FIRST ALBANY COMPANIES INC.
April 25, 1996
Dear Shareholder:
The 1996 Annual Meeting of Shareholders of First Albany Companies Inc. will be
held at the offices of the Company at 30 South Pearl Street, Albany, New York on
Thursday, May 30, 1996, at 10:00 A.M. (EST).
The attached material includes the Notice of Annual Meeting and Proxy Statement
which describes the business to be transacted at the meeting. We ask that you
give it your careful attention.
As in the past, we will be reporting on your Company's activities and you will
have an opportunity to ask questions about its operations.
We hope that you are planning to attend the Annual Meeting personally and we
look forward to seeing you. Over 87% of the outstanding shares were represented
at last year's Annual Meeting and it is important that your shares be
represented at this meeting whether or not you are able to attend in person.
Accordingly, the return of the enclosed Proxy as soon as possible will be
appreciated and will ensure that your shares are represented at the Annual
Meeting. If you do attend the Annual Meeting, you may, of course, withdraw your
Proxy should you wish to vote in person.
On behalf of the Board of Directors and management of First Albany Companies
Inc., I would like to thank you for your continued support and
confidence.
Sincerely yours,
/s/ George C. McNamee
----------------------
George C. McNamee
Chairman of the Board
FIRST ALBANY COMPANIES INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
May 30, 1996
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of First Albany
Companies Inc. (the "Company") will be held at the offices of the Company, 30
South Pearl Street, Albany, New York, on Thursday, May 30, 1996 at 10:00 A.M.
(EST) for the following purposes:
1. To elect eight Directors whose term of office will expire in 1997;
2. To approve an amendment to the 1989 Stock Incentive Plan;
3. To ratify the selection of Coopers & Lybrand L.L.P. as independent
auditors of the Company for the fiscal year ending September 27, 1996; and
4. To transact such other business as may properly come before the Annual
Meeting and any adjournments thereof.
Holders of Common Stock of record as of the close of business on April 22, 1996,
are entitled to receive notice of and vote at the Annual Meeting.
It is important that your shares be represented at the Annual Meeting. For that
reason we ask that you promptly sign, date, and mail the enclosed Proxy card in
the return envelope provided. Shareholders who attend the Annual Meeting may
revoke their proxies and vote in person.
By order of the Board of Directors
/s/ Michael R. Lindburg
--------------------------
Michael R. Lindburg
Secretary
Albany, New York
April 26, 1996
FIRST ALBANY COMPANIES INC.
30 South Pearl Street
Albany, New York 12207
____________
PROXY STATEMENT
____________
ANNUAL MEETING OF SHAREHOLDERS
_________________________________________
May 30, 1996
This Proxy Statement and the accompanying Notice of Annual Meeting and form of
proxy are being furnished to the shareholders of First Albany Companies Inc.
(the "Company") in connection with the solicitation of proxies by the Board of
Directors of the Company for use at the 1996 Annual Meeting of Shareholders of
the Company (the "Annual Meeting") to be held at the offices of the Company at
30 South Pearl Street, Albany, New York, on Tuesday, May 30, 1996, at 10:00 A.M.
(EST), and any adjournments thereof. These proxy materials are being mailed on
or about April 30, 1996, to holders of record on April 22, 1996, of the
Company's Common Stock.
A proxy may be revoked by a shareholder prior to its exercise by written notice
to the Secretary of the Company, by submission of another proxy bearing a later
date, or by voting in person at the Annual Meeting. Such notice or later proxy
will not affect a vote on any matter taken prior to the receipt thereof by the
Company. The mere presence at the Annual Meeting of the shareholder appointing
the proxy will not revoke the appointment. If not revoked, the proxy will be
voted at the Annual Meeting in accordance with the instructions indicated on the
proxy by the shareholder, or, if no instructions are indicated, will be voted
FOR the slate of directors described herein; FOR the approval of the amendment
to the 1989 Stock Incentive Plan; FOR the ratification of the selection of
Coopers & Lybrand L.L.P. as independent auditors of the Company; and, as to any
other matter of business that may properly be brought before the Annual Meeting,
in accordance with the judgment of the person or persons voting the same.
All expenses of the Company in connection with this solicitation will be borne
by the Company. In addition to solicitation by mail, proxies may be solicited by
directors, officers, and other employees of the Company, by telephone,
telegraph, telex, in person, or otherwise, without additional compensation. The
Company will also request brokerage firms, nominees, custodians, and fiduciaries
to forward proxy material to the beneficial owners of shares held of record by
such persons and will reimburse such persons and the Company's transfer agent
for their reasonable out-of-pocket expenses in forwarding such material.
THE COMPANY
The Company, which was incorporated under the laws of the State of New York in
November 1985, is a holding company which, through its principal wholly-owned
subsidiary, First Albany Corporation ("First Albany"), is an investment banking,
securities trading, and brokerage firm serving corporations, governments, and
institutional and individual investors.
VOTING SECURITIES
Holders of record at the close of business on April 22, 1996, of the Company's
Common Stock, par value $.01 per share ("Common Stock"), are entitled to notice
of and to vote at the Annual Meeting and any adjournments thereof. Each
outstanding share of Common Stock entitles the holder thereof to one vote. The
Company's Certificate of Incorporation does not provide for cumulative voting.
On April 22, 1996, 4,511,689 shares of Common Stock were outstanding. The
presence in person or by proxy at the Annual Meeting of the holders of a
majority of such shares shall constitute a quorum.
Assuming the presence of a quorum at the Annual Meeting, (1) the affirmative
vote of a plurality of the votes cast by holders of shares of Common Stock is
required for the election of directors, and (2) the affirmative vote of a
majority of the outstanding shares of Common Stock is required for the approval
of the amendment to the 1989 Stock Incentive Plan, and (3) the affirmative vote
of a majority of the outstanding shares of Common Stock is required for the
ratification of the selection of Coopers & Lybrand L.L.P. as independent
auditors of the Company, as well as any other matter of business that may
properly be brought before the Annual Meeting.
STOCK OWNERSHIP OF PRINCIPAL OWNERS AND MANAGEMENT
The following table sets forth information concerning the beneficial ownership
of Common Stock of the Company as of March 30, 1996, by (i) persons owning more
than 5% of the Common Stock, (ii) each director of the Company and the executive
officers included in the Summary Compensation Table and (iii) all officers and
directors of the Company as a group.
