester
(27) Financial Data Page --
Schedule
(b) Reports on Form 8-K:
None
<PAGE>
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.
FNB ROCHESTER CORP.
Date November 10, 1995 s\s Stacy C. Campbell
Stacy C. Campbell
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer
and Duly Authorized Officer)
<PAGE>
INDEX OF EXHIBITS
Exhibit Incorporation by
Reference or page in
sequential numbering
where exhibit may be
found:
(3.1) Certificate of Exhibits 4.2-4.5 to
Incorporation as amended, of Registration Statement
the Registrant. No. 33-7244, filed July
22, 1986
(3.2) Amendment to Exhibit 3 to Form 10-Q
Certificate of Incorporation for period ended June 30,
of Registrant dated August 1992
6, 1992
(3.3) By-laws of the Exhibit 3.3 to Annual
Registrant, as amended. Report on Form 10-K for
the year ended December
31, 1992
(10.1) Residential Mortgage Page --
Loan Agreements between
Russell Family Associates,
related to H. Bruce Russell,
and First National Bank of
Rochester
(10.2) Commercial Loan Page --
Agreements between Estate of
Fred B. Kravetz and First
National Bank of Rochester
(10.3) Commercial Line of Page --
Credit Agreement between GLC
Outsourcing Services, Inc.,
related to James D. Ryan,
and First National Bank of
Rochester
(27) Financial Data Schedule Page --
<PAGE>
PLEASE RECORD & RETURN TO:
Hodgson, Russ, Andrews, Woods & Goodyear
400 East Avenue
Rochester, New York 14607
Attn: Leeann Luty
----------[Space Above This Line For Recording Data]------------
MORTGAGE
WORDS USED OFTEN IN THIS DOCUMENT
(A) "Security Instrument". This document, which is dated
SEPTEMBER 1, 1995, will be called the "Security Instrument".
(B) "Borrower". RUSSELL FAMILY ASSOCIATES, A LIMITED PARTNERSHIP
sometimes will be called "Borrower" and sometimes simply "I" or
"me".
(C) "Lender". First National Bank of Rochester will be called
"Lender". Lender is a corporation or association which exists
under the laws of the United States of America.
Lender's address is 35 State Street, Rochester, New York 14614
(D) "Note". The note signed by Borrower and dated SEPTEMBER 1,
1995, will be called the "Note". The Note shows that I owe Lender
ONE HUNDRED FIFTY THOUSAND Dollars (U.S. $150,000.00) plus
interest. I have promised to pay this debt in monthly payments
and to pay the debt in full by AUGUST 1, 2010
(E) "Property". The property that is described below in the
section titled "Description of the Property", will be called the
"Property".
(F) "Sums Secured". The amounts described below in the section
titled "Borrower's Transfer to Lender of Rights in the Property"
sometimes will be called the "Sums Secured".
BORROWER'S TRANSFER TO LENDER OF RIGHTS IN THE PROPERTY
I mortgage, grant and convey the Property to Lender subject to
the terms of this Security Instrument. This means that, by
signing this Security Instrument, I am giving Lender those rights
that are stated in this Security Instrument and also those rights
that the law gives to lenders who hold mortgages on real
property. I am giving Lender these rights to protect Lender from
possible losses that might result if I fail to:
(A) Pay all the amounts that I owe Lender as stated in the Note;
(B) Pay, with interest, any amounts that Lender spends under
Paragraphs 2 and 7 of this Security Instrument to protect the
value of the Property and Lender's rights in the Property; and
(C) Keep all of my other promises and agreements under this
Security Instrument.
NEW YORK--Single Family--Fannie Mae/Freddie Mac UNIFORM
INSTRUMENT
DESCRIPTION OF PROPERTY
I give Lender rights in the Property described in (A) through (G)
below:
(A) The Property which is located at 5170 COUNTY ROAD 11, TOWN of
GORHAM, [Street] GORHAM, NEW YORK [City] 14461 [Zip Code]. This
Property is in ONTARIO County. It has the following legal
description:
SEE SCHEDULE "A" ATTACHED HERETO AND MADE A PART HEREOF.
Mortgagors covenant that the within described premises is a
dwelling or residence for not more than two families.
(B) All buildings and other improvements that are located on the
Property described in subparagraph (A) of this section;
(C) All rights in other property that I have as owner of the
Property described in subparagraph (A) of this section. These
rights are known as "easements and appurtenances attached to the
Property";
(D) All rights that I have in the land which lies in the streets
or roads in front of, or next to, the Property described in
subparagraph (A) of this section;
(E) All fixtures that are now or in the future will be on the
Property described in subparagraphs (A) and (B) of this section;
(F) All of the rights and property described in subparagraphs (B)
through (E) of this section that I acquire in the future; and
(G) All replacements of or additions to the Property described in
subparagraphs (B) through (F) of this section.
BORROWER'S RIGHT TO MORTGAGE THE PROPERTY AND BORROWER'S
OBLIGATION TO DEFEND OWNERSHIP OF THE PROPERTY
I promise that: (A) I lawfully own the Property; (B) I have the
right to mortgage, grant and convey the Property to Lender; and
(C) there are no outstanding claims or charges against the
Property, except for those which are of public record.
I give a general warranty of title to Lender. This means that I
will be fully responsible for any losses which Lender suffers
because someone other than myself has some of the rights in the
Property which I promise that I have. I promise that I will
defend my ownership of the Property against any claims of such
rights.
PLAIN LANGUAGE SECURITY INSTRUMENT
This Security Instrument contains promises and agreements that
are used in real property security instruments all over the
country. It also contains other promises and agreements that
vary, to a limited extent, in different parts of the country. My
promises and agreements are stated in "plain language".
COVENANTS
I promise and I agree with Lender as follows:
1. BORROWER'S PROMISE TO PAY
I will pay to Lender on time principal and interest due under the
Note and any prepayment and late charges due under the Note.
2. MONTHLY PAYMENTS FOR TAXES AND INSURANCE
(A) Borrower's Obligations
I will pay to Lender all amounts necessary to pay for taxes,
assessments, water frontage charges and other similar charges,
sewer rents, leasehold payments or ground rents (if any), hazard
or property insurance covering the Property, and flood insurance
(if any). If Lender required mortgage insurance as a condition
of making the loan that I promise to pay under the Note, (i) I
also will pay to Lender all amounts necessary to pay for mortgage
insurance, and (ii) if, under Paragraph 8 below, instead of
paying for mortgage insurance I am required to pay Lender an
amount equal to the cost of mortgage insurance, I will pay this
amount to Lender I will pay all of these amounts to Lender unless
Lender tells me, in writing, that I do not have to do so, or
unless the law requires otherwise. I will make these payments on
the same day that my monthly payments of principal and interest
are due under the Note.
My payments under this Paragraph 2 will be for the items listed
in (i) through (vi) below, which are called "Escrow Items":
(i) The estimated yearly taxes, assessments, water frontage
charges and other similar charges, as a sewer rents on the
Property which under the law may be superior to this Security
Instrument as a lien on the Property. Any claim, demand or
charge that is made against Property because an obligation has
not been fulfilled is known as a "lien";
(ii) The estimated yearly leasehold payments or ground rents on
the Property (if any);
(iii) The estimated yearly premium for hazard or property
insurance covering the Property; (iv) The estimated yearly
premium for flood insurance covering the Property (if any);
(v) The estimated yearly premium for mortgage insurance (if any);
and
(vi) The estimated yearly amount I may be required to pay Lender
under Paragraph 8 below instead of the payment of the estimated
yearly premium for mortgage insurance (if any).
Lender will estimate from time to time the amount I will have to
pay for Escrow Items by using existing assessments and bills and
reasonable estimates of the amount I will have to pay for Escrow
Items in the future, unless the law requires Lender to use
another method for determining the amount I am to pay. The
amounts that I pay to Lender for Escrow Items under this
Paragraph 2 will be called the "Funds". The Funds are pledged as
additional security for all Sums Secured.
The law puts limits on the total amount of Funds Lender can at
any time collect and hold. This total amount cannot be more than
the maximum amount a lender for a "federally related mortgage
loan" could require me to place in an "escrow account" under the
federal law called the "Real Estate Settlement Procedures Act of
1974", as that law may be amended from time to time. If there is
another law that imposes a lower limit on the total amount of
Funds Lender can collect and hold, Lender will be limited to the
lower amount.
(B) Lender's Obligations
Lender will keep the Funds in a savings or banking institution
which has its deposits insured by a federal agency,
instrumentality, or entity, or in any Federal Home Loan Bank. If
Lender is such a savings or banking institution, Lender may hold
the Funds Except as described in this Paragraph 2, Lender will
use the Funds to pay the Escrow Items. Lender will give to me,
without charge, an annual accounting of the Funds. That
accounting must show all additions to and deductions from the
Funds and the reason for each deduction.
Lender may not charge me for holding or keeping the Funds, for
using the Funds to pay Escrow Items, for making a yearly analysis
of my payment of Funds or for receiving, verifying and totaling
assessments and bills. However, Lender may charge me for the
services if Lender pays me interest on the Funds and if the law
permits Lender to make such a charge. Lender also may require me
to pay a one-time charge for an independent real estate tax
reporting service used by Lender in connection with my loan,
unless the law does not permit Lender to make such a charge.
Lender will not be required to pay me any interest or earnings on
the Funds unless either (i) Lender and I agree in writing, at the
time I sign this Security Instrument, that Lender will pay
interest on the Funds; or (ii) the law requires Lender to pay
interest on the Funds.
(C) Adjustments to the Funds
Under the law, there is a limit on the amount of Funds Lender may
hold. If the amount of Funds held by Lender exceeds this limit,
then the law requires Lender to account to me in a special manner
for the excess amount of Funds. There will be an excess amount
if, at any time, the amount of Funds which Lender is holding or
keeping is greater than the amount of Funds Lender is allowed to
hold under the law.
If, at any time, Lender has not received enough Funds to make the
payments of Escrow Items when the payments are due, Lender may
tell me in writing that an additional amount is necessary. I
will pay to Lender whatever additional amount is necessary to pay
the Escrow Items in full. Lender will determine the number of
monthly payments I have in which to pay that additional amount,
but the number of payments will not be more than twelve.
When I have paid all of the Sums Secured, Lender will promptly
refund to me any Funds that are the being held by Lender. If
under Paragraph 21 below, Lender either acquires or sells the
Property then before the acquisition or sale, Lender will use any
Funds which Lender is holding at the time of the acquisition or
sale to reduce the Sums Secured.
3. APPLICATION OF BORROWER'S PAYMENTS
Unless the law requires otherwise, Lender will apply each of my
payments under the Note and under Paragraphs 1 and 2 above in the
following order and for the following purposes:
First, to pay any prepayment charges due under the Note;
Next, to pay amounts due to Lender under Paragraph 2 above;
Next, to pay interest due;
Next, to pay principal due; and
Last, to pay any late charges due under the Note.
4. BORROWER"S OBLIGATION TO PAY CHARGES, ASSESSMENTS AND CLAIMS
I will pay taxes, assessments, water frontage charges and other
similar charges, sewer rents, and any other charges and fines
that may be imposed on the Property and that may be superior to
this Security Instrument. I will also make payments due under my
lease if I am a tenant on the Property and I will pay ground
rents (if any) due on the Property. I will do this either by
making the payments to Lender that are described in Paragraph 2
above or, if I am not required to make payments under Paragraph
2, by making the payments on time to the person owed them. (In
this Security Instrument, the word "person" means any person,
organization, governmental authority or other party). If I make
direct payments, then promptly after making any of those payments
I will give Lender a receipt which shows that I have done so. If
I make payment to Lender under Paragraph 2, I will give Lender
all notices or bills that I receive for the amounts due under
this Paragraph 4.
I will promptly pay or satisfy all liens against the Property
that may be superior to this Security Instrument. However, this
Security Instrument does not require me to satisfy a superior
lien if: (A) I agree, in writing, to pay the obligation which
gave rise to the superior lien and Lender approves the way in
which I agree to pay that obligations; or (B) in good faith, I
argue or defend against the superior lien in a lawsuit 80 that,
during the lawsuit, the superior lien may not be enforced; or (C)
I secure from the holder of that other lien an agreement,
approved in writing by Lender, that the lien of this Security
Instrument is superior to the lien held by that person. If
Lender determines that any part of the Property is subject to a
superior lien, Lender may give Borrower a notice identifying the
superior lien Borrower shall pay or satisfy the superior lien or
take one or more of the actions set forth above within 10 days of
the giving of notice.
5. BORROWER'S OBLIGATION TO MAINTAIN HAZARD INSURANCE OR PROPERTY
INSURANCE
I will obtain hazard or property insurance to cover all buildings
and other improvements that now are or in the future will be
located on the Property. The insurance must cover loss or damage
caused by fire, hazards normally covered by "extended coverage"
hazard insurance policies and other hazards for which Lender
requires coverage, including floods and flooding. The insurance
must be in the amounts and for the periods of time required by
Lender. I may choose the insurance company, but my choice is
subject to Lender's approval. Lender may not refuse to approve
my choice unless the refusal is reasonable. If I do not maintain
the insurance coverage described above, Lender may obtain
insurance coverage to protect Lender's rights in the property in
accordance with paragraph 7 below.
All of the insurance policies and renewals of those policies must
include what is known as a "standard mortgage clause" to protect
Lender. The form of all policies and renewals must be acceptable
to Lender. Lender will have the right to hold the policies and
renewals. If Lender requires, I will promptly give Lender all
receipts of paid premiums and renewal notices that I receive.
If there is a loss or damage to the Property, I will promptly
notify the insurance company and Lender. If I do not promptly
prove to the insurance company that the loss or damage occurred,
then Lender may do so.
The amount paid by the insurance company is called "proceeds".
The proceeds will be used to repair or to restore the damaged
Property unless: (A) it is not economically feasible to make the
repairs or restoration; or (B) the use of the proceeds for that
purpose would lessen the protection given to Lender by this
Security Instrument; or (C) Lender and I have agreed in writing
not to use the proceeds for that purpose If the repair or
restoration is not economically feasible or if it would lessen
Lender's protection under this Security Instrument, then the
proceeds will be used to reduce the amount that I owe to Lender
under the Note and under this Security Instrument. If any of the
proceeds remain after the amount that I owe to Lender has been
paid in full, the remaining proceeds will be paid to me.