Shares Beneficially Owned
-------------------------
Name Number Percent
- - -------------------------------------------------- -------- --------
George C. McNamee (1)(2)(4) 707,257 13.52%
Alan P. Goldberg (2)(4) 646,704 12.36%
J. Anthony Boeckh 7,033 .13%
Hugh A. Johnson, Jr. (2)(4) 141,059 2.70%
Daniel V. McNamee III (1) 87,479 1.67%
Charles L. Schwager 10,000 0.19%
Benaree P. Wiley 1,025 .01%
Edwin T. Brondo 3,645 .07%
David J. Cunningham (2)(4) 121,706 2.33%
Michael R. Lindburg (2)(4) 111,195 2.13%
First Albany Employee Stock Bonus Plan (2) 1,115,831 21.32%
The McNamee Family Trust, Barbara C. M. Dudley and
Daniel V. McNamee III, Trustees under Agreement
dated September 12, 1977 218,524 4.18%
All officers and directors of the Company as a
group (3)(4) 3,047,673 58.26%
________________________________
(1) Does not include interest as residual beneficiary under the McNamee
Family Trust, and with respect to Daniel V. McNamee III as trustee under
the Trust.
(2) The Board of Directors of the Company serves as the Administrative
Committee of the First Albany Companies Inc. Stock Bonus Plan
(the "Stock Bonus Plan"). Daniel V. McNamee III serves as Trustee of the
Trust created thereby. Pursuant to the terms of the Stock Bonus Plan,
individual employees are permitted to direct the vote of shares
allocated to their respective accounts. The number of shares
beneficially owned by Messrs. G. McNamee, Goldberg, Johnson,
Cunningham, and Lindburg includes the shares allocated to the respective
accounts of such person under the Stock Bonus Plan as of March 31, 1996,
all of which shares are fully vested.
(3) Includes all shares beneficially owned by such persons, shares owned
by the McNamee Family Trust, and all shares held under the Stock Bonus
Plan.
(4) Includes 162,978, 176,707, 33,501, 56,952, and 56,952 options to
purchase shares, granted to Messrs. G. McNamee, Goldberg,
Johnson, Cunningham, and Lindburg, respectively, all of which options
are currently exercisable.
COMPENSATION OF EXECUTIVE OFFICERS
Summary Compensation Table
The following table sets forth certain information regarding compensation paid
during each of the Company's last three fiscal years to each of the Co-Chief
Executive Officers of the Company at the end of fiscal year 1995, and the other
executive officers constituting the most highly compensated executive officers
of the Company (the "Named Executive Officers").
<TABLE>
Long Term
---------
Annual Compensation Compensation
------------------- ------------
Awards
------
- - ------------------------------------------------------------------------------------------------------
Shares All Other
<S> <C> <S>
Name & Principal Year Salary Bonus Underlying Compen-
Position Options (1)(4) sation (2)
- - ------------------------------------------------------------------------------------------------------
George C. McNamee 1995 200,000 325,000 0 5,969
Chairman & Co-Chief 1994 200,000 375,000 72,931 5,927
Executive Officer 1993 200,000 375,000 36,465 5,722
- - --------------------- ---- ------- ------- --------------- ---------------
Alan P. Goldberg, 1995 200,000 325,000 0 6,000
President & Co-Chief 1994 200,000 325,000 72,931 5,896
Executive Officer 1993 200,000 375,000 36,465 5,722
- - --------------------- ---- ------- ------- --------------- ---------------
Hugh A. Johnson, Jr. 1995 189,000 250,000 0 5,981
Senior Vice President 1994 189,000 250,000 0 5,914
1993 189,000 250,000 0 5,722
- - --------------------- ---- ------- ------- --------------- ---------------
Edwin T. Brondo, 1995 175,000 112,500 0 0
Vice President (3) 1994 175,000 125,000 0 30,250
- - --------------------- ---- ------- ------- --------------- ---------------
David J. Cunningham 1995 135,000 100,000 0 1,225
Vice President 1994 135,000 110,000 0 1,226
Chief Financial 1993 135,000 110,000 21,105 1,225
Officer
- - --------------------- ---- ------- ------- --------------- ---------------
Michael R. Lindburg, 1995 135,000 120,000 0 5,991
Secretary & 1994 135,000 130,000 0 3,360
General Counsel 1993 135,000 130,000 21,105 1,325
- - --------------------- ---- ------- ------- --------------- ---------------
</TABLE>
(1) Adjusted to reflect stock dividends through March 31, 1996.
(2) Represents, as to Messrs. McNamee, Goldberg, Johnson, Cunningham, and
Lindburg, contributions by the Company to the Employee Stock Bonus Plan,
a tax qualified employee benefit plan in which all employees of the
Company are eligible to participate; for Mr. Brondo, it represents
reimbursement of moving and relocation expenses.
(3) Mr. Brondo became an officer of the Company in 1994.
(4) During the fiscal year 1993, Messrs. McNamee and Goldberg voluntarily
surrendered 36,465 stock options granted to each of them during fiscal
year 1993, and 17,380 stock options granted to each of them during
fiscal year 1992, to increase the number of stock options available
for grant under the Stock Incentive Plan.
No Named Executive Officer received personal benefits or perquisites during
fiscal year 1995 in excess of the lesser of $50,000 or 10% of his aggregate
salary and bonus.
Aggregated Fiscal Year-End Stock Option Values
The following table provides information related to the number and value of
unexercised stock options held at fiscal year end, all of which stock options
are currently exercisable.
Value of
Number of Unexercised
Unexercised In-the-Money
Stock Options at Stock Options
Fiscal Year-End at Fiscal Year-End
- - --------------------------------------------------------------------------------
George C. McNamee 162,978 361,574
Alan P. Goldberg 176,707 462,099
Hugh A. Johnson, Jr. 33,501 148,744
David J. Cunningham 56,952 228,546
Michael R. Lindburg 56,952 228,546
EXECUTIVE COMPENSATION COMMITTEE REPORT
Overview
The Compensation Committee establishes the compensation policies applicable to
the executive officers of the Company.
Compensation Policies
Compensation for senior executives of the Company has been strongly influenced
by the principle that the compensation of senior executives should be structured
to directly link the executives' financial reward to Company performance. Thus,
senior executives would both share in the success of the Company as a whole and
be adversely affected by poor Company performances thereby aligning their
interests with the interests of the Company's shareholders.
Salaries of executive officers are intended to be relatively moderate, and are
set at levels which the Executive Compensation Committee believes are generally
competitive with salaries of executives in similar positions at comparable
financial services companies. In addition, substantial emphasis is placed on
incentive compensation directly related to short- and long-term corporate
performance through annual cash bonuses and stock option grants.
As is common in the financial services industry, a significant portion of total
compensation of the Company's executive officers is paid in the form of annual
bonuses. For example, in each of the past three fiscal years, approximately
two-thirds of the annual cash compensation of Messrs. G. McNamee and Goldberg,
the Company's Co-Chief Executive Officers (the "Co-CEOs"), was paid as an annual
bonus. Thihs is intended to maximize the portion of an individual's
compensation that is subject to fluctuation each year based upon corporate and
individual performance, as discussed below. The compensation program is
structured to recognize each executive's level of responsibility and to reward
exceptional individual and corporate performance.
Base Salary
A competitive base salary is important in fostering a career orientation among
executives consistent with the long-term nature of the Company's business
objectives. The Executive Compensation Committee determines the salary of each
of the executive officers based on its consideration of each of the Co-CEOs'
recommendations.
Salaries and salary adjustments are based on the responsibilities, performance,
and experience of each executive, regular reviews of competitive positioning
(comparing the Company's salary structure with that of similar companies) and
business performance. While there is no specific weighing of these factors, the
responsibilities, performance and experience of each executive and reviews of
competitive positioning are the most important considerations.
The Stock Incentive Plan
In past years, awards under the Stock Incentive Plan have supplemented the
bonuses paid to Named Executive Officers. All of the stock options granted
under the Stock Incentive Plan have been qualified incentive stock options, and
the number of options granted to the executive officers, in general, reflect the
decision of the Executive Compensation Committee to allocate a portion of
compensation in stock options, the value of which is directly linked to the
future financial success of the Company. No awards under the Stock Incentive
Plan were made to the Named Executive Officers for fiscal year 1995.
Compensation of Co-Chief Executive Officers
The total compensation paid to each of the Company's Co-CEOs for the fiscal year
ended September 30, 1995, was $525,000. For fiscal year 1995, each of the
Co-CEOs received a base salary of $200,000, and additional bonus compensation of
$325,000.
The specific bonus an executive receives is dependent on his level of
responsibility and individual performance. Levels of responsibility are
evaluated annually by the Executive Compensation Committee without regard to any
specific formula. Assessments of individual performance are also made annually
by the Executive Compensation Committee after receiving the recommendations of
the Co-CEOs. Such assessments are based on a number of factors, including
individual and corporate performance, initiative, business judgment, and
management skills. Messrs. G. McNamee and Goldberg's fiscal year 1995 award
reflects each of their significant personal contributions to the business and
leadership in building the Company's revenues, earnings, and capital position,
and the financial results for fiscal year 1995.
COMPENSATION COMMITTEE
Hugh L. Carey, Chairman
J. Anthony Boeckh
Charles L. Schwager
Performance Graph
Set forth below is a line graph comparing the percentage change in the
cumulative total shareholder return on the Company's Common Stock against the
cumulative total return of the S&P Composite 500 Stock Index and the Lipper
Composite Brokerage Firm Index for the period from September 30, 1990, to
September 30, 1995. The graph assumes that the value of the investment in the
Company's Common Stock and each index was $100 at September 30, 1990, and that
all dividends, if any, were reinvested.
Comparison of the Company's Common Stock
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
First Albany 100 161.42 208.37 263.46 270.60 368.23
S&P 500 Index 100 131.10 145.57 164.25 170.29 220.88
Lipper Composite
Firm Index 100 188.84 214.64 377.09 288.76 452.10
ELECTION OF DIRECTORS
The Board of Directors has nominated and recommends the election of each of the
nominees set forth below in the table under the caption "Directors and Executive
Officers" as a director of the Company to serve until the next Annual Meeting of
Shareholders or until his/her successor is duly elected and qualified. Each
nominee, with the exception of Walter Fiederowicz, is currently a director of
the Company.
Should any nominee become unable or unwilling to accept nomination or election,
it is intended that the persons named in the enclosed proxy will vote the shares
that they represent for the election of a nominee designated by the Board of
Directors, unless the Board reduces the number of directors. At present, it is
anticipated that all nominees will be candidates.
The affirmative vote of a plurality of the votes cast by holders of shares of
Common Stock is required for the election of directors. Consequently, so long
as a quorum is present, any shares not voted (whether by abstention or broker
non-votes) have no effect on the election of directors. Proxies in the enclosed
form, unless otherwise directed, will be voted for the election as directors of
the eight nominees named below.
Directors and Executive Officers of the Company
The directors nominated for election and executive officers of the Company are
as follows:
GEORGE C. McNAMEE, age 49, joined First Albany in 1969. From 1975 until 1989,
he served as President of First Albany. He has served as Chairman of First
Albany since 1984 and Co-Chief Executive Officer since 1993. Mr. McNamee serves
on the Board of Directors of Home Shopping Network, Inc., the National
Securities Clearing Corporation, the New York State Science and Technology
Foundation, and MapInfo Corporation. He previously served as a member of the
Governor's Commission on State and Local Fiscal Policies and as Chairman of the
State Debt Reform Committee for New York State. He also serves as Chairman of
the Committee on Clearance and Settlement of the Securities Industry
Association. Mr. McNamee has been Chairman and a director of the Company since
its incorporation in 1985.
ALAN P. GOLDBERG, age 50, joined First Albany in 1980 and shortly thereafter
became Executive Vice President. Mr. Goldberg became President of First Albany
in 1989 and Co-Chief Executive Officer in 1993. He is a past member of the
Board of Governors of the Boston Stock Exchange and past chairman of the
District Business Conduct Committee of the National Association of Securities
Dealers. Mr. Goldberg is Chairman of the Board of Trustees of the Albany
Institute of History and Art, is Chair-elect of the Albany-Colonie Chamber of
Commerce and a Director of the Center for Economic Growth and the Albany
Symphony Orchestra. Mr. Goldberg has been a director of the Company since its
incorporation in 1985.
DANIEL V. McNAMEE III, age 51, is Chairman of The Publishing and Media Group,
formerly McNamee Consulting Company Inc., a management consulting firm
specializing in the media communications industry since 1981. Mr. McNamee is a
member of the Audit Committee has been a director of the Company since its
incorporation in 1985.
J. ANTHONY BOECKH, Ph.D., age 57, is Chairman and Chief Executive Officer of BCA
Publications Ltd., Montreal, Canada, and has been Editor-in-Chief of The Bank
Credit Analyst since 1971. Mr. Boeckh is also a principal of Greydanus, Boeckh
and Associates Inc., Montreal, Canada, a fixed income specialty manager. He
also serves on other industry and community boards. Mr. Boeckh has been a
director of the Company since 1986, and serves as a member of the Executive
Compensation Committee.
WALTER FIEDEROWICZ, age 49, a private investor, is a member of the Board of
Directors of Colonial Data Technologies Corp. (CDT), a telecommunications
product and service provider headquartered in New Milford, Connecticut. Mr.
Fiederowicz served as Chairman of CDT from 1994 until March 1996, and on the
Board of Directors since 1985. From January 1991 until July 1994, he held
various positions, including Executive Vice President and Chairman, and served
as Director of Conning Corporation, the parent company of an investment firm.