If I abandon the Property, or if I do not answer, within 30 days,
notice from Lender stating that the insurance company has offered
to settle a claim, Lender may collect the proceeds. Lender may
use the proceeds to repair or restore the Property or to pay the
Sums Secured. The 30-day period will begin when the notice is
given.
If any proceeds are used to reduce the amount of principal which
I owe to Lender under the Note that use will not delay the due
date or change the amount of any of my monthly payments under the
Note and under Paragraphs 1 and 2 above. However, Lender and I
may agree in writing to those delays or changes.
If Lender acquires the Property under Paragraph 21 below, all of
my rights in the insurance policies will belong to Lender. Also,
all of my rights in any proceeds which are paid because of damage
that occurred before the property is acquired by Lender or sold
will belong to Lender. However, Lender's rights in those
proceeds will not be greater than the Sums Secured immediately
before the Property is acquired by Lender or sold.
6. BORROWER"S OBLIGATIONS TO OCCUPY THE PROPERTY, TO MAINTAIN AND
PROTECT THE PROPERTY, AND TO FULFILL ANY LEASE OBLIGATIONS;
BORROWER'S LOAN APPLICATION
(A) Borrower's Obligations to Occupy the Property
I will occupy the Property and use the Property as my principal
residence within sixty days after I sign this Security
Instrument. I will continue to occupy the Property and to use the
Property as my principal residence for at least one year. The
one-year period will begin when I first occupy the Property.
However, I will not have to occupy the Property and use the
Property as my principal residence within the time frames set
forth above if Lender agrees in writing that I dc not have to do
so. Lender may not refuse to agree unless the refusal is
reasonable. I also will not have to occupy the Property and use
the Property as my principal residence within the time frames set
forth above if extenuating circumstances exist which are beyond
my control.
(B) Borrower's Obligations to Maintain And Protect the Property
I will keep the Property ln good repair I will not destroy,
damage or harm the Property, and I will not allow the Property to
deteriorate.
I will be "in default" under this Security Instrument if I fail
to keep any promise or agreement made in this Security
Instrument. I also will be in default under this Security
Instrument if any civil or criminal action or proceeding for
"forfeiture" (that is, a legal action or proceeding to require
the Property, or any part of the Property, to be given up) is
begun and Lender determines, in good faith, that this action or
proceeding could result in a court ruling (i) that would require
forfeiture of the Property or (ii) that would materially impair
the lien of the Security Instrument or Lender's rights in the
Property. I may correct the default by obtaining a court ruling
that dismisses the legal action or proceeding, if Lender
determines, in good faith, that this court ruling prevents
forfeiture of my interests in the Property and also prevents any
material impairment of (i) the lien created by this Security
Instrument or (ii) Lender's rights in the Property. If I correct
the default, I will have the right to have enforcement of this
Security Instrument discontinued, as provided in Paragraph 18
below, even if Lender has required immediate payment in full.
(C) Borrower's Obligations to Fulfill Any Lease Obligations
If I do not own but am a tenant on the Property, I will fulfill
all my obligations under my lease. I also agree that, if I
acquire the fee title to the Property, my lease interest and the
fee title will not merge unless Lender agrees to the merger in
writing.
(D) Borrower's Loan Application
If, during the application process for the loan that I promise to
pay under the Note, I made false or inaccurate statements to
Lender about information important to Lender in determining my
eligibility for the loan, Lender will treat my actions as a
default under this Security Instrument. False or inaccurate
statements about information important to the Lender would
include a misrepresentation of my intentions to occupy the
Property as a principal residence. This is just one example of a
false or inaccurate statement of important information. Also, if
during the loan application process I failed to provide Lender
with information important to Lender in determining my
eligibility for the loan, Lender will treat this as a default
under this Security Instrument.
7. LENDER'S RIGHT TO PROTECT ITS RIGHTS IN THE PROPERTY
If: (A) I do not keep my promises and agreements made in this
Security Instrument, or (B) someone, including me, brings a legal
proceeding that may significantly affect Lender's rights in the
Property (such as a legal proceeding in bankruptcy, in probate,
for condemnation or forfeiture, or to enforce laws or
regulations), Lender may do and pay for whatever is necessary to
protect the value of the Property and Lender's rights in the
Property. Lender's actions may include appearing in court,
paying reasonable attorneys' fees and entering on the Property to
make repairs. Although Lender may take action under this
Paragraph 7, Lender does not have to do so. I will pay to Lender
any amounts, with interest, which Lender spends under this
Paragraph 7. I will pay those amounts to Lender when Lender
sends me a notice requesting that I do so. I will also pay
interest on those amounts at the Note rate Interest on each
amount will begin on the date that the amount is spent by Lender.
However, Lender and I may agree in writing to terms of payment
that are different from those in this paragraph. This Security
Instrument will protect Lender in case I do not keep this promise
to pay those amounts with interest.
8. MORTGAGE INSURANCE
If Lender required mortgage insurance as a condition of making
the loan that I promise to pay under the Note, I will pay the
premiums for the mortgage insurance If, for any reason, the
mortgage insurance coverage lapses or ceases to be in effect, I
will pay the premiums for substantially equivalent mortgage
insurance coverage. However, the cost of this mortgage insurance
coverage must be substantially equivalent to the cost to me of
the previous mortgage insurance coverage, and the alternate
mortgage insurer must be approved by Lender.
If substantially equivalent mortgage insurance coverage is not
available, Lender will establish a "loss reserve" as a substitute
for the mortgage insurance coverage. I will pay to Lender each
month an amount equal to one-twelfth of the yearly mortgage
insurance premium (as of the time the coverage lapsed or ceased
to be in effect.) Lender will retain these payments, and will
use these payments to pay for losses that the mortgage insurance
would have covered Lender may choose to no longer require loss
reserve payments, if mortgage insurance coverage again becomes
available and is obtained. The mortgage insurance coverage must
be in the amount and for the period of time required by Lender.
The Lender must approve the insurance company providing coverage.
I will pay the mortgage insurance premiums, or the loss reserve
payments, until the requirement for mortgage insurance ends
according to my written agreement with Lender or according to
law. Lender may require me to pay the premiums, or the loss
reserve payments, in the manner described in Paragraph 2 above.
9. LENDER'S RIGHT TO INSPECT THE PROPERTY
Lender, and others authorized by Lender, may enter on and inspect
the Property. They must do so in a reasonable manner and at
reasonable times. Before or at the time an inspection is made,
Lender must give me notice stating a reasonable purpose for the
inspection.
10. AGREEMENTS ABOUT CONDEMNATION OF THE PROPERTY
A taking of property by any governmental authority by eminent
domain is known as "condemnation". I give to Lender my right:
(A) to proceeds of all awards or claims for damages resulting
from condemnation or other governmental taking of the Property;
and (B) to proceeds from a sale of the Property that is made to
avoid condemnation. All of those proceeds will be paid to
Lender.
If all of the Property is taken, the proceeds will be used to
reduce the Sums Secured. If any of the proceeds remain after the
amount that I owe to Lender has been paid in full, the remaining
proceeds will be paid to me.
Unless Lender and I agree otherwise in writing, if only a part of
the Property is taken, and the fair market value of the Property
immediately before the taking either is equal to, or greater
than, the amount of the Sums Secured immediately before the
taking, the amount that I owe to Lender will be reduced only by
the amount of proceeds multiplied by a fraction. That fraction
is as follows: (A) the total amount of the Sums Secured
immediately before the taking, divided by (B) the fair market
value of the Property immediately before the taking. The
remainder of the proceeds will be paid to me.
Unless Lender and I agree otherwise in writing or unless the law
requires otherwise, if only a part of the Property is taken, and
the fair market value of the Property immediately before the
taking is less than the amount of the Sums Secured immediately
before the taking, the proceeds will be used to reduce the Sums
Secured.
If I abandon the Property, or if I do not answer, within 30 days,
a notice from Lender stating that a governmental authority has
offered to make a payment or to settle a claim for damages,
Lender has the authority to collect the proceeds. Lender may then
use the proceeds to repair or restore the Property or to reduce
the Sums Secured . The 30-day period will begin when the notice
is given.
If any proceeds are used to reduce the amount of principal which
I owe to Lender under the Note, that use will not delay the due
date or change the amount of any of my monthly payments under the
Note and under Paragraphs 1 and 2 above. However, Lender and I
may agree in writing to those delays or changes.
11. CONTINUATION OF BORROWER'S OBLIGATIONS AND OF LENDER'S RIGHTS
(A) Borrower's Obligations
Lender may allow a person who take over my rights and obligations
to delay or to change the amount of the monthly payments of
principal and interest due under the Note or under this security
Instrument. Even if Lender does this, however, that person and I
will both still be fully obligated under the Note and under this
Security Instrument.
Lender may allow those delays or changes for a person who takes
over my rights and obligations, even if Lender is requested not
to do so. Lender will not be required to bring a lawsuit against
such a person for not fulfilling obligations under the Note or
under this Security Instrument, ever if Lender is requested to do
so.
(B) Lender's Rights
Even if Lender does not exercise or enforce any right of Lender
under this Security Instrument or under the law, Lender will
still have all those rights and may exercise and enforce them in
the future. Even if Lender obtains insurance, pays taxes, or
pays other claims, charges or liens against the Property, Lender
will have the right under Paragraph 21 below to demand that I
make immediate payment in full of the amount that I owe to Lender
under the Note and under this Security Instrument.
12. OBLIGATIONS OF BORROWER AND OF PERSONS TAKING OVER BORROWER'S
RIGHTS OR OBLIGATIONS
Any person who takes over my rights or obligations under this
Security Instrument will have all of my rights and will be
obligated to keep all of my promises and agreements made in this
security Instrument. Similarly, any person who takes over
Lender's rights or obligations under this Security Instrument
will have all of Lender's rights and will be obligated to keep
all of Lender's agreements made in this Security Instrument.
If more than one person signs this Security Instrument as
Borrower, each of us is fully obligated to keep all of Borrower's
promises and obligations contained in this Security Instrument.
Lender may enforce Lender's rights under this Security Instrument
against each of us individually or against all of us together.
This means that any one of us may be required to pay all of the
Sums Secured. However, if one of us does not sign the Note: (A)
that person is signing this Security Instrument only to give that
person's rights in the Property to Lender under the terms of this
Security Instrument; and (B) that person is not personally
obligated to pay the sums Secured; and (C) that person agrees
that Lender may agree with the other Borrowers to delay enforcing
any of Lender's rights or to modify or make any accommodations
with regard to the terms of this security Instrument or the Note
without that person's consent.
13. LOAN CHARGES
If the loan secured by this Security Instrument is subject to a
law which sets maximum loan charges, and that law is finally
interpreted so that the interest or other loan charges collected
or to be collected in connection with the loan exceed permitted
limits: (A} any such loan charge shall be reduced by the amount
necessary to reduce the charge to the permitted limit; and (B)
any sums already collected from Borrower which exceeded permitted
limits will be refunded to Borrower. Lender may choose to make
this refund by reducing the principal owed under the Note or by
making a direct payment to Borrower. If a refund reduces
principal, the reduction will be treated as a partial prepayment
without any prepayment charge under the Note.
14. NOTICES REQUIRED UNDER THIS SECURITY INSTRUMENT
Any notice that must be given to me under this Security
Instrument will be given by delivering it or by mailing it by
first class mail unless applicable law requires use of another
method. The notice will be addressed to me at the address stated
in the section above titled "Description of Property". A notice
will be given to me at a different address if I give Lender a
notice of my different address. Any notice that must be given to
Lender under this Security Instrument will be given by mailing it
to Lender's address stated in subparagraph (C) of the section
above titled "Words Used Often In This Document". A notice will
be mailed to Lender at a different address if Lender gives me a
notice of a different address. A notice required by this
Security Instrument is given when it is mailed or when it is
delivered according to the requirements of this Paragraph 14 or
of applicable law.
15. LAW THAT GOVERNS THIS SECURITY INSTRUMENT
This Security Instrument is governed by federal law and the law
that applies in the place where the Property is located. If any
term of this Security Instrument or of the Note conflicts with
the law, all other terms of this Security Instrument and of the
Note will still remain in effect if they can be given effect
without the conflicting term. This means that any terms of this
Security Instrument and of the Note which conflict with the law
can be separated from the remaining terms, and the remaining
terms will still be enforced.
16. BORROWER'S COPY
I will be given one conformed copy of the Note and of this
Security Instrument.
17. AGREEMENTS ABOUT LENDER'S RIGHTS IF THE PROPERTY IS SOLD OR
TRANSFERRED
Lender may require immediate payment in full of all Sums Secured
by this Security Instrument if all or any part of the Property,
or if any right in the Property, is sold or transferred without
Lender's prior written permission Lender also may require
immediate payment in full if beneficial interest in Borrower is
sold or transferred and Borrower is not a natural person.
However, Lender shall not require immediate payment in full if
this is prohibited by federal law on the date of this Security
Instrument.
If Lender requires immediate payment in full under this Paragraph
17, Lender will give me a notice which states this requirement.
The notice will give me at least 30 days to make the require
payment. The 30-day period will begin on the date the notice is
mailed or delivered. If I do no make the required payment during
that period, Lender may act to enforce its rights under the
security Instrument without giving me any further notice or
demand for payment.
18. BORROWER'S RIGHT TO HAVE LENDER'S ENFORCEMENT OF THIS
SECURITY INSTRUMENT DISCONTINUED
Even if Lender has required immediate payment in full, I may have
the right to have enforcement of this Security Instrument
discontinued. I will have this right at any time before sale of
the Property under any power of sale granted by this Security
Instrument or at any time before judgement has been entered
enforcing this Security Instrument if I meet the following
conditions:
(A) I pay to Lender the full amount that then would be due under
this Security Instrument and the Note as if immediate payment in
full had never been required; and
(B) I correct my failure to keep any of my other promises or
agreements made in this Security Instrument; and
(C) I pay all of Lender's reasonable expenses in enforcing this
Security Instrument including, for example, reasonable attorneys'
fees; and
(D) I do whatever Lender reasonably requires to assure that
Lender's rights in the Property, Lender's rights under this
Security Instrument, and my obligations under the Note and under
this Security Instrument continue unchanged.