He is also a director of Photronics, Inc., a photomask manufacturer. Mr.
Fiederowicz was Chairman and a Director of Covenant Mutual Insurance Company, a
property and casualty insurance company ("Covenant") from 1989 until March 1993,
and was President and Chief Executive Officer of Covenant from 1989 until
December 1992. Covenant was placed in rehabilitation by the Insurance
Commissioner of the State of Connecticut in 1993 and subsequently liquidated as
a result of losses in connection with insurance claims relating to Hurricane
Andrew.
HUGH A. JOHNSON, JR., age 55, joined First Albany in 1977 and is currently
Senior Vice President and the Chief Investment Officer. He is also Chairman of
First Albany Asset Management Corporation. He has served on the Board of
Directors of First Albany since 1985. Mr. Johnson is a Director of the New York
State Business Development Corporation and serves on other state and community
boards. Mr. Johnson has served as Senior Vice President of the Company since
its incorporation in November 1985 and as a director of the Company since 1990.
BENAREE P. WILEY, age 49, is President and Chief Executive Officer of The
Partnership, a Boston-based organization formed by business and civic leaders to
promote the development of professionals of color through access to corporate,
municipal, and state leaders. Ms. Wiley is a member of the Board of Directors
of The Boston Company and a Trustee of Boston College and the Boston Children's
Museum. From 1989 to 1991, Ms. Wiley served as Director of Graduate Admissions
for Harvard Law School and from 1987 through 1991, she maintained a private
consulting practice. Ms. Wiley serves as Chairperson of the Audit Committee and
has been a director of the Company since 1993.
CHARLES L. SCHWAGER, age 52, founded Loanet, Inc. in 1981, a provider of on-
line, real time accounting services to support financial institutions engaged in
the business of borrowing and lending securities. Mr. Schwager served as
President of Loanet, Inc. from 1981 to 1994, when the company was sold. He
continues to be employed by Loanet, Inc. in a consulting capacity. Mr. Schwager
is a member of the Audit and Executive Compensation Committees and has been a
director of the Company since 1995.
George C. McNamee and Daniel V. McNamee, III are brothers.
Board and Committee Meetings
The Board of Directors held six meetings during the Company's fiscal year ended
September 30, 1995. Each current Director attended 75% or more of the aggregate
number of meetings of the Board of Directors that were held during the period in
which he/she was a director.
The Audit Committee, responsible for reviewing the Company's financial
statements, met twice during the fiscal year. Among other matters, the Audit
Committee reviews the Company's expenditures, reviews the Company's internal
accounting controls and financial statements, reviews with the Company's
independent auditors the scope of their audit, their report, and their
recommendations, and recommends the selection of the Company's independent
auditors. Following the close of the fiscal year 1995, the Audit Committee met
to review the report of the Company's independent auditors for fiscal year 1995.
During fiscal year 1995, the Audit Committee was comprised of Messrs. Schwager
and D. McNamee and Ms. Wiley.
The Executive Compensation Committee is responsible for reviewing and approving
the compensation of executive officers of the Company, compensation under the
Management Bonus Compensation Plan, and the granting of stock options under the
Stock Incentive Plan and awards under the Restricted Stock Plan. Following the
close of the fiscal year 1995, the Executive Compensation Committee met to
review and to approve the compensation of the Named Executive Officers. The
Executive Compensation Committee was comprised of Messrs. Carey, Boeckh, and
Schwager.
The Board of Directors does not have a nominating committee.
During 1995, the Company paid directors who are not executive officers of the
Company an annual retainer of $6,000 and $2,500 per meeting attended, plus
reimbursement of reasonable expenses. In addition, the Chairman of any
committee and non-employee members of such committees are paid $250 and $200,
respectively, per meeting attended.
In the ordinary course of its business, First Albany Corporation extends
credit to employees, including Directors and Officers, under Regulation T,
which regulates credit in cash and margin accounts. Such extensions of
credit are performing and are made on the same terms as for customers.
PROPOSED AMENDMENT TO THE STOCK INCENTIVE PLAN
The Stock Incentive Plan was initially adopted by the stockholders of the
Company in February 1989 and amended February 1992 and March 1994. The Stock
Incentive Plan provides for grants of incentive stock options, nonqualified
stock options, and stock appreciation rights to be issued to officers and key
employees of the Company. The Stock Incentive Plan presently covers an
aggregate of 1,253,996 shares of Common Stock (adjusted to reflect stock
dividends), which may be issued to officers and key employees under the Stock
Incentive Plan. At March 29, 1996, there remained 338,556 shares available for
future stock option grants. As of that date, stock options for 724,669 shares
were outstanding, exercisable at a range between $3.87 per share and $7.98 per
share. On April 25, 1996, the Board of Directors approved a plan to grant
options to purchase up to 250,000 shares to employees other than executive
officers of the Company. Upon completion of this Plan only 88,556 shares will
remain eligible for future grant. The Board of Directors believes that amending
the current plan to increase the maximum number of shares of Common Stock
available for issuance under the Stock Incentive Plan is essential to enable the
Company to continue to provide a crucial incentive in the recruitment and
retention of key employees. Accordingly, the Board of Directors adopted on
April 25, 1996, subject to shareholder approval, an amendment to the Stock
Incentive Plan to increase by 500,000 shares the number of shares of Common
Stock of the Company available for issuance under the Stock Incentive Plan. As
amended the Company would then be authorized to issue up to 1,753,996 shares
under the Stock Incentive Plan. The Stock Incentive Plan is intended to promote
the interests of the Company and its shareholders by ensuring continuity of
management and increased incentive on the part of officers and other key
employees of the Company responsible for major contributions to effective
management, through facilitating their acquisition of equity interests in the
Company. Accordingly, the Board of Directors recommends to First Albany's
stockholders the approval of the amendment of the Stock Incentive Plan, the text
of which is attached as Annex A to this Proxy Statement. The following summary
describes briefly the principal features of the Stock Incentive Plan, and is
subject to the text of the Stock Incentive Plan.
Summary of the Stock Incentive Plan
Subject to the approval of the April 25, 1996 amendment. The Stock Incentive
Plan will allow for the issuance of up to 1,753,996 shares under the Stock
Incentive Plan. Common Stock issued pursuant to the Stock Incentive Plan may be
either authorized and unissued Common Stock or reacquired Common Stock, or both.
The Stock Incentive Plan is administered by the Stock Option Committee appointed
by the Board of Directors which consists of not less than three persons who may
or may not be Directors of the Company. The Executive Compensation Committee of
the Board of Directors serves as the Stock Option Committee.
Under the Stock Incentive Plan, the Stock Option Committee has the authority to
select employees to receive grants under the Stock Incentive Plan, whether such
a grant shall consist of incentive stock options, nonqualified stock options or
a combination thereof and whether such grant shall include stock appreciation
rights, the number of shares that may be purchased under each stock option, the
exercise price per share of Common Stock and the other terms and conditions of
each grant under the Stock Incentive Plan.
All employees of the firm are entitled to participate in the Stock Incentive
Plan. With respect to future grants it is not possible at this time to
determine who may be selected to receive stock options under the Stock Incentive
Plan or the number of grants that may be made to any employee. Such selection
and determination will be made by the Stock Option Committee on the basis of the
duties, responsibilities, and present and future contributions of employees to
the success of the Company.
Options granted under the Stock Incentive Plan may be exercised by the optionee
in accordance with the terms of such optionee's stock option, but in no event
later than the earlier of (i) termination of employment for any reason or (ii)
ten years following the date of grant (or such shorter period as the Stock
Option Committee may provide). Options granted under the Stock Incentive Plan
are not transferable and lapse upon termination of employment with the Company.
The aggregate fair market value, determined on the date of grant, of the shares
of Common Stock with respect to which incentive stock options are granted under
the Stock Incentive Plan and any other plan of the Company or its parent or
subsidiary which are exercisable for the first time by an optionee during any
calendar year may not exceed $100,000. The exercise of a stock option must be
accompanied by payment in full of the purchase price. In the event of a change
in the Company's structure or capitalization which affects its outstanding
Common Stock as described in the Stock Incentive Plan, the aggregate number and
kind of shares which are subject to stock options under the Stock Incentive Plan
and the purchase price per share of shares will be appropriately adjusted by the
Stock Option Committee.
In the case of incentive stock options, the purchase price per share may not be
less than the fair market value of the stock on the date the stock option is
granted. The purchase price of incentive stock options granted to an optionee
who at the time of grant is the beneficial owner of more than 10% of the total
combined voting power of all classes of stock of the Company, its subsidiaries
and affiliates may not be less than 110% of the fair market value on the date of
grant. The purchase price of a nonqualified stock option may be such price as
the Stock Option Committee may determine in excess of the par value of the stock
subject to the nonqualified stock option.
If an optionee's employment with the Company is terminated for any reason after
such optionee's exercise of a stock option granted under the Stock Incentive
Plan, the optionee, or if the optionee's employment is terminated by reason of
death, his executors, administrators, legatees or distributees of his estate, as
the case may be, must, within thirty days of the optionee's termination of
employment, offer to sell the shares covered thereby to the Company at their
fair market value on the date of the optionee's termination of employment.
The Company, within sixty days of receipt of the optionee's offer, has the
right but not the obligation to purchase all or any portion of such shares at
such price. However, if the optionee's employment with the Company is
terminated by reason of voluntary termination of employment, retirement,
disability, or death within two years of the date of grant of an incentive stock
option under the Stock Incentive Plan or within one year of the date of transfer
to the optionee of shares covered thereby pursuant to exercise of the incentive
stock option, the Company may but is not obligated to defer the repurchase of
shares covered by such incentive stock option until the expiration of two years
from the date of grant or one year from the date of transfer of shares on
exercise.
The Stock Option Committee may also grant stock appreciation rights ("SARs") to
employees granted related stock options under the Stock Incentive Plan. An SAR
granted in tandem with either incentive stock options or nonqualified stock
options may only be exercised if the employee surrenders the right to exercise
the related stock option (or portion thereof) and at such time when the fair
market value of the shares underlying the stock option exceeds the option price
for such shares. Upon exercise of an SAR and surrender of the related stock
option, an employee will be entitled to receive an amount equal to the excess of
the fair market value of one share at the time of such surrender over the stock
option price per share specified in such stock option times the number of such
shares called for by the stock option, or portion thereof, which is surrendered.
Payment may be made in cash, shares of Common Stock, or a combination thereof.
SARs may not be exercised before six months from date of grant.
An optionee exercising a nonqualified stock option and SAR must pay the Company
the minimum amount required to be withheld for taxes under applicable law. The
optionee may also elect to pay an additional amount not to exceed his total tax
liability. The minimum and any additional tax payments shall be referred to
herein as "Withholding Taxes." Withholding Taxes shall be paid to the Company
at the optionee's election in one of the following methods (or combination
thereof): by check; transfer of shares with an aggregate fair value equal to the
Withholding Taxes; or if exercising a nonqualified stock option or SAR for
shares, by electing to have the Company withhold from the resulting stock
distribution an amount equal to the Withholding Taxes.
The Stock Incentive Plan provides that, if there is any change in the
outstanding shares of Common Stock by reason of any stock split, stock dividend,
recapitalization, merger, consolidation, reorganization, combination or exchange
of shares or other similar event, the Board of Directors may, in its discretion
and without further shareholder approval, make such adjustments as may be
equitably required in the number or kind of shares of Common Stock subject to,
or the option price per share under, any outstanding stock option. The Board of
Directors has, in the past, done so.
The Board of Directors may amend the Stock Incentive Plan at any time, but no
amendment that increases the aggregate number of shares which may be subject to
stock options granted pursuant to the Stock Incentive Plan shall be effective
unless and until the amendment is approved by the stockholders of the Company
(other than equitable adjustments referred to in the immediately preceding
paragraph which will not constitute amendments).
The Stock Incentive Plan will terminate on February 27, 1999, unless terminated
earlier by action of the Board of Directors.
No grants of options have been made to any Named Executive Officer since the
beginning of the 1995 fiscal year. During fiscal year 1995 grants of options
totaling 122,571 shares were made to employees other than Named Executive
Officers at a price range between $7.14 and $7.98.
Required Vote
The affirmative vote of the holders of a majority of the outstanding shares of
Common Stock is required for the approval of the Stock Incentive Plan as
amended. Consequently, any shares not voted (whether by abstention or broker
non-votes) have the same effect as votes against the proposed amendment to the
Stock Incentive Plan.
Federal Income Tax Consequences
The Company has been advised that under the present provisions of the Internal
Revenue Code the federal income tax consequences of the Stock Incentive Plan are
as follows:
With respect to Nonqualified Stock Options: The granting of a nonqualified
stock option will not result in taxable income to the employee or a deduction in
computing the income tax of the Company or any subsidiary. Upon exercise of a
nonqualified option, the excess of the fair market value of the shares acquired
over the option price is (a) taxable to the optionee as ordinary income and (b)
deductible in computing the Company's income tax, subject to satisfying
applicable withholding requirements and general rules relating to reasonableness
of compensation.