If I fulfill all of the conditions in this Paragraph 18, then the
Note and this Security Instrument will remain in full effect as
if immediate payment in full had never been required. However, I
will not have the right to have Lender's enforcement of this
Security Instrument discontinued if Lender has required immediate
payment in full under Paragraph 17 above.
19. NOTE HOLDER'S RIGHT TO SELL THE NOTE OR AN INTEREST IN THE
NOTE; BORROWER'S RIGHT TO NOTICE OF CHANGE OF LOAN SERVICER
The Note, or an interest in the Note, together with this Security
Instrument, may be sold one or more times I may not receive any
prior notice of these sales.
The entity that collects my monthly payments due under the Note
and this Security Instrument is called the "Loan Servicer".
There may be a change of the Loan Servicer as a result of the
sale of the Note; there also may be one or more changes of the
Loan Servicer unrelated to a sale of the Note. The law requires
that I be given written notice of any change of the Loan
Servicer. The written notice must be given ln the manner
required under Paragraph 14 above and under applicable law. The
notice will state the name and address of the new Loan Servicer,
and also tell me the address to which I should make my payments.
The notice also will contain any other information required by
the law.
20. CONTINUATION OF BORROWER"S OBLIGATIONS TO MAINTAIN AND
PROTECT TEE PROPERTY
The federal law and the laws of the jurisdiction where the
Property is located that relate to health, safety or
environmental protection are called "Environmental Laws". I
will not do anything affecting the Property that violates
Environmental Laws, and I will not allow anyone else to do so.
Environmental Laws classify certain substances as toxic or
hazardous. There are other substances that are considered
hazardous for purposes of this Paragraph 20. These are gasoline,
kerosene, other flammable or toxic petroleum products, toxic
pesticides and herbicides, volatile solvents, materials
containing asbestos or formaldehyde, and radioactive materials.
The substances defined as toxic or hazardous by Environmental
Laws and the substances considered hazardous for purposes of this
Paragraph 20 are called "Hazardous Substances".
I will not permit Hazardous Substances to be present on the
Property. I will not use or store Hazardous Substances on the
Property, and I will not allow anyone else to do so. I also will
not dispose of Hazardous Substances on the Property, or release
any Hazardous Substance on the Property, and I will not allow
anyone else to do so. However, I may permit the presence on the
Property of small quantities of Hazardous Substances that are
generally recognized as appropriate for normal residential use
and maintenance of the Property, and I may use or store these
small quantities on the Property. In addition, unless law
requires removal or other action, the buildings, the improvements
and the fixtures on the Property are permitted to contain
asbestos and asbestos containing materials if the asbestos and
asbestos containing materials are undisturbed and "non-friable"
(that is, not easily crumbled by hand pressure).
If I know of any investigation, claim, demand, lawsuit or other
action by the government or by a private party involving the
Property and any Hazardous Substance or Environmental Laws, I
will promptly notify the Lender in writing. If the government
notifies me (or I otherwise learn) that it is necessary to remove
a Hazardous Substance affecting the Property or to take other
remedial actions, I will promptly take all necessary remedial
actions as required by Environmental Laws.
21. LENDER'S RIGHTS IF BORROWER FAILS TO KEEP PROMISES AND
AGREEMENTS
Except as provide in Paragraph 17 above, if all of the conditions
stated in subparagraphs (A), (B) and (c) of this Paragraph 21 are
met, Lender say require that I pay immediately the entire amount
remaining unpaid under the Note and under this Security
Instrument Lender may do this without asking any further demand
for payment. This requirement is called "immediate payment in
full".
If Lender requires immediate payment in full, Lender may bring a
lawsuit to take away all of my remaining rights in the Property
and have the Property sold. At this sale Lender or another
person may acquire the Property. This is known as "foreclosure
and sale". In any lawsuit for foreclosure and sale, Lender will
have the right to collect all costs and disbursements and
additional allowances allowed by law and will have the right to
add all reasonable attorneys' fees to the amount I owe Lender,
which fees shall become part of the Sums Secured.
Lender may require immediate payment in full under this Paragraph
21 only if all of the following conditions are met:
(A) I fail to keep any promise or agreement made in this security
Instrument, including the promises to pay when due the Sums
Secured.
(B) Lender sends to me in the manner described in Paragraph 14
above, a notice that states:
(i) The promise or agreement that I failed to keep;
(ii) The action that I must take to correct that default;
(iii) A date by which I must correct the default. That date must
be at least 30 days from the date on which the notice is given;
(iv) That if I do not correct the default by the date stated in
the notice, Lender may require immediate payment in full, and
Lender or another person may acquire the Property by means of
foreclosure and sale;
(v) That if I meet the conditions stated in Paragraph 18 above, I
will have the right to have Lender's enforcement of this Security
Instrument discontinued and to have the Note and Security
Instrument remain fully effective as if immediate payment in full
had never been required; and
(vi) That I have the right in any lawsuit for foreclosure and
sale to argue that I did keep my promises and agreements under
the Note and under this Security Instrument, and to present any
other defenses that I may have.
(C) I do not correct the default stated in the notice from Lender
by the date stated in that notice.
22. LENDER'S OBLIGATION TO DISCHARGE THIS SECURITY INSTRUMENT
When Lender has been paid all amounts due under the Note And
Under this Security Instrument, Lender will discharge this
Security Instrument by delivering a certificate stating that this
Security Instrument has been satisfied I will not be required to
pay Lender for the discharge, but I will pay all costs of
recording the discharge in the proper official records.
23. AGREEMENTS ABOUT NEW YORK LIEN LAW
I will receive all amounts lent to me by Lender subject to the
trust fund provisions of Section 13 of the New York Lien Law.
This means that if, on the date this Security Instrument is
recorded, construction or other work on any building or other
improvement located on the Property has not been completed for at
least four months, I will: (A) hold all amounts which I receive
and which I have a right to receive from Lender under the Note as
a "trust fund"; and (B) use those amounts to pay for that
construction or work before I use them for any other purpose.
The fact that I am holding those amounts as a "trust fund" means
that for any building or other improvement located on the
Property I have a special responsibility under the law to use the
amount in the manner described in this Paragraph 23.
24. RIDERS TO THIS SECURITY INSTRUMENT
If one or more riders are signed by Borrower and recorded
together with this Security Instrument, the promises and
agreements of each rider are incorporated as a part of this
Security Instrument. [Check applicable box(es)]
__ Adjustable Rate Rider __ Condominium Rider __ 1-4 Family
Rider
__ Graduated Payment Rider __ Planned Unit Development Rider
__ Biweekly Payment Rider __ Balloon Rider __ Rate
Improvement Rider
x Second Home Rider X Other(s) [specify] __ VA Rider
X Due-On Transfer X Mortgage Rider
Schedule "A"
BY SIGNING BELOW, I accept and agree to the promises and
agreements contained in pages 1 through 10 of this Security
Instrument and in any rider(s) signed by me and recorded with it.
Witnesses:
s/ H. Bruce Russell (Seal)
RUSSELL FAMILY ASSOCIATES, A LIMITED PARTNERSHIP
BY: H. BRUCE RUSSELL, GENERAL PARTNER, Borrower
<PAGE>
MORTGAGE RIDER
I further agree with the Lender as follows:
1. RIDER NOT APPLICABLE IF MORTGAGE IS ASSIGNED TO GOVERNMENT
AGENCY
That this Rider shall replace those clauses in the Note and
in the Mortgage executed by me which are inconsistent with this
Rider unless the Mortgage is assigned to the Federal Home Loan
Mortgage Corporation, the Government National Mortgage
Association or the Federal National Mortgage Association, or any
other federal or state governmental agency, in which event this
Rider shall be inapplicable and unenforceable.
2. REIMBURSEMENT FOR UNPAID INSURANCE PREMIUMS
That I will reimburse the Lender for any premiums paid for
insurance by the Lender after my failure to do so.
3. ADDITIONAL EVENTS CAUSING POSSIBLE IMMEDIATE PAYMENT IN FULL
That the Lender may require Immediate Payment in Full, at
the option of the Lender,
a. upon my failure to pay any installment of principal or
of interest for thirty (30) days, or
b. upon my failure to pay any tax, water rate, or
assessment for thirty (30) days after a notice and demand has
been mailed or delivered to me by the Lender, or
c. after my failure to reimburse the Lender for premiums
paid for fire or flood insurance, or
d. after my failure, when requested by the Lender, to
furnish a statement of the amount due on the mortgage and whether
I have any offsets or defenses against the amounts that I owe the
Lender under the Note, Mortgage, or this Rider.
4. INTEREST RATE AFTER FORECLOSURE IS BEGUN
That in the event the Lender requires Immediate Payment in
Full and then commences an action to foreclose the Mortgage, I
shall pay interest thereafter at the rate set forth in the Note
or at the highest legal rate permitted by law, whichever is
higher.
5. AMOUNT OF "FUNDS" NEEDED AND REPAID ON DEMAND
That I will pay to the Lender at the time I sign this
Mortgage a lump sum in the amount of "Funds" due each month for
taxes and insurance times the number of months that have gone by
since the last due date of the taxes or insurance premiums; that
I also agree that any excess amount of "Funds" on deposit that
shall be repaid or credited to me on demand shall be that amount
shown as an excess as of the last annual accounting of the
"Funds".
6. ATTORNEY FEES AFTER FORECLOSURE IS BEGUN
That if the Lender commences an action to foreclose the
Mortgage, the Lender may recover reasonable attorney fees in the
amount up to five percent (5%) of the balance due on the
Mortgage, and these fees shall be secured by the Mortgage.
7. ADDITIONAL EVENTS CAUSING POSSIBLE IMMEDIATE PAYMENT IN FULL
AFTER NOTICE
That the Lender may require Immediate Payment in Full, at
the option of the Lender upon thirty (30) days notice to me,
a. if any structure or fixture on the Property shall be
removed, demolished, or substantially altered;
b. if I shall convey the Property or any part thereof;
c. if I fail to comply with any requirement of federal,
state or municipal authorities (the Lender, however, may comply
and add the expense to the mortgage debt); or
d. if the Property becomes vacant or non-owner occupied.
8. RETENTION OF INSURANCE PROCEEDS
That the Lender may retain proceeds received from an
insurance company following a loss or damage to the Property and
may apply them to reduce the mortgage debt, or, at the Lender's
option, it may pay the proceeds, in whole or part, to me for the
repair or replacement of the loss or damage.
9. APPOINTMENT OF A RECEIVER
That the Lender shall be entitled to the appointment of a
court-appointed receiver without notice to me and without regard
to whether the Property itself is adequate security for the
mortgage debt.
10. OPTIONAL DISCONTINUANCE OF FORECLOSURE AFTER PAYMENT OF
AMOUNT DUE
That in the event the Lender requires Immediate Payment in
Full, the Lender may discontinue any lawsuit brought for
foreclosure and sale, but it does not have to do so. The Lender
may elect to continue to judgment despite an offer on my part to
pay the full amount that would have been due (any attempted
payment by me would be returned) and despite my correction of a
failure to keep any of my other promises or agreements made in
the Mortgage.
11. LATE CHARGE ON TOTAL MONTHLY PAYMENT
Any late charge owing under the terms of the Note and
Mortgage shall be computed at the rate of two cents ($.02) for
each dollar ($1.00) of the total monthly payment that is overdue.
Date: SEPTEMBER 1, 1995
s/ H. Bruce Russell
RUSSELL FAMILY ASSOCIATES, A
LIMITED PARTNERSHIP
BY: H. BRUCE RUSSELL, GENERAL
PARTNER
<PAGE>
DUE-ON TRANSFER RIDER
This rider, is dated SEPTEMBER 1, 1995, and is a part of
and changes the Mortgage of the same date which I have given to
secure my Note of this date (the "Note") to FIRST NATIONAL BANK
OF ROCHESTER (the "Lender"). The Mortgage covers the property
described in the Mortgage and located at:
5170 COUNTY ROAD 11
GORHAM, NEW YORK 14461
NOTICE: This Rider adds a provision to the Mortgage
allowing the Lender to require repayment of the Note in
full upon the sale or transfer of the property.
AMENDED PROMISE.
I and Lender agree that Uniform Promise 17 of the Mortgage is
changed to read as follows:
17. AGREEMENTS ABOUT LENDER'S RIGHTS IF THE PROPERTY IS SOLD
OR TRANSFERRED.
Lender may require Immediate Payment in Full, as that phrase is
defined in Paragraph 18 below, if all or any part of the
Property, or if any right in the property, is sold or transferred
without Lender's prior written permission. Lender also may
require Immediate Payment in Full if a beneficial interest in
Borrower is sold or transferred and Borrower is not a natural
person. However, Lender shall not require Payment in Full if it
is not authorized by Federal Law to do so.
If Lender chooses to require immediate Payment in Full under this
Paragraph 17, Lender will send me a notice, in the manner
described in Paragraph 14 above, which states this requirement.
The notice will give me at least 30 days to make the required
payment. The 30 day grace period will begin on the date the
notice is mailed or delivered. If I do not make the payment
during that period, Lender may bring a lawsuit for "foreclosure
and sale" under Paragraph 19 below without giving me any further
notice or demand for payment.
I will continue to be responsible for all of my promises and
agreements under the Note and Mortgage even if I sell or transfer
the Property to someone else, unless the Lender releases me in
writing from my promises and agreements.