With respect to Incentive Stock Options: An optionee will not be deemed to
receive any income at the time an incentive stock option is granted or
exercised. If an optionee does not dispose of the shares acquired on exercise
of an incentive stock option within the two-year period beginning on the day
after the day of the grant if the incentive stock option or within the one-year
period beginning on the day after the day of the transfer of the shares to him,
under present federal income tax law the gain (if any) on a subsequent sale
(i.e., the excess of the proceeds received over the option price) will be
long-term capital gain and any loss he may sustain on such sale will be treated
as long-term capital loss.
If the optionee disposes of the shares within the two-year or one-year period
referred to above, the disposition is a "disqualifying disposition," and the
optionee will generally realize ordinary income taxable as compensation in the
year of the disqualifying disposition to the extent of the excess of the fair
market value of the shares on the date of purchase over the option price, and
the balance, if any, will be long-term or short-term capital gain depending,
generally, on whether the shares were held more than one year after the
incentive stock option was exercised. To the extent the optionee recognizes
compensation income with respect to a disqualifying disposition, the Company
will be entitled to a corresponding deduction.
With respect to Stock Appreciation Rights: The inclusion of an SAR in a stock
option will not result in taxable income to the optionee or a deduction in
computing the income tax of the Company. However, the amount of any cash, or
the fair market value of any shares, received by the employee pursuant to the
exercise of any such right will be, upon receipt by the optionee, taxable to the
optionee as ordinary income and the Company will be entitled to a corresponding
deduction, subject to satisfying applicable withholding requirements and general
rules relating to reasonableness of compensation.
The Board of Directors recommends a vote FOR approval of the amendment to the
Stock Incentive Plan.
SELECTION OF THE COMPANY'S INDEPENDENT AUDITORS
The Board of Directors has recommended that the accounting firm of Coopers &
Lybrand L.L.P. be selected as the Company's independent auditors for the fiscal
year ending September 30, 1996, subject to shareholder ratification.
Coopers & Lybrand L.L.P. conducted the audit for the fiscal year ended September
30, 1995. Representatives of Coopers & Lybrand L.L.P. are expected to be present
at the Annual Meeting, and will have an opportunity to make a statement and to
respond to appropriate questions.
In the event the shareholders fail to ratify the selection of Coopers & Lybrand
L.L.P., the selection of independent auditors will be submitted to the Board of
Directors for reconsideration and selection. It is understood that even if the
selection is ratified, the Board of Directors, in its discretion, may direct the
appointment of a new independent accounting firm at any time during the year if
the Board of Directors believes that such a change would be in the best
interests of the Company and its shareholders.
The affirmative vote of a majority of the shares of Common Stock present and
voting at the Annual Meeting is required to ratify the selection of Coopers &
Lybrand L.L.P. as independent auditors of the Company.
The Board of Directors recommends that shareholders vote FOR the ratification of
the selection of Coopers & Lybrand L.L.P. as independent auditors of the
Company.
OTHER MATTERS
At the date of this Proxy Statement, the Company has no knowledge of any
business other than that described above that will be presented at the Annual
Meeting. If any other business should come before the Annual Meeting, it is
intended that the persons named in the enclosed proxy will have discretionary
authority to vote the shares that they represent.
Any shareholder who wishes to submit a proposal for inclusion in the proxy
materials to be distributed by the Company in connection with its Annual Meeting
of Shareholders to be held in 1997 must do so no later than October 31, 1996.
To be eligible for inclusion in the 1997 proxy materials of the Company,
proposals must conform to the requirements set forth in Regulation 14A under the
Securities Exchange Act of 1934.
Upon the receipt of a written request from any shareholder, the Company will
mail, at no charge to the shareholder, a copy of the Company's Annual Report on
Form 10-K, including the financial statements and schedules required to be filed
with the Securities and Exchange Commission pursuant to Rule 13a-1 under the
Securities Exchange Act of 1934, for the Company's most recent fiscal year.
Written requests for such Reports should be directed to:
Mr. David J. Cunningham
Vice President & Chief Financial Officer
First Albany Companies Inc.
30 South Pearl Street
P.O. Box 52
Albany, New York 12201-0052
You are urged to sign and to return your Proxy promptly in the enclosed return
envelope to make certain your shares will be voted at the Annual Meeting.
By Order of the Board of Directors
/s/ Michael R. Lindburg
-----------------------
Michael R. Lindburg
Secretary
April 26, 1996
ANNEX A
1989 Stock Incentive Plan
1. Purpose. The purpose of the First Albany Companies Inc. 1989 Stock
Incentive Plan (the "Plan"), is to secure for the Company and its subsidiaries
and affiliates, the benefits of the additional incentive inherent in the
ownership of the Company's Common Stock, $.01 par value (the "Common Stock") by
key employees and officers of the Company and its subsidiaries and affiliates
who are important to the success and the growth of the business of Company and
to help the Company secure and retain the services of such persons.
2. Awards. Awards under the Plan may be (a) incentive stock options intended
to satisfy the requirements of Section 422A of the Code ("Incentive Options"),
(b) stock options not intended to qualify as Incentive Options ("Nonqualified
Options") and (c) Stock Appreciation Rights ("SARs") granted in tandem with
Options. Incentive Options and Nonqualified Options are occasionally
hereinafter referred to as "Options." Options are rights to purchase Common
Stock and are subject to terms, conditions, and restrictions specified in
Section 6 as applicable to each type of Option. A SAR is a right to receive the
difference, in cash or stock, between the exercise price of an Option, and the
fair market value of the underlying Common Stock on the date of exercise, that
is awarded subject to the terms, conditions, and restrictions specified in
Section 7.
3. Administration. The Plan shall be administered under the supervision of the
Board of Directors of the Company (the "Board"), which shall exercise its
powers, to the extend herein provided, through the agency of the Stock Option
Committee (the "Committee") which shall be appointed by the Board and shall
consist of at least three persons who may or may not be members of the Board.
Any member of the Committee may resign or be removed by the Board and new
members may be appointed by the Board. No member of the Committee shall, at the
time he exercises discretion with respect to the Plan, be eligible or, at
anytime within one year prior thereto, have been eligible for selection as a
person to whom stock may be allocated or to whom stock options or stock
appreciation rights may be granted pursuant to the Plan or any other plan of the
Company or any subsidiary or affiliate thereof.
The Committee, from time to time, may adopt rules and regulations for carrying
out the provisions and purposes of the Plan. The interpretation and
construction of any provision of the Plan by the Committee shall, unless
otherwise determined by the Board, be final and conclusive.
The Committee shall have the authority and responsibility, generally within the
limitations of the Plan, to determine (1) the persons to whom Options are to be
granted, (2) whether a grant hereunder is to consist of an Incentive Option, a
Nonqualified Option or a combination thereof and whether any such grant shall
include SARs, (3) the number of shares that may be purchased under each Option
and (4) the other terms and conditions (not inconsistent with the Plan) of each
grant under the Plan (including but not limited to restrictions and limitations
upon the shares of Common Stock issuable upon the exercise of an Option).