By signing this Rider, I agree to all of the above.
s\ H. Bruce Russell
RUSSELL FAMILY ASSOCIATES,
A LIMITED PARTNERSHIP
BY: H. BRUCE RUSSELL, GENERAL
PARTNER
DUE-ON-TRANSFER RIDER - New York - 1-4 Family - 3/83 FNMA/FHLMC
Plain Language Instrument
<PAGE>
SECOND HOME RIDER
THIS SECOND HOME RIDER is made on this 1st day of
September, 1995, and is incorporated into and shall be deemed to
amend and supplement the Mortgage, Deed of Trust, or security
Deed (the "Security Instrument") of the same date given by the
undersigned (the "Borrower," whether there are one or more
persons undersigned) to secure Borrower's Note to
First National Bank of Rochester (the "Lender")
of the same date and covering the property described in the
security Instrument (the "Property"), which is located at:
5170 County Road 11, Gorham, New York 14461
[Property Address]
In addition to the covenants and agreements made in the
Security Instrument, Borrower and Lender further covenant and
agree that Uniform Covenant 6 of the Security Instrument is
deleted and is replaced by the following:
6. Occupancy and Use; Preservation, Maintenance and
Protection of the Property; Borrower's Loan Application;
Leaseholds. Borrower shall occupy, and shall only use,
the Property as Borrower's second home. Borrower shall
keep the property available for Borrower's exclusive use
and enjoyment at all times, and shall not subject the
Property to any timesharing or other shared ownership
arrangement or to any rental pool or agreement that
requires Borrower either to rent the Property or give a
management firm or any other person any control over the
occupancy or use of the Property. Borrower shall not
destroy, damage or impair the Property, allow the
Property to deteriorate, or commit waste on the Property.
Borrower shall be in default if any forfeiture action or
proceeding, whether civil or criminal, is begun that in
Lender's good faith judgement could result in forfeiture
of the Property or otherwise materially impair the lien
created by this Security Instrument or Lender's security
interest. Borrower may cure such a default and
reinstate, as provided in paragraph 18, by causing the
action or proceeding to be dismissed with a ruling that,
in Lender's good faith determination, precludes
forfeiture of the Borrower's interest in the Property or
other material impairment of the lien created by this
Security Instrument or Lender's security interest.
Borrower shall also be in default if Borrower, during the
loan application process, gave materially false or
inaccurate information or statements to Lender (or failed
to provide Lender with any material information) in
connection with the loan evidenced by the Note,
including, but not limited to , representations
concerning Borrower's occupancy and use of the Property
as a second home. If this Security Instrument is on a
leasehold, Borrower shall comply with all the provisions
of the lease. If Borrower acquires fee title to the
Property, the leasehold and the fee title shall not merge
unless Lender agrees to the merger in writing.
BY SIGNING BELOW, Borrower accepts and agrees to the terms and
provisions contained in this Second Home Rider.
s\ H. Bruce Russell (Seal)
__________________________ (Seal)
Russell Family Associates, Borrower
A Limited Partnership
By: H. Bruce Russell, General Partner
MULTISTATE SECOND HOME RIDER -- Single Family -- Freddie Mac
UNIFORM INSTRUMENT
Form 3890/9/90 item 7099 (9102)
NOTE
_________________________________________________________________
SEPTEMBER 1, 1995
Rochester, New York
[City] [State]
5170 COUNTY ROAD 11, GORHAM, NEW YORK 14461 (TOWN of GORHAM)
[Property Address]
1. BORROWER'S PROMISE TO PAY
In return for a loan that I have received, I promise to pay
U.S. $ 150,000.00 (this amount is called "principal"), plus
interest, to the order of the Lender. The Lender is First
National Bank of Rochester. I understand that the Lender may
transfer this Note. The Lender or anyone who takes this Note by
transfer and who is entitled to receive payments under this Note
is called the "Note Holder".
2. INTEREST
Interest will be charged on unpaid principal until the full
amount has been paid. I will pay interest at a yearly rate of
7.25%.
The interest rate required by this Section 2 is the rate I
will pay both before and after any default described in Section
6(B) of this Note.
3. PAYMENTS
(A) Time and Place of Payments
I will pay principal and interest by making payments every
month.
I will make my monthly payments on the 1st day of each month
beginning on OCTOBER 1, 1995
I will make these payments every month until I have paid all
of the principal and interest and any other charges described
below that I may owe under this Note. My monthly payments will
be applied to interest before principal. If, on September 1,
2010, I still owe amounts under this Note, I will pay those
amounts in full on that date,
which is called the "Maturity Date".
I will make my monthly payments at 35 State Street,
Rochester, New York 14614 or at a different place if required by
the Note Holder.
(B) Amount of Monthly Payments
My monthly payment will be in the amount of U.S. $ 1,369.29
4. BORROWER'S RIGHT TO PREPAY
I have the right to make payments of principal at any time
before they are due. A payment of principal only is known as a
"prepayment". When I make prepayment, I will tell the Note
Holder in writing that I am doing so.
I may make a full prepayment or partial prepayments without
paying any prepayment charge. The Note Holder will use all of my
prepayments to reduce the amount of principal that I owe under
this Note. If I make a partial prepayment, there will be no
changes in the due date or in the amount of my monthly payment
unless the Note Holder agrees in writing to those changes.
5. LOAN CHARGES
If a law, which applies to this loan and which sets maximum
loan charges, is finally interpreted so that the interest or
other loan charges collected or to be collected in connection
with this loan exceed the permitted limits, then: (i) any such
loan charge shall be reduced by the amount necessary to reduce
the charge to the permitted limit; and (ii) any sums already
collected from me which exceeded permitted limits will be
refunded to me. The Note Holder may choose to make this refund
by reducing the principal I owe under this Note or by making a
direct payment to me. If a refund reduces principal, the
reduction will be treated as a partial prepayment.
6. BORROWER'S FAILURE TO PAY AS REQUIRED
(A) Late Charge for Overdue Payments
If the Note Holder has not received the full amount of any
monthly payment by the end of 15 calendar days after the date it
is due, I will pay a late charge to the Note Holder. The amount
of the charge will be 2.0% of my overdue payment of principal and
interest. I will pay this late charge promptly but only once on
each late payment.
(B) Default
If I do not pay the full amount of each monthly payment on
the date it is due, I will be in default.
(C) Notice of Default If I am in default, the Note Holder
may send me a written notice telling me that if I do not pay the
overdue amount by a certain date, the Note Holder may require me
to pay immediately the full amount of principal which has not
been paid and all the interest that I owe on that amount. That
date must be at least 30 days after the date on which the notice
is delivered or mailed to me.
(D) No Waiver By Note Holder
Even if, at a time when I am in default, the Note Holder
does not require me to pay immediately in full as described
above, the Note Holder will still have the right to do so if I am
in default at a later time.
(E) Payment of Note Holder's Costs and Expenses
If the Note Holder has required me to pay immediately in
full as described above, the Note Holder will have the right to
be paid back by me for all of its costs and expenses in enforcing
this Note, whether or not a lawsuit is brought, to the extent not
prohibited by applicable law. Those expenses include, for
example, reasonable attorneys' fees.
7. GIVING OF NOTICES
Unless applicable law requires a different method, any
notice that must be given to me under this Note will be given by
delivering it or by mailing it by first class mail to me at the
Property Address above or at a different address if I give the
Note Holder a notice of my different address.
Any notice that must be given to the Note Holder under this
Note will be given by mailing it by first class mail to the Note
Holder at the address stated in Section 3(A) above or at a
different address if I am given a notice of that different
address.
8. OBLIGATIONS OF PERSONS UNDER THIS NOTE
If more than one person signs this Note, each person is
fully and personally obligated to keep all of the promises made
in this Note, including the promise to pay the full amount owed.
Any person who is a guarantor, surety or endorser of this Note is
also obligated to do these things. Any person who takes over
these obligations, including the obligations of a guarantor,
surety or endorser of this Note, is also obligated to keep all of
the promises made in this Note. The Note Holder may enforce its
rights under this Note against each person individually or
against all of us together. This means that any one of us may be
required to pay all of the amounts owed under this Note.
9. WAIVERS
I and any other person who has obligations under this Note
waive the rights of presentment and notice of dishonor.
"Presentment" means the right to require the Note Holder to
demand payment of amounts due. "Notice of dishonor" means the
right to require the Note Holder to give notice to other persons
that amounts due have not been paid.
10. UNIFORM SECURED NOTE
This Note is a uniform instrument with limited variations in
some jurisdictions. In addition to the protections given to the
Note Holder under this Note, a Mortgage, Deed of Trust or
Security Deed (the "Security Instrument"), dated the same date as
this Note, protects the Note Holder from possible losses which
might result if I do not keep the promises which I make in this
Note. That Security Instrument describes how and under what
conditions I may be required to make immediate payment in full of
all amounts I owe under this Note. Some of those conditions are
described as follows:
AGREEMENTS ABOUT LENDER'S RIGHTS IF THE PROPERTY IS SOLD OR
TRANSFERRED
Lender may require immediate payment in full of all Sums
Secured by this Security Instrument if all or any part of the
Property, or if any right in the Property, is sold or transferred
without Lender's prior written permission. Lender also may
require immediate payment in full if a beneficial interest in
Borrower is sold or transferred and Borrower is not a natural
person. However, Lender shall not require immediate payment in
full if this is prohibited by federal law on the date of this
Security Instrument.
If Lender requires immediate payment in full under this
Paragraph 17, Lender will give me a notice which state this
requirement. The notice will give me at least 30 days to make
the required payment. The 30-day period will begin on the date
the notice is mailed or delivered. If I do not make the required
payment during that period, Lender may act to enforce its rights
under this Security Instrument without giving me any further
notice or demand for payment.
Borrower has executed and acknowledges receipt of pages 1 and 2
of this Fixed Rate Note.
WITNESS THE HAND(S) AND SEAL(S) OF THE UNDERSIGNED.
s/ H. Bruce Russell (Seal) __________________________ (Seal)
RUSSELL FAMILY ASSOCIATES, A LIMITED PARTNERSHIP
BY: H. BRUCE RUSSELL, GENERAL PARTNER-Borrower
-Borrower
SS#____________________ SS# _______________________
Form 3233 10/91
FIRST NATIONAL BANK
OF ROCHESTER
35 State Street COMMERCIAL TERM NOTE
Rochester, New York 14614
_____________________________________________________________
Account Name: ESTATE OF FRED B. KRAVETZ
Dated: August 22, 1995
Note Amount: ONE MILLION TWO HUNDRED THOUSAND AND NO/100
DOLLARS ($1,200,000.00)
For value received, the undersigned, (individually a
"Borrower") (if more than one, jointly and severally) promises to
pay to the order of, FIRST NATIONAL BANK OF ROCHESTER, a national
banking association having its chief executive office at 35 State
Street, Rochester, New York 14614 ("Bank") at any of the banking
offices of Bank, in lawful money of the United States and in
immediately available funds, the principal sum of the Note Amount
indicated above plus interest on the outstanding portion of such
principal sum in accordance with the terms and conditions set
forth in the following paragraphs.
1. Interest. Borrower shall pay interest on the outstanding
principal sum from and including the date of this Note to but not
including the date such sum is paid in full (including each day
on which Bank is closed) at a variable rate per year that shall
on each day be 0% above the rate per year in effect such day as
that designated by Bank as the prime rate of interest of Bank,
with such interest to be calculated on the basis of a 360-day
year for the actual number of days of each year. Notwithstanding
the foregoing, the rate of interest per year on and after
maturity of the outstanding Note Amount, whether such maturity is
because of acceleration or otherwise, shall on each day be 3% per
year above the rate described in the preceding sentence.
Notwithstanding the generality of the foregoing, in no event
shall interest be payable at a rate in excess of the maximum rate
permitted by applicable law.
2. Installment Payments. Borrower shall pay (a) the Note Amount
in 60 installments of principal consisting of 59 installments of
principal in the amount of $10,000.00 each and a final
installment of principal in the amount of $610,000.00, with the
first of such installments of principal to become due on October
1, 1995 and one of such installments of principal to become due
on the same day of each succeeding month through September 1,
2000, when Borrower shall pay all amounts owing pursuant to this
Note but not yet paid, and (b) interest in 60 installments of
interest the amounts of which may vary and that are to become due
on the same dates as the installments of principal are to become
due. All payments received by Bank shall be applied on the date
received first to late charges, if any, second to accrued
interest and third to Principal. Notwithstanding the foregoing,
all amounts owing hereunder shall be immediately due and payable
to the extent that any prepayment of the mortgage loan in the
original principal amount of $4,250,000 being collaterally
assigned as security for amounts owing under this Note results in
the outstanding amount of such mortgage loan being less than the
outstanding balance owing under this Note.
3. Late Charges. Borrower shall pay a late charge equal to 5% of
the amount of any scheduled installment payment not received by
Bank on or before the 10th day after it is due.
4. Charging Deposit Accounts for Payments. Borrower agrees that
Bank may, at its option and in addition to the right of offset,
charge any demand deposit account of Borrower at Bank for any
amount that has become due and owing to Bank hereunder.
5. Prepayments. Borrower shall have the option of repaying the
Note Amount to Bank in advance in full or in part at any time and
from time to time; provided, however, that the amount of any
repayment in part shall be an integral multiple of $1,000.00 and
upon making any repayment in full Borrower shall pay to Bank all
interest and other amounts owing pursuant to this Note and
remaining unpaid. Each such repayment in part shall be applied
to the installments of principal in the inverse order of such
installments becoming due.
6. Use of Loan Proceeds. Borrower represents and warrants to Bank
that the loan evidenced hereby shall be used solely for business
or commercial purposes.
7. Financial Information. Borrower agrees to provide Bank,
promptly upon Bank's request, with (a) periodic financial
statements in form satisfactory to Bank, (b) copies of federal
and state income tax returns and (c) all other financial
information requested by Bank from time to time.