The Committee shall maintain a written record of its proceedings. A majority of
the Committee shall constitute a quorum. Any determination or action of the
Committee may be made or taken by a majority of the members present at any
meeting thereof, or without a meeting by a resolution or written memorandum
concurred in by a majority of the members then in office.
4. Stock Subject to Options. Subject to the provisions of Section 10 hereof,
the aggregate number of shares of Common Stock for which Options may be granted
under the Plan shall be 1,753,996 shares. If, and to the extent that, Options
granted under the Plan terminate or expire without having been exercised the
shares covered by such terminated or expired Options may be the subject of
further grants under the Plan. Shares sold upon the exercise of any Option
granted under the Plan may be shares of authorized and unissued Common Stock,
shares of issued Common Stock held in the Company's treasury or both.
5. Employees Eligible. Under the Plan, Options may be granted to any key
employee or officer of the Company who is an employee of the Company, or a
subsidiary or affiliate of the Company. In determining the persons to whom
Options are to be granted and the number of shares to be covered by an Option,
the Committee shall take into consideration the person's present and potential
contribution to the success of the Company and such other factors as the
Committee may deem proper and relevant. A person receiving an Option under the
Plan is hereinafter referred to as an "Optionee".
6. Provisions Applicable to Options.
(a) Price. The purchase price of each share of Common Stock purchasable
under any Option granted under the Plan shall be as determined by the
Committee, which in the case of Incentive Options shall not be less than
the fair market value of a share of Common Stock at the time the Option is
granted, provided, however, that the purchase price of each share of Common
Stock purchasable under any Incentive Option granted to any Optionee owning
at the time of such grant stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company and subsidiary
or affiliated corporations shall not be less than 110% of the fair market
value of such share as determined above.
(b) Per Employee Limitation for Incentive Options. The aggregate fair
market value, determined on the date of grant, of the shares of the
Company's Common Stock with respect to which Incentive Options granted
under the Plan and any other plan of the Parent or its parent or subsidiary
which are exercisable for the first time by any employee during any
calendar year shall not exceed $100,000.
(c) Exercisability and Duration of Options. Any Option granted under the
Plan shall become exercisable in whole or in part after the expiration of
such period of time, if any, following the date on which such Option was
granted (subject to the limitations of the next paragraph of this Paragraph
(c)) or after the occurrence of such event or events, as the committee in
its discretion may provide upon the granting thereof. No portion of any
Option not exercised prior to the termination of any Optionee's employment
by the Company shall become exercisable thereafter for any reason
whatsoever.
The unexercised portion of any Option granted under the Plan shall
automatically and without notice terminate and become null and void at the
time of the earliest to occur of the following:
(i) The expiration of 10 years from the date on which such Option
was granted;
(ii) The termination of the Optionee's employment with the Company
for any reason;
(iii) In whole or in part, at such earlier time or upon the
occurrence of such earlier event as the Committee in its
discretion may provide upon the granting of such Option.
(d) Exercise of Options. Except as the Company may otherwise provide,
Options granted under the Plan may be exercised by the Optionee during the
months of September, October, November, December, or January as to all or
part of the shares covered thereby, in accordance with the terms of such
Optionee's Option. An Optionee shall exercise such Options by the giving
of written notice of the exercise thereof to the company at its principal
office, specifying the number of shares to be purchased and specifying a
business day, not less than 5 days nor more than 15 days for the date such
notice is given, for the payment of the purchase price against delivery of
the shares being purchased.
The Company shall cause a certificate for the shares os purchased to be
delivered to the Optionee at its principal office, against payment of the
purchase price by certified or official bank check on the date specified in
the notice of exercise.
(e) Non-Transferability of Options. An Option granted under the Plan or
any right evidenced thereby shall not be transferable and shall be
exercisable during the Optionee's lifetime only by him or by his guardian
or legal representative.
(f) Rights of Optionee. The Optionee shall have none of the rights of a
shareholder of the company with respect to the shares subject to an Option
granted under the Plan until a certificate or certificates for such shares
have been issued upon the exercise of such Option.
(g) Resale of Stock to Company.
(i) If the Optionee's employment with the Company is terminated for
any reason after such Optionee's exercise of an Option granted under
the Plan, the Optionee, or if the Optionee's employment is terminated
by reason of death, his executors, administrators, legatees or
distributees of his estate, as the case may be, shall, within thirty
days of the Optionee's termination of employment, offer to sell the
shares covered thereby to the Company for their fair market value
on the date of the Optionee's termination of employment.
(ii) The Company shall, within sixty days of receipt of the
Optionee's offer, have the right but not the obligation to
purchase all or any portion of such shares at such price. Anything in
the immediately preceding sentence to the contrary notwithstanding, if
the Optionee's employment with the Company is terminated by reason of
voluntary termination of employment, retirement, disability, or death
within two years of the date of grant of an Incentive Option under the
Plan or within one year of the date of transfer to the Optionee of
shares covered thereby pursuant to exercise of the Incentive Option,
the Company may but shall not be obligated to defer the repurchase of
shares covered by such Incentive Option until the expiration of two
years from the date of grant or one year from the date of transfer of
shares on exercise.
(iii) An offer made pursuant to this Paragraph (g) shall be made
in writing and delivered in person to the Secretary of the Company or
mailed by registered or certified mail addressed to the company at its
principal office and to the attention of its Secretary. Payment of
the purchase price shall be made upon delivery to the Company of
certificates for the purchased shares properly endorsed with any
necessary stock transfer stamps affixed or provided for and, if sold
by the executors, administrators, legatees or distributees of
the Optionee, accompanies by appropriate tax waivers.
7. Stock Appreciation Rights. The Committee may also grant SARs to employees
granted related Options under the Plan. A SAR may be exercised only at a time
when the fair market value of a share of the company's Common Stock exceeds the
option price for such shares, the Option is otherwise exercisable, and at the
time of such exercise the employee surrenders the privilege of exercising the
related Option to the extent that the employee exercises a SAR. Upon exercise
of a SAR and surrender of the related Option (or any portion of such Option),
the employee shall be entitled to receive an amount equal to the excess of the
fair market value of one share at the time of such surrender over the Option
price per share specified in such Option times the number of such shares called
for by the Option, or portion thereof, which is so surrendered. Such payment
shall be made as determined by the committee, in its sole discretion, either in
(i) cash or (ii) shares of Common Stock valued at fair market value as of the
date of exercise or (iii) partly in cash and partly in shares of the Common
Stock. The Committee shall also determine whether, and if so to what extent, an
exercise of an Option shall be required as a condition to entitling an employee
to exercise a SAR. No SAR can be exercised by an Optionee within six months of
the date of grant and only then if the company has been subject to the reporting
requirements of Section 13 of the Securities and Exchange Act of 1934 (the
"Exchange Act") for at least one year prior to the date of said exercise and has
filed all reports and statements required to be filed pursuant to that section
during that period. The Company, in its discretion, may impose additional
conditions upon the exercise of SARs by Optionees subject to the reporting
requirements of Section 16(a) of the Exchange Act.