8. Defaults and Acceleration. All amounts owing pursuant to this
Note but not yet paid shall, without any notice, demand,
presentment or protest of any kind (each of which is waived by
Borrower), automatically become immediately due if Borrower
commences or has commenced against it any bankruptcy or
insolvency proceeding. All amounts owing pursuant to this Note
but not yet paid shall, without any notice, demand, presentment
or protest of any kind (each of which is waived by Borrower),
become immediately due at the sole option of Bank if (a) any
amount owing pursuant to this Note is not paid when due, (b)
Borrower or any guarantor or endorser of this Note (a
"Guarantor") is dissolved, dies or becomes incompetent or
insolvent (however such insolvency is evidenced), (c) any
Guarantor commences or has commenced against it any bankruptcy or
insolvency proceeding, (d) Bank in good faith deems itself
insecure with respect to any amount owing pursuant to this Note
or is of the opinion that any guaranty, endorsement, collateral
or other security now or hereafter securing the payment of or
otherwise applicable to any amount owing pursuant to this Note is
not sufficient or has declined or may decline in value, (e) there
occurs or exists any event or condition of default for purposes
of any mortgage, security agreement, collateral assignment
agreement or other agreement now or hereafter in effect between
Bank and any Borrower or (f) there occurs or exists any event or
condition of default for purposes of any mortgage, security
agreement, collateral assignment agreement, guaranty or other
agreement that secures or applies to the payment of any amount
owing pursuant to this Note and that is now or hereafter in
effect between Bank and any person or entity other than any
Borrower.
9. Collection Expenses. Borrower shall pay all costs and expenses
incurred by Bank in endeavoring to collect any amount owing
pursuant to this Note or to otherwise protect its rights with
respect to this Note (including, but not limited to, reasonable
attorneys' fees for legal advice, litigation or other
representation of Bank).
10. New York Law; Consent to Jurisdiction and Venue. This Note
shall be governed by and interpreted and enforced in accordance
with the internal law of the State of New York, without regard to
principles of conflict of laws. Borrower consents to the
jurisdiction of the courts of the State of New York and agrees
that any court located in the county in which Bank has its chief
executive office shall be the proper forum for any action or
proceeding between Borrower and Bank unless either (a) Bank in
its sole discretion chooses another forum or (b) applicable law
requires another forum.
ESTATE OF FRED B. KRAVETZ
By: s\ Laurie Kuskin, Executrix
Laurie Kuskin, Executrix
<PAGE>
Collateral Assignment of Partial Interest
In Note and Mortgage
KNOW THAT
ESTATE OF FRED B. KRAVETZ, having an office at 150 Linden
Oaks Drive, Suite C, Rochester, New York 14625 ("Assignor"),
in consideration of One Dollar ($1.00) and other good and
valuable consideration paid by
FIRST NATIONAL BANK OF ROCHESTER, a national banking
association having its chief executive office at 35 State
Street, Rochester, New York 14614 ("Assignee"),
the payment and receipt of which is hereby acknowledged, hereby
assigns unto the Assignee, a Partial Interest (as defined herein)
in and to:
That certain Restated Mortgage Note ("Note") in the
principal sum of Four Million Two Hundred Fifty Thousand and
00/100 Dollars ($4,250,000.00) dated May 31, 1995 made and
delivered to Assignor by Nathan Benderson, Ronald Benderson
and David H. Baldauf, as Trustees under a Trust Agreement
dated September 22, 1993 known as the Randall Benderson
1993-1 Trust, together with interest thereon as provided
therein, which Note is secured by the following:
Mortgage made by Fred B. Kravetz to Rochester Savings Bank
in the amount of One Million Eight Hundred Thousand and
00/100 Dollars ($1,800,000.00) dated March 31, 1981 and
recorded in the Monroe County Clerk's Office on April 1,
1981 in Liber 5199 of Mortgages, page 245, which mortgage
was assigned to Security Trust Company by Assignment dated
June 14, 1983 and recorded on June 15, 1983 in Liber 470 of
Assignments of Mortgages, page 218, which Mortgage was
further assigned by Fleet Bank, successor to Security Trust
Company, to Assignor, by assignment dated May 26, 1995 and
recorded June 1, 1995 in Liber 1072 of Assignments of
Mortgages, page 85, which Mortgage and the indebtedness
secured thereby was assumed pursuant to the terms of an
Executor's Deed from Laurie A. Kuskin, as Executrix of the
Last Will and Testament of Fred B. Kravetz to Nathan
Benderson, Ronald Benderson and David H. Baldauf, as
Trustees under a Trust Agreement dated September 22, 1993
known as the Randall Benderson 1993-1 Trust, which deed was
dated May 31, 1995 and recorded in the Monroe County Clerk's
Office on June 1, 1995 in Liber 8613 of Deeds, at page 517.
Mortgage made by Nathan Benderson, Ronald Benderson and
David H. Baldauf, as Trustees under a Trust Agreement dated
September 22, 1993 known as the Randall Benderson 1993-1
Trust to Assignor in the amount of Three Million Four
Hundred Seventy-two Thousand Five Hundred and 00/100 Dollars
($3,472,500.00) dated May 31, 1995 and recorded June 1, 1995
in the Monroe County Clerk's Office in Liber 12579 of
Mortgages at page 135, which mortgage was consolidated with
the mortgage first above described to form a single lien in
the amount of Four Million Two Hundred Fifty Thousand and
00/100 Dollars ($4,250,000.00) pursuant to the terms of a
Mortgage Modification, Extension and Consolidation Agreement
(hereafter the "Mortgage") by and between Nathan Benderson,
Ronald Benderson and David H. Baldauf, as Trustees under a
Trust Agreement dated September 22, 1993 known as the
Randall Benderson 1993-1 Trust and Assignor dated May 31,
1995 and recorded in the Monroe County Clerk's Office on
June 1, 1995 in Liber 12579 of Mortgages, page 147.
TO HAVE AND TO HOLD the same unto the Assignee and to the
successors, legal representatives and assigns of the
Assignee forever.
AND the Assignor covenants that there is now due and owing
upon said Note and Mortgage without offset or defense of any
kind, the principal sum of Four Million Two Hundred Twenty-
Eight Thousand Four Hundred Forty-Seven and 59/100 Dollars
($4,228,447.59), with interest thereon at nine and one-half
percent (9-1/2%) per annum from the first (1st) day of
August, 1995.
The Partial Interest in the Note and Mortgage assigned
hereby shall be in an amount equal to the principal,
interest and collection expenses due to Assignee following a
default by Assignor in the payment of any and all
indebtedness, liabilities or obligations for the payment or
money which hereafter arise or accrue in favor of Assignee
against Assignor in connection with that certain Commercial
Term Note dated August 22, 1995 from Assignor to Assignee in
the principal amount of One Million Two Hundred Thousand and
00/100 Dollars ($1,200,000.00), and this Collateral
Assignment of Partial Interest in Note and Mortgage is given
as collateral security for the payment of any and all
indebtedness, liabilities or obligations for the payment or
money which hereafter arise or accrue in favor of Assignee
against Assignor in connection with said Commercial Term
Note.
This Collateral Assignment of Partial Interest in Note and
Mortgage is executed and delivered by Assignor to Assignee
upon the following terms and conditions, and Assignor and
Assignee hereby agree as follows:
1. Upon payment in full of any and all indebtedness,
liabilities or obligations for the payment or money
which hereafter arise or accrue in favor of Assignee
against Assignor in connection with said Commercial
Term Note, Assignee shall upon demand execute and
deliver to the Assignor a re-assignment of this
Collateral Assignment of Partial Interest in the Note
and Mortgage.
2. So long as there exists no default by Assignor in the
payment to Assignee of all sums due under the
Commercial Term Note or in the performance of any
other obligations of Assignor under the said
Commercial Term Note, Assignor shall have full power
and authority to enforce and collect said Note and
Mortgage according to the terms thereof.
3. Upon and after the occurrence of any default in
payment of any indebtedness under the Commercial Term
Note or in the performance of any other obligations
of Assignor thereunder, the Assignee shall have full
power and authority to enforce and collect said Note
and Mortgage according to the terms thereof, and in
case the Assignee, its successors or assigns, shall
collect and receive the money due on said Note and
Mortgage, then and in that event, the Assignee shall,
after retaining the amount of the indebtedness
secured hereby, including all interest thereon and
charges arising or growing out of the same, pay the
balance or surplus, if any, to the Assignor, or to
the successors, legal representative or assigns of
the Assignor.
4. Upon the nonpayment by Assignor of any indebtedness
owing by Assignor under the Commercial Term Note as
and when the same is due and payable, the Assignee
may, at any time in its discretion and without demand
or prior notice of any kind to the Assignor, sell the
Partial Interest in Note and Mortgage assigned
hereby, free and clear from any right of redemption
by the Assignor which right of redemption is hereby
expressly waived, and may execute and deliver to the
purchaser a further assignment of the Partial
Interest in Note and Mortgage assigned hereby. The
proceeds of such sale, after deducting the expenses
of said sale, shall be applied to the payment of any
of the indebtedness owing to Assignee under the
Commercial Term Note and secured hereby, and the
balance, if any, shall be paid to the Assignor or the
Assignor's successors, legal representatives or
assigns. The discretion of the Assignee as to the
fair value of said Partial Interest in Note and
Mortgage upon such sale, if exercised in a
commercially reasonable manner, shall be binding upon
the Assignor and upon Assignor's respective
successors, legal representative or assigns and the
Assignor shall remain liable to the Assignee for any
deficiency arising upon such sale.
5. Any subsequent or further collateral assignment by
Assignor of a partial interest in the Note and
Mortgage shall be expressly upon the following terms
and conditions:
(a) Any such further collateral assignment shall,
by its terms, be subject and subordinate to the
within Collateral Assignment of Partial
Interest in Note and Mortgage; and
(b) No such further collateral assignment shall be
effective if the amount secured by such
collateral assignment, when added to the
amounts secured by all previous collateral
assignments (including the within Collateral
Assignment of Partial Interest in Note and
Mortgage) exceeds the then unpaid principal
balance of the Note and Mortgage.
The words "Assignor" and "Assignee" shall be construed as if they
read "Assignors" or "Assignees" whenever the sense of this
instrument so requires.
IN WITNESS WHEREOF, the Assignor has duly executed this
instrument on this 22nd day of August, 1995.
ESTATE OF FRED B. KRAVETZ
By: s\ Laurie Kuskin, Executrix
LAURIE KUSKIN, EXECUTRIX
STATE OF NEW YORK)
COUNTY OF MONROE) SS.:
On the 22nd day of August, 1995, before me personally came
LAURIE KUSKIN, THE EXECUTOR OF THE LAST WILL AND TESTAMENT OF
FRED B. KRAVETZ, to me known to be the individual described in,
and who executed the foregoing instrument, and acknowledged that
he/she executed the same as Executor as aforesaid for the
purposes therein mentioned.
s\ Martin W. O'Toole
Notary Public
FIRST NATIONAL BANK
OF ROCHESTER
35 State Street COMMERCIAL LINE OF CREDIT NOTE
Rochester, New York 14614
_________________________________________________________________
Account Name: GLC OUTSOURCING SERVICES, INC.
Dated: October 20, 1995
Maximum Credit Amount: TWO HUNDRED THOUSAND AND NO/100 DOLLARS
($200,000.00)
FOR VALUE RECEIVED, the undersigned (individually a
"Borrower") (if more than one, jointly and severally) promises to
pay to the order of FIRST NATIONAL BANK OF ROCHESTER, a national
banking association having its chief executive office at 35 State
Street, Rochester, New York 14614, ("Bank") at any of the banking
offices of the Bank in lawful money of the United States and in
immediately available funds, the outstanding principal sum on the
line of credit made available to the Borrower pursuant to the
terms and conditions hereof (the "Credit) plus interest on such
principal sum in accordance with the terms and conditions set
forth in the following paragraphs. (Check or X / / spaces where
applicable.)
1. Obtaining Advances on Credit. The Borrower may obtain
advances on the Credit in multiples of the lesser of (a)
$1,000.00 or (b) the unused balance of the Maximum Credit Amount
indicated above (the "Maximum Credit") by making written or oral
requests for such advances to Bank through any of its authorized
Commercial Lending Officers. The decision to make such an advance
or to refuse to make such an advance shall be subject to the
discretion of Bank. Such requests may be made by the Borrower, by
any authorized agent of the Borrower (including any partner or
officer of the Borrower) or by any other person designated by
Borrower as a person having authority to authorize an advance
under this Note. Bank shall be entitled to rely upon the request
of any person it in good faith believes to be authorized by
Borrower to borrow under this Note and Bank shall not be liable
to Borrower as a result of making or failing to make any advance
hereunder. Advances on the Credit will be deposited by Bank to a
demand deposit account of Borrower with Bank.
2. Statement of Balance Due. Bank shall provide periodic
statements to Borrower describing, as of the effective date of
such statement, the outstanding principal balance, the interest
owing, any other charges owing and the advances and payments made
during the period covered by the statement. The Bank's records
shall be presumptive evidence of the balances owing with respect
to the Credit.
3. /X/ Out of Debt Period. During each twelve-month period
that the Credit is available to Borrower, there shall be at least
one thirty-day period when Borrower is not indebted to Bank
pursuant to the Credit.
4. Interest Rate; Interest Payments. Borrower shall pay interest
on the outstanding principal sum of the Credit from and including
the date of this Note to but not including the date such sum is
paid in full (including each day on which Bank is closed) at a
variable rate per year that shall on each day be 1.50% above the
rate per year in effect such day as that designated by Bank as
the prime rate of interest of Bank, with such interest to be
calculated on the basis of a 360-day year for the actual number
of days of each year. Notwithstanding the foregoing, the rate of
interest per year on and after maturity of the outstanding
principal balance, because of Bank's demand for immediate payment
in full of such outstanding principal balance shall on each day
be 2% per year above the rate described in the preceding
sentence. Interest will be billed to Borrower /X/ monthly
/ / quarterly on the outstanding principal sum. Notwithstanding
the generality of the foregoing, in no event shall interest be
payable at a rate in excess of the maximum rate permitted by
applicable law.
/ / The interest rate applicable to this Note is further
affected by the Compensating Balance Addendum made applicable
hereto.
5. Credit Facility Fees. The Credit shall be subject to the
following fees (as checked or marked with "X"):
/ / Except with respect to any out of debt period
required by Section 3 hereof, Borrower shall pay to Bank
when billed therefor a non-usage fee based upon the Maximum
Credit that was available but was not in use by Borrower.
The fee shall be payable in arrears and shall be in an
amount equal to ____% of the average daily amount of the
available but unused credit.
/ / Borrower shall pay an annual facility fee equal to
___% of the Maximum Credit upon execution of this Note and
annually hereafter as long as the Credit is available. If
Bank exercises its termination rights under Section 10
hereof, Borrower shall be entitled to a pro-rata refund of
the annual facility fee described in this paragraph based
upon the amount of time that the Credit was unavailable to
Borrower.
6. Late Charges. Borrower shall pay a late charge equal to 5% of
the amount of any scheduled payment with respect to each payment
not received by Bank on or before the 10th day after it is due.
7. Application of Payments; Charging Deposit Accounts for
Payments. All payments received by Bank shall be applied on the
date received first to late charges, if any, second to accrued
interest and third to Principal. Borrower agrees that Bank may,
at its option and in addition to the right of offset, charge any
demand deposit account of Borrower at Bank for any amount that
has become due and owing to Bank hereunder.
8. Use of Proceeds. Borrower represents and warrants to Bank that
the advances to be made hereunder shall be used solely for
business or commercial purposes.
9. Financial Information. Borrower agrees to provide Bank,
promptly upon Bank's request, with (a) periodic financial
statements in form satisfactory to Bank, (b) copies of federal
and state income tax returns and (c) all other financial
information requested by Bank from time to time.
10. Termination of Credit. Borrower may terminate its rights
to take advances under the Credit at any time by giving written
notice to Bank of its desire to do so. Notice should be directed
to the "Commercial Lending Department" at the address above or at
any other address provided to Borrower by Bank for the purposes
of such notices. The Credit shall become unavailable after Bank
has received such notice and has had a reasonable time to act
thereon. The Credit may be terminated by Bank at any time for any
or no reason without prior notice to Borrower. The Credit is also
subject to Bank's continuing rights of modification, restriction
or suspension, provided, however, that Bank may not modify the
interest rate applicable to outstanding balances or other fees or
charges except as specified in this Note. Termination of the
Credit shall not affect the Borrower's obligation to pay the
outstanding balance under the Credit and all interest and other
applicable charges.
11. Demand Obligation; Demands for Payment. All amounts owing
pursuant to this Note but not yet paid shall, without any notice,
demand, presentment or protest of any kind (each of which is
waived by Borrower), automatically become immediately due if
Borrower commences or has commenced against it any bankruptcy or
insolvency proceeding. This Note is payable "ON DEMAND" and Bank
may demand immediate payment in full of all amounts owing
hereunder in its sole discretion. Without limiting Bank's rights
as described in the previous sentence, all amounts owing pursuant
to this Note but not yet paid may become immediately due at the
sole option of Bank if (a) any amount owing pursuant to this Note
is not paid when due, (b) Borrower or any guarantor or endorser
of this Note (a "Guarantor") is dissolved, dies or becomes
incompetent or insolvent (however such insolvency is evidenced),
(c) any Guarantor commences or has commenced against it any
bankruptcy or insolvency proceeding, (d) Bank in good faith deems
itself insecure with respect to any amount owing pursuant to this
Note or is of the opinion that any guaranty, endorsement,
collateral or other security now or hereafter securing the
payment of or otherwise applicable to any amount owing pursuant
to this Note is not sufficient or has declined or may decline in
value, (e) there occurs or exists any event or condition of
default for purposes of any mortgage, security agreement,
collateral assignment agreement or other agreement now or
hereafter in effect between Bank and any Borrower or (f) there
occurs or exists any event or condition of default for purposes
of any mortgage, security agreement, collateral assignment
agreement, guaranty or other agreement that secures or applies to
the payment of any amount owing pursuant to this Note and that is
now or hereafter in effect between Bank and any person or entity
other than any Borrower. Borrower waives any and all rights to
any notice, demand, presentment for payment, notice of protest
and protest with respect to this Note.
12. Collection Expenses. Borrower shall pay all costs and
expenses incurred by Bank in endeavoring to collect any amount
owing pursuant to this Note or to otherwise protect its rights
with respect to this Note (including, but not limited to,
reasonable attorneys' fees for legal advice, litigation or other
representation of Bank).
13. New York Law; Consent to Jurisdiction and Venue; Waiver of
Trial by Jury. This Note shall be governed by and interpreted and
enforced in accordance with the internal law of the State of New
York, without regard to principles of conflict of laws. Borrower
consents to the jurisdiction of the courts of the State of New
York and agrees that any court located in the county in which
Bank has its chief executive office shall be the proper forum for
any action or proceeding between Borrower and Bank unless either
(a) Bank in its sole discretion chooses another forum or (b)
applicable law requires another forum. BORROWER AND BANK WAIVE
THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BETWEEN
THEM BASED UPON, ARISING OUT OF, OR IN ANY WAY CONNECTED TO, THIS
NOTE.
G L C OUTSOURCING SERVICES, INC.
By: s\ James D. Ryan, Jr.
James D. Ryan, Jr., Vice President
<PAGE>
FIRST NATIONAL BANK
OF ROCHESTER
35 State Street CONTINUING UNLIMITED GUARANTY
Rochester, New York 14614
_________________________________________________________________
Borrower: G L C OUTSOURCING SERVICES, INC.
Dated: April 28, 1995
In consideration of all loans, advances, credit or other
financial accommodations previously extended or to be extended or
continued from time to time by FIRST NATIONAL BANK OF ROCHESTER,
a national banking association having its chief executive office
at 35 State Street, Rochester, New York 14614 ("Bank") to, or on
the guarantee, endorsement or other assurance of, the person or
entity identified above as "Borrower," the undersigned
("Guarantor") does hereby agree and make this Guaranty as
follows:
1. Definition of Certain Terms. As used in this Guaranty:
(a) "Obligations" shall mean and include all indebtedness,
liabilities and obligations for the payment of money (including,
but not limited to, any obligation to pay principal, interest,
costs, expenses and attorneys' fees) of Borrower to Bank and
whether direct or indirect, absolute or contingent, now existing
or hereafter arising and any and all extensions, renewals and
modifications thereof;
(b) "Collateral" shall mean all property, real, personal
(including both tangible and intangible personal property) and
mixed, wherever located, now owned or hereafter acquired, upon
which there has been conveyed or will be conveyed a security
interest, pledge or mortgage to secure the payment of the
Obligations;
(c) "guarantor" shall mean any maker, drawer, acceptor,
endorser, guarantor, surety, accommodation party or other person
liable upon or for any of the Obligations in any capacity
whatsoever including, but not limited to, Guarantor; and
(d) "Event of Default" shall mean (i) any event or
condition of default under any agreement between Bank and
Borrower governing or relating to any of the Obligations
including, but not limited to, a failure to make payment when
due, and (ii) any other event, occurrence or condition that
results in the Obligations, or any part of the Obligations, being
immediately, or at the sole option of Bank, due and payable by
Borrower to Bank.
2. Unconditional Guaranty of Payment. Guarantor does hereby
unconditionally guarantee the punctual payment to Bank when due,
whether at a stated maturity, by acceleration or otherwise, of
each and all of the Obligations, without any limitation as to
amount, strictly in accordance with all the terms and provisions
of the Obligations and subject to all rights of Bank arising from
or relating to the Obligations. The duty, liability and
obligation of Guarantor pursuant to this Guaranty shall not be
diminished, altered, terminated or changed in any respect,
notwithstanding any law, regulation, decree, action, proceeding,
equitable doctrine or other circumstance that would or might
otherwise diminish, alter, terminate, void or change the
liability or obligation of Borrower, any other guarantor or any
other entity or person to pay any or all of the Obligations. Any
payments required to be made pursuant to this Guaranty shall be
made in United States dollars in immediately available funds at
such place and time as shall be designated by Bank.
3. Continuing Agreement. This Guaranty is a continuing
agreement and applies to all present and future Obligations,
notwithstanding that at any particular time all of the
Obligations then outstanding shall have been paid in full. This
Guaranty shall be construed at all times to be a guaranty of
payment and not a guaranty of collection.
4. Guarantor's Indemnification of Bank. Guarantor agrees to
indemnify Bank and its employees, agents, officers and directors
and hold the same harmless from all claims, demands, penalties,
fines, obligations and liabilities claimed or asserted by any
other party, whether contingent or otherwise, and against all
losses and expenses (including, but not limited to, fees of
attorneys and other consultants, court costs and litigation
expenses) in any way suffered, incurred, or paid by Bank or by
any of its employees, agents, officers and directors, as a result
of or in any way arising out of, following, or consequential to,
Bank's transactions and relationships with either or both of
Borrower and Guarantor, whether with respect to the Obligations
or otherwise, and including, but not limited to, environmental
matters
5. Certain Rights of Bank. Bank, in its sole discretion and
without notice to or further assent from Guarantor at any time or
from time to time, either before or after the occurrence of an
Event of Default, and without diminishing, altering, terminating
or changing in any respect the liability and obligation of
Guarantor pursuant to this Guaranty, may: (a) increase or
decrease the amount of, extend, change, or amend the time,
manner, place, amount or terms of payment of any or all of the
Obligations or any other terms or provisions governing the
Obligations, including those relating to any guarantor or
Collateral; (b) exchange, release, surrender, substitute or sell
any Collateral, or fail unintentionally or otherwise to perfect
its interest or create a valid security interest in any of the
Collateral; (c) waive, fail to exercise or delay in exercising
any right or remedy granted to Bank by any agreement or by law
with respect to Borrower, any of the Obligations, any guarantor
or any of the Collateral; (d) release, agree not to sue, settle
or compromise with Borrower, any guarantor or any other entity or
person who is otherwise obligated to pay any or all of the
Obligations; (e) subordinate the payment of any or all of the
Obligations to the payment of any other debt owed by Borrower to
any other entity or person; (f) sell or purchase all or any part
of the Collateral at any public or private sale, and after
deduction of all expenses incurred therefor, including attorneys'
fees, apply the proceeds to the Obligations in such manner as it
deems appropriate; (g) apply any payments or proceeds relating to
the Obligations in such manner as it deems appropriate; or (h)
act or refuse to act in any other manner which might constitute a
legal or equitable discharge or defense of a guarantor.
6. Financial Information. Guarantor agrees to provide Bank,
promptly upon Bank's request, with (a) periodic financial
statements in form satisfactory to Bank, (b) copies of federal
and state income tax returns and (c) all other financial
information requested by Bank from time to time.
7. Bank's Rights Upon Event of Default. Upon the occurrence
of any Event of Default, or at any time thereafter, any or all of
the Obligations, at the sole option of Bank, shall immediately
become due and payable in full, together with interest and all
costs and expenses of enforcing this Guaranty or any of the
Obligations, including court costs and reasonable attorneys'
fees. In such circumstances, the liability of Guarantor to Bank
shall be absolute, and it shall not constitute a defense,
counterclaim, set-off or recoupment thereto that Bank has not
made any demand or instituted any action or proceeding against
Borrower or against any other party who may be liable for all or
any of the Obligations or that Bank has not validly taken or
perfected a security interest in the Collateral or has not or has
improperly foreclosed upon the Collateral or any part of it, nor
shall Bank be required to perform any of the above acts against
Borrower, any guarantor or the Collateral as a condition to
enforcing its rights against Guarantor in accordance with the
terms of this Guaranty.
8. Right of Offset; Security Interest. In addition to the
rights that Bank has under applicable law (including, but not
limited to, the right of offset) and the other rights granted to
Bank pursuant to this Guaranty or the Obligations, Guarantor
hereby grants Bank a lien upon and security interest in any and
all of Guarantor's money, deposits or other property in the
possession, custody or control of Bank. Upon the occurrence of an
Event of Default, in addition to any other rights of Bank, Bank
may, in its sole discretion and without prior notice to
Guarantor, set-off or sell the same at any public or private sale
and apply the proceeds thereof to the Obligations in such manner
and order as Bank deems appropriate.
9. Persons or Entities Bound. If this Guaranty is executed by
two or more persons or entities or if two or more persons or
entities execute agreements similar to this Guaranty covering the
Obligations, they shall be jointly and severally liable, and all
provisions of this Guaranty shall apply to each and all of them.
The termination of this Guaranty or similar agreement as to one
or more of such persons or entities shall not terminate this
Guaranty or similar agreement as to any remaining persons or
entities. This Guaranty shall be binding upon the heirs,
executors, trustees, transferees, administrators, assigns and
successors of Guarantor and shall inure to the benefit of and be
enforceable by Bank, its successors, transferees and assigns.
10. Reinstatement of Guarantor's Liability. In the event any
payment or recovery is received by Bank with respect to the
Obligations during the time that this Guaranty is effective and
such payment or recovery is subsequently invalidated, declared
fraudulent or preferential or otherwise set aside under the terms
of any federal or state law or equitable doctrine, then the
liability of Guarantor shall be reinstated and Guarantor shall be
responsible for the amount of such payment or recovery to Bank
under the terms of this Guaranty together with any and all
interest and other charges related thereto and related to any
proceeding seeking to set aside or invalidate such payment or
recovery, including attorneys' fees, notwithstanding the fact
that this Guaranty was terminated voluntarily or by law at the
time that the payment or recovery was set aside or invalidated as
described above.
11. Waiver of Subrogation and Similar Rights. Until the
Obligations are finally and irrevocably paid in full, Guarantor
irrevocably waives each and every right of subrogation,
indemnity, contribution and reimbursement and each and every
similar right that Guarantor would have against either or both of
Borrower and any other guarantor of the Obligations because of
any payment by Guarantor of any portion of the Obligations or
because of the provision by Guarantor of any collateral security
for such Obligations. To the extent that any of the foregoing
rights survive such waiver, Guarantor assigns such rights to Bank
as collateral security for payment of the Obligations.
12. New York Law; Consent to Jurisdiction and Venue; Waiver of
Trial by Jury. This Guaranty shall be governed by and interpreted
and enforced in accordance with the internal law of the State of
New York, without regard to principles of conflict of laws.