8. Tax Withholding. Each Optionee exercising a Nonqualified Option or SAR
shall pay to the Company the minimum amount required to be withheld from the
distribution resulting from such exercise under applicable federal, state, and
local income tax and employment tax laws. In addition, the Optionee may elect
to pay to the Company an amount which, when aggregated with the minimum
withholding amount, does not exceed the Optionee's total estimated federal,
state and local income and employment tax liability with respect to such
exercise. The minimum withholding amount and any additional amount that the
Optionee elects to pay pursuant to this Section 8 shall be referred to herein as
"Withholding Taxes." Payment of such Withholding Taxes shall be subject to the
following terms and conditions:
(i) The Withholding Taxes shall be payable as of the date income
from the exercise is includible in the Optionee's gross income for
federal income tax purposes (the "Tax Date").
(ii) If the Optionee is exercising a Nonqualified Option or
exercising a SAR for shares, the Optionee shall satisfy his
Withholding Tax payment obligations in one of the following methods
(or a combination thereof) at his election:
(A) by remitting to the Company a check in the amount of the
Withholding Taxes;
(B) by remitting to the Company a number of shares of common
Stock having an aggregate fair market value at the Tax Date as
found by the committee equal to the amount of the
Withholding Taxes; or
(C) by electing to have the company withhold from the resulting
stock distribution either (I) if the Tax Date is the same as
the exercise date, the number of shares of Common Stock having
an aggregate fair market value at the Tax Date as found by
the committee equal to the amount of the Withholding Taxes, or
(II) if the Tax Date will be at a time subsequent to
the exercise date, the number of shares of common Stock having an
aggregate fair market value at the exercise date as found by the
Committee equal to the amount of Withholding Taxes that would be
payable if the Tax Date were the same as the exercise date. In
the situation described in clause (C)(II), if at the Tax Date the
amount of Withholding Taxes payable is greater than the amount
previously withheld from the stock distribution, the Optionee
shall remit the difference in cash or in shares of the common
Stock having an aggregate fair market value at the Tax Date as
found by the Committee equal to the difference.
(iii) If the Optionee is exercising a SAR for cash, the Company
shall withhold from the resulting cash distribution the minimum amount
of Withholding Taxes required by law. If such Optionee elects to pay
an additional amount of Withholding Taxes pursuant to this Section 8,
he may elect to have the Company withhold from the cash distribution
such additional amount, or he may elect either of the payment methods
described in clauses (A) or (B) of Section 8(ii) or a combination
thereof with respect to such additional amount.
(iv) Any election by the Optionee of a Withholding Tax payment
method described in Clauses (A) or (B) of Section 8(ii), above, must
be made on or prior to the Tax Date and will be irrevocable and
subject to the approval of the Committee.
(v) If the Optionee is a director or officer of the Company or
its Parent within the meaning of Section 16(a) of the Exchange Act, an
election to pay Withholding Taxes in the manner described in clauses
(B) or (C) of Section 8(ii), above, cannot be made until at least six
months after the grant of the Nonqualified Option or SAR to be
exercised (except that this limitation shall not apply in the event
the death or disability of the Optionee occurs prior to expiration of
the six-month period). In addition, the officer or director must make
such an election either:
(A) at least six months prior to the Tax Date; or
(B) during the ten-day period beginning on the third day
following the release of the company's quarterly or annual
summary statements of sales and earnings and which period
begins prior to the Tax date.
(vi) If the Optionee elects to pay his Withholding Taxes in
shares of Common Stock in the manner described in clauses (A) or (B)
of Section 8(ii), such payment shall be made solely in whole shares
(and not fractional shares) of such Common Stock. Any balance of
Withholding Taxes shall be paid by the Optionee by remitting to the
Company a check for such balance.
9. Right to Terminate Employment. Nothing in the Plan or in any Option granted
under the Plan shall confer upon any Optionee the right to continue in the
employment of the Company or affect the right of the Company to terminate an
Optionee's employment at any time, nor cause any Option granted to vest as a
result of the exercise by the Company of its right to terminate at any time the
employment of an Optionee subject, however, to the provisions of any agreement
of employment between the Company and the Optionee.
10. Dilution and Other Adjustments. In the event of any change in the
outstanding shares of the Company by reason of any stock split, stock dividend,
recapitalization, merger, consolidation, reorganization, combination or exchange
of shares or other similar event, if the Board shall determine, in its sole
discretion, that such change equitably requires an adjustment in the number or
kind of shares of Common Stock subject to, or the option price per share under,
any outstanding Option, such adjustment shall be made by the Board and shall be
conclusive and binding for all purposes of the Plan.
11. Form of Agreements with Optionees and Participants. The form of each
Incentive Option and Nonqualified Option granted under the Plan shall be in such
form as the Committee shall in its discretion determine.
12. Legend on Certificates. The Company may, to the extent deemed necessary or
advisable, endorse an appropriate legend referring to the restrictions imposed
by Section 6 upon the certificate or certificates representing any shares issued
or transferred to the Optionee upon the exercise of any Option granted under the
Plan.
13. Amendment, Expiration and Termination of the Plan. Under the Plan, Options
may be granted at any time and from time to time prior to the expiration of ten
years from the date of adoption of the Plan by the Board, at which time the Plan
will expire, except as to Options then outstanding. The Plan will remain in
effect with respect to outstanding Options until such Options have been
exercised or have expired. The Plan may be extended, terminated or modified at
any time prior to the expiration of ten years from the date of adoption of the
Plan by the Board except with respect to any Options then outstanding under the
Plan, provided that any increase in the maximum number of shares subject to
Options specified in Section 4 hereof shall be subject to the approval of the
Company's shareholders unless made pursuant to the provisions of Section 10
hereof. No amendment of the Plan shall adversely affect any right of any
Optionee with respect to any Option theretofore granted under the Plan.
15. Shareholder Approval and Effective Date. The Plan shall be effective on
March 1, 1989, subject to the approval of the Plan by the Company's
shareholders.
16. Governing Law. The Plan and any Agreement entered into under the Plan with
an Optionee pursuant to Section 11 hereof shall be governed by and construed in
accordance with the internal substantive laws, and not the choice of law rules,
of the State of New York.