Guarantor consents to the jurisdiction of the courts of the State
of New York and agrees that any court located in the county in
which Bank has its chief executive office shall be the proper
forum for any action or proceeding between them unless either (a)
Bank in its sole discretion chooses another forum or (b)
applicable law requires another forum. Guarantor also waives the
right to assert in any such action or proceeding any unrelated
offsets or counterclaims which it may otherwise have or claim to
have. GUARANTOR AND BANK WAIVE THE RIGHT TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING BETWEEN THEM BASED UPON, ARISING OUT OF, OR
IN ANY WAY CONNECTED TO, THIS GUARANTY, THE OBLIGATIONS OR ANY
TRANSACTION CONTEMPLATED HEREBY.
13. Certain Consents and Waivers; Miscellaneous Provisions.
(a) Any provision of this Guaranty which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of
the Guaranty in that jurisdiction or affecting the validity or
enforceability of such provision in any other jurisdiction.
(b) This Guaranty constitutes the final, complete and
exclusive agreement between Bank and Guarantor with respect to
the guarantee by Guarantor of the Obligations.
(c) No delay by Bank in exercising any right hereunder, or
under any of the Obligations, shall operate as a waiver thereof,
nor shall any single or partial exercise of any right preclude
other or further exercises thereof or the exercise of any other
right. No waiver, amendment, modification or release of this
Guaranty or any provision of this Guaranty or of any of the
Obligations shall be enforceable against Bank unless it is in a
writing signed by an officer of Bank and expressly referring to
this Guaranty.
(d) Any termination of this Guaranty shall not be
effective until Bank has had reasonable time to act on written
notice of such termination that has been actually received by
Bank by mail or personal delivery directed to "Commercial Banking
Division" at the address of Bank indicated at the beginning of
this Guaranty or at such other address as Bank may hereafter
specify in writing for purposes hereof. Any such termination
shall not affect any existing Obligations owed by Borrower or any
extensions or continuations thereof. Furthermore, any such
termination shall not affect the indemnification provisions set
forth in Section 4 of this Guaranty with respect to any acts
(including omissions) or occurrences that took place or are
alleged by anyone to have taken place prior to the effective date
of the termination hereof determined in accordance with the first
sentence of this subsection. Guarantor's liability with respect
to all such existing Obligations and with respect to such prior
acts or occurrences shall continue under the terms of this
Guaranty subsequent to any termination. It is further agreed in
the case where Guarantor is a natural person that any termination
based upon the death of Guarantor shall likewise not become
effective until the time that Bank received such notice of
Guarantor's death and had a reasonable time to act thereon.
(e) All rights granted Bank pursuant to this Guaranty
shall be cumulative and shall be in addition to those granted or
available to Bank with respect to the Obligations, any other
guaranty agreement and under applicable law and nothing herein
shall be construed as limiting any such other right.
(f) Guarantor represents and warrants that the execution,
delivery and performance of this Guaranty does not and will not
contravene any law, agreement, charter, by-law or undertaking to
which it is a party or by which it may in any way be bound.
(g) Guarantor waives notice of presentment, dishonor and
protest of any or all of the Obligations and of this Guaranty,
and furthermore waives promptness in the commencement of any
action relating to this Guaranty or the Obligations and in the
giving of notice or making of demand upon it or upon any other
entity or person.
(h) Words of the neuter gender may mean and include
correlative words of the masculine and feminine gender as
appropriate and vice versa. Words noting the singular number
shall mean and include the plural number as appropriate and vice
versa.
(i) The headings used in this Guaranty are for convenience
only and are not of substantive effect.
s\ James d. Ryan, Jr.
James D. Ryan, Jr.
s\ John C. Hayes
John C. Hayes
s\ Gerard J. Chambers
Gerard J. Chambers
<PAGE>
FIRST NATIONAL BANK
OF ROCHESTER
35 State Street GENERAL SECURITY AGREEMENT
Rochester, New York 14614
___________________________________________________________
Account Name: G L C OUTSOURCING SERVICES, INC.
Dated: April 28, 1995
Obligor: G L C OUTSOURCING SERVICES, INC.
In consideration of all loans, credit or other financial
accommodations extended or continued from time to time to, or on
the guaranty, endorsement or other assurance of, the undersigned
("Obligor") by FIRST NATIONAL BANK OF ROCHESTER, a banking
corporation having its principal office at 35 State Street,
Rochester, New York 14614 ("Bank"), Obligor hereby agrees as
follows:
1. Security Interest.
(a) To secure the payment and performance of all the
Obligations, Obligor hereby grants to Bank a continuing security
interest in, and assigns and pledges to Bank, all of the
Collateral.
(b) (i) "Collateral" shall mean and include, except as and
to the extent specifically excluded in Schedule A hereto, ALL
PERSONAL PROPERTY AND FIXTURES OF OBLIGOR or in which Obligor has
an interest, whether NOW OR HEREAFTER EXISTING OR NOW OWNED OR
HEREAFTER ACQUIRED and wherever located, OF EVERY KIND, NATURE
AND DESCRIPTION, TANGIBLE OR INTANGIBLE, and whether or not
subject to Article 8 or 9 of the Uniform Commercial Code,
including, but not limited to, (A) all accounts and general
intangibles (including, but not limited to, in each case,
contract rights and, in the case of general intangibles, tax
refunds), instruments, investment securities, chattel paper and
documents, (B) all inventory, (C) all equipment (including, but
not limited to, machinery, furniture and vehicles), (D) all farm
products, (E) to the extent not otherwise included, all claims,
demands and rights (including, but not limited to, claims to
insurance proceeds, tort claims, judgment claims, rights of set-
off, rights to payment under letters and advices of credit and
rights to any balance in any deposit account maintained with any
bank, including Bank, or similar organization), (F) to the extent
not otherwise included, all money, other goods and other rights
in personal property and fixtures, (G) the proceeds, products
and accessions of and to any of the foregoing, and (H) to the
extent not otherwise included, all records (including, but not
limited to, records maintained on computer software) of Obligor
evidencing or otherwise relating to the things referred to in
this sentence.
(ii) "Obligations" shall mean and include all indebtedness,
liabilities, obligations, covenants and duties of Obligor to Bank
(including those which Bank may have acquired from others) of
every kind, nature and description, direct or indirect, absolute
or contingent, due or not due, contractual or tortious,
liquidated or unliquidated, arising by operation of law or
otherwise, now existing or hereafter arising and whether or not
evidenced by any note or other instrument or agreement and
whether or not for the payment of money, including, but not
limited to, indebtedness, obligations and liabilities to Bank of
Obligor as a member of any partnership, syndicate, association or
other group.
(iii) Certain other terms used herein are defined in Section
13 hereof.
2. Rank and Perfection of Security Interest.
(a) Obligor will not create or permit to exist, nor shall
there exist, any security interest in, lien, attachment, levy or
encumbrance upon, or assignment and pledge as security of, any of
the Collateral, except the security interest of and assignment
and pledge to Bank hereunder and Permitted Liens.
(b) Obligor will take all action requested by Bank, or
which may be necessary or desirable, to perfect, continue,
evidence, preserve, protect or validate the security interest of
and assignment and pledge to Bank hereunder or to enable Bank to
exercise and enforce its rights hereunder, including, but not
limited to, (i) executing and delivering one or more notices,
statements, agreements or other writings, and (ii) delivering to
Bank, endorsed or accompanied by such instruments of assignment
as Bank may specify, and stamping or otherwise marking, in such
manner as Bank may specify, any and all chattel paper,
instruments, letters and advices of credit and documents.
(c) Obligor hereby authorizes Bank, at its option but
without any obligation so to do, to file financing and
continuation statements and amendments to financing statements,
naming Obligor as debtor, with respect to any of the Collateral
without the signature of Obligor, and agrees that a carbon,
photographic or other reproduction of the Agreement or of a
financing statement is sufficient as a financing statement.
3. Covenants Relating to Collateral. Obligor covenants that:
(a) It shall at all times: (i) be the sole owner of each
and every item of Collateral, (ii) defend the Collateral against
the claims and demands of all persons, (iii) in the case of
tangible property constituting part of the Collateral, (A)
properly maintain and keep in good order and repair such property
and (B) keep such property fully insured with responsible
companies acceptable to Bank against such risks as such
Collateral may be subject to, or as Bank may request, under
policies containing loss payable clauses naming Bank as loss
payee as its interests may appear and otherwise in form and
substance satisfactory to Bank, and providing that: (1) all
proceeds thereof shall be payable to Bank; (2) such insurance
shall not be affected by any act or neglect of Obligor or other
owner of the property described in such policy; and (3) such
policy and loss payable clause may not be cancelled or amended
except upon twenty days' prior written notice to Bank;
(b) It will comply with the requirements of all leases,
mortgages and other instruments relating to premises where any
Collateral is located;
(c) It will not sell or otherwise dispose of (i) any of its
accounts included in the Collateral, except for purposes of
collection in the ordinary course of business, (ii) any of its
inventory included in the Collateral except in the ordinary
course of business, (iii) any of its equipment included in the
Collateral, except equipment that is obsolete or worn-out or
equipment that is contemporaneously replaced with equipment of at
least the same value and that is not subject to any lien except
for Permitted Liens, (iv) any of its farm products included in
the Collateral except in accordance with any Agricultural
Financing Rider attached hereto or (v) any other Collateral
without Bank's written consent;
(d) It will give Bank prompt notice of (i) any change in
(A) its name, identity or corporate structure, (B) the location
of its chief executive office or any other place of business, or
(C) the location of any of the Collateral or its books and
records concerning any accounts, (ii) the location of each new
place of business opened by Obligor, (iii) each new location of
any Collateral, and (iv) any substantial loss or depreciation in
the value of any of the Collateral, and will provide Bank with
such other information as to the Collateral as Bank may request;
and
(e) If any account or general intangible included in the
Collateral represents money owing pursuant to any contract for
the improvement of real property or for a public improvement for
purposes of the Lien Law of the State of New York (the "Lien
Law"), Obligor shall (i) give Bank notice of such fact, (ii)
receive and hold any money advance by Bank with respect to such
account or general intangible as a trust fund to be first applied
to the payment of trust claims as such term is defined in the
Lien Law (Section 71 or otherwise), (iii) until such trust claim
is paid, not use or permit the use of any such money for any
purpose other than the payment of such trust claims and (iv)
promptly upon the request of Bank, execute and deliver each
agreement or other document, and take each other action, that
Bank shall deem necessary or desirable at the sole option of Bank
to give or file notice of Bank's interest in such account or
general intangible pursuant to the Lien Law.
4. Certain Rights of Bank.
(a) At any time and from time to time: (i) Bank may and is
hereby authorized to transfer into or register in the name of
itself or its nominee any instruments or documents that
constitute a part of the Collateral without notice to Obligor;
and (ii) Obligor will: (A) permit representatives of Bank during
normal business hours to inspect its premises and books and
records pertaining to the Collateral and make extracts from such
books and records; and (B) upon request, enter into warehousing,
lock box or other custodial arrangements satisfactory to Bank.
(b) Should Bank at any time and for any reason deem itself
to be insecure or the risk of non-payment or non-performance of
any of the Obligations increased: (i) Bank may, without notice to
Obligor: (A) notify account debtors and all other persons
against whom Obligor has claims or rights of Bank's rights
hereunder, collect all amounts payable with respect to such
accounts, claims and rights directly and apply such collections
to the repayment of the Obligations in such order as it may
elect; (B) in its own or Obligor's name, demand, sue for, collect
or receive any money or property payable or receivable on account
of or in exchange for, make any compromise or settlement with
respect to, or modify any of the terms of any of, the Collateral
as Bank may in its sole discretion elect; (C) receive and open
mail addressed to Obligor which bank reasonably believes relates
to or is included in the Collateral and change the address for
delivery of such mail to an address designated by Bank and notify
the postal authorities of any such change; (D) in the name and on
behalf of Obligor, endorse instruments and other evidences of
payment that relate to or are a part of the Collateral; (E)
appropriate and hold, or apply (directly or by way of set-off) to
the payment of the Obligations (whether or not then due), all
money of Obligor then or thereafter in possession of Bank, the
balance of every deposit account (demand or time, matured or
unmatured) of Obligor then or thereafter with Bank and every
other claim of Obligor then or thereafter against Bank; and (F)
with respect to any securities constituting part of the
Collateral, in its own or Obligor's name, exercise any and all
powers with respect thereto with the same force and effect as
could Obligor; and (ii) Obligor will, upon request of Bank: (A)
receive and hold all proceeds of Collateral in trust for Bank and
not commingle any collections with any of its other funds; (B)
immediately deliver such collections to Bank in the identical
form received; and (C) deliver to Bank additional property as
security for, or make one or more extra payments on account of,
the Obligations in an amount satisfactory to Bank.
(c) Bank may obtain the appointment of a receiver of any or
all of the Collateral and Obligor consents to and waives any
right to prior notice of such appointment.
5. Events of Default.
(a) It shall be an Event of Default if: (i) Obligor
defaults in the payment when due of any of the Obligations; (ii)
Obligor otherwise defaults in the performance of any of the
Obligations, (iii) any representation or warranty made by Obligor
to Bank hereunder or in connection with any of the other
Obligations proves to have been incorrect or misleading in any
material respect when made; (iv) Obligor fails to pay when due
any other indebtedness for borrowed money, the maturity of any
such indebtedness is accelerated or an event occurs which, with
notice or lapse of time or both, would permit acceleration of
such indebtedness; (v) Obligor (if an individual) or any
individual Guarantor dies or becomes incompetent, or any
Guarantor challenges, or institutes any proceedings, or any
proceedings are instituted, to challenge, the validity, binding
effect or enforceability of its obligations with respect to any
of the Obligations; (vi) Obligor challenges, or institutes any
proceedings, or any proceedings are instituted, to challenge, the
validity, binding effect or enforceability of this Agreement;
(vii) Obligor (if a business entity) or any Guarantor (if a
business entity) is dissolved or is a party to any merger or
consolidation or sells or otherwise disposes of all or
substantially all of its assets without the written consent of
Bank; (viii) any Guarantor creates a security interest in or lien
upon, or an attachment or levy is made upon, any assets of such
Guarantor, or a judgment is rendered against any Guarantor or
against Obligor; (ix) Obligor or any Guarantor becomes insolvent
or unable to meet its debts as they mature, or is generally not
paying its debts as they become due, or suspends or ceases its
present business, or a custodian, as defined in Title 11 of the
United States Code, of substantially all of its property shall
have been appointed or taken possession; (x) a case under such
Title 11, or any proceeding under any other federal or state
bankruptcy, insolvency or other law relating to the relief of
debtors, the readjustment, composition or extension of
indebtedness or reorganization, is commenced by or against
Obligor or any Guarantor; (xi) Obligor or any Guarantor makes any
payment on account of any indebtedness subordinated to any of the
Obligations in contravention of the terms of such subordination;
or (xii) Obligor or any copartnership of which Obligor is a
member is expelled from or suspended by any stock or securities
exchange or other exchange.
(b) The occurrence of an Event of Default shall be
conclusively presumed to have increased the risk of non-payment
or non-performance of the Obligations, and Bank shall be
conclusively presumed, thereupon, to have deemed itself to be
insecure.
6. Post-Event of Default Rights. Upon the occurrence of an
Event of Default and at any time or from time to time thereafter:
(a) In the case of any Event of Default, other than an
Event of Default referred to in clause (ix) or (x) of paragraph
(a) of Section 5, Bank may declare, by notice to Obligor, any and
all of the Obligations immediately due and payable, and in the
case of any Event of Default referred to in clause (ix) or (x) of
paragraph (a) of Section 5, all of the Obligations shall
automatically be and become due and payable, in either case
without any other presentment, demand, protest or notice of any
kind, anything in any other agreement to the contrary
notwithstanding;
(b) Bank shall have no obligation to make further loans,
extensions of credit or other financial accommodations to or on
behalf of Obligor, anything in any other agreement to the
contrary notwithstanding;
(c) Bank may exercise all other rights to which it is
entitled hereunder, including but not limited to those specified
in Section 4 hereof;
(d) Obligor shall, upon request of Bank, assemble the
Collateral and maintain or deliver it into the possession of Bank
at such place or places as Bank may designate and as are
reasonably convenient to both Bank and Obligor; and
(e) Bank may (i) without notice, demand or other process,
and without charge, enter any of Obligor's premises and, without
breach of the peace, until Bank completes the enforcement of its
rights in the Collateral, take possession of such premises or
place custodians in exclusive control thereof, remain on such
premises and use the same and any of Obligor's equipment for the
purpose of completing any work-in-process, preparing any
Collateral for disposition and disposing of or collecting any
Collateral, and (ii) in the exercise of its rights under this
Agreement, without payment of compensation of any kind, use any
and all trademarks, trade styles, trade names, patents, patent
applications, licenses, franchises and the like to the extent of
Obligor's rights therein and Obligor hereby grants a license for
that purpose.
7. General Representations, Warranties and Agreements. Obligor
hereby represents, warrants and agrees that:
(a) The execution, delivery and performance of this
Agreement are within its powers, corporate or otherwise, have
been duly authorized by all required action and do not and will
not contravene any law or any agreement or undertaking to which
it is a party or by which it may in any way be bound or, if
Obligor is a corporation, its certificate of incorporation or by-
laws;
(b) Obligor will furnish Bank with all information
concerning its business and financial condition as Bank may
request including, but not limited to, periodic financial
statements in form satisfactory to Bank and copies of federal and
state income tax returns; and
(c) Each of the representations and warranties contained in
any Questionnaire submitted to Bank by Obligor in connection with
this Agreement is true and correct on the date hereof as if made
on the date hereof and all other information, including financial
statements and projections, furnished to Bank at any time by or
on behalf of Obligor was and will be complete and correct in all
material respects to the extent necessary for the purpose of
presenting the subject matter thereof fairly to Bank.
8. Expenses of Obligor's Duties; Bank's Right to Perform on
Obligor's Behalf/Power of Attorney; Bank's Expenses and
Indemnification.
(a) Obligor's agreements and duties hereunder shall be
performed by it at its sole cost and expense.
(b) If Obligor shall fail to do any act or thing which it
has covenanted or agreed to do hereunder, Bank may (but shall not
be obligated to) do the same or cause it to be done and Obligor
hereby irrevocably appoints Bank as the attorney-in-fact of
Obligor, with full power of substitution and revocation, to take,
in the name of Obligor or otherwise, each such action. The power
of attorney given pursuant to the preceding sentence is coupled
with an interest in favor of Bank and shall not be terminated or
otherwise affected by the death, disability or incompetence of
Obligor.
(c) Obligor agrees to reimburse Bank for all costs and
expenses, including attorneys' fees and disbursements, incurred,
and to indemnify and hold Bank harmless from and against all
losses suffered, by Bank in connection with (i) Bank's exercise
of any right or remedy granted to it hereunder, (ii) any claim
and the prosecution or defense thereof arising out of or in any
way connected with this Agreement, and (iii) the collection or
enforcement of the Obligations.
(d) In connection with Bank's release or termination of all
or any portion of the Collateral, whether because the Obligations
are paid in full, this Agreement is being terminated or
otherwise, Obligor shall pay Bank's standard Collateral Release
Fee, as the same may be designated by Bank from time to time.
(e) Amounts payable by Obligor under this Section 8 shall
constitute Obligations which shall be payable on demand.
9. No Waivers of Rights Hereunder; Rights Cumulative.
(a) No delay by Bank in exercising any right hereunder, or
under any of the other Obligations, shall operate as a waiver
thereof, nor shall any single or partial exercise of any right
preclude other or further exercise thereof or the exercise of any
other right. No waiver or amendment of any provision of this
Agreement or of any of the other Obligations shall be enforceable
against Bank unless in writing and signed by an officer of Bank,
and unless it expressly refers to the provision affected; any
such waiver shall be limited solely to the specific event waived.
(b) All rights granted Bank hereunder shall be cumulative
and shall be supplementary of and in addition to those granted or
available to Bank with respect to the other Obligations or under
applicable law and nothing herein shall be construed as limiting
any such other right.
(c) Bank shall not be required to take any steps necessary
to preserve rights against prior parties, having or asserting
liens against any part of the Collateral.
10. Assignment; Participations.
(a) Bank may assign any or all of the Obligations and may
transfer therewith any or all of the Collateral therefor and the
transferee shall have the same rights with respect thereto as had
Bank. Upon such transfer, Bank shall be released from all
responsibility for the Collateral so transferred.
(b) Bank may from time to time sell or otherwise grant
participations in any of the Obligations and the holder of any
such participation shall, subject to the terms of any agreement
between Bank and such holder, be entitled to the same benefits
with respect to any Collateral for the Obligations in which such
holder is a participant as Bank. Obligor agrees that each such
holder may exercise any and all rights of banker's lien, set-off
and counterclaim with respect to its participation in the
Obligations as fully as though Obligor were directly indebted to
such holder in the amount of such participation.
11. Continuing Agreement: Termination.
(a) This Agreement shall be a continuing agreement and
shall apply to all future Obligations, notwithstanding that at
any particular time all of the Obligations then outstanding shall
have been paid in full.
(b) This Agreement shall continue in full force and effect
until written notice of termination shall have been received by
Bank at its address determined in accordance with Section 14, but
notwithstanding any such notice, this Agreement shall continue in
full force and effect until all Obligations then outstanding
(whether absolute or contingent) shall have been paid in full and
all rights of Bank hereunder shall have been satisfied or other
arrangements for the securing of such rights satisfactory to Bank
shall have been made. Upon receipt of any such notice, Bank
shall have no obligation to make further loans, extensions of
credit or other financial accommodations to or on behalf of
Obligor, anything in any other agreement to the contrary
notwithstanding.
12. Governing Law; Consent to Jurisdiction and Venue; Waiver of
Trial by Jury. This Agreement shall be governed by and
interpreted and enforced in accordance with the internal law of
the State of New York, without regard to principles of conflict
of laws. Bank shall have the rights and remedies of a secured
party under applicable law, including but not limited to the
Uniform Commercial Code of New York. Obligor consents to the
jurisdiction of the courts of the State of New York and agrees
that any court located in the county in which Bank has its chief
executive office shall be the proper forum for any action or
proceeding between them unless either (a) Bank in its sole
discretion chooses another forum or (b) applicable law requires
another forum. Obligor also waives the right to assert in any
such action or proceeding any unrelated offsets or counterclaims
which it may otherwise have or claim to have. OBLIGOR AND BANK
WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING
BETWEEN THEM BASED UPON, ARISING OUT OF, OR IN ANY WAY CONNECTED
TO, THIS AGREEMENT, THE OBLIGATIONS OR ANY TRANSACTION
CONTEMPLATED HEREBY.
13. Definitions. As used herein:
(a) Each of the following terms has the meaning given it
for purposes of Article 9 of the New York Uniform Commercial Code
as in effect on the date of this Agreement: "account," "chattel
paper," "deposit account," "document," "equipment," "farm
products," "fixture," "general intangibles," "goods,"
"instrument," "inventory," "proceeds," and "products."
(b) The following terms shall have the indicated meanings:
"Guarantor" shall mean any maker, drawer, acceptor,
endorser, guarantor, surety, accommodation party or other person
liable upon or for any of the Obligations.
"Permitted Liens" shall mean (i) the lien of any real estate
mortgage in effect on the date of this Agreement to the extent
that it is at any time a lien on any Collateral that constitutes
a "fixture"; (ii) liens for taxes not yet due; (iii) other liens
incurred in the ordinary course of business that do not (A) arise
under the Employee Retirement Income Security Act of 1974 or (B)
secure obligations which are due and payable or obligations for
borrowed money; (iv) easements, rights-of-way and other similar
encumbrances on real property which do not interfere with the
ordinary conduct of the business of the Obligor; and (v) liens
consented to by Bank in writing including, but not limited to,,
any listed in Schedule B hereto.
(c) The words "it" or "its" as used herein shall be deemed
to refer to individuals and to business entities.
14. Notices; Agreement as to Reasonableness of Notice.
Any notice or request hereunder may be given to Obligor or to
Bank at their respective addresses set forth in this Agreement or
at such other address as may hereafter be specified in a notice
designated as a notice of change of address under this Section.
Any notice or request hereunder may be given by mail, hand
delivery or telegram, or by telephone or facsimile subsequently
confirmed in a writing delivered by mail, hand delivery or
telegram. Any requirement under applicable law of reasonable
notice by Bank to Obligor of any event shall be met if notice is
given to Obligor in the manner prescribed above at least seven
days before (a) the date of such event or (b) the date after
which such event will occur.
15. General.
(a) If this Agreement is executed by two or more Obligors,
they shall be jointly and severally liable hereunder, all
provisions hereof regarding the Obligations or the Collateral
shall apply to the Obligations and Collateral of any or all of
them and the termination of this Agreement as to one or more of
such Obligors shall not terminate this Agreement as to any
remaining Obligors.
(b) This Agreement shall be binding upon the heirs,
executors, administrators, assigns or successors of each of the
undersigned Obligors and shall inure to the benefit of and be
enforceable by Bank, its successors, transferees and assigns.
(c) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof in that jurisdiction or affecting the validity or
enforceability of such provision in any other jurisdiction.
(d) The headings used in this Agreement are for convenience
only and are not intended to be of substantive effect.
This General Security Agreement is signed by each Obligor on the
date first above written.
G L C OUTSOURCING SERVICES, INC.
By: s\ James D. Ryan, Jr.
James D. Ryan, Jr., Vice President
<PAGE>
Schedule A to General Security Agreement
[Exclusions from Collateral]
/ / The following property is specifically excluded from the
definition of the term "Collateral"*:
_______________________
Bank Officer's Initials
___________________
*except that:
1. Property (such as, for example, inventory) which would be
excluded from the definition of "Collateral" by reason of its
being set forth above shall nonetheless constitute
"Collateral" if and to the extent that such property
constitutes proceeds or products of or accessions to, any
property (such as, for example, accounts) not so excluded;
and
2. The exclusion from the definition of "Collateral" of property
(such as, for example, inventory) by reason of its being set
forth above shall not result in the exclusion of the proceeds
(including property purchased with proceeds) or products of
such property( such as, for example, accounts) if and to the
extent that such proceeds or products consist of property
that is not so excluded and such proceeds or products shall
constitute "Collateral".
If this Schedule A is not completed, no property shall be
excluded from the definition of Collateral.
_________________________________________________________________
Schedule B to General Security Agreement
[Permitted Liens]
/ / Bank has consented to the liens specified below as
Permitted Liens pursuant to Section 13 (b)(v) of this
General Security Agreement:
_______________________
Bank Officer's Initials
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 16,856
<INT-BEARING-DEPOSITS> 1,038
<FED-FUNDS-SOLD> 4,300
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 47,180
<INVESTMENTS-CARRYING> 57,799
<INVESTMENTS-MARKET> 57,958
<LOANS> 245,056
<ALLOWANCE> 6,125
<TOTAL-ASSETS> 378,303
<DEPOSITS> 341,337
<SHORT-TERM> 8,800
<LIABILITIES-OTHER> 3,632
<LONG-TERM> 0
<COMMON> 3,569
0
0
<OTHER-SE> 20,965
<TOTAL-LIABILITIES-AND-EQUITY> 378,303
<INTEREST-LOAN> 15,884
<INTEREST-INVEST> 5,139
<INTEREST-OTHER> 478
<INTEREST-TOTAL> 21,501
<INTEREST-DEPOSIT> 8,665
<INTEREST-EXPENSE> 8,970
<INTEREST-INCOME-NET> 12,531
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 53
<EXPENSE-OTHER> 11,430
<INCOME-PRETAX> 3,064
<INCOME-PRE-EXTRAORDINARY> 2,109
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,109
<EPS-PRIMARY> 0.59
<EPS-DILUTED> 0.59
<YIELD-ACTUAL> 4.91
<LOANS-NON> 2,316
<LOANS-PAST> 386
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 6,452
<CHARGE-OFFS> 512
<RECOVERIES> 185
<ALLOWANCE-CLOSE> 6,125
<ALLOWANCE-DOMESTIC> 6,125
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
